Exhibit 10.2


 


AMENDED AND RESTATED CREDIT AGREEMENT


 


among


 


SMURFIT-STONE CONTAINER CORPORATION,


a Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy
Code,


 


as the Parent and a U.S. Guarantor,


 


SMURFIT-STONE CONTAINER ENTERPRISES, INC.,


a Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy
Code,


 


as U.S. Borrower,


 


SMURFIT-STONE CONTAINER CANADA INC.,


a company operating pursuant to a proceeding under the CCAA and a
Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code,


 


as Canadian Borrower,


 


THE OTHER LOAN PARTIES PARTY HERETO,


 


THE LENDERS PARTY HERETO,


 


JPMORGAN CHASE BANK, N.A.,


 


as Administrative Agent and Collateral Agent,


 


and


 


JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,


 


as Canadian Administrative Agent and Canadian Collateral Agent,


 






 


J.P. MORGAN SECURITIES INC. and DEUTSCHE BANK SECURITIES INC.


 


as Co-Lead Arrangers,


 


J.P. MORGAN SECURITIES INC., DEUTSCHE BANK SECURITIES INC.,


GE CAPITAL MARKETS, INC. and BANC OF AMERICA SECURITIES LLC


 


as Joint Bookrunners,


 


DEUTSCHE BANK SECURITIES INC.,


 


as Syndication Agent,


 


and


 


GENERAL ELECTRIC CAPITAL CORPORATION and BANK OF AMERICA, N.A.


 


as Co-Documentation Agents


 






 


Dated as of February 25, 2009


 

















 


AMENDED AND RESTATED CREDIT AGREEMENT

TABLE OF CONTENTS


 


	
  ARTICLE 1.

  	
  DEFINITIONS

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Defined
  Terms

  	
  4

  
	
  Section 1.2

  	
  Terms
  Generally

  	
  46

  
	
  Section 1.3

  	
  Accounting
  Terms; GAAP

  	
  47

  
	
  Section 1.4

  	
  Exchange
  Rate Calculations

  	
  47

  
	
  Section 1.5

  	
  Québec
  Matters

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
  AMOUNT AND TERMS OF CREDIT

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Commitment
  of the Lenders

  	
  48

  
	
  Section 2.2

  	
  Availability
  of U.S. Loans

  	
  49

  
	
  Section 2.3

  	
  Availability
  of Canadian Loans

  	
  50

  
	
  Section 2.4

  	
  Letters of
  Credit

  	
  50

  
	
  Section 2.5

  	
  Issuance

  	
  54

  
	
  Section 2.6

  	
  Nature of
  Letter of Credit Obligations Absolute

  	
  55

  
	
  Section 2.7

  	
  Making of
  Loans and Disbursements

  	
  55

  
	
  Section 2.8

  	
  Repayment of
  Loans and Unreimbursed Draws; Evidence of Debt

  	
  60

  
	
  Section 2.9

  	
  Interest on
  Loans

  	
  61

  
	
  Section 2.10

  	
  Default
  Interest

  	
  63

  
	
  Section 2.11

  	
  Optional
  Termination or Reduction of Commitment

  	
  63

  
	
  Section 2.12

  	
  Alternate
  Rate of Interest

  	
  64

  
	
  Section 2.13

  	
  Refinancing
  of Loans

  	
  64

  
	
  Section 2.14

  	
  Mandatory
  Prepayment; Commitment Termination

  	
  66

  
	
  Section 2.15

  	
  Optional
  Prepayment of Loans; Reimbursement of Lenders

  	
  70

  
	
  Section 2.16

  	
  Reserve
  Requirements; Change in Circumstances

  	
  74

  
	
  Section 2.17

  	
  Change in
  Legality

  	
  75

  
	
  Section 2.18

  	
  Pro Rata
  Treatment, etc.

  	
  76

  
	
  Section 2.19

  	
  Taxes

  	
  77

  
	
  Section 2.20

  	
  Certain Fees

  	
  79

  
	
  Section 2.21

  	
  Commitment
  Fee

  	
  79

  
	
  Section 2.22

  	
  Letter of
  Credit Fees

  	
  80

  
	
  Section 2.23

  	
  Nature of
  Fees

  	
  80

  
	
  Section 2.24

  	
  Priority and
  Liens

  	
  80

  
	
  Section 2.25

  	
  Use of Cash
  Collateral

  	
  87

  
	
  Section 2.26

  	
  Right of
  Set-Off

  	
  87

  
	
  Section 2.27

  	
  Security
  Interest in Collateral Accounts

  	
  87

  
	
  Section 2.28

  	
  Payment of
  Obligations

  	
  87

  
	
  Section 2.29

  	
  No
  Discharge; Survival of Claims

  	
  88

  
	
  Section 2.30

  	
  Fifteen
  Month Facility Extension Option

  	
  88

  
	
  Section 2.31

  	
  Eighteen
  Month Facility Extension Option

  	
  88

  
	
  Section 2.32

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
  89

  
	
  Section 2.33

  	
  Defaulting
  Lenders

  	
  90

  



 


i

















 


	
  ARTICLE 3.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  93

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Organization
  and Authority

  	
  93

  
	
  Section 3.2

  	
  Due
  Execution

  	
  93

  
	
  Section 3.3

  	
  Statements
  Made

  	
  93

  
	
  Section 3.4

  	
  Financial
  Statements

  	
  94

  
	
  Section 3.5

  	
  Ownership

  	
  94

  
	
  Section 3.6

  	
  Liens

  	
  94

  
	
  Section 3.7

  	
  Compliance
  with Law

  	
  95

  
	
  Section 3.8

  	
  Insurance

  	
  95

  
	
  Section 3.9

  	
  The Orders

  	
  95

  
	
  Section 3.10

  	
  Use of
  Proceeds

  	
  95

  
	
  Section 3.11

  	
  Litigation

  	
  96

  
	
  Section 3.12

  	
  Intellectual
  Property

  	
  96

  
	
  Section 3.13

  	
  Taxes

  	
  96

  
	
  Section 3.14

  	
  Investment
  Company Act; Other Regulations

  	
  96

  
	
  Section 3.15

  	
  ERISA;
  Employee Matters

  	
  97

  
	
  Section 3.16

  	
  Material
  Subsidiaries

  	
  98

  
	
  Section 3.17

  	
  Receivables
  Securitization Indebtedness

  	
  98

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
  CONDITIONS OF LENDING

  	
  98

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Conditions
  Precedent to Initial Loans

  	
  98

  
	
  Section 4.2

  	
  Conditions
  Precedent to Each Loan and Each Letter of Credit

  	
  101

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
  AFFIRMATIVE COVENANTS

  	
  102

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Financial
  Statements, Reports, etc.

  	
  102

  
	
  Section 5.2

  	
  Existence

  	
  106

  
	
  Section 5.3

  	
  Insurance

  	
  106

  
	
  Section 5.4

  	
  Obligations
  and Taxes

  	
  106

  
	
  Section 5.5

  	
  Notice of
  Event of Default, etc.

  	
  106

  
	
  Section 5.6

  	
  Access to
  Books and Records; Collateral Reviews and Appraisals

  	
  107

  
	
  Section 5.7

  	
  Maintenance
  of Concentration Account; Cash Dominion

  	
  108

  
	
  Section 5.8

  	
  Borrowing
  Base Certificate

  	
  109

  
	
  Section 5.9

  	
  Compliance
  with Laws

  	
  109

  
	
  Section 5.10

  	
  Environmental
  Laws

  	
  109

  
	
  Section 5.11

  	
  Additional
  Collateral; Further Assurances

  	
  110

  
	
  Section 5.12

  	
  Material
  Contracts

  	
  110

  
	
  Section 5.13

  	
  Receivables
  Securitization Programs

  	
  110

  
	
  Section 5.14

  	
  Restructuring
  Advisors

  	
  111

  
	
  Section 5.15

  	
  Ratings

  	
  111

  
	
  Section 5.16

  	
  Use of
  Proceeds

  	
  111

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
  NEGATIVE COVENANTS

  	
  111

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Liens

  	
  111

  



 


ii

















 


	
  Section 6.2

  	
  Merger, etc.

  	
  111

  
	
  Section 6.3

  	
  Indebtedness

  	
  112

  
	
  Section 6.4

  	
  Capital
  Expenditures

  	
  112

  
	
  Section 6.5

  	
  EBITDA

  	
  112

  
	
  Section 6.6

  	
  Minimum
  Liquidity

  	
  113

  
	
  Section 6.7

  	
  Guarantees
  and Other Liabilities

  	
  113

  
	
  Section 6.8

  	
  Chapter
  11/CCAA Claims

  	
  113

  
	
  Section 6.9

  	
  Dividends;
  Capital Stock

  	
  114

  
	
  Section 6.10

  	
  Transactions
  with Affiliates

  	
  114

  
	
  Section 6.11

  	
  Investments,
  Loans and Advances

  	
  114

  
	
  Section 6.12

  	
  Disposition
  of Assets

  	
  115

  
	
  Section 6.13

  	
  Nature of
  Business

  	
  115

  
	
  Section 6.14

  	
  Restrictive
  Agreements among Loan Parties

  	
  115

  
	
  Section 6.15

  	
  Right of
  Subrogation among Loan Parties

  	
  115

  
	
  Section 6.16

  	
  Derivative
  Agreements

  	
  115

  
	
  Section 6.17

  	
  Reorganization
  Plan

  	
  116

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
  EVENTS OF DEFAULT

  	
  116

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Events of
  Default

  	
  116

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
  THE AGENTS

  	
  120

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Administration

  	
  120

  
	
  Section 8.2

  	
  Advances and
  Payments

  	
  120

  
	
  Section 8.3

  	
  Sharing of
  Setoffs

  	
  121

  
	
  Section 8.4

  	
  Agreement of
  Required Lenders

  	
  122

  
	
  Section 8.5

  	
  Liability of
  Agents

  	
  122

  
	
  Section 8.6

  	
  Reimbursement
  and Indemnification

  	
  122

  
	
  Section 8.7

  	
  Rights of
  Agents

  	
  123

  
	
  Section 8.8

  	
  Other
  Duties, etc.

  	
  123

  
	
  Section 8.9

  	
  Independent
  Lenders

  	
  123

  
	
  Section 8.10

  	
  Notice of
  Transfer

  	
  123

  
	
  Section 8.11

  	
  Successor
  Agents

  	
  123

  
	
  Section 8.12

  	
  Quebec
  Security

  	
  124

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
  MISCELLANEOUS

  	
  125

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Notices

  	
  125

  
	
  Section 9.2

  	
  Survival of
  Agreement, Representations and Warranties, etc.

  	
  126

  
	
  Section 9.3

  	
  Successors
  and Assigns

  	
  126

  
	
  Section 9.4

  	
  Confidentiality

  	
  130

  
	
  Section 9.5

  	
  Expenses

  	
  131

  
	
  Section 9.6

  	
  Indemnity

  	
  132

  
	
  Section 9.7

  	
  Choice of
  Law

  	
  132

  
	
  Section 9.8

  	
  No Waiver

  	
  132

  
	
  Section 9.9

  	
  Extension of
  Maturity

  	
  132

  



 


iii

















 


	
  Section 9.10

  	
  Amendments,
  etc.

  	
  133

  
	
  Section 9.11

  	
  Severability

  	
  134

  
	
  Section 9.12

  	
  Headings

  	
  134

  
	
  Section 9.13

  	
  Execution in
  Counterparts

  	
  134

  
	
  Section 9.14

  	
  Prior
  Agreements; Inconsistencies

  	
  134

  
	
  Section 9.15

  	
  Further
  Assurances

  	
  134

  
	
  Section 9.16

  	
  Waiver of
  Jury Trial

  	
  135

  
	
  Section 9.17

  	
  Subordination
  of Intercompany Indebtedness

  	
  135

  
	
  Section 9.18

  	
  Certain Post
  Closing Matters

  	
  136

  
	
  Section 9.19

  	
  USA Patriot
  Act

  	
  138

  
	
  Section 9.20

  	
  Judgment
  Currency

  	
  139

  
	
  Section 9.21

  	
  Several
  Obligations; Nonreliance; Violation of Law

  	
  139

  
	
  Section 9.22

  	
  Canadian
  Anti-Money Laundering Legislation

  	
  139

  
	
  Section 9.23

  	
  Conversion

  	
  140

  
	
  Section 9.24

  	
  Restated
  Agreement

  	
  144

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
  Guaranty

  	
  144

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  U.S.
  Guaranty

  	
  144

  
	
  Section 10.2

  	
  Canadian
  Guaranty

  	
  144

  
	
  Section 10.3

  	
  Guaranty of
  Payment

  	
  145

  
	
  Section 10.4

  	
  No Discharge
  or Diminishment of Guaranty

  	
  145

  
	
  Section 10.5

  	
  Defenses
  Waived

  	
  146

  
	
  Section 10.6

  	
  Rights of
  Subrogation

  	
  146

  
	
  Section 10.7

  	
  Reinstatement;
  Stay of Acceleration

  	
  146

  
	
  Section 10.8

  	
  Information

  	
  146

  
	
  Section 10.9

  	
  Termination

  	
  146

  
	
  Section 10.10

  	
  Taxes

  	
  147

  
	
  Section 10.11

  	
  Maximum
  Liability

  	
  147

  
	
  Section 10.12

  	
  Contribution

  	
  147

  
	
  Section 10.13

  	
  Liability
  Cumulative

  	
  148

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11.

  	
  Collection Allocation
  Mechanism

  	
  148

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Implementation
  of CAM

  	
  148

  
	
  Section 11.2

  	
  Letters of
  Credit

  	
  148

  
	
  Section 11.3

  	
  Conversion

  	
  150

  
	
   

  	
   

  
	
  Annex A-1 — Canadian Revolving Commitment Amounts

  	
   

  
	
  Annex A-2 — U.S. Tranche A Revolving Commitment Amounts

  	
   

  
	
  Annex A-3 — U.S. Term Loan Commitment Amounts

  	
   

  
	
  Annex A-4 — Canadian Term Loan Commitment Amounts

  	
   

  
	
  Annex A-5 — U.S. Tranche B Revolving Commitment Amounts

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1 — Form of U.S. Interim Order

  	
   

  
	
  Exhibit A-2 — Form of Initial Order

  	
   

  



 


iv

















 


	
  Exhibit A-3 — Form of Final Order

  	
   

  
	
  Exhibit B-1 — Form of Security and Pledge Agreement

  	
   

  
	
  Exhibit B-2 — Form of Canadian Security Agreement

  	
   

  
	
  Exhibit C-1 — Form of Daily/Weekly Borrowing Base
  Certificate

  	
   

  
	
  Exhibit C-2 — Form of Monthly Borrowing Base Certificate

  	
   

  
	
  Exhibit D — Form of Opinion of Counsel

  	
   

  
	
  Exhibit E — Form of Assignment and Acceptance

  	
   

  
	
  Exhibit F — Form of Loan Party Joinder Agreement

  	
   

  
	
  Exhibit G — Form of Compliance Certificate

  	
   

  
	
   

  	
   

  
	
  Schedule 1.1 — Eligible Equipment

  	
   

  
	
  Schedule 1.2 — Eligible Real Property

  	
   

  
	
  Schedule 2.24 — Non-Primed Liens

  	
   

  
	
  Schedule 3.5 — Subsidiaries

  	
   

  
	
  Schedule 3.6 — Liens

  	
   

  
	
  Schedule 3.7 — Environmental Matters

  	
   

  
	
  Schedule 3.12 — Intellectual Property

  	
   

  
	
  Schedule 4.1 — Closing Documents

  	
   

  
	
  Schedule 6.3 — Indebtedness

  	
   

  
	
  Schedule 6.11 — Other Investments

  	
   

  
	
  Schedule 6.12 — Permitted Asset Sales

  	
   

  
	
  Schedule 6.14 — Loan Party
  Transaction Restrictions

  	
   

  



 


v
















 


AMENDED AND RESTATED CREDIT
AGREEMENT
 Dated as of February 25, 2009


 


AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 25,
2009, among SMURFIT-STONE CONTAINER
ENTERPRISES, INC., a Delaware corporation, a debtor and
debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code
(“U.S. Borrower”), SMURFIT-STONE CONTAINER CANADA INC., a company continued under the Companies Act
(Nova Scotia), a company operating pursuant to a proceeding under the
CCAA, and a debtor and debtor in possession in a case pending under Chapter 11
of the Bankruptcy Code (“Canadian Borrower,” and together with
the U.S. Borrower, the “Borrowers”),
SMURFIT-STONE CONTAINER CORPORATION,
a Delaware corporation, a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code (“Parent”),
the other Loan Parties party hereto, the Lenders party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent and
Collateral Agent, and JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian Administrative Agent and Canadian
Collateral Agent.


 


INTRODUCTORY STATEMENT


 


WHEREAS, on January 26, 2009, the Loan Parties filed voluntary
petitions with the Bankruptcy Court initiating the U.S. Cases and have
continued in the possession of their assets and in the management of their
businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code; and


 


WHEREAS, on January 26, 2009, the Canadian Loan Parties (other
than Smurfit-MBI and SLP Finance General Partnership) commenced the Canadian
Cases in the Canadian Court under the CCAA; and


 


WHEREAS, on January 26, 2009, Smurfit-MBI and SLP Finance General
Partnership commenced recognition proceedings under the Bankruptcy and
Insolvency Act (Canada); and


 


WHEREAS, the Loan Parties are parties to that certain Credit Agreement
dated as of January 28, 2009 (the “Prior Agreement”);
and


 


WHEREAS, the Borrowers have applied to the Lenders for a credit
facility in an aggregate principal amount of US$750,000,000 (subject to the
terms and conditions of this Agreement) consisting of (i) a US$215,000,000
revolving credit facility available in Dollars to the U.S. Borrower or the
Canadian Borrower; (ii) a US$35,000,000 revolving credit and letter of
credit facility available in Dollars to the U.S. Borrower or the Canadian
Borrower; (iii) a US$400,000,000 term loan facility available in Dollars
to the U.S. Borrower; (iv) a US$65,000,000 revolving credit and letter of
credit facility available in Dollars or Canadian Dollars to the U.S. Borrower
or the Canadian Borrower; and (v) a US$35,000,000 term loan facility
available in Dollars to the Canadian Borrower; and


 


WHEREAS, the proceeds of the Loans will be used for (i) working
capital, Letters of Credit and Capital Expenditures; (ii) other general
corporate purposes of the Loan Parties (including intercompany loans to the
extent permitted by this Agreement); (iii) for the 


 


1

















 


refinancing in full of
Indebtedness outstanding under the Receivables Securitization Programs; (iv) payment
of any related transaction costs, fees and expenses; and (v) the costs of
administration of the Cases, all as provided for herein; and


 


WHEREAS, all Letters of Credit issued and outstanding under the Prior
Agreement as of the Amended and Restated Effective Date and all Loans
outstanding thereunder on such date shall be deemed to be issued and
outstanding under this Agreement (as more fully described herein); and


 


WHEREAS, to provide for the repayment of the Loans, the reimbursement
of any drafts drawn under the Letters of Credit and the payment of the other
Secured Obligations of the Loan Parties, the Loan Parties will provide to the
Agents for the benefit of the Secured Parties the following (each as more fully
described herein):


 


(a)           With
respect to the Secured Obligations of the U.S. Loan Parties and the Canadian
Borrower:


 


(1)           in the U.S. Cases
pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed
Superpriority Claim payable from and having recourse to all pre-petition and
post-petition property of the estates of the U.S. Loan Parties and the Canadian
Borrower and all proceeds thereof (including, upon entry of the Final Order,
any proceeds of Avoidance Actions);


 


(2)           in
the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code,
a perfected first priority Lien on all unencumbered property of the U.S. Loan
Parties and the Canadian Borrower (including, upon entry of the Final Order,
any proceeds of Avoidance Actions) and on all cash maintained in any Collateral
Account and any investments of the funds contained therein, provided that
amounts in the Collateral Accounts shall not be subject to the Carve-Out or the
CCAA Charges;


 


(3)           in
the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code,
a perfected junior Lien upon all property of the U.S. Loan Parties and the
Canadian Borrower that is subject to valid and perfected Liens in existence on
the Filing Date or that is subject to valid Liens in existence on the Filing
Date that are perfected subsequent to the Filing Date as permitted by Section 546(b) of
the Bankruptcy Code (other than certain property that is subject to the
existing Liens that secure obligations under the Pre-Petition Credit Agreement,
which Liens shall be primed by the Liens granted pursuant to Section 364(d)(1) of
the Bankruptcy Code);


 


(4)           in
the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code,
a perfected first priority, senior priming Lien on all of the property of the
U.S. Loan Parties and the Canadian Borrower (including, without limitation,
cash, inventory, receivables, rights under license agreements, property, plant
and equipment and the residual interest of the U.S. Loan Parties and the
Canadian Borrower in any Receivables Securitization Programs) that is subject
to the Primed Liens, which Primed Liens shall be primed by and made subject and
subordinate to the perfected first priority senior priming Liens to be granted
to the Administrative Agent, which senior priming Liens in favor of the
Administrative Agent shall also prime any Liens granted after the commencement
of the Cases to provide adequate 


 


2

















 


protection
Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed
Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely
to the extent such Non-Primed Liens secure claims in an aggregate amount less
than or equal to US$60,000,000; and


 


(5)           in
the Canadian Cases, pursuant to an order of the Canadian Court, in respect of
the Secured Obligations of the Canadian Borrower, a CCAA DIP Lenders’ Charge
over all of the present and future assets of the Canadian Borrower with
priority over all existing Liens and security, including the Primed Liens; and


 


(b)           With
respect to the Secured Obligations of the Canadian Loan Parties:


 


(1)           in
the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code,
an allowed Superpriority Claim payable from and having recourse to all
pre-petition and post-petition property of the estates of the Canadian Loan
Parties and all proceeds thereof (including, upon entry of the Final Order, any
proceeds of Avoidance Actions);


 


(2)           in
the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code,
a perfected first priority Lien on all unencumbered property of the Canadian
Loan Parties (including, upon entry of the Final Order, any proceeds of
Avoidance Actions) and on all cash maintained in any Collateral Account and any
investments of the funds contained therein, provided that amounts in the
Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;


 


(3)           in
the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code,
a perfected junior Lien upon all property of the Canadian Loan Parties that is
subject to valid and perfected Liens in existence on the Filing Date or that is
subject to valid Liens in existence on the Filing Date that are perfected
subsequent to the Filing Date as permitted by Section 546(b) of the
Bankruptcy Code (other than certain property that is subject to the existing
Liens that secure obligations under the Pre-Petition Credit Agreement, which
liens shall be primed by the liens to be granted to the Administrative Agent
pursuant to Section 364(d)(1) of the Bankruptcy Code);


 


(4)           in
the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code,
a perfected first priority, senior priming Lien on all of the property of the
Canadian Loan Parties (including, without limitation, cash, inventory,
receivables, rights under license agreements, property, plant and equipment and
the residual interest of the Canadian Loan Parties in any Receivables
Securitization Programs) that is subject to the Primed Liens, which Primed
Liens shall be primed by and made subject and subordinate to the perfected
first priority senior priming Liens to be granted to the Administrative Agent,
which senior priming Liens in favor of the Administrative Agent shall also
prime any Liens granted after the commencement of the Cases to provide adequate
protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed
Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely
to the extent such Non-Primed Liens secure claims in an aggregate amount less
than or equal to US$60,000,000; and


 


3

















 


(5)           in
the Canadian Cases, pursuant to an order of the Canadian Court, the CCAA DIP
Lenders’ Charge over all of the present and future assets of the Canadian Loan
Parties with priority over all existing liens and security, including the
Primed Liens;


 


WHEREAS, all of the claims and Liens granted hereunder to the Agents
for the benefit of the Secured Parties in the U.S. Cases shall be subject to
the Carve-Out to the extent provided in Section 2.24 and in the
Canadian Cases shall be subject to the CCAA Charges to the extent provided in Section 2.24.


 


Accordingly, the parties hereto hereby agree as follows:


 


ARTICLE 1. DEFINITIONS


 


Section 1.1            Defined
Terms.  As used
in this Agreement, the following terms shall have the meanings specified below:


 


“ABR Loan” shall mean
any Loan bearing interest at a rate determined by reference to the Alternate
Base Rate in accordance with the provisions of ARTICLE 2.


 


“Account” has the meaning
specified in Article 9 of the UCC or the PPSA, as applicable, and shall
include, without limitation, any right to payment owed to any Person arising
out of the sale of goods or services by such Person.


 


“Account Debtor” shall
mean, with respect to any Account, the obligor with respect to such Account.


 


“Additional Credit” shall have
the meaning given such term in Section 4.2(d).


 


“Adjusted LIBO Rate”
shall mean, with respect to any Eurodollar Borrowing for any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of
1.0%) equal to the greater of (a) 3.5% and (b) (i) the LIBO Rate
in effect for such Interest Period multiplied by (ii) the Statutory
Reserve Rate.  For purposes hereof, the
term “LIBO Rate” shall mean
the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or
substitute page of such service, or any successor to or substitute for
such service, providing rate quotations comparable to those currently provided
on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period.  In
the event that such rate is not available at such time for any reason, then the
“LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period
shall be the rate at which dollar deposits of US$5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office
of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.


 


4

















 


“Administration Charge” shall
have the meaning given such term in Section 2.24.


 


“Administrative Agent”
shall mean JPMorgan Chase Bank, N.A., in its capacity as administrative agent
for the Lenders hereunder.


 


“Administrative Questionnaire”
shall mean an administrative questionnaire in a form supplied by the
Administrative Agent.


 


“Affiliate” shall mean,
as to any Person, any other Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such Person.  For purposes of this definition, a Person (a “Controlled Person”) shall be deemed to be “controlled
by” another Person (a “Controlling Person”) if
the Controlling Person possesses, directly or indirectly, power to direct or
cause the direction of the management and policies of the Controlled Person
whether by contract or otherwise.


 


“Agents” shall mean the
Administrative Agent, the Canadian Administrative Agent, the Collateral Agent,
and  the Canadian Collateral Agent,
together, and “Agent”
means any one of such Agents individually.


 


“Aggregate Credit Exposure”
shall mean, at any time, the aggregate Credit Exposure of all the Lenders.


 


“Agreement” shall mean
this Amended and Restated Credit Agreement, as the same may from time to time
be amended, restated, modified or supplemented.


 


“Alternate Base Rate”
shall mean, for any day, a rate per annum equal to the greatest of (a) 4.5%,
(b) the Prime Rate in effect on such day, (c) the Federal Funds
Effective Rate in effect on such day plus 1⁄2 of 1% and (d) the Adjusted
LIBO Rate for a one month Interest Period on such day (or if such day is not a
Business Day, the immediately preceding Business Day) plus 1%, provided that,
for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based
on the rate appearing on the Reuters Screen LIBOR01 Page (or on any
successor or substitute page) at approximately 11:00 a.m. London time on
such day (without any rounding).  For
purposes hereof, “Prime Rate” shall mean
the rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New
York City (or, in the case of Loans or Borrowings denominated in Dollars made
by the Canadian Lenders pursuant to the Canadian Commitments, the rate per
annum announced from time to time by the Canadian Administrative Agent as its
U.S. base rate for commercial loans in effect at its office in Toronto); each
change in the Prime Rate shall be effective on the date such change is publicly
announced.  If the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (c) of the first
sentence of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. 
Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective
from and including the effective date 


 


5

















 


of such change in the Prime
Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.


 


“Amended and Restated Effective Date”
shall mean the date on which the First Amendment to Credit Agreement has been
executed and the conditions precedent to the effectiveness of the First
Amendment to Credit Agreement have been satisfied or waived.


 


“Applicable Agent” shall mean (a) with
respect to the Canadian Commitments, extensions of credit thereunder, payments
in respect thereof and other matters pertaining thereto, the Canadian
Administrative Agent, (b) with respect to the U.S. Commitments, extensions
of credit thereunder, payments in respect thereof and other matters pertaining
thereto, the Administrative Agent and (c) with respect to any action or
determination under any Collateral Document or Collateral thereunder, the Agent
to which a security interest is granted under such Collateral Document;
provided that the Administrative Agent shall be the Applicable Agent for all
purposes not involving a particular Class of Commitments, extensions of
credit thereunder, payments thereunder or other matters pertaining thereto, or
actions or determinations under a particular Collateral Document.


 


“Applicable Margin”
shall mean, for any day, with respect to any ABR Loan, Eurodollar Loan,
Canadian Prime Rate Loan, Discount Rate Loan, or with respect to the Letters of
Credit issued hereunder, as the case may be, the applicable rate per annum set
forth below under the caption “ABR and Canadian Prime Rate Spread”, “Eurodollar
and Discount Rate Spread”, “Letter of Credit Fees” or “Drafts Drawn under
Letters of Credit”, as the case may be:


 


	
  Pricing Level

  	
   

  	
  ABR and Canadian

  Prime Rate Spread

  	
   

  	
  Eurodollar

  and Discount

  Rate Spread

  	
   

  	
  Letter of

  Credit Fees

  	
   

  	
  Drafts Drawn

  under Letters

  of Credit

  	
   

  
	
  1

  	
   

  	
  5.5

  	
  %

  	
  6.5

  	
  %

  	
  6.5

  	
  %

  	
  5.5

  	
  %

  
	
  2

  	
   

  	
  6.5

  	
  %

  	
  7.5

  	
  %

  	
  7.5

  	
  %

  	
  6.5

  	
  %

  
	
  3

  	
   

  	
  7.5

  	
  %

  	
  8.5

  	
  %

  	
  8.5

  	
  %

  	
  7.5

  	
  %

  



 


The Applicable Margin shall be determined based on Pricing Level 1; provided,
that from and after January 28, 2010 (assuming the proper exercise of the
Fifteen Month Facility Extension Option), the Applicable Margin shall be
determined based on Pricing Level 2; provided, further, that from
and after April 28, 2010 (assuming the proper exercise of the Eighteen
Month Facility Extension Option), the Applicable Margin shall be determined
based on Pricing Level 3. 
Notwithstanding anything to the contrary contained in this definition,
the determination of the Applicable Margin for any period shall be subject to
the provisions of Section 2.10.


 


“Applicable Percentage” shall
mean, with respect to (a) any U.S. Tranche A Revolving Lender, a
percentage equal to a fraction the numerator of which is such Lender’s U.S.
Tranche A Revolving Commitment and the denominator of which is the aggregate
U.S. Tranche A Revolving Commitments of all U.S. Tranche A Revolving Lenders
(if the U.S. Tranche A Revolving Commitments have terminated or expired, the
Applicable Percentages shall be determined based upon such Lender’s share of
the aggregate U.S. Tranche A Revolving Loans at that time), (b) any U.S.
Tranche B Revolving Lender, a percentage equal to a fraction the numerator of
which is such Lender’s U.S. Tranche B Revolving Commitment and the 


 


6

















 


denominator of which is the
aggregate U.S. Tranche B Revolving Commitments of all U.S. Tranche B Revolving
Lenders (if the U.S. Tranche B Revolving Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon such Lender’s
share of the aggregate U.S. Tranche B Revolving Credit Utilization at that
time), (c) any Canadian Revolving Lender, a percentage equal to a fraction
the numerator of which is such Lender’s Canadian Revolving Commitment and the
denominator of which is the aggregate Canadian Revolving Commitment of all
Canadian Revolving Lenders (if the Canadian Revolving Commitments have
terminated or expired, the Applicable Percentages shall be determined based
upon such Lender’s share of the aggregate Canadian Revolving Credit Utilization
at that time); provided that in the case of Section 2.33 when a
Defaulting Lender shall exist, any such Defaulting Lender’s Revolving
Commitment shall be disregarded in any calculation pursuant to the foregoing
clauses (a), (b) and (c), (d) any U.S. Term Loan Lender, a percentage
equal to a fraction the numerator of which is such Lender’s outstanding
principal amount of the U.S. Term Loans and the denominator of which is the
aggregate outstanding amount of the U.S. Term Loans of all U.S. Term  Loan Lenders, (e) any Canadian Term Loan
Lender, a percentage equal to a fraction the numerator of which is such Lender’s
outstanding principal amount of the Canadian Term Loans and the denominator of
which is the aggregate outstanding amount of the Canadian Term Loans of all
Canadian Term Loan Lenders and (f) the Aggregate Credit Exposure of any
Lender, a percentage based upon such Lender’s share of the Aggregate Credit
Exposure and the unused Commitments; provided that in the case of Section 2.33
when a Defaulting Lender shall exist, any such Defaulting Lender’s Commitment
shall be disregarded in any calculation pursuant to this clause (f).


 


“Approved Fund” shall
have the meaning set forth in Section 9.3.


 


“Asset Sale” shall mean
a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback,
assignment, conveyance, transfer or other disposition to, or any exchange of
property with, any Person (other than a Loan Party), in one transaction or
series of transactions, of all or any part of the Loan Parties’ or any of their
Subsidiaries’ businesses, assets or properties of any kind, whether real,
personal, or mixed and whether tangible or intangible, whether now owned or
hereafter acquired, including, without limitation, the capital stock of any of
the Loan Parties (other than the Parent) or their Subsidiaries in each case
other than (i) Inventory sold in the ordinary course of business, and (ii) sales
of assets for aggregate consideration of less than US$1,000,000 with respect to
any transaction or series of related transactions and less than US$10,000,000
in the aggregate on a cumulative basis with respect to all such transactions
during the term of this Agreement.


 


“Assignment and Acceptance”
shall mean an assignment and acceptance entered into by a Lender and an
Eligible Assignee, and accepted by the Administrative Agent, substantially in
the form of Exhibit E.


 


“Available Cash” shall mean, on
any date, (a) the fair market value on such date of unrestricted cash and
cash equivalents held in securities accounts of the Loan Parties and their
Subsidiaries, and (b) the amount of unrestricted available funds held on
such date in bank deposit accounts of the Loan Parties and their Subsidiaries,
in each case subject to no Liens other than (i) Liens in favor of the
Agents on behalf of the Secured Parties, (ii) Liens in favor of the
Pre-Petition Agent on behalf of the Pre-Petition Secured Lenders, (iii) the
CCAA Charges and (iv) an 


 


7

















 


unregistered Lien in respect of
Priority Payables that are not yet due and payable, and in any event excluding
amounts held in any Collateral Account, as evidenced in the applicable
Borrowing Base Certificate delivered by each Borrower to the Administrative
Agent pursuant to Section 5.8.


 


“Avoidance Actions” shall mean
claims and causes of action under Sections 502(d), 544, 545, 547, 548, 549 and
550 of the Bankruptcy Code.


 


“Banking Services” shall mean
each and any of the following bank services provided to any Loan Party by any
Lender or any of its Affiliates: (a) commercial credit cards, (b) stored
value cards and (c) treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions, return
items, overdrafts and interstate depository network services).


 


“Banking Services Obligations”
shall mean any and all obligations of the Loan Parties, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor) in connection with Banking Services.


 


“Banking Services Reserves”
means all Reserves which the Applicable Agent from time to time establishes in
its Permitted Discretion for Banking Services then provided or outstanding.


 


“Bankruptcy Code” shall
mean The Bankruptcy Reform Act of 1978, as heretofore and hereafter amended,
and codified as 11 U.S.C. Section 101 et  seq.


 


“Bankruptcy Court” shall
mean the United States Bankruptcy Court for the District of Delaware or any
other court having jurisdiction over the U.S. Cases from time to time.


 


“Board” shall mean the
Board of Governors of the Federal Reserve System of the United States.


 


“Borrowers” shall have the
meaning set forth in the Introduction.


 


“Borrowing” shall mean
the incurrence of Revolving Loans or the Term Loans, as the case may be, of a
single Type and Class made from all the Lenders in accordance with their
Applicable Percentages on a single date and having, in the case of Eurodollar
Loans or Discount Rate Loans, a single Interest Period or Contract Period (with
any ABR Loan or Canadian Prime Rate Loan made pursuant to Section 2.17
being considered a part of the related Borrowing of Eurodollar Loans or
Discount Rate Loans).


 


“Borrowing Bases” shall mean
the U.S. Borrowing Base and the Canadian Borrowing Base.


 


“Borrowing Base Certificate”
shall mean a certificate substantially in the form of Exhibit C-1
hereto (with respect to the certificate to be delivered by the Loan Parties
weekly or more frequently) and Exhibit C-2 hereto (with respect to
the certificate to be delivered by the Loan Parties monthly) (in each case with
such changes therein as may be required by the 


 


8

















 


Administrative Agent from time
to time to reflect the components of and reserves against the U.S. Borrowing
Base and the Canadian Borrowing Base as provided for hereunder from time to
time), executed and certified as accurate and complete by a Financial Officer
of each of the Loan Parties, which shall include appropriate exhibits,
schedules and supporting documentation, and additional reports as (i) outlined
in Exhibits C-1 and C-2, (ii) requested by the
Administrative Agent, and (iii) provided in Section 5.8.


 


“Budget” shall have the meaning
set forth in Section 4.1(j).


 


“Business Day” shall
mean any day other than a Saturday, Sunday or other day on which banks in the
State of New York are required or permitted to close (and, for a Letter of
Credit, other than a day on which the applicable Fronting Bank issuing such
Letter of Credit is closed); provided, however, that (a) when
used in connection with a Eurodollar Loan, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in dollar deposits on
the London interbank market and (b) when used in connection with a
Borrowing of Canadian Revolving Loans, Canadian Term Loans or a Canadian
Revolving Facility Letter of Credit, the term “Business Day” shall also exclude
any day on which banks are not open for business in Toronto and Montreal.


 


“Calculation Date” shall mean (a) the
last Business Day of each month, (b) the date of each notice of Borrowing
or refinancing of Canadian Revolving Loans or Canadian Term Loans, or (c) the
Business Day preceding the issuance, amendment, extension or renewal of each
Canadian Revolving Facility Letter of Credit.


 


“Calpine” shall mean Calpine
Corrugated LLC, a California limited liability company.


 


“Calpine Debt” shall mean
Indebtedness of Calpine under (i) that certain Amended and Restated Credit
Agreement dated as of July 28, 2008 between Calpine and The CIT
Group/Equipment Financing, Inc. in respect of a loan in the principal
amount of US$40,350,000 and (ii) that certain Loan and Security Agreement
dated as of March 30, 2006 between Calpine and Union Bank of California,
N.A. as amended prior to and including that certain Sixth Amendment to Loan and
Security Agreement dated as of July 28, 2008 in respect of a loan in the
principal amount of US$12,000,000.


 


“CAM” shall mean the mechanism
for the allocation and exchange of interests in the Credit Facilities and
collections thereunder established under ARTICLE 11.


 


“CAM Exchange” shall mean the
exchange of the Lenders’ interests provided for in Section 11.1.


 


“CAM Percentage” shall mean, as
to each Lender, a fraction, expressed as a decimal, of which (a) the
numerator shall be the aggregate Obligations owed to such Lender, and (b) the
denominator shall be the aggregate Obligations owed to all the Lenders, in each
case immediately prior to the Termination Date. 
For purposes of computing each Lender’s CAM Percentage, all Obligations
which shall be denominated in Canadian Dollars shall be translated into Dollars
at the Exchange Rate in effect on the Termination Date.


 


9

















 


“Canadian Administrative
Agent” shall mean JPMorgan Chase Bank,
N.A., Toronto Branch, in its capacity as Canadian administrative agent for the
Lenders hereunder.


 


“Canadian Benefit Plans” shall
mean all employee benefit plans of any nature or kind whatsoever (other than
the Canadian Pension Plans) that are maintained or contributed to by the
Canadian Borrower or any other Canadian Loan Party.


 


“Canadian Borrower” shall have
the meaning set forth in the Introduction.


 


“Canadian Borrowing Base”
shall mean, at the time of any determination, an amount equal to the sum
(expressed in Dollars, based on the Exchange Rate determined in accordance with
Section 1.4), without duplication, of (a) 85% of Eligible
Accounts of the Canadian Loan Parties at such time plus (b) the
lesser of (i) 65% of Eligible Inventory of the Canadian Loan Parties at
such time and (ii) 85% of the Net Orderly Liquidation Value of Eligible
Inventory of the Canadian Loan Parties at such time (in each case with respect
to clauses (i) and (ii) with any Eligible Inventory to be valued at
the lower of cost (determined on a first-in, first-out basis) or market), plus
(c) the Canadian PP&E Component, minus (d) the amount of
the Reserves at such time, minus, without duplication, (e) the then
applicable aggregate amount of obligations secured by the CCAA Charges as
calculated pursuant to Section 2.24 at such time, minus (f) to
the extent not otherwise included in the CCAA Charges, the amount of Priority
Payables at such time.  The Canadian
Borrowing Base at any time shall be determined by reference to the most recent
Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 5.8
of this Agreement.


 


“Canadian Cases”
shall mean the consolidated proceedings of the CCAA Cases and the Recognition
Cases.


 


“Canadian Collateral Agent”
shall mean JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as
Canadian collateral agent for the Lenders hereunder and the other Secured
Parties.


 


“Canadian Commitments” shall
mean the Canadian Revolving Commitment and the Canadian Term Loan Commitment.


 


“Canadian Concentration Account”
shall mean the blocked concentration account established by the Canadian
Borrower pursuant to Section 5.7 and designated as the “Smurfit-Stone
Canadian Concentration Account” with JPMorgan Chase Bank, N.A., Toronto Branch,
or a bank acceptable to the Canadian Administrative Agent.


 


“Canadian Conversion Notice” shall have the meaning given such term in Section 9.23(c).


 


“Canadian Court” shall mean the
Ontario Superior Court of Justice or any other court having jurisdiction over
the Canadian Cases.


 


“Canadian Dollar Equivalent”
shall mean, on any date of determination, with respect to any amount in Dollars,
the equivalent in Canadian Dollars of such amount determined by the
Administrative Agent using the Exchange Rate then in effect.


 


10
















 


“Canadian Dollars”
and “C$” shall mean lawful
currency of Canada.


 


“Canadian Guaranteed Obligations”
shall have the meaning set forth in Section 10.2.


 


“Canadian Guarantor” and “Canadian Guarantors” shall mean,
individually or collectively, SMBI Inc. and each of the Canadian Subsidiaries
party to this Agreement (other than the Canadian Borrower).  As of the Closing Date, the Canadian
Guarantors are 3083527 Nova Scotia Company, a corporation organized under the
laws of the Province of Nova Scotia, MBI Limited/Limitée, a corporation
organized under the laws of the Province of New Brunswick, Smurfit-MBI, a
limited partnership organized under the laws of the Province of Ontario, Stone
Container Finance Company of Canada II, a corporation organized under the laws
of the Province of Nova Scotia, 639647 British Columbia Ltd., a company with
limited liability organized under the laws of the Province of British Columbia,
B.C. Shipper Supplies Ltd., a corporation organized under the laws of the
Province of British Columbia, Specialty Containers Inc., a corporation
organized under the laws of the Province of Alberta, SLP Finance General
Partnership, a general partnership formed and operated under the Civil Code of
Québec, Francobec Company, a corporation organized under the laws of the
Province of Nova Scotia, 605681 N.B. Inc., a corporation organized under the
laws of the Province of New Brunswick, and SMBI Inc., a Delaware corporation,
and, after the Closing Date, shall include each subsequently organized Canadian
Subsidiary and each direct parent thereof.


 


“Canadian Investment Account”
shall mean the account established by the Canadian Borrower pursuant to Section 2.7(d) and
designated as the “Smurfit-Stone Canadian Investment Account” with JPMorgan
Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian
Administrative Agent.


 


“Canadian Lender” shall mean,
as of any date of determination, a Person constituting a Canadian Revolving
Lender or Canadian Term Lender.


 


“Canadian Letter
of Credit Account” shall mean the
non-interest bearing account established by the Canadian Borrower under the
sole and exclusive control of the Canadian Administrative Agent maintained at
JPMorgan Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian
Administrative Agent, designated as the “JPMorgan Chase Bank NA (Smurfit-Stone
Canadian Letter of Credit) Account” that shall be used solely for the purposes
set forth in Section 2.4(c) and Section 2.14.


 


“Canadian Letter of Credit Outstandings”
shall mean, at any time of determination, the sum of (a) the aggregate
undrawn amount of all outstanding Canadian Revolving Facility Letters of Credit
that are denominated in Dollars, plus the U.S. Dollar Equivalent at such time
of the aggregate undrawn amount of all Canadian Revolving Facility Letters of
Credit that are denominated in Canadian Dollars and (b) the aggregate
amount that has been drawn under any Canadian Revolving Facility Letter of
Credit denominated in Dollars that has not been reimbursed by the Canadian
Borrower or another Loan Party at such time plus the U.S. Dollar Equivalent of
the aggregate amount that has been drawn under any Canadian Revolving Facility
Letter of Credit denominated in Canadian Dollars that has not been reimbursed
by the Canadian Borrower or another Loan Party at such time.  The Canadian
Letter 


 


11

















 


of Credit Outstandings with
respect to any Canadian Revolving Lender at any time shall equal its Applicable
Percentage of the aggregate Canadian Letter of Credit Outstandings at such
time.


 


“Canadian Loan Party” and “Canadian  Loan Parties”
shall mean, individually or collectively, the Canadian Borrower and the
Canadian Guarantors.


 


“Canadian Loans” shall mean the
Canadian Revolving Loans and the Canadian Term Loans.


 


“Canadian Pension Plans” shall
mean all plans that are considered to be pension plans for the purposes of, and
are required to be registered under, the ITA or any applicable pension benefits
standards statute or regulation in Canada and that are established, maintained
or contributed to by the Canadian Borrower or any other Canadian Loan Party for
its current or former employees.


 


“Canadian PP&E Component”
shall mean the lesser of (x) (i) during the period commencing with the Closing Date until the
twelve (12) month anniversary of the Closing Date, up to US$15,000,000, (ii) during
the period commencing with the twelve (12) month anniversary of the Closing
Date until the fifteen (15) month anniversary of the Closing Date, up to
US$10,000,000, and (iii) on the fifteen (15) month anniversary of the
Closing Date and thereafter, up to US$7,500,000, or, in each case, such lesser
amount as may be specified by the Canadian Borrower on the Canadian Borrower’s
most recent Borrowing Base Certificate, and (y) the greater of (A) (i) 50%
of the Net Orderly Liquidation Value of Eligible Equipment of the Canadian Loan
Parties at such time plus (ii) 50% of the Fair Market Value of
Eligible Real Property of the Canadian Loan Parties at such time (as set forth
in the most recent third party real estate appraisal in form and substance
satisfactory to the Administrative Agent), and (B) 20% of the Net Orderly
Liquidation Value In Place of (i) Eligible Equipment of the Canadian Loan
Parties at such time and (ii) Eligible Real Property of the Canadian Loan
Parties at such time.  Notwithstanding
the foregoing sentence, until the earlier of (x) such time as appraisals
satisfactory to the Administrative Agent are completed pursuant to Section 5.6
and (y) May 28, 2009, or such later date as the Administrative Agent
may approve in its exclusive discretion, the Canadian PP&E Component shall
be US$15,000,000 or such lesser amount as may be specified by the Canadian
Borrower on the Canadian Borrower’s most recent Borrowing Base Certificate.


 


“Canadian Prime Rate” shall
mean, on any day, the greatest of (a) 4.5%, (b) the annual rate of
interest announced from time to time by the Canadian Administrative Agent as
being its reference rate then in effect for determining interest rates on
Canadian Dollar-denominated commercial loans made by it in Canada and (c) the
CDOR Rate for a one month term in effect from time to time plus 100 basis
points per annum.


 


“Canadian Prime Rate Loan”
shall mean any Loan bearing interest at a rate determined by reference to the
Canadian Prime Rate in accordance with the provisions of ARTICLE 2.


 


“Canadian Receivables Securitization Program”
shall mean the Receivables Purchase Agreement, dated as of March 30, 2004,
among MBI Limited/Limitee, in its capacity as general partner of Smurfit-MBI,
Computershare Trust Company of Canada, in its capacity as 


 


12

















 


trustee of King Street Funding
Trust, and Scotia Capital Inc., as amended, restated, modified or waived from
time to time.


 


“Canadian Revolving Commitment”
shall mean, with respect to each Canadian Revolving Lender, the commitment of
such Lender to make Canadian Revolving Loans hereunder and to acquire
participations in Canadian Revolving Facility Letters of Credit in the amount
set forth opposite its name on Annex A-1 hereto or as may subsequent to
the Closing Date be set forth in the Register from time to time, as the same
may be reduced from time to time pursuant to the terms of this Agreement. 
As of the Closing Date, the aggregate amount of the Canadian Revolving
Commitments is US$65,000,000.


 


“Canadian Revolving Credit Utilization”
shall mean, at any time of determination, the sum of (a) the aggregate
principal amount of Canadian Revolving Loans outstanding at such time and
denominated in Dollars, plus (b) the U.S. Dollar Equivalent of the
aggregate principal amount of Canadian Revolving Loans outstanding at such time
and denominated in Canadian Dollars, plus (c) the Canadian Letter
of Credit Outstandings at such time.


 


“Canadian Revolving Facility Letters of Credit”
shall mean any irrevocable letter of credit issued pursuant to Section 2.4
for the account of the Canadian Borrower or a Canadian Subsidiary by a Fronting
Bank pursuant to the terms and conditions of ARTICLE 2, which letter of
credit shall be (i) a standby or import documentary letter of credit, (ii) issued for purposes consistent with the
ordinary course of business of the Loan Parties, as determined by the Loan
Parties in their reasonable judgment, or for such other purposes as are
acceptable to the Canadian Administrative Agent, (iii) denominated in
Dollars or Canadian Dollars and (iv) otherwise in such form as may be
approved from time to time by the Canadian Administrative Agent and the applicable
Fronting Bank.


 


“Canadian Revolving Lenders”
shall mean the Lenders having Canadian Revolving Commitments or holding
Canadian Revolving Loans.


 


“Canadian Revolving Loan” shall
mean a revolving loan to the U.S. Borrower or the Canadian Borrower made
pursuant to Section 2.1(b)(iii) in Dollars or Canadian
Dollars.


 


“Canadian Secured Obligations”
shall mean (a) all Obligations owing by the Canadian Borrower (other than
in respect of its guaranty of Obligations of the U.S. Borrower), (b) all
Obligations owing by any other Canadian Loan Party, (b) all Banking
Services Obligations owing by any Canadian Loan Party and (c) all Swap
Obligations owing by any Canadian Loan Party to one or more Canadian Lenders or
their respective Affiliates; provided that at or prior to the time that any
transaction relating to a Swap Obligation is executed, the Canadian Lender or
an Affiliate thereof party thereto (other than JPMCB) shall have delivered
written notice to the Administrative Agent that such a transaction has been
entered into and that it constitutes a Canadian Secured Obligation entitled to
the benefits of the Collateral Documents.


 


“Canadian Security Agreement”
shall mean the Canadian Security Agreement made by each of the Canadian Loan
Parties in favor of the Canadian Collateral Agent and the Quebec Security
Agreements.


 


13

















 


“Canadian Subsidiary” shall
mean any Subsidiary of the Parent incorporated, organized or formed under the
laws of Canada or any province or other territory thereof.


 


“Canadian Term Loans” shall
mean the term loans to the Canadian Borrower made pursuant to Section 2.1(a)(ii) (or
made to the Canadian Borrower pursuant to Section 9.23(c))in
Dollars.


 


“Canadian Term Loan Collateral Account”
shall mean the account established by the Canadian Borrower under the sole and
exclusive control of the Canadian Administrative Agent maintained with JPMorgan
Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian
Administrative Agent, designated as the “Smurfit-Stone Canadian Term Loan
Collateral Account” that shall be used solely for the purposes set forth in Section 2.7(d) and
Section 2.14(d).


 


“Canadian Term Loan Commitment”
shall mean, with respect to each Canadian Term Loan Lender, the commitment of
such Lender to make a Canadian Term Loan hereunder in the amount set forth
opposite its name on Annex A-4 hereto, as the same shall be reduced on the
Closing Date pursuant to Section 2.14(k) and as may be
modified pursuant to Section 9.23(c).  As of the Closing Date
and prior to making the Canadian Term Loans, the aggregate amount of the
Canadian Term Loan Commitments of the Canadian Term Loan Lenders is
US$35,000,000.


 


“Canadian Term Loan Conversion”
shall have the
meaning given such term in Section 9.23(c).


 


“Canadian Term Loan Lenders”
shall mean the Lenders having Canadian Term Loan Commitments or holding
Canadian Term Loans.


 


“Canadian Term Outstandings”
shall mean, at any time of determination, an amount equal to (a) the
aggregate principal amount of the Canadian Term Loans outstanding at such time minus
(b) the amount of cash held in the Canadian Term Loan Collateral Account
at such time.


 


“Capital Expenditures”
shall mean, for any period, the aggregate of all expenditures (whether paid in
cash and not accrued prior to such period but after the Closing Date or accrued
as liabilities during such period, and including that portion of Capital Lease
Obligations which is capitalized on the consolidated balance sheet of the Loan
Parties and their Subsidiaries) by the Loan Parties and their Subsidiaries
during such period that, in conformity with GAAP, are required to be included
in or reflected by the property, plant, equipment or intangibles or similar
fixed asset accounts reflected in the consolidated balance sheet of the Loan
Parties and their Subsidiaries, but excluding expenditures made in connection
with the replacement or restoration of assets, to the extent reimbursed or
financed from insurance proceeds paid on account of the loss of or the damage
to the assets being replaced or restored, or from awards of compensation
arising from the taking by condemnation or eminent domain of such assets being
replaced.


 


14

















 


“Capital Lease Obligations” of
any Person means the obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.


 


“Carve-Out” shall have
the meaning set forth in Section 2.24.


 


“Cases” shall mean the U.S.
Cases and the Canadian Cases, individually and collectively.


 


“Cash Flow Forecast” shall have
the meaning set forth in Section 4.1(k).


 


“CCAA” shall mean the Companies’
Creditors Arrangement Act, R.S.C. 1985, c. C-36, as heretofore or hereafter amended.


 


“CCAA Cases”
shall mean the cases commenced by the Canadian Loan Parties (other than
Surfit-MBI and SLP Finance General Partnership) pursuant to the CCAA.


 


“CCAA Charges”
shall mean the Administration Charge and the Directors’ Charge.


 


“CCAA DIP Lenders’ Charge”
shall have the meaning set forth in Section 2.24.


 


“CDOR Rate” shall mean on any
day, with respect to a particular term as specified herein, the annual rate of
discount or interest which is the arithmetic average of the discount rates for such
term applicable to Canadian Dollar bankers’ acceptances identified as such on
the Reuters Screen CDOR Page at approximately 10:00 A.M. (Toronto,
Ontario time) on such day, or if such day is not a Business Day, then on the
immediately preceding Business Day (as adjusted by the Administrative Agent
after 10:00 A.M. (Toronto, Ontario time) to reflect any error in any
posted rate or in the posted average annual rate).  If the rate does not appear on the Reuters
Screen CDOR Page as contemplated above, then the CDOR Rate on any day
shall be calculated as the arithmetic average of the annual discount rates for
such term applicable to Canadian Dollar bankers’ acceptances of, and as quoted
by, the Schedule I Banks, as of 10:00 A.M. (Toronto, Ontario time) on that
day, or if that day is not a Business Day, then on the immediately preceding
Business Day.


 


“Change of Control”
shall mean (x) with respect to the Parent (i) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules of
the Securities and Exchange Commission thereunder as in effect on the Closing
Date), of shares representing more than 35% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Parent; or
(ii) the occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Parent, after the Filing Date, by Persons who
were neither (a) nominated by the board of directors of the Parent nor (b) appointed
by the directors so nominated, (y) the Parent shall cease to own, directly
or indirectly, beneficially and of record, 100% of the issued and outstanding
capital stock of the U.S. Borrower or any other Loan Party (or, in the case of 


 


15

















 


Calpine, 90%), or (z) the
U.S. Borrower shall cease to own, directly or indirectly, beneficially and of
record, 100% of the issued and outstanding capital stock of the Canadian Borrower.


 


“Class”, when used in reference
to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are U.S. Tranche A Revolving Loans, U.S. Tranche B Revolving
Loans, Canadian Revolving Loans, U.S. Term Loans, or Canadian Term Loans, and,
when used in reference to any Commitment, refers to whether such Commitment is
a U.S. Tranche A Revolving Commitment, U.S. Tranche B Revolving Commitment,
Canadian Revolving Commitment, U.S. Term Loan Commitment, or Canadian Term Loan
Commitment.


 


“Closing Date” shall
mean January 28, 2009.


 


“Closing Date Lender” shall
have the meaning set forth in Section 9.3.


 


“Code” shall mean the
Internal Revenue Code of 1986, as amended.


 


“Co-Lead Arrangers” shall mean
J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc.


 


“Collateral” shall mean
all of the real, personal and mixed property (including equity interests) in
which Liens are purported to be granted pursuant to the Orders or Collateral
Documents.


 


 “Collateral
Accounts” shall mean collectively, the Canadian Letter of Credit
Account, the Letter of Credit Account, the Canadian Term Loan Collateral
Account and the U.S. Term Loan Collateral Account.


 


“Collateral Agent” shall
mean JPMorgan Chase Bank, N.A., in its capacity as collateral agent for the
Lenders hereunder and the other Secured Parties.


 


“Collateral Documents” shall
mean, collectively, the Security Agreements and any other documents granting a
Lien upon the Collateral as security for payment of any of the Secured
Obligations.


 


“Commercial LC Exposure” shall
mean, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding commercial Letters of Credit at such time plus (b) the
aggregate amount of all disbursements relating to commercial Letters of Credit
that have not yet been reimbursed by or on behalf of the Borrowers at such
time.  The Commercial LC Exposure shall
be determined on a separate basis for each Class.  The Commercial LC Exposure of any Canadian
Revolving Lender or U.S. Tranche B Revolving Lender, as the case may be, at any
time shall be its Applicable Percentage of the total Commercial LC Exposure at
such time.


 


“Commitment” shall mean each
of, and “Commitments” shall
mean, collectively, the Canadian Revolving Commitments, the U.S. Tranche A
Revolving Commitments, the U.S. Tranche B Revolving Commitments, the U.S. Term
Loan Commitments and the Canadian Term Loan Commitments, and, with respect to
each Canadian Revolving Lender, U.S. Tranche A Revolving Lender, U.S. Tranche B
Revolving Lender, U.S. Term Loan Lender or Canadian Term Loan Lender, as
applicable, the Commitment of each such Lender 


 


16

















 


hereunder in the amount set
forth opposite its name on Annex A-1,  Annex A-2,  Annex A-3,
Annex A-4 or Annex A-5 hereto or as may subsequent to the Closing
Date be set forth in the Register from time to time, as the same may be reduced
from time to time pursuant to this Agreement.


 


“Commitment Fee” shall
have the meaning set forth in Section 2.21.


 


“Commitment Fee Percentage” shall
mean 1.0% per annum.


 


“Commitment Letter”
shall mean that certain Commitment Letter dated January 6, 2009 among the
Administrative Agent, J.P. Morgan Securities Inc., Deutsche Bank Securities
Inc., Deutsche Bank Trust Company Americas and the Parent on behalf of itself
and the other Loan Parties.


 


“Concentration Account” shall
mean the blocked concentration account established by the U.S. Borrower
pursuant to Section 5.7 and designated as the “Smurfit-Stone
Concentration Account” with JPMCB.


 


“Consenting Lenders”
shall have the meaning set forth in Section 9.10(b).


 


“Consolidated EBITDA”
shall mean, for any period, all as determined in accordance with GAAP, the
Consolidated Net Income of the Loan Parties and their Subsidiaries for such
period, plus, without duplication and to the extent deducted in
determining Consolidated Net Income for such period, (i) all federal,
state, provincial, local and foreign income taxes, (ii) Consolidated
Interest Expense, (iii) depreciation, depletion, amortization of
intangibles and other non-cash charges or non-cash losses deducted in
determining such Consolidated Net Income, (iv) cash restructuring charges
in an amount not to exceed US$25,000,000 in the aggregate during any twelve
(12) month period (“restructuring charges”), (v) cash restructuring
charges solely consisting of one-time lump sum cash severance payments made in
connection with a reduction in force undertaken by the Loan Parties and their
Subsidiaries in an amount not to exceed US$25,000,000 in the aggregate during
any twelve (12) month period, (vi) “Chapter 11/CCAA expenses” (or “administrative
costs reflecting Chapter 11/CCAA expenses”, inclusive of professional fees), (vii) non-cash
pension expenses, as shown on the Loan Parties’ consolidated statement of
income for such period, and (viii) any Downtime Credit, minus,
without duplication and to the extent included in determining such Consolidated
Net Income for such period, (i) any non-cash income or non-cash gains, (ii) cash
contributions to fund pension plan liabilities and (iii) cash expenditures
pertaining to non-cash charges or non-cash losses that were added back in the
calculation of Consolidated EBITDA hereunder for the same or a prior
period.  The classification of items as “restructuring
charges” or “Chapter 11/CCAA expenses” for purposes of determining Consolidated
EBITDA shall be made by the Loan Parties in a manner consistent with the
allocations in the Budget and the Cash Flow Forecast delivered to the
Administrative Agent on or prior to the Closing Date.


 


“Consolidated Interest Expense”
means, with reference to any period, total interest expense (including that
attributable to Capital Lease Obligations) of the Parent and its Subsidiaries
for such period with respect to all outstanding Indebtedness of the Parent and
its Subsidiaries (including all commissions, discounts and other fees and
charges owed with respect 


 


17

















 


to letters of credit and
bankers’ acceptance financing), calculated on a consolidated basis for the
Parent and its Subsidiaries for such period in accordance with GAAP.  For purposes of the foregoing, interest
expense shall be determined after giving effect to any net payments made or received
by the Parent and its Subsidiaries with respect to Swap Agreements, but
excluding any gain or loss recognized under GAAP that results from the
mark-to-market valuation of any Swap Agreement.


 


“Consolidated  Net Income” means, for any period, the consolidated net
income (or loss) of the Parent and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with the Parent
or any of its Subsidiaries, (b) the income (or deficit) of any Person
(other than a Subsidiary) in which the Parent or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by the Parent or such Subsidiary in the form of dividends or similar
distributions, (c) the undistributed earnings of any Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any contractual
obligation (other than under any Loan Document) or Requirement of Law
applicable to such Subsidiary and (d) any gain (or loss) from the sale or
other disposition of any asset occurring outside of the ordinary course of
business of the Loan Parties.


 


“Contract Period” shall mean
the term of a Discount Rate Loan selected by the Canadian Borrower in
accordance with Section 2.7 and Section 2.13 commencing
on the date of the Borrowing of such Discount Rate Loan, any rollover date and
the date on which any Canadian Prime Rate Loans are refinanced with Discount
Rate Loans pursuant to Section 2.13, as applicable, and expiring on
a Business Day which shall be either one month, three months, or, with the
consent of all of the applicable Canadian Lenders, six months later; provided,
that no Contract Period shall extend beyond the Maturity Date.  Notwithstanding the foregoing, whenever the
last day of any Contract Period would otherwise occur on a day which is not a
Business Day, the last day of such Contract Period shall occur on the next
succeeding Business Day.


 


“Converting Lender” shall mean, each
of JPMCB, JPMorgan Chase Bank, N.A., Toronto Branch and Deutsche Bank Trust Company Americas.


 


“Credit Exposure” shall mean as
to any Lender at any time, the sum of (a) such Lender’s Revolving Loans at
such time, plus (b) such Lender’s LC Exposure plus (c) an
amount equal to the aggregate principal amount of its Term Loans outstanding at
such time.


 


“Credit Facility” shall mean a Class of
Commitments and extensions of credit thereunder.  For purposes of this
Agreement, each of the following comprises a separate Credit Facility:  (a) the
U.S. Term Loans, (b) the Canadian Term Loans, (c) the U.S. Tranche A
Revolving Commitments and the U.S. Tranche A Revolving Loans, (d) the U.S.
Tranche B Revolving Commitments, the U.S. Tranche B Revolving Loans and the
U.S. Revolving Facility Letters of Credit, and (e) the Canadian Revolving
Commitments, the Canadian Revolving Loans and the Canadian Revolving Facility
Letters of Credit.


 


“Default” shall have the
meaning given such term in Section 2.24.


 


18

















 


“Defaulting Lender” shall mean
any Lender, as determined by the Applicable Agent, that has (a) failed to
fund any portion of its Loans or participations in Letters of Credit within
three (3) Business Days of the date required to be funded by it hereunder,
(b) notified any Borrower, the Applicable Agent, any Fronting Bank or any
Lender in writing that it does not intend to comply with any of its funding
obligations under this Agreement or has made a public statement to the effect
that it does not intend to comply with its funding obligations under this
Agreement or under other agreements in which it commits to extend credit, (c) failed,
within three (3) Business Days after request by the Applicable Agent, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund prospective Loans and participations in then outstanding
Letters of Credit, (d) otherwise failed to pay over to the Applicable
Agent or any other Lender any other amount required to be paid by it hereunder
within three (3) Business 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 has become or is insolvent or (ii) become the subject
of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment or has a parent company that has become the subject
of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.


 


“Dilution Factors” shall mean,
without duplication, with respect to any period, the aggregate amount of all deductions,
credit memos, returns, adjustments, allowances, bad debt write-offs and other
non-cash credits which are recorded to reduce accounts receivable in a manner
consistent with current and historical accounting practices of the Loan
Parties.


 


“Dilution Ratio” shall mean, at
any date, the amount (expressed as a percentage) equal to (a) the
aggregate amount of the applicable Dilution Factors for the twelve (12) most
recently ended fiscal months divided by (b) total gross sales for the
twelve (12) most recently ended fiscal months.


 


“Dilution Reserve” shall mean,
at any date, (i) the amount by which the Dilution Ratio exceeds five  percent (5%) multiplied by (ii) the
Eligible Accounts on such date.


 


“Directors’ Charge” shall have
the meaning given such term in Section 2.24.


 


“Discount Rate” shall mean with
respect to a Discount Rate Loan: (a) made by a Canadian Revolving Lender
which is a Schedule I Bank, the greater of (x) 3.5% and (y) the CDOR
Rate, and (b) made by a Canadian Revolving Lender which is not a Schedule
I Bank, the greater of (x) 3.5% and (y) the CDOR Rate plus 10 basis
points per annum.


 


“Discount Rate Loan” shall mean
any Loan bearing interest at a rate determined by reference to the Discount
Rate in accordance with the provisions of ARTICLE 2.


 


“Dollars” and “US$” shall mean lawful money of the United States
of America.


 


“Domestic Subsidiary”
shall mean any Subsidiary of the U.S. Borrower organized under the laws of the
United States or any political subdivision thereof.


 


19

















 


“Downtime Credit” shall mean a
credit for production downtime, if any, in excess of downtime identified in the
Budget delivered on or prior to the Closing Date, in an amount equal to
US$2,500,000 for every 10,000 tons of production downtime in excess of downtime
identified in the Budget taken in any month ending on or prior to July 31,
2009 (other than, in any event, downtime associated with maintenance activity
in the ordinary course of business), provided that the cumulative amount
of the Downtime Credit during all periods shall not exceed US$20,000,000.  In the event the amount of production
downtime in excess of downtime identified in the Budget is more or less than
10,000 tons, the Downtime Credit for such month shall be prorated based upon
the actual number of tons of production downtime in excess of the downtime
identified in the Budget (but in any event not to exceed the US$20,000,000 cap
set forth above).


 


“Effective Date” shall
mean the date identified as the effective date of a Reorganization Plan of the
Loan Parties that is confirmed or sanctioned pursuant to an order of the
Bankruptcy Court or Canadian Court, as the case may be, in the Cases.


 


“Eighteen Month Facility Extension Option”
shall have the meaning given such term in Section 2.31.


 


“Eligible Accounts” means, at
any time, the Accounts of a Loan Party which the Applicable Agent determines in
its Permitted Discretion are eligible as the basis for the extension of Loans
and the issuance of Letters of Credit hereunder.  Without limiting the Applicable Agent’s
discretion provided herein, Eligible Accounts shall not include any Account:


 


(a)           which is not subject
to a first priority perfected Lien in favor of the Applicable Agent for the
benefit of the Secured Parties subject only to (i) the CCAA Charges and (ii) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable;


 


(b)           which is subject to
any Lien other than (i) a Lien in favor of the Applicable Agent for the
benefit of the Secured Parties, (ii) a Lien (if any) permitted by the Loan
Documents which does not have priority over the Lien in favor of the Applicable
Agent for the benefit of the Secured Parties, (iii) a Lien contemplated by
clause (iv) of the definition of Permitted Liens, and (iv) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable;


 


(c)           which (i) is
unpaid more than 90 days after the date of the original invoice therefor, or (ii) has
been written off the books of the Loan Party or otherwise designated as
uncollectible (in determining the aggregate amount from the same Account Debtor
that is unpaid hereunder there shall be excluded the amount of any net credit
balances relating to Accounts due from an Account Debtor which are unpaid more
than 90 days from the date of invoice);


 


(d)           which is owing by an
Account Debtor for which more than 50% of the Accounts owing from such Account
Debtor and its Affiliates are ineligible hereunder;


 


(e)           which is owing by an
Account Debtor to the extent the aggregate amount of Accounts owing from such
Account Debtor and its Affiliates to the Loan Parties exceeds 10% of the
aggregate amount of Eligible Accounts of the Loan Parties;


 


20
















 


(f)            which, for any
Account Debtor, exceeds the applicable credit limit, if any, determined by the
Loan Parties, to the extent of such excess, as determined in a manner mutually
acceptable to the Loan Parties and the Applicable Agent;


 


(g)           with respect to which
any covenant, representation, or warranty contained in this Agreement or in the
Collateral Documents has been breached or is not true in any material respect;


 


(h)           which (i) does
not arise from the sale of goods or performance of services in the ordinary
course of business, (ii) is not evidenced by an invoice or other
documentation satisfactory to the Applicable Agent which has been sent to the
Account Debtor, (iii) represents a progress billing, (iv) is
contingent upon any Loan Party’s completion of any further performance, (v) represents
a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval,
consignment, cash-on-delivery or any other repurchase or return basis or (vi) relates
to payments of interest, in each case determined in a manner mutually
acceptable to the Loan Parties and the Applicable Agent;


 


(i)            for which the goods
giving rise to such Account have not been shipped to the Account Debtor or for
which the services giving rise to such Account have not been performed by a Loan
Party or if such Account was invoiced more than once, in each case determined
in a manner mutually acceptable to the Loan Parties and the Applicable Agent;


 


(j)            which is owed by an
Account Debtor which has (i) applied for, suffered, or consented to the
appointment of any receiver, custodian, trustee, or liquidator of its assets, (ii) has
had possession of all or a material part of its property taken by any receiver,
custodian, trustee or liquidator, (iii) filed, or had filed against it,
any request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or
involuntary case under any state, provincial or federal bankruptcy laws, (iv) has
admitted in writing its inability, or is generally unable to, pay its debts as
they become due, (v) become insolvent, or (vi) ceased operation of
its business;


 


(k)           which is owed by any
Account Debtor which has sold all or a substantially all of its assets;


 


(l)            which is owed by an
Account Debtor which (i) does not maintain its chief executive office or
have material business operations in the U.S. or Canada or (ii) is not
organized and existing under applicable law of the U.S. or Canada or, in either
case any political subdivision thereof, unless, in either case, such Account is
backed by a Letter of Credit acceptable to the Applicable Agent which is in the
possession of, has been assigned to and is directly drawable by, the Applicable
Agent;


 


(m)          which is owed in any
currency other than Dollars or Canadian Dollars;


 


(n)           (A) with
respect to the U.S. Borrowing Base, which is owed by (i) the government
(or any department, agency, public corporation, or instrumentality thereof) of
any country other than the U.S. unless such Account is backed by a Letter of
Credit acceptable to the Applicable Agent which is in the possession of the
Applicable Agent, or (ii) the government of the U.S., or any department,
agency, public corporation, or instrumentality thereof, unless the 


 


21

















 


Federal Assignment of Claims
Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.),
and any other steps necessary to perfect the Lien of the Applicable Agent for
the benefit of the Secured Parties in such Account have been complied with to
the Applicable Agent’s satisfaction; and (B) with respect to the Canadian
Borrowing Base, which is owed by (i) the government (or any department,
agency, public corporation, or instrumentality thereof) of any country other
than Canada unless such Account is backed by a Letter of Credit acceptable to
the Applicable Agent which is in the possession of the Applicable Agent, or (ii) the
government of Canada, or any department, agency, public corporation, or
instrumentality thereof, unless the Financial Administration Act (Canada) or
similar provincial or territorial legislation or municipal ordinance of similar
purpose, in each case as amended, and any other steps necessary to perfect the
Lien of the Applicable Agent for the benefit of the Secured Parties in such
Account have been complied with to the Applicable Agent’s satisfaction;


 


(o)           which is owed by any
Affiliate, employee, officer, director, agent, holder of more than 2% of the
issued and outstanding capital stock of the Parent or any stockholder of any
other Loan Party;


 


(p)           which is owed by an
Account Debtor or any Affiliate of such Account Debtor to which any Loan Party
is indebted, but only to the extent of such indebtedness or is subject to any
security, deposit, progress payment, retainage or other similar advance made by
or for the benefit of an Account Debtor, in each case to the extent thereof;


 


(q)           which is subject to
any counterclaim, deduction, defense, setoff or dispute but only to the extent
of any such counterclaim, deduction, defense, setoff or dispute;


 


(r)            which is evidenced
by any promissory note, chattel paper, or instrument or subject to a payment
plan;


 


(s)           with respect to
which such Loan Party has made any agreement with the Account Debtor for any
reduction thereof, other than discounts and adjustments given in the ordinary
course of business, or any Account which was partially paid and such Loan Party
created a new receivable for the unpaid portion of such Account, or any unpaid
portion of any partially paid Account to the extent of such unpaid portion;


 


(t)            which does not
comply in all material respects with the requirements of all applicable laws
and regulations, whether federal, state, provincial or local, including without
limitation the Federal Consumer Credit Protection Act, the Federal Truth in
Lending Act and Regulation Z of the Board;


 


(u)           which is for goods
that have been sold under a purchase order or pursuant to the terms of a
contract or other agreement or understanding (written or oral) that indicates
or purports that any Person other than such Loan Party has or has had an
ownership interest in such goods, or which indicates any party other than such
Loan Party as payee or remittance party, in each case determined in a manner
mutually acceptable to the Loan Parties and the Applicable Agent; or


 


(v)           which was created on
cash on delivery terms.


 


22

















 


In the event that an Account
which was previously an Eligible Account ceases to be an Eligible Account hereunder,
such Loan Party shall notify the Applicable Agent thereof on and at the time of
submission to the Applicable Agent of the next Borrowing Base Certificate.  Except as otherwise set forth above, the
amount of an Eligible Account shall be determined based on the face amount of
such Account; provided that the face amount of an Account may, in the
Applicable Agent’s Permitted Discretion, be reduced by, without duplication, to
the extent not reflected in such face amount, (i) the amount of all
accrued and actual discounts, claims, credits or credits pending, promotional
program allowances, price adjustments, finance charges or other allowances
(including any amount that such Loan Party may be obligated to rebate to an
Account Debtor pursuant to the terms of any agreement or understanding (written
or oral)) and (ii) the aggregate amount of all cash received in respect of
such Account but not yet applied by such Loan Party to reduce the amount of
such Account.


 


“Eligible Equipment” means the
equipment owned by a Loan Party located at the Loan Parties’ facilities
described on Schedule 1.1, as updated from time to time with the consent
of the Administrative Agent, and meeting each of the following requirements:


 


(a)           such Loan Party has
good title to such equipment;


 


(b)           such Loan Party has
the right to subject such equipment to a Lien in favor of the Applicable Agent
for the benefit of the Secured Parties; such equipment is subject to a first
priority perfected Lien in favor of the Applicable Agent for the benefit of the
Secured Parties and is free and clear of all other Liens of any nature
whatsoever (except for (i) Permitted Liens which do not have priority over
the Lien in favor of the Applicable Agent for the benefit of the Secured
Parties, (ii) unregistered Liens in respect of Priority Payables that are
not yet due and payable, (iii) the CCAA Charges and (iv) Liens
permitted by clause (iv) of the definition of Permitted Liens);


 


(c)           the full purchase
price for such equipment has been paid by such Loan Party;


 


(d)           such equipment is
located on premises (i) owned by such Loan Party, which premises are
subject to a first priority perfected Lien in favor of the Applicable Agent for
the benefit of the Secured Parties, or (ii) leased by such Loan Party
where (x) the lessor has delivered to the Applicable Agent a Landlord Lien
Waiver or (y) a Reserve for rent, charges, and other amounts due or to
become due with respect to such facility has been established by the Applicable
Agent in its Permitted Discretion;


 


(e)           such equipment is in
good working order and condition (ordinary wear and tear excepted) and is used
or held for use by such Loan Party in the ordinary course of business of the
Loan Party;


 


(f)            such equipment is
not subject to any agreement which restricts the ability of such Loan Party to
use, sell, transport or dispose of such equipment or which restricts the
Applicable Agent’s ability to take possession of, sell or otherwise dispose of
such equipment; and


 


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


 


23

















 


“Eligible Inventory”  means, at any time, the Inventory of a Loan
Party which the Applicable Agent determines in its Permitted Discretion is
eligible as the basis for the extension of Loans and the issuance of Letters of
Credit hereunder.  Without limiting the
Applicable Agent’s discretion provided herein, Eligible Inventory shall not
include any Inventory:


 


(a)           which is not subject
to a first priority perfected Lien in favor of the Applicable Agent for the
benefit of the Secured Parties subject only to (i) the CCAA Charges and (ii) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable;


 


(b)           which is subject to
any Lien other than (i) a Lien in favor of the Applicable Agent for the
benefit of the Secured Parties, (ii) a Lien (if any) permitted by the Loan
Documents which does not have priority over the Lien in favor of the Applicable
Agent for the benefit of the Secured Parties, (iii) a Lien contemplated by
clause (iv) of the definition of Permitted Liens, and (iv) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable;


 


(c)           which is, in the
Applicable Agent’s opinion, slow moving, obsolete, unmerchantable, defective,
used, unfit for sale, not salable at prices approximating at least the cost of
such Inventory in the ordinary course of business or unacceptable due to age,
type, category or quantity;


 


(d)           with respect to
which any covenant, representation, or warranty contained in this Agreement or
the Collateral Documents been breached or is not true  in any material respect and which does not
conform in any material respect to all standards imposed by any Governmental Authority;


 


(e)           in which any Person
other than such Loan Party shall (i) have any direct or indirect
ownership, interest or title to such Inventory or (ii) be indicated on any
purchase order or invoice with respect to such Inventory as having or
purporting to have an interest therein;


 


(f)            which is not
Work-in-Process, Raw Materials or Finished Goods or which constitutes spare or
replacement parts, subassemblies, packaging supplies and shipping material,
manufacturing supplies, samples, prototypes, displays or display items,
bill-and-hold goods, goods that are returned or marked for return, repossessed
goods, defective or damaged goods, goods held on consignment, or goods which
are not of a type held for sale in the ordinary course of business, including, but
not limited to, fuels, chemicals, starches, ink and adhesives;


 


(g)           which is not located
in the United States or Canada or is in transit (other than between locations
in the United States or Canada controlled by Loan Parties, to the extent
included in current perpetual inventory reports of any Loan Party);


 


(h)           which is located in
any location leased by such Loan Party unless (i) the lessor has delivered
to the Applicable Agent a Landlord Lien Waiver 
or (ii) a Reserve for rent, charges, and other amounts due or to
become due with respect to such facility has been established by the Applicable
Agent in its Permitted Discretion;


 


24

















 


(i)            which is located in
any third party warehouse or is in the possession of a bailee (other than a
third party processor) and is not evidenced by a document (other than bills of
lading issued with respect to Inventory in transit between locations in the
United States or Canada controlled by Loan Parties), unless (i) such
warehouseman or bailee has delivered to the Applicable Agent a Landlord Lien
Waiver and such other documentation as the Applicable Agent may require or (ii) an
appropriate Reserve has been established by the Applicable Agent in its
Permitted Discretion;


 


(j)            which is being
processed offsite at a third party location or outside processor, or is
in-transit to or from said third party location or outside processor;


 


(k)           which is a
discontinued product or component thereof;


 


(l)            which is the
subject of a consignment by such Loan Party as consignor;


 


(m)          which contains or
bears any intellectual property rights licensed to such Loan Party unless the
Applicable Agent is satisfied that it may sell or otherwise dispose of such
Inventory without (i) infringing the rights of such licensor, (ii) violating
any contract with such licensor, or (iii) incurring any liability with
respect to payment of royalties other than royalties incurred pursuant to sale
of such Inventory under the current licensing agreement;


 


(n)           which is not reflected
in a current inventory report of such Loan Party (unless such Inventory is
reflected in a report to the Applicable Agent as “in transit” Inventory);


 


(o)           for which
reclamation rights have been asserted by the seller; or


 


(p)           any portion of the
cost of such Inventory is attributable to intercompany profit between any Loan
Party and any of its Affiliates (but only to the extent of such portion).


 


In the event that Inventory
which was previously Eligible Inventory ceases to be Eligible Inventory hereunder,
such Loan Party shall notify the Applicable Agent thereof on and at the time of
submission to the Applicable Agent of the next Borrowing Base Certificate.


 


“Eligible Real Property” means
the real property (including fixtures thereto) listed on Schedule 1.2,
as updated from time to time with the consent of the Administrative Agent (such
consent not to be unreasonably withheld), owned by a Loan Party (i) that
is acceptable in the exclusive discretion of the Applicable Agent for inclusion
in the U.S. Borrowing Base or Canadian Borrowing Base, as the case may be, (ii) in
respect of which an appraisal report has been delivered to the Applicable Agent
in form, scope and substance reasonably satisfactory to the Applicable Agent, (iii) in
respect of which the Applicable Agent is satisfied that all actions necessary
or desirable in order to create perfected first priority Lien (subject only to (i) the
CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables
that are not yet due and payable) on such real property have been taken,
including, the filing and recording of Collateral Documents, (iv) in
respect of which an environmental assessment report has been completed and
delivered to the Applicable Agent in form and substance satisfactory to such Applicable
Agent and which does not indicate any material environmental liability, or
material non-compliance with any Environmental Law (which liability or
non-compliance was not previously disclosed to Lenders), (v) which is
adequately 


 


25

















 


protected by fully-paid valid
title insurance with endorsements and in amounts reasonably acceptable to the
Applicable Agent, insuring that the Applicable Agent, for the benefit of the
Secured Parties, shall have a perfected first priority Lien (subject only to (i) the
CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables
that are not yet due and payable) on such real property, evidence of which
shall have been provided in form and substance reasonably satisfactory to the
Applicable Agent, and (vi) if required by the Applicable Agent: (A) an
ALTA survey has been delivered for which all necessary fees have been paid and
which is dated no more than 30 days prior to the date on which the applicable
Collateral Document is recorded, certified to the Applicable Agent and the
issuer of the title insurance policy in a manner reasonably satisfactory to the
Applicable Agent by a land surveyor duly registered and licensed in the state
or province in which such Eligible Real Property is located and reasonably
acceptable to the Applicable Agent, and shows all buildings and other
improvements, any offsite improvements, the location of any easements, parking
spaces, rights of way, building setback lines and other dimensional regulations
and the absence of encroachments, either by such improvements or on to such
property, and other defects, other than encroachments and other defects
reasonably acceptable to the Applicable Agent; and (B) such Loan Party
shall have used its reasonable best efforts to obtain such consents, agreements
and confirmations of lessors and third parties as the Applicable Agent may deem
necessary or desirable, together with evidence that all other actions that the
Applicable Agent may deem necessary or desirable in order to create perfected
first priority Liens (subject only to (i) the CCAA Charges and (ii) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable) on the property described in the Collateral Document have been taken.


 


“Environmental Laws” shall mean
all local, state, federal, provincial and foreign laws, statutes, ordinances,
orders, rules, regulations, or binding policies or decrees relating to (i) pollution
or protection of the environment, including, without limitation, those relating
to protection or rehabilitation of the land, water (surface or subsurface
water) or air, or fines, injunctions, penalties, damages, contribution, cost
recovery compensation, losses, injuries, investigations or remedial work resulting
from the presence, release or threatened release of Hazardous Waste or
Hazardous Substances, (ii) the generation, use, storage, transportation or
disposal of Hazardous Waste or Hazardous Substance, or (iii) occupational
safety and health, industrial hygiene or protection of wetlands, in any manner
applicable to the Loan Parties or any of their respective properties, and any
analogous future local, state, federal, provincial and foreign laws, statutes,
ordinances, orders, rules, regulations, or binding policies or decrees, each as
in effect as of the date of determination.


 


“Environmental Lien”
shall mean a Lien in favor of any Governmental Authority for (i) any
liability under federal, provincial or state Environmental Laws, or (ii) damages
arising from or costs incurred by such Governmental Authority in response to a
release or threatened release of a Hazardous Substance or Hazardous Waste.


 


“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated and rulings issued thereunder.


 


“ERISA Affiliate” shall
mean any trade or business (whether or not incorporated) which is a member of a
group of which any of the Loan Parties is a member and which is under 


 


26

















 


common control within the
meaning of Section 414(b) or (c) of the Code and the regulations
promulgated and rulings issued thereunder.


 


“Eurocurrency Liabilities”
shall have the meaning assigned thereto in Regulation D issued by the Board, as
in effect from time to time.


 


“Eurodollar Borrowing”
shall mean a Borrowing comprised of Eurodollar Loans.


 


“Eurodollar Loan” shall
mean any Loan bearing interest at a rate determined by reference to the
Adjusted LIBO Rate in accordance with the provisions of ARTICLE 2.


 


“Event of Default” shall
have the meaning given such term in ARTICLE 7.


 


“Excess Availability” shall
mean, on any date of determination, (x) the lesser of (i) the sum of (A) the
Total Revolving Commitment plus (B) Canadian Term Outstandings plus
U.S. Term Outstandings and (ii) the sum of (A) the U.S. Borrowing
Base plus (B) the Canadian Borrowing Base minus (y) the
Total U.S. Outstandings minus (z) the Total Canadian Outstandings.


 


“Exchange Rate” shall mean, on
any day, (a) for purposes of determining the U.S. Dollar Equivalent, the
rate at which Canadian Dollars may be exchanged into Dollars and (b) for
purposes of determining the Canadian Dollar Equivalent, the rate at which
Dollars may be exchanged into Canadian Dollars, in each case as quoted by the
Bank of Canada for Canadian Dollars (or, if not so quoted, the spot rate of
exchange quoted for wholesale transactions made by the Administrative Agent in
Toronto, Ontario) at 12:00 Noon, Toronto time, on such day; provided, that if
at the time of any such determination, for any reason, no such spot rate is
being quoted, the Administrative Agent may use any reasonable method it deems
applicable to determine such rate, and such determination shall be conclusive
absent manifest error.


 


“Facilities” shall mean any and
all real property (including, without limitation, all buildings, fixtures or
other improvements located thereon) now, hereafter or heretofore owned, leased,
operated or used by the Loan Parties (but only as to portions of buildings
actually leased or used) or any of their respective predecessors or any of
their respective Affiliates that are directly or indirectly controlled by the
Loan Parties.


 


“Fair Market Value” shall mean
the price at which property would change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or to sell and both
having reasonable knowledge of relevant facts determined in a manner acceptable
to the Applicable Agent by an appraiser acceptable to the Applicable Agent.


 


“Federal Funds Effective Rate”
means, for any day, the weighted average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business
Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of
the quotations for such day for such transactions received 


 


27

















 


by the Administrative Agent
from three Federal funds brokers of recognized standing selected by it.


 


“Fees” shall
collectively mean the Commitment Fees, Letter of Credit Fees and other fees
referred to in Section 2.20, Section 2.21,  Section 2.22, Section 2.30
and Section 2.31.


 


“Fifteen Month Facility Extension Option”
shall have the meaning given such term in Section 2.30.


 


“Filing Date” shall mean
January 26, 2009.


 


“Final Order” shall have
the meaning set forth in Section 4.2(d).


 


“Financial Officer”
shall mean the Chief Financial Officer, Chief Accounting Officer, Controller or
Treasurer of a Loan Party.


 


“Finished Goods” shall
mean completed goods which require no additional processing or manufacturing to
be sold to third party customers by the Loan Parties in the ordinary course of
business.


 


“First Amendment to Credit Agreement”
shall mean that certain First Amendment to Credit Agreement dated as of February 25,
2009.


 


“Foreign Subsidiary” shall mean
any Subsidiary of the Parent that is not organized under the laws of the United
States of America.


 


“Fronting Bank” shall
mean JPMCB or such other commercial bank as may agree with JPMCB to act in such
capacity and shall be reasonably satisfactory to the Loan Parties and the
Administrative Agent.


 


“GAAP” shall mean
accounting principles generally accepted in the United States and applied in
accordance with Section 1.3.


 


“Governmental Authority”
shall mean the government of the United States of America or Canada, any other
nation or any political subdivision thereof, whether state, provincial or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.


 


“Guaranteed Obligations” shall
have the meaning set forth in Section 10.2.


 


“Guarantor” shall mean each of
the Borrowers, the U.S. Guarantors and the Canadian Guarantors; provided that
no Foreign Subsidiary (other than the Canadian Borrower) shall, or shall be
deemed to, guarantee any Secured Obligations of any entity organized under the
laws of the United States nor shall it have any obligations with respect to any
such amounts.


 


“Guaranty” shall mean ARTICLE
10 of this Agreement.


 


28

















 


“Hazardous Substances” shall
mean, but is not limited to, any pollutant, contaminant, toxic substance,
hazardous material, dangerous good, asbestos, urea formaldehyde, PCB or
non-hazardous petroleum products or any other substance defined in or regulated
by any Environmental Laws as a hazardous substance.


 


“Hazardous Waste” shall mean
any Hazardous Substance that is a waste, by-product, residual material or
recyclable material, or any other substance which, in each case, is defined in
or regulated by any Environmental Laws as a hazardous waste.


 


“Indebtedness” shall
mean, at any time and with respect to any Person:  (i) all indebtedness of such Person for
borrowed money; (ii) all indebtedness of such Person for the deferred
purchase price of property or services (other than property, including
inventory, and services purchased, and trade accounts payable, accrued expenses
and deferred compensation items arising, in the ordinary course of business); (iii) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments; (iv) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (v) all obligations
of such Person under leases which have been or should be, in accordance with
GAAP, recorded as Capital Lease Obligations, to the extent required to be so
recorded; (vi) all reimbursement, payment or similar obligations of such
Person, contingent or otherwise, under acceptance, letter of credit or similar
facilities; (vii) all net obligations of such Person in respect of Swap
Agreements (such net obligations to be equal at any time to the termination
value of such Swap Agreements or other arrangements that would be payable by or
to such Person at such time); (viii) all indebtedness referred to in
clauses (i) through (vii) above guaranteed directly or indirectly by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (a) to pay or purchase such indebtedness or to
advance or supply funds for the payment or purchase of such indebtedness, (b) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such indebtedness or to assure the holder of such indebtedness against loss in
respect of such indebtedness, (c) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such services are
rendered) or (d) otherwise to assure a creditor against loss in respect of
such indebtedness; and (ix) all indebtedness referred to in clauses (i) through
(viii) above secured by (or for which the holder of such indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for
the payment of such indebtedness.


 


“Indemnified Party”
shall have the meaning given such term in Section 9.6.


 


“Initial Order” shall mean an
order of the Canadian Court in the Canadian Cases in substantially the form of Exhibit A-2,
or such other form as is satisfactory to the Administrative Agent in its
exclusive discretion, entered in accordance with the terms and conditions of Section 4.1,
as such order may be amended or restated to effect the consolidation of the
Recognition Cases and the CCAA Cases, and as such order may be further amended
or restated with the express written consent of the Administrative Agent.


 


29

















 


“Insufficiency” shall mean,
with respect to any Plan, the amount, if any, of its unfunded benefit
liabilities within the meaning of Section 4001(a)(18) of ERISA.


 


“Intercompany Indebtedness”
shall mean any claim of an Affiliate of a Loan Party against any other
Affiliate of a Loan Party, any claim of a Loan Party against any of its
Affiliates, and any claim of any Affiliate of a Loan Party against a Loan Party
and shall include the face amount of Letters of Credit issued for the account
of Loan Parties other than the Borrowers.


 


“Interest Payment Date”
shall mean (i) as to any Eurodollar Loan and any Discount Rate Loan, the
last day of each consecutive thirty (30) day period running from the
commencement of the applicable Interest Period or Contract Period, and (ii) as
to all ABR Loans and Canadian Prime Rate Loans, the last calendar day of each
month and the date on which any ABR Loans are refinanced with Eurodollar Loans
or Canadian Prime Rate Loans are refinanced with Discount Rate Loans pursuant
to Section 2.13.


 


“Interest Period” shall
mean, as to any Borrowing of Eurodollar Loans, the period commencing on the
date of such Borrowing (including as a result of a refinancing of ABR Loans) or
on the last day of the preceding Interest Period applicable to such Borrowing
and ending on the numerically corresponding day (or if there is no
corresponding day, the last day) in the calendar month that is one, three or
six months thereafter, as the Borrowers may elect in the related notice
delivered pursuant to Section 2.7(b) or Section 2.13;
provided,
however,
that (i) if any Interest Period would end on a day which shall not be a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (ii) no Interest Period shall end later than
the Maturity Date.


 


“Interim Canadian Revolving Commitment”
shall have the meaning set forth in Section 2.3(a).


 


“Interim Order” shall mean,
individually and collectively, the Initial Order and the U.S. Interim Order.


 


“Interim Period” shall have the
meaning set forth in Section 2.2(a).


 


“Interim U.S. Revolving Commitment”
shall have the meaning set forth in Section 2.2(a).


 


“Interim U.S. Tranche A Revolving Commitment”
shall have the meaning set forth in Section 2.2(a).


 


“Inventory” shall
mean all Raw Materials, Work-in-Process and Finished Goods owned, held or
generated by the Loan Parties in the normal course of business.


 


“Inventory Reserves” shall mean
reserves against Inventory equal to the sum of the following:


 


30
















 


(a)                                  a
reserve for shrink, or discrepancies that arise pertaining to inventory
quantities on hand between the Loan Parties’ perpetual accounting system, and
physical counts of the inventory which will be determined by the Administrative
Agent in its Permitted Discretion with the variance expressed as a percentage
of Inventory; and


 


(b)                                 a
reserve for Inventory which is designated to 
be  returned to vendor or which is
recognized as damaged or off quality or not to customer specifications by a
Loan Party; and


 


(c)                                  a
revaluation reserve whereby capitalized favorable variances shall be deducted
from Eligible Inventory and unfavorable variances shall not be added to
Eligible Inventory; and


 


(d)                                 a
lower of the cost or market reserve for any differences between a Loan Party’s
actual cost to produce versus its selling price to third parties, determined on
a product line basis; and


 


(e)                                  any
other reserve established by the Applicable Agent in its Permitted Discretion,
from time to time.


 


“Investment Accounts” shall mean,
individually or collectively, the Canadian Investment Account and the U.S.
Investment Account.


 


“Investments” shall have
the meaning given such term in Section 6.11.


 


“ITA” shall mean the Income Tax
Act (Canada), as amended, and any successor thereto, and any regulations
promulgated thereunder.


 


“JPMCB” shall mean
JPMorgan Chase Bank, N.A., a national banking association.


 


“Judgment Currency” and “Judgment Currency Conversion Date”
shall have the meanings set forth in Section 9.20.


 


“Landlord Lien Waiver” shall
mean a written agreement in such form as is reasonably acceptable to the
Administrative Agent, pursuant to which a Person shall waive or subordinate its
rights and claims as landlord in any Collateral of the Loan Parties for unpaid
rents, grant access to the Administrative Agent for the repossession and sale
of such Collateral and make other agreements relative thereto.


 


“LC Exposure” shall mean the
sum of the Commercial LC Exposure and the Standby LC Exposure.  The LC Exposure shall be determined on a
separate basis for each Class.  The LC
Exposure of any Canadian Revolving Lender or U.S. Tranche B Revolving Lender,
as the case may be, at any time shall be its Applicable Percentage of the total
LC Exposure at such time.


 


“LC Reserve Account” shall have
the meaning set forth in Section 11.2.


 


31

















 


“Lenders” shall mean the
Canadian Lenders and the U.S. Lenders.


 


“Lender Affiliate” shall
mean, (i) with respect to any Lender, (a) an Affiliate of such Lender
or (b) any entity (whether a corporation, partnership, trust or otherwise)
that is engaged in making, purchasing, holding or otherwise investing in loans
and similar extensions of credit in the ordinary course of its business and is
administered or managed by such Lender or an Affiliate of such Lender and (ii) with
respect to any Lender that is a fund which invests in loans and similar
extensions of credit, any other fund that invests in loans and similar
extensions of credit and is managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.


 


“Letters of Credit”
shall mean the Canadian Revolving Facility Letters of Credit and the U.S.
Revolving Facility Letters of Credit.


 


“Letter of Credit Account”
shall mean the non-interest bearing account established by the U.S. Borrower
under the sole and exclusive control of the Administrative Agent maintained at
the office of the Administrative Agent at 270 Park Avenue, New York, New York
10017 designated as the “Smurfit-Stone U.S. Letter of Credit Account” that
shall be used solely for the purposes set forth in Section 2.4(c) and
Section 2.14.


 


“Letter of Credit Fees”
shall mean the fees payable in respect of Letters of Credit pursuant to Section 2.22.


 


“Letter of Credit Outstandings”
shall mean, at any time, the sum of (i) the U.S. Letter of Credit
Outstandings plus (ii) the Canadian Letter of Credit Outstandings.


 


“Lien” shall mean (i) any
mortgage, deed of trust, pledge, security interest, encumbrance, lien,
assignment for security, hypothecation, prior claim (within the meaning of the
Civil Code of Quebec), encumbrance or charge of any kind whatsoever (including
any conditional sale or other title retention agreement or any lease in the
nature thereof), (ii) in the case of securities, any purchaser option,
call or similar right of a third party with respect to such securities, and (iii) any
other arrangement having the effect of providing security.


 


“Loan” shall mean each Canadian
Revolving Loan, U.S. Revolving Loan, Canadian Term Loan, and U.S. Term Loan.


 


“Loan Documents” shall
mean this Agreement, the Letters of Credit, any Letter of Credit applications,
the Collateral Documents and any other instrument or agreement executed and
delivered in connection herewith.


 


“Loan Party” and “Loan Parties” shall mean the U.S.
Borrower, the Canadian Borrower, the Parent, the other U.S. Guarantors and the
Canadian Guarantors.


 


“Loan Party Joinder Agreement”
shall have the meaning give such term in Section 5.11.


 


“Material Adverse Effect” shall
mean (i) a material adverse effect upon the business, operations, assets,
properties or financial condition of the Parent and its consolidated 


 


32

















 


Subsidiaries, taken as a whole, (ii) the material impairment of
the ability of any Loan Party to perform its Obligations or (iii) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of a Loan Document to which it is a
party.


 


“Maturity Date” shall
mean January 28, 2010; provided, that upon the effectiveness of the
Fifteen Month Facility Extension Option, the Maturity Date shall be extended to
April 28, 2010; provided, further that upon the effectiveness of
the Eighteen Month Facility Extension Option, the Maturity Date shall be
extended to July 28, 2010.


 


“Maximum Liability” shall have
the meaning given such term in Section 10.11.


 


“Minority Lenders” shall
have the meaning given such term in Section 9.10(b).


 


“Moody’s” shall mean
Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.


 


“Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA to which any Loan Party or any ERISA Affiliate is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.


 


“Multiple Employer Plan”
shall mean a Single Employer Plan, which (i) is maintained for employees
of a Loan Party or an ERISA Affiliate and at least one Person other than such
Loan Party and its ERISA Affiliates or (ii) was so maintained and in
respect of which a Loan Party or an ERISA Affiliate could have liability under Section 4064
or 4069 of ERISA in the event such Plan has been or were to be terminated.


 


“Net Orderly Liquidation Value”
shall mean, with respect to machinery, equipment or Inventory of any Person,
the orderly liquidation value thereof as determined in a manner acceptable to
the Applicable Agent by an appraiser acceptable to the Applicable Agent, net of
all costs of liquidation thereof.


 


“Net Orderly Liquidation Value In Place”
shall mean, with respect to machinery, equipment, Inventory or real estate of
any Person, the orderly liquidation value thereof when such assets are being
purchased in place to remain in operation in “as is” condition, taking
advantage of all leasehold and site improvements designed to facilitate such
assets’ operation, as determined in a manner acceptable to the Applicable Agent
by an appraiser acceptable to the Applicable Agent, net of all costs of
liquidation thereof.


 


“Net Proceeds” means, with
respect to any event, (a) the cash proceeds received in respect of such
event including (i) any cash received in respect of any non-cash proceeds
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but excluding any interest payments), but only as and
when received, (ii) in the case of a casualty, insurance proceeds and (iii) in
the case of a condemnation or similar event, condemnation awards and similar
payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in connection
with such event, (ii) in the case of a sale, transfer or other disposition
of an asset that is subject to a Non-Primed Lien 


 


33

















 


(including pursuant to a sale and leaseback transaction or a casualty
or a condemnation or similar proceeding), the amount of all payments required
to be made as a result of such event to repay such Non-Primed Liens and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) and the amount
of any reserves established to fund contingent liabilities reasonably estimated
to be payable, in each case during the year that such event occurred or the
next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by a Financial Officer).


 


“Non-Paying Guarantor” shall
have the meaning set forth in Section 10.12.


 


“Non-Primed Liens” shall mean
those Liens securing: (i) certain pre-petition claims of warehousemen,
shippers, Permitted Liens and other classes of claimants acceptable to the
Administrative Agent against the Loan Parties that in each case: (x) are
senior in priority to the Pre-Petition Credit Agreement Liens; and (y) are
set forth on Schedule 2.24; and (ii) the Calpine Debt.


 


“Obligation Currency” shall have
the meaning set forth in Section 9.20.


 


“Obligations” shall mean
all unpaid principal of and accrued and unpaid interest on the Loans, the
reimbursement of all amounts drawn on Letters of Credit, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Loan Parties to the Lenders or to any Lender, any Agent, any Fronting Bank or
any indemnified party arising under the Loan Documents.


 


“Obligated Party” shall have
the meaning set forth in Section 10.3.


 


“Orders” shall mean,
collectively, (i) the Interim Order and (ii) the Final Order.


 


“Organizational Documents”
shall mean (i) with respect to any corporation, its certificate or
articles of incorporation, as amended, and its by-laws, as amended, (ii) with
respect to any limited partnership, its certificate of limited partnership or
formation, as amended, and its partnership agreement, as amended, (iii) with
respect to any general partnership, its partnership agreement, as amended, (iv) with
respect to any limited liability company, its certificate of formation or
articles of organization, as amended, and its operating agreement, as amended,
and (v) with respect to any unlimited liability company, its certificate
of formation, as amended, and its memorandum and articles of association, as
amended.  In the event any term or
condition of this Agreement or any other Loan Document requires any
Organizational Document to be certified by a secretary of state or similar
governmental official, the reference to any such “Organizational Document”
shall only be to a document of a type customarily certified by such
governmental official.


 


“Other Taxes” shall have
the meaning given such term in Section 2.19(b).


 


“Parent” shall have the meaning
set forth in the Introduction.


 


“Participant” shall have the
meaning set forth in Section 9.3.


 


“Patriot Act” shall have the
meaning given such term in Section 9.19.


 


34

















 


“Paying Guarantor” shall have
the meaning set forth in Section 10.12.


 


“PBGC” shall mean the
Pension Benefit Guaranty Corporation, or any successor agency or entity
performing substantially the same functions.


 


“Pension Plan” shall
mean a defined benefit pension (as defined in Section 414(j) of the
Code and Section 3(35) of ERISA) which meets and is subject to the
requirements of Section 401(a) of the Code.


 


“Permitted Discretion” shall
mean a determination made in good faith and in the exercise of reasonable (from
the perspective of a secured asset-based lender) business judgment, following
either (x) consultation with the Borrowers or (y) two (2) Business
Days’ advance notice to the Borrowers.


 


“Permitted Investments”
shall mean (i) direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of
America) or Canada (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of Canada), in each case maturing within
one year from the date of acquisition thereof, (ii) without
limiting the provisions of paragraph (iv) below, investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s, (iii) investments
in certificates of deposit, banker’s acceptances and time deposits (including
Eurodollar time deposits) maturing within six months from the date of
acquisition thereof issued or guaranteed by or placed with (a) any
domestic office of the Administrative Agent or the bank with whom the Loan
Parties maintain their cash management system, provided, that if such bank is
not a Lender hereunder, such bank shall have entered into an agreement with the
Administrative Agent pursuant to which such bank shall have waived all rights
of setoff and confirmed that such bank does not have, nor shall it claim, a
security interest therein or (b) any domestic office of any other
commercial bank of recognized standing organized under the laws of the United
States of America or any State thereof that has a combined capital and surplus
and undivided profits of not less than US$500,000,000 and is the principal
banking Subsidiary of a bank holding company having a long-term unsecured debt
rating of at least “A” or the equivalent thereof from S&P or at least “A2”
or the equivalent thereof from Moody’s, (iv) investments in commercial
paper maturing within six months from the date of acquisition thereof and
issued by (a) the holding company of the Administrative Agent or (b) the
holding company of any other commercial bank of recognized standing organized
under the laws of the United States of America or any State thereof that has (1) a
combined capital and surplus in excess of US$500,000,000 and (2) commercial
paper rated at the highest credit rating obtainable from S&P or from Moody’s,
(v) investments in fully collateralized repurchase agreements with a term
of not more than thirty (30) days for underlying securities of the types
described in clause (i) above entered into with any office of a bank or
trust company meeting the qualifications specified in clause (iii) above, (vi) investments
in money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (v) above,
and (vii) to the extent owned by the Loan Parties on the Filing Date,
investments in joint ventures as disclosed in Schedule 6.11 or in the
capital stock of any direct or indirect Subsidiary of the Loan Parties as
disclosed in Schedule
3.5.


 


35

















 


“Permitted Liens” shall
mean (i) Liens set forth on Schedule 3.6, (ii) Liens
in favor of the Agents on behalf of the Secured Parties, (iii) the CCAA
Charges, (iv) Liens imposed by law (other than Environmental Liens and any
Lien imposed under ERISA) for taxes, assessments or charges of any Governmental
Authority for claims not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP; (v) Liens
(other than any Lien imposed under ERISA) incurred or deposits made in
connection with workers’ compensation, unemployment insurance and other types
of social security benefits or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of Indebtedness), statutory
obligations and other similar obligations incurred in the ordinary course of
business; (vi) non-material Liens of landlords and Liens of statutory
carriers, warehousemen, mechanics, materialmen and other Liens (other than
Environmental Liens and any Lien imposed under ERISA) in existence on the
Filing Date or thereafter imposed by law and created in the ordinary course of
business; (vii) deposits to secure the performance of tenders, bids, and
other contracts, other than for the payment of borrowed money, arising in the
ordinary course of business; (viii) easements (including, without
limitation, reciprocal easement agreements and utility agreements), all
applicable development, subdivision, use and site plan agreements, or similar
agreements, rights-of-way, covenants, consents, reservations, encroachments,
variations and zoning and other restrictions, charges or encumbrances (whether
or not recorded) and interest of ground lessors, which do not materially
interfere with the ordinary conduct of the business of any Loan Party, and
which do not materially detract from the value of the property to which they
attach or materially impair the use thereof to any Loan Party; (ix) purchase
money Liens (including Capital Lease Obligations) upon or in any property
acquired or held in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness permitted by Section 6.3(iii) solely for the purpose of financing
the acquisition of such property; (x) Liens created in connection with
extensions, renewals or replacements, including replacement Liens granted by
the Bankruptcy Court, of any Lien referred to in clauses (i) through (ix) above,
provided that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby; (xi) pre-petition Liens granted
pursuant to the Pre-Petition Credit Agreement or the Security Documents (as
defined therein) by the Loan Parties party to the Pre-Petition Credit Agreement
for the benefit of the Secured Parties (as defined in such Security Documents);
(xii) Liens junior to the senior liens contemplated hereby that are granted by
any of the Orders pursuant to 11 U.S.C. §364(d)(1) as adequate protection
to the Primed Parties, provided that the Orders provide that the holders
of such junior liens shall not be permitted to take any action to enforce their
rights with respect to such junior liens as long as any amounts are outstanding
under this Agreement or the Lenders have any Commitment hereunder; (xiii) Liens
on assets of Foreign Subsidiaries (other than the Canadian Loan Parties)
securing Indebtedness permitted by Section 6.3(vi); (xiv) Liens
arising from the granting of a license to enter into or use any asset of a Loan
Party in the ordinary course of business of such Loan Party that does not
interfere in any material respect with the use or application by such Loan
Party of the asset subject to such license; (xv) Liens arising by operation of
law on insurance policies and proceeds thereof to secure premiums thereunder;
(xvi) Liens arising out of judgments or awards in respect of which an appeal or
proceeding for review is being diligently prosecuted, provided that (x) a
stay of execution pending such appear or proceeding for review has been
obtained, (y) full provision for the payment of the indebtedness secured
by such Lien has been made on the books 


 


36

















 


of such Person if and to the extent required by GAAP, and (z) an
Event of Default under Section 7.1 shall not have occurred as a
result of the incurrence of such Lien; (xvii) Liens consisting of cash deposits
in an amount not to exceed US$10,000,000 with swap counterparties as may be
required pursuant to the terms of Swap Agreements permitted by Section 6.16;
(xviii) Liens granted by Calpine to secure the Calpine Debt; (xix) rights of
collecting banks or other financial institutions having a right of setoff,
revocation, refund or chargeback with respect to money or instruments on
deposit with or in the possession of such financial institution; (xx) Liens
with respect to a court ordered administration charge in the Canadian Cases,
junior to the CCAA DIP Lenders Charge, in an aggregate amount not in excess of
US$4,000,000 for the payment of (a) allowed and unpaid professional fees
and disbursements incurred by professionals retained by the Canadian Loan
Parties and (b) allowed and unpaid professional fees and disbursements of
the monitor in the Canadian Cases including allowed and unpaid legal fees and
expenses of its counsel (and including any allowed and unpaid professional fees
and disbursements incurred by the parties referred to in (a) and (b),
prior to the occurrence of such Event of Default); and (xxi) other Liens securing
Indebtedness in an aggregate amount outstanding at any time not in excess of
US$1,000,000.


 


“Person” shall mean any
natural person, corporation, partnership, trust, joint venture, association,
company, estate, unincorporated organization or government or any agency or
political subdivision thereof.


 


“Plan” shall mean a
Single Employer Plan or a Multiemployer Plan.


 


“Prepayment Event” means (a) any
Asset Sale; or (b) any casualty or other insured damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding of, any
property or asset of any Loan Party.


 


“Pre-Petition Agent” shall have
the meaning set forth in Section 2.24.


 


“Pre-Petition Credit Agreement” shall
mean that certain Credit Agreement dated as of November 1, 2004, as
amended, supplemented or otherwise modified prior to the Filing Date, among the
Borrowers, as borrowers, the Parent and certain of the other Loan Parties, as
guarantors, the banks and other financial institutions from time to time
parties thereto, and Deutsche Bank Trust Company Americas, as administrative
agent.


 


“Pre-Petition Debt” shall have
the meaning set forth in Section 2.24.


 


“Pre-Petition Payment”
shall mean a payment (by way of adequate protection or otherwise) of principal
or interest or otherwise on account of any pre-petition/pre-filing Indebtedness
or trade payables or other pre-petition/pre-filing claims against the Loan
Parties, including, without limitation, reclamation claims and materialmen’s
liens.


 


“Pre-Petition Secured Lenders”
shall have the meaning set forth in Section 2.24.


 


“Primed Liens” shall
have the meaning set forth in Section 2.24.


 


“Primed Parties” shall mean the
parties who hold Primed Liens.


 


37

















 


“Prior Agreement” shall have
the meaning set forth in the Introduction.


 


“Priority Payables” means, with
respect to any Person, any amount payable by such Person (i) solely to the
extent that it is owing and is secured by a Lien which ranks or is capable of
ranking prior to or pari passu with the Liens created by the Collateral
Documents, including amounts which are past due and owing for wages, vacation
pay, severance pay, employee deductions, sales tax, excise tax, Tax payable
pursuant to Part IX of the Excise Tax Act (Canada) (net of GST input
credits), income tax, workers compensation, government royalties, pension fund
obligations and overdue Taxes and (ii) is not being contested by such
Person in good faith by appropriate proceedings promptly instituted and
diligently conducted in a manner that stays enforcement of such Lien and with
respect to whom such Person has established a cash reserve on its books for the
full amount thereof.


 


“Quebec Security Agreements”
shall mean any (i) Deed of Hypothec and Issue of Bonds made by any
Canadian Loan Party in favor of the Applicable Agent, as fondé de pouvoir under
Article 2692 of the Civil Code of Quebec, to be executed before a notary
of the Province of Quebec, (ii) bond issued by any Canadian Loan Party
pursuant to such Deed of Hypothec and Issue of Bonds, and (iii) pledge
agreement to be granted by any Canadian Loan Party in respect of any bond
issued under such Deed of Hypothec and Issue of Bonds.


 


“Raw Materials” shall
mean any items or materials used or consumed in the manufacture of goods to be
sold by the Loan Parties in the ordinary course of business.


 


“Receivables Securitization Entities”
shall mean  Stone Receivables Corporation
and SSCE Funding, LLC.


 


“Receivables Securitization Programs”
shall mean the Canadian Receivables Securitization Program and the U.S.
Receivables Securitization Program.


 


“Receivables Securitization Termination
Date” means the date on which each of the
Receivables Securitization Programs are terminated in accordance with the
requirements of Section 5.13, as determined by the Administrative
Agent in its exclusive discretion.


 


“Recognition Cases” shall mean
the recognition proceedings commenced by the Canadian Loan Parties pursuant to
the Bankruptcy and Insolvency Act (Canada) of the U.S. Cases with respect to
Smurfit-MBI and SLP Finance General Partnership.


 


“Register” shall have
the meaning set forth in Section 9.3.


 


“Related Parties” shall mean,
with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.


 


“Release” shall mean the
disposing, discharging, injecting, spilling, pumping, leaking, leaching,
dumping, emitting, escaping, emptying, pouring, seeping or migrating of any
Hazardous Substance or Hazardous Waste into or upon any land or water or air,
or otherwise entering into the environment.


 


38

















 


“Rent Reserve” with respect to
any leased location where any Collateral subject to Liens arising by operation
of law is located, a reserve for rent at such location in an amount established
in the Applicable Agent’s Permitted Discretion.


 


“Reorganization Plan”
shall mean a bankruptcy plan of reorganization or a CCAA plan or arrangement in
any of the Cases.


 


“Required Lenders” shall
mean, at any time, Lenders having aggregate Total Canadian Outstandings, Total
U.S. Outstandings and unused Commitments representing more than 50% of the
aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused
Commitments at such time.


 


“Requirement of Law” means, as
to any Person, the Organizational Documents or other governing documents of
such Person, and any law, treaty, rule or regulation or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.


 


“Reserves” means Dilution
Reserves, Inventory Reserves, Rent Reserves and any other reserves established
by the Applicable Agent in its Permitted Discretion (including, without
limitation, reserves for accrued and unpaid interest on the Secured
Obligations, Banking Services Reserves, reserves for consignee’s, warehousemen’s
and bailee’s charges, reserves for Swap Obligations, reserves for environmental
liabilities of any Loan Party, reserves for contingent liabilities of any Loan
Party, reserves for uninsured losses of any Loan Party, reserves for uninsured,
underinsured, un-indemnified or under-indemnified liabilities or potential
liabilities with respect to any litigation, reserves for cash held in deposit
accounts of Smurfit-Stone Puerto Rico, Inc. during such times as cash
dominion is in effect under Section 5.7 and reserves for taxes,
fees, assessments, and other governmental charges) with respect to the
Collateral or any Loan Party, with regard to the Canadian Borrowing Base,
reserves for Priority Payables outstanding on or after the Effective Date that
may affect the collectability of such accounts or the saleability of such
inventory and that have not already been taken into account in the calculation
of the applicable Borrowing Base to the extent such Priority Payables do not
constitute amounts otherwise secured by the Directors’ Charge.


 


“Reset Date” shall have the
meaning set forth in Section 1.4.


 


“Revolving Commitment” shall
mean the Canadian Revolving Commitment and the U.S. Revolving Commitment.


 


“Revolving Loans” shall mean,
individually or collectively, U.S. Revolving Loans and Canadian Revolving
Loans.


 


“S&P” shall mean
Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor to the rating agency business thereof.


 


“Schedule I Banks” shall mean
the banks listed in Schedule I of the Bank Act (Canada) having equity of more
than C$8,000,000,000.


 


39

















 


“Secured Obligations” means the
Canadian Secured Obligations and the U.S. Secured Obligations.


 


“Secured Parties” means the
Agents, the Lenders, the Fronting Banks and all of the Lenders and the
Affiliates of the Lenders to whom Banking Service Obligations or Swap
Obligations are owed.


 


“Security Agreements” means,
collectively, the Security and Pledge Agreement and the Canadian Security
Agreement, and “Security Agreement”
means any one of them.


 


“Security and Pledge Agreement”
shall have the meaning given such term in Section 4.1(c).


 


“Single Employer Plan”
shall mean a single employer plan, as defined in Section 4001(a)(15) of
ERISA, that (i) is maintained for employees of a Loan Party or an ERISA
Affiliate or (ii) was so maintained and in respect of which a Loan Party
could have liability under Section 4069 of ERISA in the event such Plan
has been or were to be terminated.


 


“Standby LC Exposure” means, at
any time, the sum of (a) the aggregate undrawn amount of all outstanding
standby Letters of Credit at such time plus (b) the aggregate amount of
all disbursements relating to standby Letters of Credit that have not yet been
reimbursed by or on behalf of the Borrowers at such time.  The Standby LC Exposure shall be determined
on a separate basis for each Class.  The
Standby LC Exposure of any Canadian Revolving Lender or U.S. Tranche B
Revolving Lender, as the case may be, at any time shall be its Applicable Percentage
of the total Standby LC Exposure at such time.


 


“Statutory Reserve Rate”
shall mean on any date the percentage (expressed as a decimal) established by
the Board and any other banking authority which is the then stated maximum rate
for all reserves (including but not limited to any emergency, supplemental or
other marginal reserve requirements) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency Liabilities (or any successor
category of liabilities under Regulation D issued by the Board, as in effect
from time to time).  Such reserve
percentages shall include, without limitation, those imposed pursuant to said
Regulation.  The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change
in such percentage.


 


“Subsidiary” shall mean,
with respect to any Person (herein referred to as the “parent”), any
corporation, association or other business entity (whether now existing or
hereafter organized) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power for the election of directors is, at the time as of which any
determination is being made, owned or controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.


 


“Super-majority Lenders”
shall mean, at any time, Lenders having aggregate Total Canadian Outstandings,
Total U.S. Outstandings and unused Commitments representing at least 66-2/3% of
the aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused
Commitments at such time.


 


40
















 


“Superpriority Claim”
shall mean a claim against any U.S. Loan Party in any of the U.S. Cases which
is a superpriority administrative expense claim having priority over any or all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of
the Bankruptcy Code.


 


“Swap Agreement” means any
agreement with respect to any swap, forward, future or derivative transaction
or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions.


 


“Swap Obligations” of a Person
means any and all obligations of such Person, whether absolute or contingent
and howsoever and whensoever created, arising, evidenced or acquired (including
all renewals, extensions and modifications thereof and substitutions therefor),
under (a) any and all Swap Agreements, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any Swap
Agreement transaction, in each case that is permitted by Section 6.16.


 


“Taxes” shall have the
meaning given such term in Section 2.19.


 


“Term Loans” shall mean, individually
or collectively, the U.S. Term Loans and the Canadian Term Loans.


 


“Term Loan Commitment” shall
mean the U.S. Term Loan Commitment and the Canadian Term Loan Commitment.


 


“Termination Date” shall mean
the earliest to occur of (i) the Maturity Date, (ii) the Effective
Date, (iii) the forty-fifth (45th) day after the entry of the Interim
Order if the Final Order has not been entered prior to such forty-fifth day,
and (iv) the acceleration of the Loans and the termination of the
Revolving Commitment in accordance with the terms hereof.


 


“Termination Event”
shall mean (i) a “reportable event”, as such term is described in Section 4043
of ERISA and the regulations issued thereunder (other than a “reportable event”
not subject to the provision for 30-day notice to the PBGC under Section 4043
of ERISA or such regulations) or an event described in Section 4068 of
ERISA excluding events described in Section 4043(c)(9) of ERISA or 29
CFR §§ 2615.21 or 2615.23, or (ii) the withdrawal of any Loan Party or any
ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a “substantial employer”, as such term is defined in Section 4001(a)(2) of
ERISA, or the incurrence of liability by any Loan Party or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer
Plan, or (iii) providing notice of intent to terminate a Plan pursuant to Section 4041(c) of
ERISA or the treatment of a Plan amendment as a termination under Section 4041
of ERISA, or (iv) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA, or (v) any other event or
condition (other than the commencement of the Cases and the failure to have
made any contribution accrued as of the Filing Date but not paid) which would
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the 


 


41

















 


appointment of a trustee to administer, any Plan, or the imposition of
any liability under Title IV of ERISA (other than for the payment of premiums
to the PBGC).


 


“Total Canadian Outstandings”  shall mean, at any time of determination, the
Canadian Revolving Credit Utilization plus the Canadian Term
Outstandings.


 


“Total Revolving Commitment”
shall mean, collectively, the Canadian Revolving Commitments and the U.S.
Revolving Commitments.


 


“Total U.S. Outstandings” shall
mean, at any time of determination, (a) the aggregate principal amount of
the U.S. Tranche A Revolving Loans outstanding at such time plus (b) the
U.S. Tranche B Revolving Credit Utilization plus (c) the U.S. Term
Outstandings.


 


“Transferee” shall have
the meaning given such term in Section 2.19.


 


“Type” when used in
respect of any Loan or Borrowing shall refer to the Rate of interest by
reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.  For purposes
hereof, “Rate” shall mean the Canadian Prime
Rate, the Discount Rate, the Adjusted LIBO Rate and the Alternate Base Rate.


 


“UCC” means the Uniform
Commercial Code as in effect from time to time in the State of New York or any
other state the laws of which are required to be applied in connection with the
issue of perfection of security interests. In addition, “UCC”
means with respect to the Canadian Loan Parties or any Collateral of the
Canadian Loan Parties subject thereto, the Personal Property Security Act (the “PPSA”) or similar legislation as
from time to time in effect in the Province of Ontario or any other
jurisdiction the laws of which are required to be applied in connection with
the issue of perfection of security interests including, without limitation,
the Civil Code of Quebec.


 


“Unfunded Current Liability”
shall mean, with respect to any Pension Plan, the amount, if any, by which the
actuarial present value of the accumulated plan benefits under such Pension
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement
of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by such Pension Plan’s actuary in the most recent annual
valuation of such Pension Plan.


 


“Unused Revolving Commitment”
shall mean, at any time, (i) the Total Revolving Commitment less (ii) the
sum of (a) the Canadian Revolving Credit Utilization, (b) the
aggregate principal amount of the U.S. Tranche A Revolving Loans outstanding at
such time and (c) the U.S. Tranche B Revolving Credit Utilization.


 


“U.S. Borrower” shall have the
meaning set forth in the Introduction.


 


“U.S. Borrowing Base”
shall mean, at the time of any determination, an amount equal to the sum,
without duplication, of (a) 85% of Eligible Accounts of the U.S. Loan
Parties at such time plus (b) the lesser of (i) 65% of Eligible
Inventory of the U.S. Loan Parties at such time and (ii) 85% of the Net
Orderly Liquidation Value of Eligible Inventory of the U.S. Loan Parties at
such time (in each case with respect to clauses (i) and (ii) with any
Eligible Inventory 


 


42

















 


to be valued at the lower of cost (determined on a first-in, first-out
basis) or market), plus (c) the U.S. PP&E Component, minus
(d) the Reserves at such time, minus (e) the Carve-Out.  The U.S. Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to Section 5.8 of this
Agreement.


 


“U.S. Cases”
shall mean the cases under the Bankruptcy Code of the Loan Parties.


 


“U.S. Conversion Notice” shall have
the meaning given such term in Section 9.23(a).


 


“U.S. Dollar Equivalent” shall
mean, on any date of determination, with respect to any amount in Canadian
Dollars, the equivalent in Dollars of such amount determined by the Administrative
Agent using the Exchange Rate in effect on such date of determination.


 


“U.S. Guaranteed Obligations”
shall have the meaning set forth in Section 10.1.


 


“U.S. Guarantor” and “U.S. Guarantors” means,
individually or collectively, the Parent and each of the Domestic Subsidiaries
party to this Agreement.  As of the
Closing Date, the U.S. Guarantors are the Parent, Calpine, Cameo Container
Corporation, an Illinois corporation, Lot 24D Redevelopment Corporation, a
Missouri corporation, Atlanta & Saint Andrews Bay Railway Company, a
Florida corporation, Stone International Services Corporation, a Delaware
corporation, Stone Global, Inc., a Delaware corporation, Stone Connecticut
Paperboard Properties, Inc., a Delaware corporation, Smurfit-Stone Puerto
Rico, Inc., a Puerto Rico corporation, Smurfit Newsprint Corporation, a
Delaware corporation, SLP Finance I, Inc., a Delaware corporation, and SLP
Finance II, Inc., a Delaware corporation, each of which is a debtor and
debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code,
and, after the Closing Date, shall include each subsequently organized Domestic
Subsidiary and each direct parent thereof.


 


“U.S. Interim Order” shall mean
an order of the Bankruptcy Court in the U.S. Cases in substantially the form of
Exhibit A-1, or such other form as is satisfactory to the
Administrative Agent in its exclusive discretion, entered in accordance with
the terms and conditions of Section 4.1, as such order may be
amended, supplemented or restated with the express written consent of the
Administrative Agent in its exclusive discretion.


 


“U.S. Investment Account” shall
mean the account established by the U.S. Borrower pursuant to Section 2.7(c) and
designated as the “Smurfit-Stone Investment Account” with JPMCB.


 


“U.S. Lender” means, as of any
date of determination, a Person constituting a U.S. Term Loan Lender or U.S.
Revolving Lender.


 


“U.S. Letter of Credit Outstandings”
shall mean, at any time of determination, the sum of (a) the aggregate
undrawn amount of all outstanding U.S. Revolving Facility Letters of Credit and
(b) the aggregate amount that has been drawn under any U.S. Revolving
Facility Letter of Credit and has not been reimbursed by the U.S. Borrower or
another Loan Party at such time.  The U.S. Letter of Credit Outstandings
of any U.S. Tranche B Revolving Lender at any 


 


43

















 


time shall equal its Applicable Percentage of the aggregate U.S. Letter
of Credit Outstandings at such time.


 


“U.S. Loan Party” and “U.S. Loan Parties” shall mean,
individually or collectively, the U.S. Borrower, the Parent and the other U.S.
Guarantors.


 


“U.S. Loans” shall mean the
U.S. Revolving Loans and the U.S. Term Loans.


 


“U.S. PP&E Component” shall
mean the lesser of (x) (i) during the period commencing with the Closing Date until the
twelve (12) month anniversary of the Closing Date, US$150,000,000, (ii) during
the period commencing with the twelve (12) month anniversary of the Closing
Date until the fifteen (15) month anniversary of the Closing Date,
US$100,000,000, and (iii) on the fifteen (15) month anniversary of the
Closing Date and thereafter, US$75,000,000, in each case minus
the Canadian PP&E Component at such time, and (y) the greater of (A) (i) 50%
of the Net Orderly Liquidation Value of Eligible Equipment of the U.S. Loan
Parties at such time plus (ii) 50% of the Fair Market Value of
Eligible Real Property of the U.S. Loan Parties at such time (as set forth in
the most recent third party real estate appraisal in form and substance
satisfactory to the Administrative Agent), and (B) 20% of the Net Orderly
Liquidation Value In Place of (i) Eligible Equipment of the U.S. Loan
Parties at such time and (ii) Eligible Real Property of the U.S. Loan
Parties at such time.  Notwithstanding
the foregoing sentence, until the earlier of (x) such time as appraisals
satisfactory to the Administrative Agent are completed pursuant to Section 5.6
and (y) May 28, 2009, or such later date as the Administrative Agent
may approve in its exclusive discretion, the U.S. PP&E Component shall be
US$150,000,000 minus the Canadian PP&E Component.


 


“U.S. Receivables Securitization Program”
shall mean (a) that certain Master Indenture, dated as of November 23,
2004, between SSCE Funding, LLC (as used in this definition, the “Securitization Issuer”) and
Deutsche Bank Trust Company Americas, as Indenture Trustee (as used in this Section and
in such capacity, the “Securitization Trustee”)
and (b) that certain Series 2004-1 Indenture Supplement to Master
Indenture, dated as of November 23, 2004, between the Securitization
Issuer and the Securitization Trustee, in each case, as amended, restated,
modified or waived from time to time.


 


“U.S. Revolving Commitment”
shall mean the U.S. Tranche A Revolving Commitment and the U.S. Tranche B
Revolving Commitment.


 


“U.S. Revolving Facility Letters of Credit”
shall mean any irrevocable letter of credit issued pursuant to Section 2.4
for the account of the U.S. Borrower or a Domestic Subsidiary by a Fronting
Bank pursuant to the terms and conditions of ARTICLE 2, which letter of
credit shall be (i) a standby or import documentary letter of credit, (ii) issued
for purposes that are consistent with the ordinary course of business of the
Loan Parties or for such other purposes as are acceptable to the Administrative
Agent, (iii) denominated in Dollars and (iv) otherwise in such form
as may be approved from time to time by the Administrative Agent and the
applicable Fronting Bank.


 


“U.S. Revolving Lenders” shall
mean the U.S. Tranche A Revolving Lenders and the U.S. Tranche B Revolving
Lenders.


 


44

















 


“U.S. Revolving Loans” shall
mean the U.S. Tranche A Revolving Loans and the U.S. Tranche B Revolving Loans.


 


“U.S. Secured Obligations”
means (a) all Obligations owing by any U.S. Loan Party, (b) all
Banking Services Obligations owing by any U.S. Loan Party, (c) Swap
Obligations owing by any U.S. Loan Party to one or more U.S. Lenders or their
respective Affiliates; provided that at or prior to the time that any
transaction relating to a Swap Obligation is executed, the U.S. Lender or an
Affiliate thereof party thereto (other than JPMCB) shall have delivered written
notice to the Administrative Agent that such a transaction has been entered
into and that it constitutes a U.S. Secured Obligation entitled to the benefits
of the Collateral Documents, and (d) all obligations owing by the Canadian
Borrower in respect of its guaranty of Obligations of the U.S. Borrower.


 


“U.S. Term Loans” means the
term loans to the U.S. Borrower made pursuant to Section 2.1(a)(i) (or
made to the U.S. Borrower pursuant to Section 9.23(a))in Dollars.


 


“U.S. Term Loan Collateral Account”
shall mean the account established by the U.S. Borrower under the sole and
exclusive control of the Administrative Agent maintained at the office of the
Administrative Agent at 270 Park Avenue, New York, New York 10017 designated as
the “Smurfit-Stone U.S. Term Loan Collateral Account” that shall be used solely
for the purposes set forth in Section 2.7(c) and Section 2.14(a) and
shall include any separate investment product linked to such account mutually
acceptable to the U.S. Borrower and the Administrative Agent in accordance with
Section 6.11.


 


“U.S. Term Loan Commitment”
shall mean, with respect to each U.S. Term Loan Lender, the commitment of such
Lender to make a U.S. Term Loan hereunder in the amount set forth opposite its
name on Annex A-3 hereto, as the same shall be reduced on the Closing Date
pursuant to Section 2.14(k) and as may be modified pursuant to
Section 9.23(a). 
As of the Closing Date and prior to making the U.S. Term Loans, the aggregate
amount of the U.S. Term Loan Commitments of the U.S. Term Loan Lenders is
US$400,000,000.


 


 “U.S. Term Loan Conversion”
shall have the meaning given such term in Section 9.23(a).


 


“U.S. Term Loan Lenders” shall
mean the Lenders having U.S. Term Loan Commitments or holding the  U.S. Term Loans.


 


“U.S. Term Outstandings” shall
mean, at any time of determination, an amount equal to (a) the aggregate
principal amount of U.S. Term Loans outstanding at such time minus (b) the
amount of cash held in the U.S. Term Loan Collateral Account at such time.


 


“U.S. Tranche A Revolving Commitment”
shall mean, with respect to each U.S. Tranche A Revolving Lender, the
commitment of such Lender to make U.S. Tranche A Revolving Loans hereunder in
the amount set forth opposite its name on Annex A-2 hereto or as may
subsequent to the Amended and Restated Effective Date be set forth in the Register
from time to time, as the same may be reduced from time to time pursuant to the
terms of this Agreement.  As of the Amended and Restated Effective Date,
the aggregate amount of the U.S. 


 


45

















 


Tranche A Revolving Commitments of the U.S. Tranche A Revolving Lenders
is US$215,000,000.


 


“U.S. Tranche A Revolving Lender”
shall mean the Lenders having U.S. Tranche A Revolving Commitments or holding
U.S. Tranche A Revolving Loans.


 


“U.S. Tranche A Revolving Loans”
shall mean the revolving loans to the U.S. Borrower or the Canadian Borrower
made pursuant to Section 2.1(b)(i) in Dollars.


 


“U.S. Tranche B Revolving Commitment”
shall mean, with respect to each U.S. Tranche B Revolving Lender, the
commitment of such Lender to make U.S. Tranche B Revolving Loans hereunder and
to acquire participations in U.S. Revolving Facility Letters of Credit in the
amount set forth opposite its name on Annex A-5 hereto or as may
subsequent to the Amended and Restated Effective Date be set forth in the
Register from time to time, as the same may be reduced from time to time
pursuant to the terms of this Agreement.  As of the Amended and Restated
Effective Date, the aggregate amount of the U.S. Tranche B Revolving Commitments
of the U.S. Tranche B Revolving Lenders is US$35,000,000.


 


“U.S. Tranche B Revolving Credit Utilization”
shall mean, at any time of determination, the sum of (a) the aggregate
principal amount of U.S. Tranche B Revolving Loans outstanding at such time and
(b) the U.S. Letter of Credit Outstandings at such time.


 


“U.S. Tranche B Revolving Lender”
shall mean the Lenders having U.S. Tranche B Revolving Commitments or holding
U.S. Tranche B Revolving Loans.


 


“U.S. Tranche B Revolving Loans”
shall mean the revolving loans to the U.S. Borrower or the Canadian Borrower
made pursuant to Section 2.1(b)(ii) in Dollars.


 


“Withdrawal Liability”
shall have the meaning given such term under Part I of Subtitle E of Title
IV of ERISA.


 


“Work-in-Process” shall
mean Inventory which consists of work-in-process including, without limitation,
materials other than Raw Materials, Finished Goods or saleable products, title
to which and sole ownership of which is vested in a Loan Party.


 


Section 1.2                                      Terms
Generally.  The definitions in Section 1.1
shall apply equally to both the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless the context requires otherwise (a) any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words 


 


46

















 


“asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.


 


Section 1.3                                      Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Loan Parties notify the Administrative Agent that the Loan Parties
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the Closing Date in GAAP or in the application thereof
on the operation of such provision (or if the Administrative Agent notifies the
Loan Parties that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until  such notice shall have been withdrawn or such
provision  amended in accordance
herewith.


 


Section 1.4                                      Exchange
Rate Calculations.  On each
Calculation Date, the Administrative Agent shall (a) determine the
Exchange Rate as of such Calculation Date in respect of Canadian Dollars (and
any other currency for which an Exchange Rate is required) and (b) give
notice thereof to the applicable Borrower, and with respect to each Lender, to
any Lender that shall have requested such information. The Exchange Rate so
determined shall become effective on the first Business Day immediately following
the relevant Calculation Date (each, a “Reset Date”)
and shall remain effective until the next succeeding Reset Date, and shall for
all purposes of this Agreement (other than Section 2.13, Section 9.20,
Section 11.3 and any other provision expressly requiring the use of
a current Exchange Rate) be the Exchange Rate employed in converting amounts
between Dollars, on the one hand, and any other applicable currency on the
other hand; provided that, for purposes of determining any Borrowing Base, the
relevant Exchange Rate shall be determined by the applicable Borrower at the
time that the relevant Borrowing Base Certificate is prepared and shall be set
forth in such Borrowing Base Certificate. Notwithstanding the foregoing, for
purposes of determining compliance by the Loan Parties with the limitations on
Indebtedness, Indebtedness secured by Liens, loans, advances, investments,
guarantees and payments contained in ARTICLE 6, compliance will be
determined based on the U.S. Dollar Equivalent amount of the Indebtedness,
Liens, Loans, advances, investments, guarantees and payments denominated in
currencies other than Dollars subject to such provisions on the date of
incurrence or payment thereof, and Borrowers will not be deemed to be in
violation of such covenants solely as a result of subsequent changes in the
Exchange Rate which cause the U.S. Dollar Equivalent amount of such obligations
or payments to exceed such limitations.


 


Section 1.5                                      Québec
Matters.  For purposes of any assets,
liabilities or entities located in the Province of Québec and for all other
purposes pursuant to which the interpretation or construction of this Agreement
may be subject to the laws of the Province of Québec or a court or tribunal
exercising jurisdiction in the Province of Québec, (a) “personal property”
shall include “movable property”, (b) “real property” or “real estate”
shall include “immovable property”, (c) “tangible property” shall include “corporeal
property”, (d) “intangible property” shall include “incorporeal property”,
(e) “security interest”, “mortgage” and “lien” shall include a “hypothec”,
“right of retention”, “prior claim” and a resolutory clause, (f) all
references to 


 


47

















 


filing, perfection, priority, registering or recording under the
Uniform Commercial Code or a Personal Property Security Act shall include
publication under the Civil Code of Québec, (g) all
references to “perfection” of or “perfected” liens or security interest shall
include a reference to an “opposable” or “set up” lien or security interest as
against third parties, (h) any “right of offset”, “right of setoff” or
similar expression shall include a “right of compensation”, (i) “goods”
shall include “corporeal movable property” other than chattel paper, documents
of title, instruments, money and securities, (j) an “agent” shall include
a “mandatary”, (k) “construction liens” shall include “legal hypothecs”
contemplated under Article 2724(2) of the Civil Code
of Québec; (l) “joint and several” shall include “solidary”; (m) “gross
negligence or willful misconduct” shall be deemed to be “intentional or gross
fault”; (n) “beneficial ownership” shall include “ownership on behalf of
another as mandatary”; (o) “easement” shall include “servitude”; (p) “priority”
shall include “prior claim”; (q) “survey” shall include “certificate of
location and plan”; (r) “state” shall include “province”; (s) “fee
simple title” shall include “absolute ownership”; (t) “accounts” shall
include “claims”.  The parties hereto
confirm that it is their wish that this Agreement and any other document
executed in connection with the transactions contemplated herein be drawn up in
the English language only and that all other documents contemplated thereunder
or relating thereto, including notices, may also be drawn up in the English
language only.  Les parties
aux présentes confirment que c’est leur volonté que cette convention et les
autres documents de crédit soient rédigés en langue anglaise seulement et que
tous les documents, y compris tous avis, envisagés par cette convention et les
autres documents peuvent être rédigés en langue anglaise seulement.


 


ARTICLE 2. AMOUNT AND TERMS OF CREDIT.


 


Section 2.1                                      Commitment
of the Lenders.


 


(a)                                  Subject
to the terms and subject to the conditions herein set forth:


 


(i)            each
U.S. Term Loan Lender agrees to make to the U.S. Borrower on the Closing Date a
U.S. Term Loan in Dollars in a principal amount equal to its U.S. Term Loan
Commitment; and


 


(ii)           each
Canadian Term Loan Lender agrees to make to the Canadian Borrower on the
Closing Date a Canadian Term Loan in Dollars  in
a principal amount equal to its Canadian Term Loan Commitment.


 


Amounts paid or repaid in
respect of Term Loans may not be reborrowed.


 


(b)                                 Subject
to the terms and subject to the conditions herein set forth:


 


(i)            each
U.S. Tranche A Revolving Lender agrees to make to the U.S. Borrower or the
Canadian Borrower at any time and from time to time during the period
commencing on the Closing Date and ending on the Termination Date (or the
earlier date of termination of the U.S. Tranche A Revolving Commitment) U.S.
Tranche A Revolving Loans in Dollars in an aggregate principal amount not to
exceed, when added to such Lender’s Applicable Percentage of 


 


48

















 


the then aggregate U.S. Tranche
A Revolving Loans, the U.S. Tranche A Revolving Commitment of such Lender;


 


(ii)           each
U.S. Tranche B Revolving Lender agrees to make to the U.S. Borrower or the
Canadian Borrower at any time and from time to time during the period
commencing on the Closing Date and ending on the Termination Date (or the
earlier date of termination of the U.S. Tranche B Revolving Commitment) U.S.
Tranche B Revolving Loans in Dollars in an aggregate principal amount not to
exceed, when added to such Lender’s Applicable Percentage of the then aggregate
U.S. Tranche B Revolving Credit Utilization, the U.S. Tranche B Revolving
Commitment of such Lender; and


 


(iii)          each
Canadian Revolving Lender agrees to make to the U.S. Borrower or the Canadian
Borrower at any time and from time to time during the period commencing on the
Closing Date and ending on the Termination Date (or the earlier date of
termination of the Canadian Revolving Commitment) Canadian Revolving Loans in
Dollars or Canadian Dollars  in an
aggregate principal amount not to exceed, when added to such Lender’s
Applicable Percentage of the then aggregate Canadian Revolving Credit
Utilization, the Canadian Revolving Commitment of such Lender.


 


Subject to the
terms and conditions set forth herein, Revolving Loans may be repaid and
reborrowed.


 


(c)                                  Each
Borrowing shall be made by the Lenders pro rata in accordance with their
respective applicable Commitments; provided, however,
that the failure of any Lender to make any Loan shall not in itself relieve the
other Lenders of their obligations to lend.


 


Section 2.2                                      Availability
of U.S. Loans.


 


(a)                                  During
the period commencing on the Closing Date and ending on the date the Bankruptcy
Court and Canadian Court (if applicable), as the case may be, enters the Final
Order (such period being referred to as the “Interim Period”), (i) US$65,000,000 of the U.S.
Tranche A Revolving Commitment (the “Interim
U.S. Tranche A Revolving Commitment”) and (ii) the entire
U.S. Tranche B Revolving Commitment (the U.S. Tranche B Revolving Commitment,
together with the Interim U.S. Tranche A Revolving Commitment, the “Interim U.S. Revolving Commitment”)
shall be available to the U.S. Borrower and the Canadian Borrower (subject to
compliance with the U.S. Borrowing Base and the terms, conditions and covenants
described in this Agreement).


 


(b)                                 On
the first Business Day after the expiration of the Interim Period, the entire
U.S. Revolving Commitment shall be available to the U.S. Borrower and the
Canadian Borrower (subject to compliance with the U.S. Borrowing Base and the
terms, conditions and covenants in this Agreement).


 


49
















 


(c)           Notwithstanding
any other provision of this Agreement to the contrary, (i) Total U.S.
Outstandings shall not at any time exceed the U.S. Borrowing Base, (ii) the
aggregate principal amount of the U.S. Tranche A Revolving Loans shall not at
any time exceed (x) prior to the expiration of the Interim Period, the
Interim U.S. Tranche A Revolving Commitment, and (y) from and after the
expiration of the Interim Period, the U.S. Tranche A Revolving Commitment (as
such U.S. Tranche A Revolving Commitment may be reduced from time to time
pursuant to the terms of this Agreement) and (iii) U.S. Tranche B
Revolving Credit Utilization shall not at any time exceed the U.S. Tranche B
Revolving Commitment (as such U.S. Tranche B Revolving Commitment may be
reduced from time to time pursuant to the terms of this Agreement), and no Loan
shall be made or Letter of Credit issued in violation of the foregoing.


 


Section 2.3            Availability
of Canadian Loans.


 


(a)           During
the Interim Period, US$15,000,000 (or the Canadian Dollar Equivalent thereof)
of the Canadian Revolving Commitment (the “Interim
Canadian Revolving Commitment”) shall be available to the
Canadian Borrower and the U.S. Borrower (subject to compliance with the
Canadian Borrowing Base and the terms, conditions and covenants described in
this Agreement).


 


(b)           On
the first Business Day after the expiration of the Interim Period, the entire
Canadian Revolving Commitment shall be available to the Canadian Borrower and
the U.S. Borrower (subject to compliance with the Canadian Borrowing Base and
the terms, conditions and covenants in this Agreement).


 


(c)           Notwithstanding
any other provision of this Agreement to the contrary, (i) Total Canadian
Outstandings shall not at any time exceed the Canadian Borrowing Base and (ii) Canadian
Revolving Credit Utilization shall not at any time exceed (x) prior to the
expiration of the Interim Period, the Interim Canadian Revolving Commitment,
and (y) from and after the expiration of the Interim Period, the Canadian
Revolving Commitment (as such Canadian Revolving Commitment may be reduced from
time to time pursuant to the terms of this Agreement), and no Loan shall be
made or Letter of Credit issued in violation of the foregoing.


 


Section 2.4            Letters
of Credit.


 


(a)           Upon
the terms and subject to the conditions herein set forth, the U.S. Borrower may
request a Fronting Bank, at any time and from time to time after the Closing
Date and prior to the Termination Date, to issue, and, subject to the terms and
conditions contained herein, such Fronting Bank shall issue, for the account of
the U.S. Borrower or a Domestic Subsidiary, as the case may be, one or more
U.S. Revolving Facility Letters of Credit in a form reasonably acceptable to
the Administrative Agent and such Fronting Bank in support of obligations of
the U.S. Borrower or a Domestic Subsidiary of the U.S. Borrower, as the case
may be, provided
that no Letter of Credit shall be issued if after giving effect to such
issuance (i) the aggregate U.S. Letter of Credit Outstandings would
exceed US$35,000,000, (ii) the Total U.S. Outstandings would exceed the
U.S. Borrowing Base or (iii) the U.S. Tranche B Revolving Credit
Utilization would exceed the U.S. Tranche B Revolving Commitment (as such U.S.
Tranche B Revolving Commitment may be reduced from time to time pursuant to the
terms of 


 


50

















 


this
Agreement).  In connection with a request
for a U.S. Revolving Facility Letter of Credit, the U.S. Borrower shall execute
and deliver a form of letter of credit application or other agreement to such
Fronting Bank in a form reasonably acceptable to the Administrative Agent and
such Fronting Bank.  In the event of any
inconsistency between the terms and conditions set forth herein and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the U.S. Borrower to, or entered into by the U.S. Borrower with,
any Fronting Bank relating to any U.S. Revolving Facility Letter of Credit, the
terms and conditions of this Agreement shall control.  All U.S. Revolving Facility Letters of Credit
issued and outstanding under the Prior Agreement as of the Amended and Restated
Effective Date shall be deemed to be issued and outstanding under this
Agreement and allocated among the U.S. Tranche B Revolving Lenders in
accordance with their Applicable Percentages as of the Amended and Restated
Effective Date.


 


(b)           Upon
the terms and subject to the conditions herein set forth, the Canadian Borrower
may request a Fronting Bank, at any time and from time to time after the
Closing Date and prior to the Termination Date, to issue, and, subject to the
terms and conditions contained herein, such Fronting Bank shall issue, in
Dollars or Canadian Dollars, for the account of the Canadian Borrower or a
Canadian Subsidiary one or more Canadian Revolving Facility Letters of Credit
in a form reasonably acceptable to the Applicable Agent and such Fronting Bank
in support of obligations of the Canadian Borrower or a Canadian Subsidiary, provided
that no Letter of Credit shall be issued if after giving effect to such
issuance (i) the aggregate Canadian Letter of Credit Outstandings
would exceed US$10,000,000 (or the Canadian Dollar Equivalent thereof), (ii) the
Total Canadian Outstandings would exceed the Canadian Borrowing Base or (iii) the
Canadian Revolving Credit Utilization would exceed (x) prior to the
expiration of the Interim Period, the Interim Canadian Revolving Commitment and
(y) from and after the expiration of the Interim Period, the Canadian
Revolving Commitment (as such Canadian Revolving Commitment may be reduced from
time to time pursuant to the terms of this Agreement).   In connection with a request for a Canadian
Revolving Facility Letter of Credit, the Canadian Borrower shall execute and
deliver a form of letter of credit application or other agreement to such
Fronting Bank in a form reasonably acceptable to the Applicable Agent and such
Fronting Bank.  In the event of any
inconsistency between the terms and conditions set forth herein and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Canadian Borrower to, or entered into by the Canadian Borrower
with, any Fronting Bank relating to any Canadian Revolving Facility Letter of
Credit, the terms and conditions of this Agreement shall control. All Canadian
Revolving Facility Letters of Credit issued and outstanding under the Prior
Agreement as of the Amended and Restated Effective Date shall be deemed to be
issued and outstanding under this Agreement and allocated among the Canadian
Revolving Lenders in accordance with their Applicable Percentages as of the
Amended and Restated Effective Date.


 


(c)           No
Letter of Credit shall expire later than twelve (12) months after the issuance
thereof, provided
that if the Termination Date shall occur prior to the expiration of any Letter
of Credit, the Borrowers shall, at or prior to the Termination Date, except as
the Applicable Agent may otherwise agree in writing, (i) cause all Letters
of Credit which expire after the Termination Date to be returned to the
applicable Fronting Bank undrawn and marked “canceled” and each such Letter of
Credit accompanied by written consent of the beneficiary on its letterhead
signed by an authorized signatory consenting to such cancellation or (ii) if
the 


 


51

















 


Borrowers are
unable to do so in whole or in part, either (x) provide a “back-to-back”
letter of credit to one or more Fronting Banks in a form satisfactory to such
Fronting Bank and the Applicable Agent (in their exclusive discretion), issued
by a bank satisfactory to such Fronting Bank and the Applicable Agent (in their
exclusive discretion), in an amount equal to the greater of (A) an amount,
as determined by such Fronting Bank and the Applicable Agent, equal to the face
amount of all outstanding Letters of Credit issued by such Fronting Bank plus
the sum of all projected contractual obligations to the Applicable Agent, such
Fronting Bank and the Lenders of the Borrowers thereunder through the
expiration date(s) of such Letters of Credit, and (B) 105% of the
then Letter of Credit Outstandings with respect to Letters of Credit issued by
such Fronting Bank or (y) solely with respect to Letters of Credit
scheduled to expire on or before the date that is ninety (90) days after the
Termination Date, deposit cash in the Letter of Credit Account or Canadian
Letter of Credit Account, as the case may be, in an amount which, together with
any amounts then held in the Letter of Credit Account or the Canadian Letter of
Credit Account, as the case may be, is equal to the greater of (A) an
amount, as determined by the Fronting Banks and the Applicable Agent, equal to
the face amount of all outstanding Letters of Credit plus the sum of all
projected contractual obligations to the Applicable Agent, the Fronting Banks
and the Lenders of the Borrowers thereunder through the expiration date(s) of
such Letters of Credit, and (B) 105% of the then Letter of Credit
Outstandings as collateral security for the Borrowers’ reimbursement
obligations in connection therewith, such cash to be remitted to the Borrowers
upon the expiration, cancellation or other termination or satisfaction of such
reimbursement obligations.


 


(d)           The
Borrowers shall pay to each Fronting Bank, in addition to such other fees and
charges as are specifically provided for in Section 2.22 hereof,
such fees and charges in connection with the issuance and processing of the
Letters of Credit issued by such Fronting Bank as are customarily imposed by
such Fronting Bank from time to time in connection with letter of credit
transactions.


 


(e)           Drafts
drawn under each Letter of Credit (i) shall be reimbursed by the
applicable Borrower in the same currency as which such draw was paid on the
Business Day immediately following the day such Borrower received notice from
the applicable Fronting Bank that payment of such draft will be made, provided,
that if such Borrower shall have received such notice thereof prior to 10:00 a.m.,
New York time, on the date such draft was drawn, such Borrower shall effect
reimbursement on the same Business Day as such Borrower received notice
thereof, and, (ii)(A) with respect to Letters of Credit denominated in
Dollars, shall bear interest from the date of draw until the first Business Day
following the date of draw at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin and thereafter until reimbursed in full at a
rate per annum equal to the Alternate Base Rate plus the Applicable Margin
plus 2.0%,  and (B) with
respect to Letters of Credit denominated in Canadian Dollars, shall bear
interest from the date of draw until the first Business Day following the date
of draw at a rate per annum equal to the Canadian Prime Rate plus the
Applicable Margin and thereafter until reimbursed in full at a rate per annum
equal to the Canadian Prime Rate plus the Applicable Margin plus
2.0%  (computed on the basis of the
actual number of days elapsed over a year of 360 days).  In the case of drafts drawn on any U.S.
Revolving Facility Letter of Credit, the U.S. Borrower shall effect such
reimbursement (x) if such draw occurs prior to the Termination Date (or
the earlier date of termination of the U.S. Tranche B Revolving Commitment), in
cash or through a Borrowing of U.S. Tranche B Revolving Loans without the
satisfaction of the 


 


52

















 


conditions
precedent set forth in Section 4.2 or (y) if such draw occurs
on or after the Termination Date (or the earlier date of termination of the
U.S. Tranche B Revolving Commitment), in cash. 
Each U.S. Tranche B Revolving Lender agrees to make the U.S. Tranche B
Revolving Loans described in clause (x) of the preceding sentence
notwithstanding a failure to satisfy the applicable lending conditions thereto
or the provisions of Section 2.33. 
In the case of drafts drawn on any Canadian Revolving Facility Letter of
Credit, the Canadian Borrower shall effect such reimbursement (x) if such
draw occurs prior to the Termination Date (or the earlier date of termination
of the Canadian Revolving Commitment), in cash or through a Borrowing of
Canadian Revolving Loans without the satisfaction of the conditions precedent
set forth in Section 4.2 or (y) if such draw occurs on or
after the Termination Date (or the earlier date of termination of the Canadian
Revolving Commitment), in cash.  Each
Canadian Revolving Lender agrees to make the Canadian Revolving Loans described
in clause (x) of the preceding sentence notwithstanding a failure to satisfy
the applicable lending conditions thereto or the provisions of Section 2.33.


 


(f)            Immediately
upon the issuance of any Letter of Credit by any Fronting Bank, such Fronting
Bank shall be deemed to have sold to each Canadian Revolving Lender or U.S. Tranche
B Revolving Lender, as the case may be, other than such Fronting Bank, and each
such other Lender shall be deemed unconditionally and irrevocably to have
purchased from such Fronting Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender’s Applicable
Percentage, in such Letter of Credit, each drawing thereunder and the
obligations of the Borrowers under this Agreement with respect thereto.  Upon any change in the Commitments pursuant
to Section 2.11, Section 2.14, Section 2.15,  Section 9.3 or ARTICLE
11, it is hereby agreed that with respect to all Letter of Credit
Outstandings, there shall be an automatic adjustment to the participations
hereby created to reflect the new Applicable Percentages of the assigning and
assignee Lenders.  Any action taken or
omitted by a Fronting Bank under or in connection with a Letter of Credit, if
taken or omitted in the absence of gross negligence or willful misconduct,
shall not create for such Fronting Bank any resulting liability to any other
Lender.


 


(g)           In
the event that a Fronting Bank makes any payment under any U.S. Revolving
Facility Letter of Credit and the U.S. Borrower shall not have reimbursed such
amount in full to such Fronting Bank pursuant to this Section, the applicable
Fronting Bank shall promptly notify the Administrative Agent, which shall
promptly notify each U.S. Tranche B Revolving Lender of such failure, and each
U.S. Tranche B Revolving Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of the applicable Fronting Bank the amount
of such Lender’s Applicable Percentage of such unreimbursed payment in Dollars
and in same day funds.  In the event that
a Fronting Bank makes any payment under any Canadian Revolving Facility Letter
of Credit and the Canadian Borrower shall not have reimbursed such amount in
full to such Fronting Bank pursuant to this Section, the applicable Fronting
Bank shall promptly notify the Canadian Administrative Agent, which shall
promptly notify each Canadian Revolving Lender of such failure, and each
Canadian Revolving Lender shall promptly and unconditionally pay to the
Canadian Administrative Agent for the account of the applicable Fronting Bank
the amount of such Lender’s Applicable Percentage of such unreimbursed payment
in Dollars (or in respect of a Canadian Revolving Facility Letter of Credit
denominated in Canadian Dollars, in Canadian Dollars) and in same day
funds.  If the applicable Fronting Bank
so notifies the Applicable Agent, and the Applicable Agent so notifies the U.S.



 


53

















 


Tranche B
Revolving Lenders or the Canadian Revolving Lenders, as the case may be, prior
to 11:00 a.m. (New York City time) on any Business Day, such Lenders shall
make available to the applicable Fronting Bank such Lender’s Applicable
Percentage of the amount of such payment on such Business Day in same day
funds.  If and to the extent such Lender
shall not have so made its Applicable Percentage of the amount of such payment
available to the applicable Fronting Bank, such Lender agrees to pay to such
Fronting Bank, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the Applicable
Agent for the account of such Fronting Bank at the Federal Funds Effective
Rate.  The failure of any Lender to make
available to the applicable Fronting Bank its Applicable Percentage of any
payment under any Letter of Credit shall not relieve any other Lender of its
obligation hereunder to make available to the applicable Fronting Bank its
Applicable Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Lender shall be responsible for the
failure of any other Lender to make available to such Fronting Bank such other
Lender’s Applicable Percentage of any such payment.  Whenever a Fronting Bank receives a payment
of a reimbursement obligation as to which it has received any payments from the
Lenders pursuant to this paragraph, such Fronting Bank shall pay to each Lender
which has paid its Applicable Percentage thereof, in Dollars or Canadian
Dollars, as applicable, and in same day funds, an amount equal to such Lender’s
Applicable Percentage thereof.


 


(h)           Unless
otherwise requested by the Applicable Agent, each Fronting Bank shall report in
writing to the Applicable Agent (i) on the first Business Day of each
week, the daily activity (set forth by day) in respect of Letters of Credit
during the immediately preceding week, including all issuances, extensions,
amendments and renewals, all expirations and cancellations and all
disbursements and reimbursements, (ii) on or prior to each Business Day on
which such Fronting Bank expects to issue, amend, renew or extend any Letter of
Credit, the date of such issuance, amendment, renewal or extension and the
aggregate face amount of the Letters of Credit to be issued, amended, renewed
or extended by it and outstanding after giving effect to such issuance,
amendment, renewal or extension (and whether the amount thereof changed), it
being understood that such Fronting Bank shall not permit any issuance,
renewal, extension or amendment resulting in an increase in the amount of a
Letter of Credit to occur without first obtaining written confirmation from the
Applicable Agent that it is then permitted under this Agreement, (iii) on
each Business Day on which such Fronting Bank makes any payment under any
Letter of Credit, the date of such payment and the amount and currency of such
payment, (iv) on any Business Day on which a Borrower fails to reimburse a
payment under a Letter of Credit required to be reimbursed to such Fronting
Bank on such day, the date of such failure, the applicable Borrower and the
amount and currency of such Letter of Credit payment and (v) on any other
Business Day, such other information as the Applicable Agent shall reasonably
request.


 


Section 2.5            Issuance.  Whenever a Borrower desires a Fronting Bank
to issue a Letter of Credit, it shall give to such Fronting Bank and the
Applicable Agent at least three (3) Business Days’ prior written
(including facsimile communication) notice (or such shorter period as may be
agreed upon by the Applicable Agent, the Borrowers and such Fronting Bank)
specifying the date on which the proposed Letter of Credit is to be issued
(which shall be a Business Day), the stated amount and currency of the Letter
of Credit so requested, the expiration date of such Letter of Credit and the
name and address of the beneficiary thereof.


 


54

















 


Section 2.6            Nature
of Letter of Credit Obligations Absolute. 
The obligations of the Borrowers to reimburse the Lenders and Fronting
Banks for drawings made under any Letter of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation:  (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim,
setoff, defense or other right which any Borrower may have at any time against
a beneficiary of any Letter of Credit or against any of the Lenders or Fronting
Banks, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction; (iii) any draft, demand, certificate
or other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (iv) payment by a Fronting Bank
of any Letter of Credit against presentation of a demand, draft or certificate
or other document which does not comply with the terms of such Letter of
Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that any Event of
Default shall have occurred and be continuing; provided, that such circumstance
or event shall not have been the result of the gross negligence or willful
misconduct of the applicable Fronting Bank.


 


Section 2.7            Making of Loans and
Disbursements.


 


(a)           Except
as contemplated by Section 2.12, Loans denominated in Dollars shall
be either ABR Loans or Eurodollar Loans and Loans denominated in Canadian
Dollars shall be either Canadian Prime Rate Loans or Discount Rate Loans, in
each case as the Borrowers may request subject to and in accordance with this
Section, provided that all Loans made pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, be Loans of the same Type and in
the same currency.  Each Lender may
fulfill its Commitment with respect to any Eurodollar Loan or ABR Loan by
causing any lending office of such Lender to make such Loan; provided
that any such use of a lending office shall not affect the obligation of the
applicable Borrower to repay such Loan in accordance with the terms of this
Agreement.  Each Lender shall, subject to
its overall policy considerations, use reasonable efforts (but shall not be
obligated) to select a lending office which will not result in the payment of
increased costs by the Borrowers pursuant to Section 2.16 or Section 2.19,
provided that a Lender’s selection of a lending office shall have no
effect on the obligations of any Loan Party pursuant to Section 2.16
or Section 2.19.  Subject to
the other provisions of this Section and the provisions of Section 2.13,
Borrowings of Loans of more than one Type may be incurred at the same time,
provided that no more than ten (10) Borrowings of Eurodollar Loans and
Discount Rate Loans may be outstanding at any time.  All U.S. Revolving Loans outstanding under
the Prior Agreement as of the Amended and Restated Effective Date shall be
deemed to be U.S. Tranche A Revolving Loans and allocated among the U.S. Tranche
A Revolving Lenders in accordance with their Applicable Percentages as of the
Amended and Restated Effective Date.  All
other Loans outstanding under the Prior Agreement as of the Amended and
Restated Effective Date shall be deemed to be Loans of the same Class under
this Agreement and allocated among the Lenders of each applicable Class in
accordance with their Applicable Percentages as of the Amended and Restated
Effective Date.


 


(b)           The
applicable Borrower shall give the Applicable Agent (with a simultaneous copy
to the Administrative Agent if the Administrative Agent is not the Applicable
Agent) prior written, facsimile or telephonic (confirmed promptly in writing)
notice of each 


 


55

















 


Borrowing of
Revolving Loans hereunder of at least three (3) Business Days prior to a
Borrowing of Eurodollar Loans and Discount Rate Loans and, to the extent
practical, one (1) Business Day for ABR Loans and Canadian Prime Rate
Loans, otherwise such ABR Loans and Canadian Prime Rate Loans may be borrowed
on the Business Day on which such Borrower gives such notice; such notice shall
be irrevocable and shall specify the following information:


 


(i)            the Borrower
requesting such Borrowing;


 


(ii)           the Type (e.g.,
Discount Rate, Canadian Prime Rate, Eurodollar or ABR) of such Borrowing;


 


(iii)          the Class (e.g.,
Canadian Revolving Loan, U.S. Tranche A Revolving Loan or U.S. Tranche B
Revolving Loan) of such Borrowing;


 


(iv)          the amount and currency
of such Borrowing (which shall not (A) in the case of Dollar-denominated
Revolving Loans, be less than US$1,000,000 or any integral multiple of
US$1,000,000 in excess of such minimum amount, or (B) in the case of
Canadian Dollar-denominated Revolving Loans, be less than C$1,000,000 or any
integral multiple of C$1,000,000 in excess of such minimum amount);


 


(v)           the date of such
Borrowing (which shall be a Business Day);


 


(vi)          in the case of a
Eurodollar Loan, the Interest Period with respect thereto;


 


(vii)         in the case of a Discount
Rate Loan, the Contract Period with respect thereto; and


 


(viii)        the number and location of
the account to which funds are to be disbursed.


 


Such notice, to be effective,
must be received by the Applicable Agent (and the Administrative Agent if the
Administrative Agent is not the Applicable Agent) not later than 10:00 a.m.,
New York City time, on the third (3rd) Business Day preceding the date on
which such Borrowing is to be made in the case of Eurodollar Loans or Discount
Rate Loans and not later than 12:00 Noon, New York City time, on the same
Business Day as the date of such Borrowing in the case of ABR Loans and
Canadian Prime Rate Loans.  If no
election is made as to the Type of a U.S. Revolving Loan or Canadian Revolving
Loan denominated in Dollars, such notice shall be deemed a request for Borrowing
of ABR Loans.  If no election is made as
to the Type of a Canadian Revolving Loan denominated in Canadian Dollars, such
notice shall be deemed a request for Borrowing of Canadian Prime Rate Loans.  If the Borrowing is a request for a
Eurodollar Loan and no election is made as to the Interest Period, such notice
shall be deemed to have requested an Interest Period of one month’s
duration.  If the Borrowing is a request
for a Discount Rate Loan and no election is made as to the Contract Period,
such notice shall be deemed to have requested a Contract Period of one month’s
duration.  If no election is made as 


 


56

















 


to the currency of a Loan, such
notice shall be deemed a request for Borrowing of Dollars.  The Applicable Agent shall promptly notify
each Revolving Lender of its Applicable Percentage of such Borrowing, the date
of such Borrowing, the Type and Class of Borrowing or Loans being
requested, the Interest Period or Interest Periods applicable thereto and the
Contract Period or Contract Periods applicable thereto, as appropriate.  On the Borrowing date specified in such
notice, each Revolving Lender shall make its share of Borrowings of ABR Rate
Loans or Canadian Prime Rate Loans available to the Applicable Agent at its
office most recently designated for such purpose in a notice to the Lenders, no
later than 3:00 p.m., New York City time, and its share of Borrowings of
Eurodollar Loans or Discount Rate Loans available at the office of the
Applicable Agent at its office most recently designated for such purpose in a
notice to the Lenders, no later than no later than 1:00 p.m., New York
City time, in each case in immediately available funds.  Upon receipt of the funds made available by
the Lenders to fund any Borrowing hereunder, the Applicable Agent shall
disburse such funds in the manner specified in the notice of Borrowing
delivered by the Borrowers.


 


(c)           The
U.S. Borrower shall borrow the entire principal amount of the U.S. Term Loans
on the Closing Date and the proceeds of such Borrowing shall be disbursed as
follows: (x) an amount equal to the excess of the U.S. Term Loans over the
then current U.S. Borrowing Base shall be deposited in the U.S. Term Loan
Collateral Account, (y) the amount requested by the U.S. Borrower to be
used in amounts and for purposes consistent with the Budget delivered to the
Administrative Agent on or prior to the Closing Date shall be disbursed to the
U.S. Borrower and (z) the remainder of such Borrowing shall be deposited
in the U.S. Investment Account.  The U.S.
Borrower shall give the Administrative Agent at least three (3) Business
Days’ prior written, facsimile or telephonic (confirmed promptly in writing)
notice that it is borrowing the U.S. Term Loans on the Closing Date; such
notice shall specify the following information:


 


(i)            the Type (e.g.,
Eurodollar or ABR ) of such Borrowing;


 


(ii)           in the case of a
Eurodollar Loan, the Interest Period with respect thereto;


 


(iii)          the amount of such
Borrowing to be deposited in the U.S. Term Loan Collateral Account pursuant to
clause (x) of the first sentence of this Section 2.7(c);


 


(iv)          the amount of such
Borrowing to be disbursed to the U.S. Borrower pursuant to clause (y) of
the first sentence of this Section 2.7(c);


 


(v)           the amount of such
Borrowing to be deposited in the U.S. Investment Account pursuant to clause (z) of
the first sentence of this Section 2.7(c); and


 


(vi)          such other instructions
as the Administrative Agent may require.


 


If no election is made as to
the Type of Loan, such notice shall be deemed a request for Borrowing of ABR
Loans.  If the Borrowing is a request for
a Eurodollar Loan and no election is 


 


57

















 


made as to the Interest Period,
such notice shall be deemed to have requested an Interest Period of one month’s
duration.  The Administrative Agent shall
promptly notify each U.S. Term Loan Lender of its Applicable Percentage of such
Borrowing, the Type of Borrowing being requested and the Interest Period or
Interest Periods applicable thereto, as appropriate.  On the Closing Date, each U.S. Term Loan
Lender shall make its share of the U.S. Term Loans available to the
Administrative Agent at its office most recently designated for such purpose in
a notice to the Lenders, no later than 12:00 Noon, New York City time, in
immediately available funds.  Upon
receipt of the funds made available by the U.S. Term Loan Lenders to fund the
U.S. Term Loans hereunder, the Administrative Agent shall disburse such funds
in the manner specified in the notice of Borrowing delivered by the U.S.
Borrower.  After the Closing Date, one (1) Business
Day after the Administrative Agent’s receipt of (i) a Borrowing Base
Certificate demonstrating to the Administrative Agent’s satisfaction that the
then U.S. Borrowing Base exceeds the amount of the Total U.S. Outstandings, (ii) such
written disbursement instructions as the Administrative Agent may require and (iii) a
certification from a Financial Officer of the U.S. Borrower that no Default or
Event of Default has occurred and is continuing, the Administrative Agent shall
disburse an amount not to exceed the amount by which the U.S. Borrowing Base
exceeds the Total U.S. Outstandings from the U.S. Term Loan Collateral Account
(including amounts deposited therein pursuant to this paragraph (c) or Section 2.14(a))
to the U.S. Investment Account.  Upon the
Administrative Agent’s receipt from the U.S. Borrower of such written
disbursement instructions as the Administrative Agent may require, the Administrative
Agent shall permit the U.S. Borrower to withdraw from the U.S. Investment
Account such amount as the U.S. Borrower shall request.  If, as of the end of the third (3rd) Business
Day following any such withdrawal, the Available Cash (excluding amounts on
deposit in the Investment Accounts) shall exceed US$50,000,000, the U.S.
Borrower shall make a deposit to the U.S. Investment Account on the following
Business Day in an amount which, when aggregated with the amount deposited in
the Canadian Investment Account on such day, shall be equal to such excess. The
U.S. Investment Account shall be closed and the cash deposited therein shall be
disbursed to the U.S. Borrower on the earlier of (x) the Receivables
Securitization Termination Date and (y) sixty (60) days after the Closing
Date.


 


(d)           The
Canadian Borrower shall borrow the entire principal amount of the Canadian Term
Loans on the Closing Date and the proceeds of such Borrowing shall be disbursed
as follows: (x) an amount equal to the excess of the Canadian Term Loans
over the then current Canadian Borrowing Base shall be deposited in the
Canadian Term Loan Collateral Account, (y) the amount requested by the
Canadian Borrower to be used in amounts and for purposes consistent with the
Budget delivered to the Administrative Agent on or prior to the Closing Date
shall be disbursed to the Canadian Borrower and (z) the remainder of such
Borrowing shall be deposited in the Canadian Investment Account.  The Canadian Borrower shall give the Canadian
Administrative Agent at least three (3) Business Days’ prior written,
facsimile or telephonic (confirmed promptly in writing) notice that it is
borrowing the Canadian Term Loans on the Closing Date; such notice shall
specify the following information:


 


(i)            the Type (e.g.,
Eurodollar or ABR ) of such Borrowing;


 


(ii)           in the case of a
Eurodollar Loan, the Interest Period with respect thereto;


 


58

















 


(iii)          the amount of such
Borrowing to be deposited in the Canadian Term Loan Collateral Account pursuant
to clause (x) of the first sentence of this Section 2.7(d);


 


(iv)          the amount of such
Borrowing to be disbursed to the Canadian Borrower pursuant to clause (y) of
the first sentence of this Section 2.7(d);


 


(v)           the amount of such
Borrowing to be deposited in the Canadian Investment Account pursuant to clause
(z) of the first sentence of this Section 2.7(d); and


 


(vi)          such other instructions
as the Canadian Administrative Agent may require.


 


If no election is made as to
the Type of Loan, such notice shall be deemed a request for Borrowing of ABR
Loans.  If the Borrowing is a request for
a Eurodollar Loan and no election is made as to the Interest Period, such
notice shall be deemed to have requested an Interest Period of one month’s
duration.  The Canadian Administrative
Agent shall promptly notify each Canadian Term Loan Lender of its Applicable
Percentage of such Borrowing, the Type of Borrowing being requested and the
Interest Period or Interest Periods applicable thereto, as appropriate.  On the Closing Date, each Canadian Term Loan
Lender shall make its share of the Canadian Term Loans available to the
Canadian Administrative Agent at its office most recently designated for such
purpose in a notice to the Lenders, no later than 12:00 Noon, New York City
time, in immediately available funds. 
Upon receipt of the funds made available by the Canadian Term Loan
Lenders to fund the Canadian Term Loans hereunder, the Canadian Administrative
Agent shall disburse such funds in the manner specified in the notice of
Borrowing delivered by the Canadian Borrower. 
After the Closing Date, one (1) Business Day after the Canadian
Administrative Agent’s receipt of (i) a Borrowing Base Certificate
demonstrating to the Canadian Administrative Agent’s satisfaction that the then
Canadian Borrowing Base exceeds the amount of the Total Canadian Outstandings, (ii) such
written disbursement instructions as the Canadian Administrative Agent may
require and (iii) a certification from a Financial Officer of the Canadian
Borrower that no Default or Event of Default has occurred and is continuing,
the Canadian Administrative Agent shall disburse an amount not to exceed the
amount by which the Canadian Borrowing Base exceeds the Total Canadian
Outstandings from the Canadian Term Loan Collateral Account (including amounts
deposited therein pursuant to this paragraph (d) or Section 2.14(d))
to the Canadian Investment Account.  Upon
the Canadian Administrative Agent’s receipt from the Canadian Borrower of such
written disbursement instructions as the Canadian Administrative Agent may
require, the Canadian Administrative Agent shall permit the Canadian Borrower
to withdraw from the Canadian Investment Account such amount as the Canadian
Borrower shall request.  If, as of the
end of the third (3rd) Business Day following any such withdrawal, the
Available Cash (excluding amounts on deposit in the Investment Accounts) shall
exceed US$50,000,000, the Canadian Borrower shall make a deposit to the
Canadian Investment Account on the following Business Day in an amount which,
when aggregated with the amount deposited in the U.S. Investment Account on
such day, shall be equal to such excess. 
The Canadian Investment Account shall be closed and the cash deposited
therein shall be 


 


59

















 


disbursed to the Canadian
Borrower on the earlier of (x) the Receivables Securitization Termination
Date and (y) sixty (60) days after the Closing Date.


 


(e)           Unless
the Applicable Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Applicable Agent such Lender’s share of such Borrowing, the Applicable Agent
may assume that such Lender has made such share available on such date in
accordance with this Section and may, in reliance upon such assumption,
make available to the applicable Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Applicable Agent,
then the applicable Lender and the applicable Borrower severally agree to pay
to the Applicable Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the applicable Borrower to but excluding the date of payment to
the Applicable Agent, at (i) in the case of such Lender, the greater of
the Federal Funds Effective Rate and a rate determined by the Applicable Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans or Canadian
Prime Rate Loans, as the case may be.  If
such Lender pays such amount to the Applicable Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.


 


Section 2.8            Repayment of Loans and
Unreimbursed Draws; Evidence of Debt


 


(a)           The
U.S. Borrower hereby unconditionally promises to pay to (i) the
Administrative Agent for the account of each U.S. Tranche A Revolving Lender
the then unpaid principal amount of each U.S. Tranche A Revolving Loan obtained
by the U.S. Borrower as set forth herein; (ii) the Administrative Agent
for the account of each U.S. Tranche B Revolving Lender the then unpaid
principal amount of each U.S. Tranche B Revolving Loan obtained by the U.S.
Borrower and each unreimbursed draw under all U.S. Revolving Facility Letters
of Credit as set forth herein; (iii) the Administrative Agent for the
account of each U.S. Term Loan Lender the then unpaid principal amount of each
U.S. Term Loan as set forth herein; and (iv) the Canadian Administrative
Agent for the account of each Canadian Revolving Lender the then unpaid
principal amount of each Canadian Revolving Loan obtained by the U.S. Borrower
as set forth herein.


 


(b)           The
Canadian Borrower hereby unconditionally promises to pay to (i) the
Administrative Agent for the account of each U.S. Tranche A Revolving Lender
the then unpaid principal amount of each U.S. Tranche A Revolving Loan obtained
by the Canadian Borrower as set forth herein; (ii) the Administrative
Agent for the account of each U.S. Tranche B Revolving Lender the then unpaid
principal amount of each U.S. Tranche B Revolving Loan obtained by the Canadian
Borrower as set forth herein; (iii) the Canadian Administrative Agent for
the account of each Canadian Revolving Lender the then unpaid principal amount
of each Canadian Revolving Loan obtained by the Canadian Borrower and each
unreimbursed draw under all Canadian Revolving Facility Letters of Credit as
set forth herein; and (iv) the Canadian Administrative Agent for the
account of each Canadian Term Loan Lender the unpaid principal amount of each
Canadian Term Loan as set forth herein.


 


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(c)           Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the Obligations of the Borrowers to such Lender resulting
from each Loan made by such Lender or participation in each Letter of Credit in
which such Lender is participating, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.


 


(d)           The
Applicable Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type and Class thereof and the
Interest Period or Contract Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
U.S. Borrower or the Canadian Borrower, as the case may be, to each Lender
hereunder, (iii) the amount of Term Loans on deposit in the respective
Collateral Accounts and all disbursements from deposits to such accounts and (iv) the
amount of any sum received by the Applicable Agent hereunder for the account of
the Lenders and each Lender’s share thereof.


 


(e)           The
entries made in the accounts maintained pursuant to paragraph (c) or (d) of
this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided that the failure of any Lender
or the Applicable Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Loan Parties to repay the Loans
and draws under Letters of Credit in accordance with the terms of this
Agreement.


 


(f)            Any
Lender may request that Loans made by it be evidenced by a promissory
note.  In such event, the Borrowers shall
execute and deliver to such Lender a promissory note or notes payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) in a form furnished by the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.3) be represented by one or more
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).


 


Section 2.9            Interest
on Loans


 


(a)           Subject
to the provisions of Section 2.10, each ABR Loan shall bear
interest (computed, for ABR Loans wherein the Alternate Base Rate is determined
by reference to the Adjusted LIBO Rate or the Federal Funds Effective Rate, on
the basis of the actual number of days elapsed over a year of 360 days, and otherwise
computed on the basis of the actual number of days elapsed over a year of 365
days) at a rate per annum equal to the Applicable Margin plus the
Alternate Base Rate.


 


(b)           Subject
to the provisions of Section 2.10, each Eurodollar Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal, during each Interest Period
applicable thereto, to the Applicable Margin plus the Adjusted LIBO Rate
for such Interest Period in effect for such Borrowing.


 


61

















 


(c)           Subject
to the provisions of Section 2.10, each Canadian Prime Rate Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 365 days) at a rate per annum equal to the Applicable Margin plus
the Canadian Prime Rate.


 


(d)           Subject
to the provisions of Section 2.10, each Discount Rate Loan shall
bear interest (computed on the basis of the actual number of days elapsed over
a year of 365 days) at a rate per annum equal, during each Contract Period
applicable thereto, to the Applicable Margin plus the Discount Rate for
such Contract Period in effect for such Borrowing.


 


(e)           Accrued
interest on all Loans shall be payable in arrears on each Interest Payment Date
applicable thereto, at maturity (whether by acceleration or otherwise), after
such maturity on demand and (with respect to Eurodollar Loans and Discount Rate
Loans) upon any repayment or prepayment thereof (on the amount prepaid).


 


(f)            For
the purposes of the Interest Act (Canada)
and disclosure thereunder, whenever any interest or any fee to be paid
hereunder or in connection herewith is to be calculated on the basis of a
360-day or 365-day year, the yearly rate of interest to which the rate used in
such calculation is equivalent is the rate so used multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and
divided by 360 or 365, as applicable. 
The rates of interest under this Agreement are nominal rates, and not
effective rates or yields.  The principle
of deemed reinvestment of interest does not apply to any interest calculation
under this Agreement.


 


(g)           Any
provision of this Agreement that would oblige a Canadian Loan Party to pay any
fine, penalty or rate of interest on any arrears of principal or interest
secured by a mortgage on real property or hypothec on immovables that has the
effect of increasing the charge on arrears beyond the rate of interest payable
on principal money not in arrears shall not apply to such Canadian Loan Party,
which shall be required to pay interest on money in arrears at the same rate of
interest payable on principal money not in arrears.


 


(h)           If
any provision of this Agreement would oblige a Canadian Loan Party to make any
payment of interest or other amount payable to any Secured Party in an amount
or calculated at a rate which would be prohibited by law or would result in a
receipt by that Secured Party of “interest” at a “criminal rate” (as such terms
are construed under the Criminal Code (Canada)),
then, notwithstanding such provision, such amount or rate shall be deemed to
have been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by applicable law
or so result in a receipt by that Secured Party of “interest” at a “criminal
rate”, such adjustment to be effected, to the extent necessary (but only to the
extent necessary), as follows:


 


(i)            first, by reducing the
amount or rate of interest; and


 


(ii)           thereafter, by reducing
any fees, commissions, costs, expenses, premiums and other amounts required to
be paid which would constitute interest for purposes of section 347 of the
Criminal Code (Canada).


 


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Section 2.10          Default
Interest.  Upon the occurrence and
during the continuance of an Event of Default, the principal amount of all
Loans outstanding and, to the extent permitted by applicable law, any interest
payments on the Loans or any fees or other amounts owed hereunder, shall
thereafter bear interest payable on demand at a rate that is 2% per annum in
excess of the interest rate otherwise payable hereunder with respect to the
applicable Loans (or, (x) in the case of any such fees and other amounts
owed by the U.S. Loan Parties, at a rate which is 2% per annum in excess of the
interest rate otherwise payable hereunder for ABR Loans that are U.S. Revolving
Loans and (y) in the case of any such fees and other amounts owed by the
Canadian Loan Parties, at a rate which is 2% per annum in excess of the
interest rate otherwise payable hereunder for Canadian Prime Rate Loans that
are Canadian Revolving Loans); provided, in the case of Eurodollar Loans and
Discount Rate Loans, upon the expiration of the Interest Period or Contract
Period, as the case may be, in effect at the time any such increase in interest
rate is effective, if an Event of Default shall then be continuing, such
Eurodollar Loans and Discount Rate Loans shall thereupon become ABR Loans and
Canadian Prime Rate Loans, respectively, and shall thereafter bear interest
payable upon demand at a rate which is 2% per annum in excess of the interest
rate otherwise payable hereunder for ABR Loans and Canadian Prime Rate Loans,
as the case may be.  Payment or
acceptance of the increased rates of interest provided in this Section 2.10
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of the Agents or any Lender.


 


Section 2.11          Optional
Termination or Reduction of Commitment. 
Upon at least three (3) Business Days’ prior written notice to the
Applicable Agent (and the Administrative Agent if the Administrative Agent is
not the Applicable Agent), (i) the U.S. Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
U.S. Tranche A Revolving Commitment, (ii) the U.S. Borrower may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the U.S. Tranche B Revolving Commitment and (iii) the Canadian
Borrower may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Canadian Revolving Commitment.  Each such reduction or termination, as
applicable, of such Commitment shall be in the principal amount of US$1,000,000
or any integral multiple of US$1,000,000 in excess thereof.  The U.S. Borrower shall not be permitted to
terminate or reduce the U.S. Tranche A Revolving Commitment if, as a result of
such termination or reduction, the aggregate principal amount of the U.S.
Tranche A Revolving Loans would exceed the aggregate U.S. Tranche A Revolving
Commitment.  The U.S. Borrower shall not
be permitted to terminate or reduce the U.S. Tranche B Revolving Commitment if,
as a result of such termination or reduction, the U.S. Tranche B Revolving
Credit Utilization would exceed the aggregate U.S. Tranche B Revolving
Commitment.  The Canadian Borrower shall
not be permitted to terminate or reduce the Canadian Revolving Commitment if,
as a result of such termination or reduction, the Canadian Revolving Credit
Utilization would exceed the aggregate Canadian Revolving Commitment.  Any reduction or termination, as applicable,
pursuant to this Section shall be applied pro rata to reduce the
applicable Revolving Commitment of each applicable Lender until such Revolving
Commitment is zero.  Simultaneously with
each reduction or termination, as applicable, of any Revolving Commitment, the
applicable Borrower shall pay to the Applicable Agent for the account of each
applicable Lender the Commitment Fee accrued on the amount of the Revolving
Commitment of such Lender so terminated or reduced to but excluding the date of
such termination or reduction.


 


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Section 2.12          Alternate
Rate of Interest.


 


(a)           If
prior to the commencement of any Interest Period for a Eurodollar Borrowing:


 


(i)            the Administrative
Agent determines (which determination shall be conclusive absent manifest
error) that adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or


 


(ii)           the Administrative
Agent is advised by the Required Lenders of the applicable Class that the
Eurodollar Rate for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (or Lender) of making or maintaining their Loans (or
its Loan) included in such Borrowing for such Interest Period;


 


then the Administrative Agent
shall give notice thereof to the Borrowers and the Lenders by telephone or
facsimile as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrowers and the Lenders that the circumstances giving rise
to such notice no longer exist, any request by the Borrowers for a Borrowing of
Eurodollar Loans (including pursuant to a refinancing with Eurodollar Loans)
pursuant to Section 2.7 or Section 2.13 shall be deemed
a request for a Borrowing of ABR Loans.


 


(b)           If prior to the commencement of any Contract
Period for a Borrowing comprised of a Discount Rate Loan:


 


(i)            the Canadian
Administrative Agent determines (which determination shall be conclusive
manifest error) that adequate and reasonable means do not exist for
ascertaining the Discount Rate for such Contract Period, or


 


(ii)           the Canadian
Administrative Agent is advised by the Required Lenders of the applicable Class that
the Discount Rate for such Contract Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Contract Period,


 


then the Canadian
Administrative Agent shall give notice thereof to the Borrowers and the Lenders
by telephone or facsimile as promptly as practical thereafter and, until the
Canadian Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exists, any request by the
Borrowers for a Borrowing of Discount Rate Loans (including pursuant to a refinancing
with Discount Rate Loans) pursuant to Section 2.7 or Section 2.13
shall be deemed a request for a Borrowing of Canadian Prime Rate Loans.


 


Section 2.13          Refinancing
of Loans.  The Borrowers shall have
the right, at any time, on three (3) Business Days’ prior irrevocable
notice to the Applicable Agent (and the Administrative Agent if the
Administrative Agent is not the Applicable Agent) (which notice, to be
effective, must be received by the Applicable Agent not later than 1:00 p.m.,
New York City 


 


64

















 


time, on the third Business Day preceding the
date of any refinancing), (x) to refinance any outstanding Borrowing or
Borrowings of Loans of one Type (or a portion thereof) with a Borrowing of
Loans of the other Type or (y) to continue an outstanding Borrowing of
Eurodollar Loans for an additional Interest Period or to continue an
outstanding Borrowing of Discount Rate Loans for an additional Contract Period,
subject to the following:


 


(a)           as
a condition to the refinancing of ABR Loans with Eurodollar Loans and to the
continuation of Eurodollar Loans for an additional Interest Period, no Event of
Default shall have occurred and be continuing at the time of such refinancing;


 


(b)           as
a condition to the refinancing of Canadian Prime Rate Loans with Discount Rate
Loans and to the continuation of Discount Rate Loans for an additional Contract
Period, no Event of Default shall have occurred and be continuing at the time
of such refinancing;


 


(c)           if
less than a full Borrowing of Loans shall be refinanced, such refinancing shall
be made pro rata among the applicable Lenders in accordance with the respective
principal amounts of the Loans comprising such Borrowing held by such Lenders
immediately prior to such refinancing;


 


(d)           the
aggregate principal amount of Loans being refinanced shall be at least (i) in
the case of Dollar-denominated Loans, US$1,000,000 or any integral multiple of
US$1,000,000 in excess thereof, or (ii) in the case of Canadian
Dollar-denominated Loans, C$1,000,000 or any integral multiple of C$1,000,000
in excess thereof, provided that no partial refinancing of a Borrowing
of Eurodollar Loans or Discount Rate Loans as the case may be, shall result in
the Eurodollar Loans or Discount Rate Loans as the case may be, remaining
outstanding pursuant to such Borrowing being less than US$1,000,000 or
C$1,000,000, respectively, in aggregate principal amount;


 


(e)           each
Lender shall effect each refinancing by applying the proceeds of its new
Canadian Prime Rate Loan, Discount Rate Loan, Eurodollar Loan or ABR Loan, as
the case may be, to its Loan being refinanced;


 


(f)            the
Interest Period with respect to a Borrowing of Eurodollar Loans effected by a
refinancing or in respect to the Borrowing of Eurodollar Loans being continued
as Eurodollar Loans shall commence on the date of refinancing or the expiration
of the current Interest Period applicable to such continuing Borrowing, as the
case may be;


 


(g)           a
Borrowing of Eurodollar Loans may be refinanced only on the last day of an
Interest Period applicable thereto;


 


(h)           each
request for a refinancing with a Borrowing of Eurodollar Loans which fails to
state an applicable Interest Period shall be deemed to be a request for an
Interest Period of one month;


 


(i)            the
Contract Period with respect to a Borrowing of Discount Rate Loans effected by
a refinancing or in respect to the Borrowing of Discount Rate Loans being
continued 


 


65

















 


as Discount
Rate Loans shall commence on the date of refinancing or the expiration of the
current Contract Period applicable to such continuing Borrowing, as the case
may be;


 


(j)            a
Borrowing of Discount Rate Loans may be refinanced only on the last day of a
Contract Period applicable thereto; and


 


(k)           each
request for a refinancing with a Borrowing of Discount Rate Loans which fails
to state an applicable Contract Period shall be deemed to be a request for a
Contract Period of one month.


 


In the event that the U.S. Borrower or Canadian Borrower, as
applicable, shall not give notice to refinance any Borrowing of Eurodollar
Loans, or to continue such Borrowing as Eurodollar Loans, or shall not be
entitled to refinance or continue such Borrowing as Eurodollar Loans, in each
case as provided above, such Borrowing shall automatically be refinanced with a
Borrowing of ABR Loans at the expiration of the then-current Interest
Period.  In the event that the Canadian
Borrower shall not give notice to refinance any Borrowing of Discount Rate
Loans, or to continue such Borrowing as Discount Rate Loans, or shall not be
entitled to refinance or continue such Borrowing as Discount Rate Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of Canadian Prime Rate Loans at the expiration of the
then-current Contract Period.  The
Applicable Agent shall, after it receives notice from the U.S. Borrower or
Canadian Borrower, as applicable, promptly give each Lender notice of any refinancing,
in whole or part, of any Loan made by such Lender.


 


(l)            Notwithstanding
anything to the contrary contained herein:


 


(i)            all Loans denominated
in Dollars shall be repaid in Dollars;


 


(ii)           all Loans denominated
in Canadian Dollars shall be repaid in Canadian Dollars;


 


(iii)          Loans denominated in
Dollars may only be ABR Loans or Eurodollar Loans; and


 


(iv)          Loans denominated in
Canadian Dollars may only be Canadian Prime Rate Loans or Discount Rate Loans.


 


All Borrowings, refinancings,
continuations and conversions, as applicable, of Loans shall be consistent with
the foregoing.


 


Section 2.14         Mandatory
Prepayment; Commitment Termination


 


(a)           If
at any time the Total U.S. Outstandings exceeds the U.S. Borrowing Base, within
one (1) Business Day (i) the Borrowers will prepay the U.S. Revolving
Loans in an amount necessary to cause the Total U.S. Outstandings to be equal
to or less than the U.S. Borrowing Base, (ii) after giving effect to the
prepayment in full of the U.S. Revolving Loans, the U.S. Borrower will deposit
into the Letter of Credit Account an amount equal to 105% of the amount by
which the aggregate U.S. Letter of Credit Outstandings (net of the amount of
cash held in the Letter of Credit Account) so exceeds the U.S. Borrowing Base,
and (iii) after giving 


 


66

















 


effect to the
prepayment in full of the U.S. Revolving Loans and the cash collateralization
of the U.S. Letter of Credit Outstandings, the U.S. Borrower will (x) deposit
into the U.S. Term Loan Collateral Account an amount equal to the amount by
which the U.S. Term Outstandings exceeds the U.S. Borrowing Base or (y) prepay
the U.S. Term Loans in an amount equal to the amount by which the U.S. Term
Outstandings exceeds the U.S. Borrowing Base.


 


(b)           If
at any time the aggregate principal amount of the U.S. Tranche A Revolving
Loans exceeds (A) prior to the expiration of the Interim Period, the
Interim U.S. Tranche A Revolving Commitment, or (B) from and after the
expiration of the Interim Period, the U.S. Tranche A Revolving Commitment,
within one (1) Business Day the Borrowers will prepay the U.S. Tranche A
Revolving Loans in an amount necessary to cause the aggregate principal amount
of the U.S. Tranche A Revolving Loans to be equal to or less than (A) prior
to the expiration of the Interim Period, the Interim U.S. Tranche A Revolving
Commitment, or (B) from and after the expiration of the Interim Period,
the U.S. Tranche A Revolving Commitment.


 


(c)           If
at any time the U.S. Tranche B Revolving Credit Utilization exceeds the U.S.
Tranche B Revolving Commitment, within one (1) Business Day (i) the
Borrowers will prepay the U.S. Tranche B Revolving Loans in an amount necessary
to cause the aggregate principal amount of the U.S. Tranche B Revolving Credit
Utilization, including unreimbursed draws, to be equal to or less than the U.S.
Tranche B Revolving Commitment and (ii) if, after giving effect to the
prepayment in full of the U.S. Tranche B Revolving Loans, the aggregate U.S.
Letter of Credit Outstandings exceeds the U.S. Tranche B Revolving Commitment,
the U.S. Borrower will deposit into the Letter of Credit Account an amount
equal to 105% of the amount by which the aggregate U.S. Letter of Credit
Outstandings (net of the amount of cash held in the Letter of Credit Account)
so exceeds the U.S. Tranche B Revolving Commitment.


 


(d)           If
at any time the Total Canadian Outstandings exceeds the Canadian Borrowing
Base, within one (1) Business Day (i) the Borrowers will prepay the
Canadian Revolving Loans in an amount necessary to cause the Total Canadian
Outstandings to be equal to or less than the Canadian Borrowing Base, (ii) after
giving effect to the prepayment in full of the Canadian Revolving Loans, the
Canadian Borrower will deposit into the Canadian Letter of Credit Account an
amount equal to 105% of the amount by which the aggregate Canadian Letter of
Credit Outstandings (net of the amount of cash held in the Canadian Letter of
Credit Account) so exceeds the Canadian Borrowing Base, and (iii) after
giving effect to the prepayment in full of the Canadian Revolving Loans and the
cash collateralization of the Canadian Letter of Credit Outstandings, the
Canadian Borrower will (x) deposit into the Canadian Term Loan Collateral
Account an amount equal to the amount by which the Canadian Term Outstandings
exceeds the Canadian Borrowing Base or (y) prepay the Canadian Term Loans
in an amount equal to or the amount by which the Canadian Term Outstandings
exceeds the Canadian Borrowing Base.


 


(e)           If
at any time the Canadian Revolving Credit Utilization exceeds (A) prior to
the expiration of the Interim Period, the Interim Canadian Revolving
Commitment, or (B) from and after the expiration of the Interim Period,
the Canadian Revolving Commitment, within one (1) Business Day (i) the
Borrowers will prepay the Canadian Revolving Loans in an amount necessary to
cause the aggregate principal amount of the Canadian Revolving Credit
Utilization, including unreimbursed draws, to be equal to or less than (A) prior
to the expiration of the Interim Period, the Interim Canadian Revolving
Commitment, or (B) from and after the 


 


67

















 


expiration of
the Interim Period, the Canadian Revolving Commitment and (ii) if, after
giving effect to the prepayment in full of the Canadian Revolving Loans, the
aggregate Canadian Letter of Credit Outstandings exceeds (A) prior to the
expiration of the Interim Period, the Interim Canadian Revolving Commitment, or
(B) from and after the expiration of the Interim Period, the Canadian
Revolving Commitment, the Canadian Borrower will deposit into the Canadian
Letter of Credit Account an amount equal to 105% of the amount by which the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account) so exceeds (A) prior to the
expiration of the Interim Period, the Interim Canadian Revolving Commitment, or
(B) from and after the expiration of the Interim Period, the Canadian
Revolving Commitment.


 


(f)            Upon
the receipt of the Net Proceeds by any of the U.S. Loan Parties from any
Prepayment Event (including amounts received by a U.S. Loan Party from a
Canadian Guarantor pursuant to Section 2.14(h)), the U.S. Loan
Parties shall, jointly and severally, apply such Net Proceeds as follows:  first, to repay the then outstanding
U.S. Term Loans; second, to repay the then outstanding U.S. Revolving
Loans ratably (without a permanent reduction of the U.S. Revolving Commitment);
third, to repay the then outstanding Canadian Term Loans; fourth,
to repay the then outstanding Canadian Revolving Loans (without a permanent
reduction of the Canadian Revolving Commitment); fifth, to deposit into
the Letter of Credit Account an amount equal to the greater of (i) an
amount, as determined by the Fronting Banks and the Administrative Agent, equal
to the face amount of all outstanding U.S. Revolving Facility Letters of Credit
plus the sum of all projected contractual obligations of the Agents, the
Fronting Banks and the Lenders of the U.S. Borrower thereunder through the
expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in
the Letter of Credit Account); and sixth, to deposit into the Canadian
Letter of Credit Account an amount equal to the greater of (i) an amount,
as determined by the Fronting Banks and the Canadian Administrative Agent,
equal to the face amount of all outstanding Canadian Revolving Facility Letters
of Credit plus the sum of all projected contractual obligations of the Agents,
the Fronting Banks and the Lenders of the Canadian Borrower thereunder through
the expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account); provided, however,
that if the U.S. Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer to the effect that the U.S. Loan Parties
intend to apply the Net Proceeds from a Prepayment Event described in clause (b) of
the definition thereof within 180 days after receipt of such Net Proceeds to
acquire (or replace or rebuild) real property, equipment or other tangible
assets (excluding inventory) to be used in the business of the U.S. Loan Parties,
and certifying that no Default or Event of Default has occurred and is
continuing, then no prepayment shall be required by this Section (to the
extent the U.S. Loan Parties effect such reinvestment within the foregoing
180-day period) so long as such Net Proceeds shall remain deposited in an
account with the Applicable Agent until requested by a U.S. Loan Party for use
in accordance with such notice.


 


(g)           Upon
the receipt of the Net Proceeds by the Canadian Borrower from any Prepayment
Event (including amounts received by the Canadian Borrower from a Canadian
Guarantor pursuant to Section 2.14(h), with the understanding that
no such amount received from a Canadian Guarantor shall be applied in respect
of the Canadian Borrower’s guaranty of the U.S. Secured Obligations), the
Canadian Borrower shall apply such Net Proceeds as follows:  


 


68

















 


first,
to repay the then outstanding Canadian Term Loans; second, to repay the
then outstanding Canadian Revolving Loans made to the Canadian Borrower
(without a permanent reduction of the Canadian Revolving Commitment); third,
to the extent permitted by applicable law and not otherwise prohibited by an
order of the Canadian Court, to repay the then outstanding U.S. Term Loans; fourth,
to the extent permitted by applicable law and not otherwise prohibited by an
order of the Canadian Court, to repay the then outstanding U.S. Revolving Loans
ratably (without a permanent reduction of the U.S. Revolving Commitment); fifth,
to the extent permitted by applicable law and not otherwise prohibited by an
order of the Canadian Court, to repay the then outstanding Canadian Revolving
Loans made to the U.S. Borrower (without a permanent reduction of the Canadian
Revolving Commitment); sixth, to deposit into the Canadian Letter of
Credit Account an amount equal to the greater of (i) an amount, as
determined by the Fronting Banks and the Canadian Administrative Agent, equal
to the face amount of all outstanding Canadian Revolving Facility Letters of
Credit plus the sum of all projected contractual obligations of the Agents, the
Fronting Banks and the Lenders of the Canadian Borrower thereunder through the
expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account); and seventh, to the
extent permitted by applicable law and not otherwise prohibited by an order of
the Canadian Court, to deposit into the Letter of Credit Account an amount
equal to the greater of (i) an amount, as determined by the Fronting Banks
and the Administrative Agent, equal to the face amount of all outstanding U.S.
Revolving Facility Letters of Credit plus the sum of all projected contractual
obligations of the Agents, the Fronting Banks and the Lenders of the U.S.
Borrower thereunder through the expiration date(s) of such Letters of
Credit and (ii) 105% of the aggregate U.S. Letter of Credit Outstandings
(net of the amount of cash held in the Letter of Credit Account); provided,
however, that if the Canadian Borrower shall deliver to the Canadian
Administrative Agent a certificate of a Financial Officer to the effect that
the Canadian Loan Parties intend to apply the Net Proceeds from a Prepayment Event
described in clause (b) of the definition thereof within 180 days after
receipt of such Net Proceeds to acquire (or replace or rebuild) real property,
equipment or other tangible assets (excluding inventory) to be used in the
business of the Canadian Loan Parties, and certifying that no Default or Event
of Default has occurred and is continuing, then no prepayment shall be required
by this Section (to the extent the Canadian Loan Parties effect such
reinvestment within the foregoing 180-day period) so long as such Net Proceeds
shall remain deposited in an account with the Applicable Agent until requested
by a Canadian Loan Party for use in accordance with such notice.


 


(h)           Upon
the receipt of the Net Proceeds by any Canadian Guarantor from any Prepayment
Event, such Canadian Guarantor shall apply such Net Proceeds as follows:  first, to repay the then outstanding
Canadian Term Loans; second, to repay the then outstanding Canadian
Revolving Loans made to the Canadian Borrower (without a permanent reduction of
the Canadian Revolving Commitment); third, to deposit into the Canadian
Letter of Credit Account an amount equal to the greater of (i) an amount,
as determined by the Fronting Banks and the Canadian Administrative Agent,
equal to the face amount of all outstanding Canadian Revolving Facility Letters
of Credit plus the sum of all projected contractual obligations of the Agents,
the Fronting Banks and the Lenders of the Canadian Borrower thereunder through
the expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account); fourth, to repay any
outstanding post-petition/post-filing Indebtedness owed by such Canadian 


 


69

















 


Guarantor to a
U.S. Loan Party or the Canadian Borrower; and fifth to the extent
permitted by applicable law and not otherwise prohibited by any applicable
court order to repay any outstanding pre-petition Indebtedness owed by such
Canadian Guarantor to a U.S. Loan Party or the Canadian Borrower; provided,
however, that if the Canadian Borrower shall deliver to the Canadian
Administrative Agent a certificate of a Financial Officer to the effect that
the Canadian Guarantors intend to apply the Net Proceeds from a Prepayment
Event described in clause (b) of the definition thereof within 180 days
after receipt of such Net Proceeds to acquire (or replace or rebuild) real
property, equipment or other tangible assets (excluding inventory) to be used
in the business of the Canadian Guarantors, and certifying that no Default or
Event of Default has occurred and is continuing, then no prepayment shall be
required by this Section (to the extent the Canadian Guarantors effect
such reinvestment within the foregoing 180-day period) so long as such Net
Proceeds shall remain deposited in an account with the Applicable Agent until
requested by a Canadian Loan Party for use in accordance with such notice.


 


(i)            If
on any date, as a result of fluctuations in the Exchange Rate, the
Administrative Agent determines that the aggregate Canadian Revolving Credit
Utilization shall have exceeded for more than three (3) consecutive
Business Days (x) an amount equal to 105% of the total Canadian Revolving
Commitments or (y) an amount equal to the Canadian Borrowing Base minus
the Canadian Term Loans, the Administrative Agent shall notify the Borrowers of
such occurrence and the Borrowers shall on the next succeeding Business Day
prepay Canadian Revolving Loans in an amount sufficient to eliminate such
excess.


 


(j)            Upon
the Termination Date, the Canadian Revolving Commitment and the U.S. Revolving
Commitment shall each be terminated in full and the Loan Parties shall pay the
Loans in full in cash and, if any Letter of Credit remains outstanding, comply
with Section 2.4(c).


 


(k)           The
U.S. Term Loan Commitments and the Canadian Term Loan Commitments shall
terminate at 5:00 p.m., New York City time, on the Closing Date.


 


Section 2.15          Optional
Prepayment of Loans; Reimbursement of Lenders


 


(a)           The
Borrowers shall have the right at any time and from time to time to prepay any
Borrowings without penalty (except for any breakage costs associated with
Eurodollar Loans and Discount Rate Loans), in whole or in part, (x) with
respect to a Borrowing of Eurodollar Loans or Discount Rate Loans, upon at
least three (3) Business Days’ prior written, facsimile or telephonic
(confirmed promptly in writing) notice to the Applicable Agent (and the
Administrative Agent if the Administrative Agent is not the Applicable Agent)
and (y) with respect to a Borrowing of ABR Loans or Canadian Prime Rate
Loans, upon prior written, facsimile or telephonic (confirmed promptly in
writing) notice to the Applicable Agent (and the Administrative Agent if the
Administrative Agent is not the Applicable Agent) received no later than 12:00
Noon, New York City time on the date of such prepayment; provided, however,
that (i) each such partial prepayment shall be in integral multiples of
US$1,000,000 or C$1,000,000, as applicable, or the entire amount of such
Borrowing, (ii) no prepayment of a Borrowing of Eurodollar Loans or
Discount Rate Loans shall be permitted pursuant to this Section 2.15(a) other
than on the last day of an Interest Period or Contract Period applicable
thereto unless such prepayment is accompanied by the payment of the amounts
described in clause (i) of the first 


 


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sentence of Section 2.15(b),
and (iii) no partial prepayment of a Borrowing of Eurodollar Loans or
Discount Rate Loans shall result in the aggregate principal amount of the
Eurodollar Loans or Discount Rate Loans remaining outstanding pursuant to such
Borrowing being less than US$1,000,000 or C$1,000,000, as applicable.  Each notice of prepayment shall specify the
prepayment date, the principal amount of the Borrowing to be prepaid and in the
case of a Borrowing of Eurodollar Loans, the Borrowing or Borrowings pursuant
to which made, shall be irrevocable and shall commit the U.S. Borrower or
Canadian Borrower, as the case may be, to prepay such Loan by the amount and on
the date stated therein.  The Applicable
Agent shall, promptly after receiving notice from the U.S. Borrower or Canadian
Borrower, as the case may be, hereunder, notify each applicable Lender of the
principal amount of the Loans held by such Lender which are to be prepaid, the
prepayment date and the manner of application of the prepayment.  Subject to Section 2.15(d), such
prepayments shall be applied ratably to the Loans included in the prepaid
Borrowing.


 


(b)           The
Borrowers shall reimburse each Lender on demand for any loss incurred or to be
incurred by it in the reemployment of the funds released (i) resulting
from any prepayment (for any reason whatsoever, including, without limitation,
refinancing with ABR Loans or Canadian Prime Rate Loans, as applicable) of any
Eurodollar Loan or Discount Rate Loan required or permitted under this
Agreement, if such Loan is prepaid other than on the last day of the Interest
Period or Contract Period for such Loan or (ii) in the event that after
the Borrowers deliver a notice of Borrowing under Section 2.7 in
respect of Eurodollar Loans or Discount Rate Loans, such Loans are not made on
the first day of the Interest Period or Contract Period specified in such
notice of Borrowing for any reason other than a breach by such Lender of its
obligations hereunder.  In the case of a
Eurodollar Loan, such loss shall be the amount as reasonably determined by such
Lender as the excess, if any, of (A) the amount of interest which would
have accrued to such Lender on the amount so paid or not borrowed at a rate of
interest equal to the Adjusted LIBO Rate for such Loan, for the period from the
date of such payment or failure to borrow to the last day (x) in the case
of a payment or refinancing with ABR Loans other than on the last day of the
Interest Period for such Loan, of the then current Interest Period for such
Loan, or (y) in the case of such failure to borrow, of the Interest Period
for such Loan which would have commenced on the date of such failure to borrow,
over (B) the amount of interest which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the London interbank market. 
Each Lender shall deliver to the U.S. Borrower or Canadian Borrower, as
the case may be, from time to time one or more certificates setting forth the
amount of such loss as determined by such Lender.


 


(c)           In
the event the U.S. Borrower or Canadian Borrower, as the case may be, fails to
prepay any Borrowing on the date specified in any prepayment notice delivered
pursuant to Section 2.15(a), the U.S. Borrower or Canadian
Borrower, as the case may be, on demand by any Lender shall pay to the
Applicable Agent for the account of such Lender any amounts required to
compensate such Lender for any loss incurred by such Lender as a result of such
failure to prepay, including, without limitation, any loss, cost or expenses
incurred by reason of the acquisition of deposits or other funds by such Lender
to fulfill deposit obligations incurred in anticipation of such prepayment, but
without duplication of any amounts paid under Section 2.15(b).  Each Lender shall deliver to the U.S.
Borrower or Canadian Borrower, as the case may 


 


71

















 


be, from time
to time one or more certificates setting forth the amount of such loss as
determined by such Lender.


 


(d)           Any
proceeds of Collateral (other than Collateral of the Canadian Loan Parties)
received by any Agent (i) not constituting either (A) a specific
payment of principal, interest, fees or other sum payable under the Loan
Documents (which shall be applied as specified by the applicable Borrower), (B) a
mandatory prepayment (which shall be applied in accordance with Section 2.14),
(C) amounts to be applied from weekly sweeps of Available Cash (which
shall be applied in accordance with Section 5.7) or (D) amounts
to be applied from the Concentration Account when full cash dominion is in
effect (which shall be applied in accordance with Section 2.15(g) and
Section 5.7) or (ii) after an Event of Default has occurred
and is continuing and the Applicable Agent so elects or the Required Lenders so
direct, such funds shall be applied ratably as follows: first, to pay
any fees, indemnities, or expense reimbursements then due to the Agents and the
Fronting Banks from the U.S. Loan Parties (other than in connection with
Banking Services Obligations or Swap Obligations); second, to pay any
fees or expense reimbursements then due to the Lenders from the U.S. Loan
Parties (other than in connection with Banking Services Obligations or Swap
Obligations); third, to pay interest then due and payable on the U.S.
Loans ratably; fourth, to prepay principal on the U.S. Loans and
unreimbursed drafts drawn under U.S. Revolving Facility Letters of Credit
ratably, fifth, to pay an amount to the Administrative Agent equal to
the greater of (x) an amount, as determined by the Fronting Banks and the
Administrative Agent, equal to the face amount of all outstanding U.S.
Revolving Facility Letters of Credit plus the sum of all projected contractual
obligations to the Agents, the Fronting Banks and the Lenders of the U.S.
Borrower thereunder through the expiration date(s) of such Letters of
Credit, and (y) 105% of the aggregate U.S. Letter of Credit Outstandings
(net of the amount of cash held in the Letter of Credit Account), to be held in
the Letter of Credit Account as cash collateral for such Obligations; sixth,
to payment of any amounts owing by the U.S. Loan Parties with respect to
Banking Services Obligations and Swap Obligations; seventh, to the
payment of any other U.S. Secured Obligation due to the Agents or any Lender by
the U.S. Loan Parties; eighth, to pay any fees, indemnities, or expense
reimbursements then due to the Agents and the Fronting Banks from the Canadian
Loan Parties (other than in connection with Banking Services Obligations or
Swap Obligations); ninth, to pay any fees or expense reimbursements then
due to the Lenders from the Canadian Loan Parties (other than in connection
with Banking Services Obligations or Swap Obligations); tenth, to pay
interest then due and payable on the Canadian Loans ratably; eleventh,
to prepay principal on the Canadian Loans and unreimbursed drafts drawn under
Canadian Revolving Facility Letters of Credit ratably, twelfth, to pay
an amount to the Canadian Administrative Agent equal to the greater of (x) an
amount, as determined by the Fronting Banks and the Canadian Administrative
Agent, equal to the face amount of all outstanding Canadian Revolving Facility
Letters of Credit plus the sum of all projected contractual obligations to the
Agents, the Fronting Banks and the Lenders of the Canadian Borrower thereunder
through the expiration date(s) of such Letters of Credit, and (y) 105%
of the aggregate Canadian Letter of Credit Outstandings (net of the amount of
cash held in the Canadian Letter of Credit Account), to be held in the Canadian
Letter of Credit Account as cash collateral for such Obligations; thirteenth,
to payment of any amounts owing by the Canadian Loan Parties with respect to
Banking Services Obligations and Swap Obligations; and fourteenth, to
the payment of any other Canadian Secured Obligation due to the Agents or any
Lender by the Canadian Loan Parties.


 


72
















 


(e)           Any
proceeds of Collateral of the Canadian Loan Parties received by any Agent (i) not
constituting either (A) a specific payment of principal, interest, fees or
other sum payable under the Loan Documents (which shall be applied as specified
by the applicable Borrower), (B) a mandatory prepayment (which shall be
applied in accordance with Section 2.14), or (C) amounts to be
applied from the Canadian Concentration Account when full cash dominion is in
effect (which shall be applied in accordance with Section 2.15(g) and
Section 5.7) or (ii) after an Event of Default has occurred
and is continuing and the Applicable Agent so elects or the Required Lenders so
direct, such funds shall be applied ratably as follows: first, to pay
any fees, indemnities, or expense reimbursements then due to the Agents and the
Fronting Banks from the Canadian Loan Parties (other than in connection with
Banking Services Obligations or Swap Obligations); second, to pay any
fees or expense reimbursements then due to the Lenders from the Canadian Loan
Parties (other than in connection with Banking Services Obligations or Swap
Obligations); third, to pay interest then due and payable on the Loans
to the Canadian Borrower ratably; fourth, to prepay principal on the
Canadian Loans made to the Canadian Borrower and unreimbursed drafts drawn
under Canadian Revolving Facility Letters of Credit ratably, fifth, to
pay an amount to the Canadian Administrative Agent equal to the greater of (x) an
amount, as determined by the Fronting Banks and the Canadian Administrative
Agent, equal to the face amount of all outstanding Canadian Revolving Facility
Letters of Credit plus the sum of all projected contractual obligations to the
Canadian Administrative Agent, the Fronting Banks and the Lenders of the
Canadian Borrower thereunder through the expiration date(s) of such
Letters of Credit, and (y) 105% of the aggregate Canadian Letter of Credit
Outstandings (net of the amount of cash held in the Canadian Letter of Credit
Account), to be held in the Canadian Letter of Credit Account as cash
collateral for such Obligations; sixth, to payment of any amounts owing
with respect to Banking Services Obligations and Swap Obligations owed by any
Canadian Loan Party; seventh, to the payment of any other Canadian Secured
Obligation due to the Agents or any Lender by the Loan Parties; and eighth,
solely with respect to any remaining proceeds of Collateral of the Canadian
Borrower, to the extent permitted by applicable law and not otherwise
prohibited by any court order, to the payment of any other Secured Obligations
in the amounts and in the priorities set forth in Section 2.15(d).


 


(f)            Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by a
Borrower, or unless a Default or Event of Default is in existence, neither the
Applicable Agent nor any Lender shall apply any payment which it receives to
any Eurodollar Loan or Discount Rate Loan of a Class, except (a) on the
expiration date of the Interest Period applicable to any such Eurodollar Loan
or Contract Period applicable to any such Discount Rate Loan or (b) in the
event, and only to the extent, that there are no outstanding ABR Loans or
Canadian Prime Rate Loans of the same Class and, in any such event, the
Loan Parties shall pay the break funding payment required in accordance with Section 2.15(b).
The Agents and the Lenders shall have the continuing and exclusive right to
apply and reverse and reapply any and all such proceeds and payments to any
portion of the Secured Obligations.


 


(g)           At
all times when full cash dominion is in effect pursuant to Section 5.7,
on each Business Day, (i) the Administrative Agent shall apply all funds
credited to the Concentration Account the previous Business Day to prepay the
U.S. Revolving Loans and (ii) the Canadian Administrative Agent shall
apply all funds credited to the Canadian Concentration Account the previous
Business Day to prepay the Canadian Revolving Loans.


 


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Section 2.16          Reserve Requirements;
Change in Circumstances.


 


(a)           Notwithstanding
any other provision herein, if after the Closing Date any change in applicable
law or regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof (whether or not having the force of law) shall change the basis of
taxation of payments to any Lender of the principal of or interest on any
Eurodollar Loan or Discount Rate Loan made by such Lender or any fees or other
amounts payable hereunder (other than changes in respect of Taxes, Other Taxes
and taxes imposed on, or measured by, the net income or net profits or
franchise taxes of such Lender in each case imposed by the jurisdiction in
which such Lender is organized, has its principal office, or in which the
applicable lending office for such Loan is located or by any political
subdivision or taxing authority therein, or by any other jurisdiction or by any
political subdivision or taxing authority therein other than a jurisdiction in
which such Lender would not be subject to tax but for the execution and
performance of, or receipt of payment and enforcement of rights under, this
Agreement or any other Loan Document), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by such Lender
(except any such reserve requirement which is reflected in the Adjusted LIBO
Rate) or shall impose on such Lender or the applicable interbank market any
other condition affecting this Agreement or the Eurodollar Loans or Discount
Rate Loans made by such Lender, and the result of any of the foregoing shall be
to increase the cost to such Lender of making or maintaining any Loan or to
reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise) by an amount deemed by such
Lender to be material, then the Borrowers will pay to such Lender in accordance
with paragraph (c) below such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction
suffered.


 


(b)           If
any Lender shall have determined that the adoption or effectiveness after the
Closing Date of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
any Lender’s holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender’s capital or on the capital of such Lender’s
holding company, if any, as a consequence of this Agreement, the Loans made by
such Lender pursuant hereto, such Lender’s Commitment hereunder or the issuance
of, or participation in, any Letter of Credit by such Lender to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such adoption, change or compliance (taking into account Lender’s policies
and the policies of such Lender’s holding company with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time to
time the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender or such Lender’s holding company for any such
reduction suffered.


 


(c)           A
certificate of each Lender setting forth such amount or amounts as shall be
necessary to compensate such Lender or its holding company as specified in
paragraph (a) or (b) above, as the case may be, shall be delivered to
the Borrowers and shall be conclusive absent 


 


74

















 


manifest
error.  The Borrowers shall pay each
Lender the amount shown as due on any such certificate delivered to it within
ten (10) days after its receipt of the same.  Any Lender receiving any such payment shall
promptly make a refund thereof to the Borrowers if the law, regulation,
guideline or change in circumstances giving rise to such payment is
subsequently deemed or held to be invalid or inapplicable.


 


(d)           Except
as provided in the next sentence, failure on the part of any Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of such Lender’s right to demand compensation with
respect to such period or any other period. Notwithstanding anything to the
contrary set forth herein, unless a Lender gives notice to a Borrower that it
is obligated to pay an amount under this Section 2.16 within 270
days after the increased cost or reduced return giving rise to such a claim is
incurred or suffered, then such Lender shall only be entitled to be compensated
to the extent that such increased cost or reduced return is incurred or
suffered within the 270-day period before such Lender gives such notice to the
Borrower; provided that if the circumstances giving rise to such a claim have a
retroactive effect, then such 270-day period shall be extended to include the
period of such retroactive effect.  The
protection of this Section shall be available to each Lender regardless of
any possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.


 


Section 2.17          Change
in Legality


 


(a)           Notwithstanding
anything to the contrary contained elsewhere in this Agreement, if (x) any
change after the Closing Date in any law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration thereof
shall make it unlawful for a Lender to make or maintain a Eurodollar Loan or
Discount Rate Loan or to give effect to its obligations as contemplated hereby
with respect to a Eurodollar Loan or Discount Rate Loan or (y) at any time
any Lender determines that the making or continuance of any of its Eurodollar
Loans or Discount Rate Loans has become impracticable as a result of a
contingency occurring after the Closing Date which adversely affects the
applicable interbank market or the position of such Lender in such market,
then, by written notice to the Borrowers, such Lender may (i) declare that
Eurodollar Loans or Discount Rate Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrowers for a (A) Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR Loan
unless such declaration shall be subsequently withdrawn and, (B) a
Borrowing comprised of Discount Rate Loans shall, as to such Lenders only, be
deemed a request for a Canadian Prime Rate Loan unless such declaration shall
be subsequently withdrawn; and (ii) require that all outstanding (A) Eurodollar
Loans made by it be converted to ABR Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans as of the effective date of
such notice as provided in paragraph (b) below, and (B) Discount Rate
Loans made by it be converted to Canadian Prime Rate Loans, in which event all
such Discount Rate Loans shall be automatically converted to Canadian Prime
Rate Loans as of the effective date of such notice as provided in paragraph (b) below.  In the event any Lender shall exercise its
rights under clause (i) or (ii) of this paragraph (a), all payments
and prepayments of principal which would otherwise have been applied to repay
the Eurodollar Loans or Discount Rate Loans, as the case may be, that would
have been made by such Lender or the converted Eurodollar Loans or Discount
Rate Loans, as 


 


75

















 


the case may
be, of such Lender shall instead be applied to repay the ABR Loans or Canadian
Prime Rate Loans, as the case may be, made by such Lender in lieu of, or
resulting from the conversion of, such Eurodollar Loans or Discount Rate Loans,
as the case may be.


 


(b)           For
purposes of this Section 2.17, a notice to the Borrowers by any
Lender pursuant to paragraph (a) above shall be effective, if lawful, and
if any Eurodollar Loans or Discount Rate Loans, as the case may be, shall then
be outstanding, on the last day of the then-current Interest Period or Contract
Period, otherwise, such notice shall be effective on the date of receipt by the
Borrowers.


 


Section 2.18          Pro
Rata Treatment, etc.


 


(a)           All
payments and repayments of principal and interest in respect of the Loans
(except as expressly provided in Section 2.14, Section 2.15,
Section 2.16, Section 2.17 and ARTICLE 11) and
all payments of Letter of Credit Fees (other than those payable to a Fronting
Bank) for Letters of Credit shall be made pro rata among the applicable Lenders
in accordance with their respective applicable Commitments (provided that in
the case of Term Loans or in the event that such Commitments shall have expired
or been terminated, such pro rata allocation shall be based on the respective
principal amounts of the outstanding Loans or participations in Letters of
Credit).  All payments of Commitment Fees
shall be made pro rata among the Lenders in accordance with their
Commitments.  All payments by the
Borrowers hereunder shall be (i) except as otherwise provided in Section 2.19,
net of any tax applicable to the Borrowers and (ii) made in Dollars or
Canadian Dollars (as applicable) in immediately available funds, without
defense, setoff or counterclaim and free of any restriction or condition, at
the office of the Applicable Agent by 12:00 Noon, New York City time, on the
date on which such payment shall be due. 
Interest in respect of any Loan hereunder shall accrue from and
including the date of such Loan to but excluding the date on which such Loan is
paid in full or converted to a Loan of a different Type.


 


(b)           Unless
the Applicable Agent shall have received notice from the applicable Borrower
prior to the date on which any payment is due to the Applicable Agent for the
account of the Lenders or a Fronting Bank hereunder that the Borrower will not
make such payment, the Applicable Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or a Fronting Bank, as the case may be,
the amount due.  In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or a
Fronting Bank, as the case may be, severally agrees to repay to the Applicable
Agent forthwith on demand the amount so distributed to such Lender or Fronting
Bank with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Applicable Agent, at the greater of the Federal Funds Effective Rate and a rate
determined by the Applicable Agent in accordance with banking industry rules on
interbank compensation.


 


(c)           If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.4(e) or 2.4(g), Section 2.7(b), 2.7(c),
2.7(d) or 2.7(e), Section 2.18(b) or Section 9.6(b),
then the Applicable Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Applicable
Agent for the account 


 


76

















 


of such Lender
to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.


 


Section 2.19          Taxes


 


(a)           Except
as otherwise provided in this Section 2.19, any and all payments by
the Loan Parties hereunder and under any other Loan Document shall be made free
and clear of and without deduction for any and all current or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on or measured by the net income or
net profit of an Agent, a Fronting Bank or any Lender (or any transferee or
assignee thereof, including a participation holder (any such entity being
called a “Transferee”)) and
franchise taxes, in each case imposed on an Agent, a Fronting Bank or any
Lender (or Transferee) by the jurisdiction under the laws of which such Agent,
such Fronting Bank or any such Lender (or Transferee) is organized or in which
the applicable lending office of any such Lender (or Transferee) or applicable
office of such Agent or such Fronting Bank, is located or any political
subdivision thereof or by any other jurisdiction or by any political
subdivision or taxing authority therein other than a jurisdiction in which such
Agent, such Fronting Bank or such Lender (or Transferee) would not be subject
to tax but for the execution and performance of, the receipt of payment and the
enforcement of rights under this Agreement or any other Loan Document (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”).  If the
Loan Parties shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to the Lenders (or any Transferee), a Fronting Bank
or the Agents, (i) the sum payable shall be increased by the amount
necessary so that after making all required deductions (including deductions applicable
to additional sums payable under this Section) such Lender (or Transferee),
such Fronting Bank or such Agent (as the case may be) shall receive an amount
equal to the sum it would have received had no such deductions been made, (ii) the
Loan Parties shall make such deductions and (iii) the Loan Parties shall
pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law.


 


(b)           In
addition, the Loan Parties agree to pay any current or future stamp or
documentary taxes or any other excise or property taxes, charges, assessments
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as “Other Taxes”).


 


(c)           The
Borrowers will indemnify each Lender (or Transferee), each Fronting Bank and
each Agent for the full amount of Taxes and Other Taxes paid by such Lender (or
Transferee), such Fronting Bank or such Agent, as the case may be, and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted by the relevant taxing authority or other Governmental
Authority.  Such indemnification shall be
made within thirty (30) days after the date any Lender (or Transferee), any
Fronting Bank or any Agent, as the case may be, makes written demand therefor.  If any Lender (or Transferee), Fronting Bank
or Agent receives a refund in respect of any Taxes or Other Taxes as to which
it has been indemnified by the Loan Parties pursuant to this Section, and in
such Lender’s (or Transferee’s), Fronting Bank’s or Agent’s opinion, such
refund amount is both reasonably identifiable and quantifiable by it 


 


77

















 


without
unacceptable administrative burden, it shall promptly notify the Loan Parties
of such refund and shall, within thirty (30) days after receipt of a request by
the Loan Parties (or promptly upon receipt, if the Loan Parties have requested
application for such refund pursuant hereto), repay such refund to the Loan
Parties (to the extent of amounts that have been paid by the Loan Parties under
this Section with respect to such refund) plus interest that is received
by the Lender (or Transferee), Fronting Bank or such Agent as part of the
refund, net of all taxes and out-of-pocket expenses of such Lender (or
Transferee), Fronting Bank or such Agent and without additional interest
thereon; provided that the Loan Parties, upon the request of such Lender
(or Transferee), such Fronting Bank, or such Agent, agree to return such refund
(plus penalties, interest or other charges) to such Lender (or Transferee),
Fronting Bank or the Administrative Agent in the event such Lender (or
Transferee), such Fronting Bank, or such Agent is required to repay such
refund.  Nothing contained in this sub-Section (c) shall
interfere with the right of any Lender (or Transferee), Fronting Bank or any
Agent to arrange its affairs in any manner it thinks fit and, in particular, no
Lender (or Transferee), Fronting Bank or Agent shall be under any obligation to
claim relief for tax purposes on its corporate profits or otherwise, or to
claim such relief in priority to any other claims, reliefs, credits or
deductions available to it, or to require any Lender (or Transferee), any
Fronting Bank or any Agent to make available any of its tax returns (or any
other information relating to its taxes that it deems to be confidential) to
any Loan Party or any other Person.


 


(d)           Within
thirty (30) days after the date of any payment of Taxes or Other Taxes withheld
by the Loan Parties in respect of any payment to any Lender (or Transferee),
any Fronting Bank or any Agent, the Loan Parties will furnish to the
Administrative Agent, at its address referred to on the signature pages hereof,
the original or a certified copy of a receipt evidencing payment thereof or
such other evidence of payment as shall be satisfactory to the Agent or the
Lender (or Transferee).


 


(e)           Without
prejudice to the survival of any other agreement contained herein, the
agreements and obligations contained in this Section shall survive the
payment in full of the principal of and interest on all Loans made hereunder.


 


(f)            Each
Lender (and Transferee), each Fronting Bank and each Agent shall on or prior to
the Closing Date (in the case of each Lender and Agent listed on the signature pages hereof
on the Closing Date) or on or prior to the date of the Assignment and
Acceptance pursuant to which it becomes a Lender (in the case of each other
Lender), deliver to the Loan Parties and the Administrative Agent such
certificates, documents and other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including, if a United States Person (as
such term is defined in Section 7701(a)(30) of the Code), two original
copies of (A) Internal Revenue Service Form W-9 (unless such Lender
(or Transferee), Fronting Bank or Agent is an “exempt recipient” as defined in
Treasury Regulations Section 1.6049-4(c) for which no withholding is
required) and, if not a United States Person (as such term is defined in Section 7701(a)(30)
of the Code), two original copies of (B) Internal Revenue Service Forms
W-8BEN, W-8IMY, or W-8ECI and any other certificate or statement of exemption
required by the applicable Treasury Regulations, properly completed and duly
executed by such Lender (or Transferee), Fronting Bank or such Agent to establish
that such payment is not subject to United States Federal withholding tax under
the Code.  In addition, each Lender (and
Transferee), each Fronting Bank, and each Agent agrees that from time to time
after the Closing Date or the date of 


 


78

















 


the Assignment
and Acceptance pursuant to which it becomes a Lender, whenever a lapse in time
or change in circumstances renders such forms or other documents obsolete or
inaccurate in any material respect, such Lender (and Transferee), such Fronting
Bank, or such Agent shall, to the extent permitted under applicable law,
promptly deliver to the Loan Parties such replacement forms or other documents
or notify the Loan Parties of its inability to deliver any such forms or other
documents.  Unless the Loan Parties and
the Administrative Agent have received forms or other documents satisfactory to
them indicating that such payments hereunder are not subject to United States
Federal withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Loan Parties or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate.


 


(g)           The
Loan Parties shall not be required to pay any additional amounts to any Lender
(or Transferee), any Fronting Bank or any Agent in respect of United States
Federal withholding tax pursuant to sub-Section(a) above if the obligation
to pay such additional amounts would not have arisen but for a failure by such
Lender (or Transferee), such Fronting Bank or such Agent to comply with the
provisions of sub-Section (f) above.


 


(h)           Any
Lender (or Transferee), Fronting Bank or Agent claiming any additional amounts
payable pursuant to this Section 2.19 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file or deliver to the
applicable Loan Party with a copy to the Administrative Agent any certificate
or document reasonably requested by the Loan Parties if the making of such
delivery or such a filing would avoid the need for or reduce the amount of any
such additional amounts that may thereafter accrue and would not, in the sole
determination of such Lender (or Transferee), such Fronting Bank or such Agent,
be otherwise materially disadvantageous to such Lender (or Transferee),
Fronting Bank or such Agent.


 


(i)            For
greater certainty, no failure to provide such information, make such filing or
change such lending office shall relieve any Loan Party of any of its
obligations hereunder.


 


Section 2.20          Certain
Fees.  The Borrowers shall pay to the
Administrative Agent, for the respective accounts of the Administrative Agent
and the Lenders, the fees set forth in (i) that certain fee letter dated January 6,
2009 among the Administrative Agent, J.P. Morgan Securities Inc. and the
Parent, (ii) that certain fee letter dated January 6, 2009 among the
Administrative Agent, the Co-Lead Arrangers, Deutsche Bank Trust Company
Americas and the Parent, and (iii) that certain participation fee letter
dated January 23, 2009 among the Administrative Agent, the Co-Lead
Arrangers, Deutsche Bank Trust Company Americas and the Parent, in each case at
the times set forth therein; provided, that if the Canadian Borrower
would otherwise pay any of the fees described in this Section 2.20
to the Administrative Agent with respect to any services provided in Canada by
the Canadian Administrative Agent or the Canadian Collateral Agent, it shall
pay such portion of the fee directly to the Canadian Administrative Agent or
the Canadian Collateral Agent, as the case may be.


 


Section 2.21          Commitment
Fee.  The applicable Borrower shall
pay to the Applicable Agent on behalf of the U.S. Revolving Lenders and the
Canadian Revolving Lenders a commitment fee (the “Commitment
Fee”) for the period commencing on the Closing Date and
ending on the Termination Date or the earlier date of termination of the
Commitments calculated 


 


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(on the basis of the actual number of days
elapsed over a year of 360 days) at a rate equal to the Commitment Fee
Percentage on the average daily Unused Revolving Commitment during the
preceding quarter.  For the avoidance of
doubt, the Commitment Fee shall cease to accrue on any portion of the Unused
Revolving Commitment on the date such portion is converted to a U.S. Term Loan
pursuant to Section 9.23(a) or to a Canadian Term Loan
pursuant to Section 9.23(c). 
Such Commitment Fee, to the extent then accrued, shall be payable (x) monthly,
in arrears, on the last calendar day of each month, (y) on the Termination
Date and (z) as provided in Section 2.11 hereof, upon any
reduction or termination in whole or in part of the Total Revolving Commitment.


 


Section 2.22          Letter of Credit Fees.  The applicable Borrower shall pay with
respect to each Letter of Credit (i) to the Applicable Agent on behalf of
the U.S. Tranche B Revolving Lenders and the Canadian Revolving Lenders, as
applicable, a fee calculated (from the date issued on the basis of the actual
number of days elapsed over a year of 360 days) at a rate equal to the
Applicable Margin on the undrawn stated amount thereof, and (ii) to the
applicable Fronting Bank such Fronting Bank’s customary fees for issuance,
amendments and processing referred to in Section 2.4.  In addition, the applicable Borrower shall
pay each Fronting Bank for its account a fronting fee in respect of each Letter
of Credit issued by such Fronting Bank, for the period from the date issued to
and including the date of termination of such Letter of Credit, computed at a rate
per annum equal to 0.25%, or, if such Fronting Bank is a bank other than JPMCB,
as separately agreed by the Borrowers and such Fronting Bank.  Accrued fees described in clause (i) of
the first sentence of this paragraph in respect of each Letter of Credit shall
be due and payable monthly in arrears on the last calendar day of each month
and on the Termination Date, or such earlier date as the Total Revolving
Commitment is terminated.  Accrued fees
described in clause (ii) of the first sentence of this paragraph in
respect of each Letter of Credit shall be payable at times to be determined by
the Fronting Banks, the Borrowers and the Administrative Agent.


 


Section 2.23          Nature
of Fees.All Fees shall be paid on the dates due, in immediately available
funds, to the Applicable Agent for the respective accounts of the Applicable
Agent and the Lenders, as provided herein and in the letters described in Section 2.20.  Once paid, none of the Fees shall be
refundable under any circumstances.


 


Section 2.24          Priority
and Liens


 


(a)           Each
of the Loan Parties hereby covenants and agrees that the Secured Obligations of
the Loan Parties hereunder and under the Loan Documents, the U.S. Guaranteed
Obligations and the Canadian Guaranteed Obligations of each of the Loan Parties
as follows:


 


(i)            With respect to the
Secured Obligations of the U.S. Loan Parties and the Canadian Borrower:


 


(A)          in the U.S. Cases
pursuant to Section 364(c)(1) of the Bankruptcy Code, such Secured
Obligations shall at all times constitute an allowed Superpriority Claim and be
payable from and have recourse to all pre-petition and post-petition property
of the estates of the U.S. Loan Parties and 


 


80

















 


the Canadian Borrower and all
proceeds thereof (including, upon entry of the Final Order, any proceeds of
Avoidance Actions), and which Superpriority Claim shall be senior to the
Superpriority Claim granted to the Pre-Petition Agent and the Pre-Petition
Secured Lenders pursuant to Section 2.24(d) below;


 


(B)           in the U.S. Cases
pursuant to Section 364(c)(2) of the Bankruptcy Code, such Secured
Obligations shall at all times be secured by a perfected first priority Lien on
all unencumbered property of the U.S. Loan Parties and the Canadian Borrower
(including, upon entry of the Final Order, any proceeds of Avoidance Actions)
and on all cash maintained in any Collateral Account and any investments of the
funds contained therein, provided that amounts in the Collateral Accounts shall
not be subject to the Carve-Out or the CCAA Charges;


 


(C)           in the U.S. Cases
pursuant to Section 364(c)(3) of the Bankruptcy Code, such Secured
Obligations shall be secured by a perfected junior Lien upon all property of
the U.S. Loan Parties and the Canadian Borrower that is subject to valid and
perfected Liens in existence on the Filing Date or that is subject to valid
Liens in existence on the Filing Date that are perfected subsequent to the
Filing Date as permitted by Section 546(b) of the Bankruptcy Code
(other than certain property that is subject to the existing Liens that secure
obligations under the Pre-Petition Credit Agreement, which liens shall be
primed by the liens to be granted to the Administrative Agent described in the
following clause (D));


 


(D)          in the U.S. Cases
pursuant to Section 364(d)(1) of the Bankruptcy Code, such Secured
Obligations shall be secured by a perfected first priority, senior priming Lien
on all of the property of the U.S. Loan Parties and the Canadian Borrower
(including, without limitation, cash, inventory, receivables, rights under
license agreements, property, plant and equipment and the residual interest of
the U.S. Loan Parties and the Canadian Borrower in any Receivables
Securitization Programs) that is subject to the existing liens which secure (1) the
obligations of the Loan Parties under or in connection with the Pre-Petition
Credit Agreement, and (2) other Liens, obligations or indebtedness of the
Loan Parties junior to the Pre-Petition Credit Agreement (collectively, the “Primed Liens”), which Primed Liens
shall be primed by and made subject 


 


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and subordinate to the
perfected first priority senior priming Liens to be granted to the
Administrative Agent, which senior priming Liens in favor of the Administrative
Agent shall also prime any Liens granted after the commencement of the Cases to
provide adequate protection Liens in respect of any of the Primed Liens, but
shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other
Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an
aggregate amount less than or equal to US$60,000,000; and


 


(E)           in the Canadian Cases,
pursuant to an order of the Canadian Court, in respect of the Secured
Obligations of the Canadian Borrower, such Secured Obligations will be secured
by a superpriority charge and senior priming security interest (“CCAA DIP Lenders’ Charge”) over all of
the present and future assets of the Canadian Borrower with priority over all
existing liens and security, including the Primed Liens; and


 


(ii)           With respect to the
Canadian Secured Obligations of the Canadian Loan Parties:


 


(A)          in the U.S. Cases
pursuant to Section 364(c)(1) of the Bankruptcy Code, such Secured
Obligations shall at all times constitute an allowed Superpriority Claim and be
payable from and have recourse to all pre-petition and post-petition property
of the estates of the Canadian Loan Parties and all proceeds thereof
(including, upon entry of the Final Order, any proceeds of Avoidance Actions),
and which Superpriority Claim shall be senior to the Superpriority Claim
granted to the Pre-Petition Agent and the Pre-Petition Secured Lenders pursuant
to Section 2.24(d) below;


 


(B)           in the U.S. Cases
pursuant to Section 364(c)(2) of the Bankruptcy Code, such Secured
Obligations shall at all times be secured by a perfected first priority Lien on
all unencumbered property of the Canadian Loan Parties (including, upon entry
of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained
in any Collateral Account and any investments of the funds contained therein,
provided that amounts in the Collateral Accounts shall not be subject to the
Carve-Out or the CCAA Charges;


 


82
















 


(C)           in the U.S. Cases
pursuant to Section 364(c)(3) of the Bankruptcy Code, such Secured
Obligations shall be secured by a perfected junior Lien upon all property of
the Canadian Loan Parties that is subject to valid and perfected Liens in
existence on the Filing Date or that is subject to valid Liens in existence on
the Filing Date that are perfected subsequent to the Filing Date as permitted
by Section 546(b) of the Bankruptcy Code (other than certain property
that is subject to the existing Liens that secure obligations under the
Pre-Petition Credit Agreement, which liens shall be primed by the liens to be
granted to the Administrative Agent described in the following clause (D));


 


(D)          in the U.S. Cases
pursuant to Section 364(d)(1) of the Bankruptcy Code, such Secured
Obligations shall be secured by a perfected first priority, senior priming Lien
on all of the property of the Canadian Loan Parties (including, without
limitation, cash, inventory, receivables, rights under license agreements,
property, plant and equipment and the residual interest of the Canadian Loan
Parties in any Receivables Securitization Programs) that is subject to the
Primed Liens, which Primed Liens shall be primed by and made subject and
subordinate to the perfected first priority senior priming Liens to be granted
to the Administrative Agent, which senior priming Liens in favor of the
Administrative Agent shall also prime any Liens granted after the commencement
of the Cases to provide adequate protection Liens in respect of any of the
Primed Liens, but shall not prime (1) Non-Primed Liens which secure the
Calpine Debt or (2) other Non-Primed Liens solely to the extent such
Non-Primed Liens secure claims in an aggregate amount less than or equal to
US$60,000,000; and


 


(E)           in the Canadian Cases,
pursuant to an order of the Canadian Court, such Secured Obligations will be
secured by the CCAA DIP Lenders’ Charge over all of the present and future
assets of the Canadian Loan Parties with priority over all existing liens and
security, including the Primed Liens;


 


subject in
each case only to the following:


 


(x)           with respect to the
Cases and assets of the U.S. Loan Parties, (x) in the event of the
occurrence and during the continuance of an Event of Default or an event that
would constitute an Event of Default 


 


83

















 


with the giving of notice or
lapse of time or both (a “Default”),
the payment of allowed and unpaid professional fees and disbursements incurred
by (A) the U.S. Loan Parties and (B) any statutory committees
appointed in the Cases of the U.S. Loan Parties, in an aggregate amount of
items (A) and (B) not in excess of the lesser of (I) US$4,000,000
(plus all unpaid professional fees and disbursements reported on the Borrowing
Base Certificate delivered immediately prior to the occurrence of such Default
or Event of Default, to the extent such fees and expense are subsequently
allowed by the Bankruptcy Court), and (II) US$6,500,000, and (y) the
payment of fees pursuant to 28 U.S.C. § 1930 and to the Clerk of the Bankruptcy
Court ((x) and (y), collectively, the “Carve-Out”);


 


(y)           the CCAA DIP Lenders’
Charge in the assets of the Canadian Loan Parties in the Canadian Cases will be
subject to the court ordered administration charge in an aggregate amount not
in excess of US$1,000,000 (the “Administration Charge”)
for the payment of (a) allowed and unpaid professional fees and
disbursements incurred by professionals retained by the Canadian Loan Parties
and (b) allowed and unpaid professional fees and disbursements of the
monitor in the Canadian Cases including allowed and unpaid legal fees and
expenses of its counsel (and including any allowed and unpaid professional fees
and disbursements incurred by the parties referred to in (a) and (b),
prior to the occurrence of such Event of Default); and


 


(z)            the CCAA DIP Lenders’
Charge in the assets of the Canadian Loan Parties in the Canadian Cases will
also be subject to the Canadian Court ordered directors charge in an amount not
exceeding US$8,600,000 (the “Directors Charge”),
securing the Canadian Loan Parties’ obligation to indemnify the officers and
directors of the Canadian Loan Parties for personal liability which may arise
from non-payment by the Canadian Loan Parties of the following (which shall be
separately identified on the most recent Borrowing Base Certificate): (a) all
outstanding and future wages, salaries, employee and pension benefits, vacation
pay, bonuses and expenses payable on or after the Filing Date, in each case
incurred in the ordinary course of business and consistent with existing
compensation policies and arrangements; (b) any statutory deemed trust
amounts in favour of the Crown in right of Canada or of any Province thereof or
any other taxation authority which are required to be deducted from employees’
wages, including, without limitation, amounts in respect of (i) employment
insurance, (ii) Canada Pension Plan, (iii) Quebec Pension Plan, and (iv) income
taxes; (c) all goods and services or other applicable sales taxes 


 


84

















 


required to be remitted by the
Canadian Loan Parties in connection with the sale of goods and services by the
Canadian Loan Parties, but only where such sales taxes are accrued or collected
after the Filing Date, or where such sales taxes were accrued or collected
prior to the Filing Date but are not required to be remitted until on or after
the Filing Date; and (d) any amount payable to the Crown in right of
Canada or of any Province thereof or any political subdivision thereof or any
other taxation authority in respect of municipal realty, municipal business or
other taxes, assessments or levies of any nature or kind which are entitled at
law to be paid in priority to claims of secured creditors and which are
attributable to or in respect of the carrying on of the business by the
Canadian Loan Parties;


 


provided
that no portion of the Carve-Out shall be utilized for the payment of
professional fees and disbursements incurred in connection with any challenge
to the amount, extent, priority, validity, perfection or enforcement of (A) the
Indebtedness of the Loan Parties owed to the parties primed by the priming
Liens or to the collateral securing such Indebtedness or any other action
against such parties or (B) the Secured Obligations.  Amounts in the Collateral Accounts shall not
be subject to the Carve-Out.  By
execution hereof, the Loan Parties hereby consent to the priming Liens referenced
in clauses (i)(D) and (ii)(D) above. 
Notwithstanding the foregoing, so long as no Default or Event of Default
shall have occurred and be continuing, the Loan Parties shall be permitted to
pay compensation and reimbursement of expenses allowed and payable under 11
U.S.C. §§ 328, 330 and 331, or as allowed and payable pursuant to orders of the
Canadian Court, as the same may be due and payable, and any compensation and
expenses previously paid, or accrued but unpaid, prior to the occurrence of
such Default or Event of Default shall not reduce the Carve-Out or the Administration
Charge.


 


(b)           As
a component of adequate protection, the administrative agents under the
Pre-Petition Credit Agreement (collectively, the “Pre-Petition Agent”) shall receive from the applicable
Borrowers (i) following the Closing Date, immediate cash payment of all
accrued and unpaid interest (including any pre-petition interest) on the
obligations of such Borrower under the Pre-Petition Credit Agreement (the “Pre-Petition Debt”) and letter of
credit fees at the non-default contract rate applicable on the Filing Date as
provided for in the Pre-Petition Credit Agreement, and all other accrued and
unpaid fees and disbursements (including, but not limited to, fees and expenses
owed to the Pre-Petition Agent and incurred prior to the Filing Date), (ii) current
cash payments of all fees and expenses owing by such Borrower payable to the
Pre-Petition Agent under the Pre-Petition Credit Agreement, including, but not
limited to, the reasonable fees and disbursements of counsel, financial and
other consultants for the Pre-Petition Agent (including, but not limited to,
such fees and disbursements incurred prior to the Filing Date), and (iii) current
cash payments of all accrued but unpaid interest on the Pre-Petition Debt owing
by such Borrower, and letter of credit and other fees, in each case at the
non-default contract rate applicable on the Filing Date (including LIBOR
pricing options) under the Pre-Petition Credit Agreement, provided that,
without prejudice to the rights of any other party to contest such assertion,
the lenders under the Pre-Petition Credit Agreement (the “Pre-Petition Secured Lenders”) reserve
their rights to assert claims for the payment of additional interest 


 


85

















 


calculated at
any other applicable rate of interest (including, without limitation, default
rates), or on any other basis, provided for in the Pre-Petition Credit
Agreement.


 


(c)           As
a further component of adequate protection, to the extent of the diminution in
the value of collateral on the Petition Date securing the Pre-Petition Debt,
including use of cash collateral, the Pre-Petition Agent and the Pre-Petition
Secured Lenders shall be granted junior replacement security interests in and
Liens upon all of the property of the U.S. Loan Parties (including, upon entry
of the Final Order, any proceeds of Avoidance Actions), which security
interests and Liens shall be subject to the Carve-Out and shall be junior to
the security interest in and Liens upon the property of the U.S. Loan Parties
granted under Section 364(d)(1) of the Bankruptcy Code for the
benefit of the Administrative Agent and the Lenders.


 


(d)           As
a further component of adequate protection, the Pre-Petition Agent and the
Pre-Petition Secured Lenders shall be granted, subject to the payment of the
Carve-Out, a Superpriority Claim in an amount equal to the diminution in the
value of collateral on the Filing Date securing the indebtedness under the
Pre-Petition Credit Agreement, as provided for in section 507(b) of the
Bankruptcy Code, immediately junior to the claims under section 364(c)(1) of
the Bankruptcy Code held by the Administrative Agent and the Lenders and
payable from all property of the U.S. Loan Parties; provided, however,
that the Pre-Petition Agent and the Pre-Petition Secured Lenders shall not
receive or retain any payments, property or other amounts in respect of the
Superpriority Claims under section 507(b) of the Bankruptcy Code unless
and until payment in full of all Secured Obligations of the U.S. Loan Parties.


 


(e)           Subject
to the priorities set forth in subsection (a) above and to the Carve-Out,
in the case of the U.S. Loan Parties, or the Administration Charge, in the case
of the Canadian Loan Parties, as to all real property the title to which is
held by a Loan Party, or the possession of which is held by a Loan Party
pursuant to leasehold interest, the Loan Parties hereby assign and convey as
security, grant a security interest in, hypothecate, mortgage, pledge and set
over unto each Applicable Agent, on behalf of the Secured Parties all of the
right, title and interest of the Loan Parties, in all of such owned real
property and in all such leasehold interests, together in each case with all of
the right, title and interest of the Loan Parties in and to all buildings,
improvements, and fixtures related thereto, any lease or sublease thereof, all
general intangibles relating thereto and all proceeds thereof.  Each Loan Party acknowledges that, pursuant
to the Orders, the Liens in favor of the Applicable Agents on behalf of the
Secured Parties in all of such real property and leasehold instruments of the
Loan Parties shall be perfected without the recordation of any instruments of
mortgage or assignment.  The Loan Parties
further agree that, upon the request of the Administrative Agent, in the
exercise of its business judgment, the Loan Parties shall enter into separate
fee mortgages in recordable form with respect to such properties and other
Collateral Documents, each on terms satisfactory to the Administrative Agent; provided,
however, that no U.S. Loan Party shall be required to pledge in excess
of 65% of the capital stock of its direct Foreign Subsidiaries (other than
capital stock of the Canadian Borrower) or any of the capital stock of any
indirect Foreign Subsidiaries.


 


(f)            To
the extent any Loan Party makes aggregate payments to the Lenders in excess of
the aggregate amount of all Loans received by such Loan Party after the
commencement of the Cases, then such Loan Party, after the payment in full of
all Secured 


 


86

















 


Obligations
and the termination of the Revolving Commitment, shall be entitled to a claim
under Section 364(c)(1) of the Bankruptcy Code or the Initial Order,
as applicable, against each other Loan Party, in such amount as may be
determined by the Bankruptcy Court or the Canadian Court taking into account
the relative benefits received by each such person, and such claims shall be
deemed to be subordinate and junior in all respects to the superpriority claims
and charges of the Lenders and the superpriority claims granted as adequate
protection to the Primed Parties.


 


Section 2.25          Use
of Cash Collateral.  Notwithstanding
anything to the contrary contained herein, neither the U.S. Borrower nor the Canadian
Borrower shall be permitted to request a Borrowing under Section 2.7
unless the Loan Parties shall at that time have the use of substantially all
cash collateral subject to the Orders for the purposes described in Section 3.10.


 


Section 2.26          Right
of Set-Off.  Subject to the
provisions of Section 7.1, upon the occurrence and during the
continuance of any Event of Default, each Agent and each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law and without further order of or application to the Bankruptcy Court or
the Canadian Court, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by each such Agent and each such Lender to or
for the credit or the account of any Loan Party against any and all of the
Secured Obligations of such Loan Party now or hereafter existing under the Loan
Documents, irrespective of whether or not such Agent or such Lender shall have
made any demand under any Loan Document and although such obligations may not
have been accelerated.  Each Lender and
each Agent agrees promptly to notify the Loan Parties after any such set-off
and application made by such Lender or by such Agent, as the case may be, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.  The rights of
each Lender and each Agent under this Section are in addition to other
rights and remedies which such Lender and such Agent may have upon the
occurrence and during the continuance of any Event of Default.


 


Section 2.27          Security
Interest in Collateral Accounts.  The
Loan Parties, pursuant to Section 364(c)(2) of the Bankruptcy Code,
hereby assign and pledge to the Applicable Agent, for the ratable benefit of
the Secured Parties, and hereby grant to the Applicable Agent, for the ratable
benefit of the Secured Parties, a first priority security interest, senior to
all other Liens, if any, in all of the Loan Parties’ right, title and interest
in and to the Collateral Accounts and any investment of the funds contained
therein.  Cash held in the Letter of
Credit Account or the Canadian Letter of Credit Account shall not be available
for use by the Loan Parties, whether pursuant to Section 363 of the
Bankruptcy Code or otherwise.


 


Section 2.28          Payment
of Obligations.  Subject to the
provisions of Section 7.1, upon the maturity (whether by
acceleration or otherwise) of any of the Secured Obligations under this
Agreement or any other Loan Documents of the Loan Parties, the Lenders shall be
entitled to immediate payment of such Secured Obligations without further
application to or order of the Bankruptcy Court or the Canadian Court.  The Borrowers and the U.S. Loan Parties shall
be jointly and severally liable for payment of all Secured Obligations under
this Agreement or any of the other Loan Documents.  The U.S. Loan Parties and the Canadian Loan
Parties shall be jointly and severally liable for payment of all Canadian
Guaranteed Obligations under this Agreement or any of the other Loan Documents.


 


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Section 2.29          No
Discharge; Survival of Claims.  Each
of the Loan Parties agrees that (i) its obligations hereunder shall not be
discharged by the entry of an order (w) confirming a Reorganization Plan
in any of the Cases under the Bankruptcy Code or under the CCAA, (x) converting
any of the U.S. Cases to a case under Chapter 7 of the Bankruptcy Code or any
of the Canadian Cases to similar liquidation proceeding in the Canadian Cases, (y) dismissing
or terminating any of the Cases, or (z) appointing any trustee in
bankruptcy, interim receiver, receiver or receiver-manager or similar officer
or agent with respect to the Canadian Loan Parties (and each of the Loan
Parties, pursuant to Section 1141(d)(4) of the Bankruptcy Code,
hereby waives any such discharge) and (ii) the Superpriority Claims and
the CCAA DIP Lenders’ Charge granted to the Agents and the Lenders pursuant to
the Orders and described in Section 2.24 shall not be affected in
any manner by the entry of an order confirming a Reorganization Plan.


 


Section 2.30          Fifteen
Month Facility Extension Option.  The
Borrowers may extend the Maturity Date from January 28, 2010 to April 28,
2010 (the “Fifteen Month Facility Extension Option”)
subject to, and the Maturity Date shall be so extended upon satisfaction of,
the following conditions precedent:


 


(i)            the Borrowers shall
provide written notice to the Administrative Agent at least thirty (30) days
prior to January 28, 2010 of their intention to exercise the Fifteen Month
Facility Extension Option;


 


(ii)           the Borrowers shall pay
a fee to the Administrative Agent on or before the initial Maturity Date for
the account of the Lenders equal to 1.0% of the outstanding principal balance
of the Term Loans plus the then aggregate Commitments;


 


(iii)          the Loan Parties shall have filed with the Bankruptcy Court and the
Canadian Court a Reorganization Plan providing for the full repayment of the
Loans in cash upon consummation thereof;


 


(iv)          as of the initial
Maturity Date, (a) Excess Availability plus (b) the Loan
Parties’ Available Cash shall be at least US$150,000,000 of which Excess
Availability is not less than US$100,000,000 (taking into account the reduction
in the U.S. PP&E Component and Canadian PP&E Component to be effective
on January 28, 2010); and


 


(v)           no Default or Event of
Default shall have occurred and be continuing as of the initial Maturity Date.


 


The
Administrative Agent will notify the Borrowers and the Lenders upon the
effectiveness of the Fifteen Month Facility Extension Option.


 


Section 2.31          Eighteen
Month Facility Extension Option. 
Following exercise of the Fifteen Month Facility Extension Option, the
Borrowers may extend the Maturity Date from April 28, 2010 to July 28,
2010 (the “Eighteen Month Facility Extension Option”)
subject to, 


 


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and the Maturity Date shall be so extended
upon satisfaction of, the following conditions precedent:


 


(i)            the Borrowers shall
provide written notice to the Administrative Agent at least thirty (30) days
prior to April 28, 2010 of their intention to exercise the Eighteen Month
Facility Extension Option;


 


(ii)           the Borrowers shall pay
a fee to the Administrative Agent on or before April 28, 2010 for the
account of the Lenders equal to 1.0% of the outstanding principal balance of
the Term Loans plus the then aggregate Commitments;


 


(iii)          Required Lenders shall
have approved the extension of the Maturity Date to July 28, 2010;


 


(iv)          the Loan Parties shall
not have withdrawn from the Bankruptcy Court or the Canadian Court a
Reorganization Plan and confirmation or approval of such Reorganization Plan
shall not have been denied by the Bankruptcy Court or the Canadian Court, as
applicable, at any time prior to April 28, 2010;


 


(v)           as of April 28,
2010, (a) Excess Availability plus (b) the Loan Parties’
Available Cash shall be at least US$150,000,000 of which Excess Availability is
not less than US$100,000,000 (taking into account the reduction in the U.S.
PP&E Component and Canadian PP&E Component to be effective on April 28,
2010); and


 


(vi)          no Default or Event of
Default shall have occurred and be continuing as of April 28, 2010.


 


The
Administrative Agent will notify the Borrowers and the Lenders upon the
effectiveness of the Eighteen Month Facility Extension Option.


 


Section 2.32                             Mitigation
Obligations; Replacement of Lenders.


 


(a)           If
any Lender requests compensation under Section 2.16, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.19,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.16 or Section 2.19,
as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender.  The Borrowers hereby
agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.


 


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(b)           If
any Lender requests compensation under Section 2.16, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender) pursuant to Section 2.19,
or if any Lender becomes a Defaulting Lender, then the Borrowers may, at their
sole expense and effort, upon notice to such Lender and the Applicable Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Section 9.3), all
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrowers shall
have received the prior written consent of the Applicable Agent (and if a
Revolving Commitment is being assigned, the Fronting Banks), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in Letters of Credit, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.16
or payments required to be made pursuant to Section 2.19, such
assignment will result in a reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrowers to require
such assignment and delegation cease to apply.


 


Section 2.33          Defaulting
Lenders.  Notwithstanding any
provision of this Agreement to the contrary, if any Lender becomes a Defaulting
Lender, then the following provisions shall apply for so long as such Lender is
a Defaulting Lender:


 


(a)           fees
shall cease to accrue on the unfunded portion of the Revolving Commitment of
such Defaulting Lender pursuant to Section 2.21;


 


(b)           the
Commitment and Credit Exposure of such Defaulting Lender shall not be included
in determining whether all Lenders or the Required Lenders have taken or may
take any action hereunder (including any consent to any amendment or waiver
pursuant to Section 9.10), provided that any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender which
affects such Defaulting Lender differently than other affected Lenders shall
require the consent of such Defaulting Lender;


 


(c)           if
any LC Exposure exists at the time a Lender becomes a Defaulting Lender then:


 


(i)            all or any part of
such LC Exposure which pertains to the U.S. Letter of Credit Outstandings shall
be reallocated among the non-Defaulting Lenders having U.S. Tranche B Revolving
Commitments in accordance with their respective Applicable Percentages but only
to the extent (x) the sum of all non-Defaulting Lenders’ U.S. Tranche B
Revolving Loans plus all non-Defaulting Lenders’ LC Exposure in respect of U.S.
Letter of Credit Outstandings plus such Defaulting Lender’s LC Exposure in
respect of U.S. Letter of Credit Outstandings does not exceed the 


 


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total of all non-Defaulting
Lenders’ U.S. Tranche B Revolving Commitments and (y) the conditions set
forth in Section 4.2 are satisfied at such time;


 


(ii)           all or any part of such
LC Exposure which pertains to the Canadian Letter of Credit Outstandings shall
be reallocated among the non-Defaulting Lenders having Canadian Revolving Commitments
in accordance with their respective Applicable Percentages but only to the
extent (x) the sum of all non-Defaulting Lenders’ Canadian Revolving Loans
plus all non-Defaulting Lenders’ LC Exposure in respect of Canadian Letter of
Credit Outstandings plus such Defaulting Lender’s LC Exposure in respect of
Canadian Letter of Credit Outstandings does not exceed the total of all
non-Defaulting Lenders’ Canadian Revolving Commitments and (y) the
conditions set forth in Section 4.2 are satisfied at such time


 


(iii)          if the reallocation
described in clauses (i) or (ii) above cannot, or can only partially,
be effected, neither the Fronting Banks nor any Lender shall have any
obligation to issue new Letters of Credit under this Agreement unless the
Borrowers shall have cash collateralized such Defaulting Lender’s LC Exposure
(after giving effect to any partial reallocation pursuant to clauses (i) and
(ii) above) in accordance with the procedures set forth in Section 2.4(c) for
so long as such LC Exposure is outstanding;


 


(iv)          if the Borrowers cash
collateralize any portion of such Defaulting Lender’s LC Exposure pursuant to Section 2.33(c),
the Borrowers shall not be required to pay any fees to such Defaulting Lender
pursuant to Section 2.21 with respect to such Defaulting Lender’s
LC Exposure during the period such Defaulting Lender’s LC Exposure is cash
collateralized;


 


(v)           if the LC Exposure of
the non-Defaulting Lenders is reallocated pursuant to Section 2.33(c),
then the fees payable to the Lenders pursuant to Section 2.21 shall
be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages; or


 


(vi)          if any Defaulting Lender’s
LC Exposure is neither cash collateralized nor reallocated pursuant to Section 2.33(c),
then, without prejudice to any rights or remedies of any Fronting Bank or any
Lender hereunder, all letter of credit fees payable under Section 2.22
with respect to such Defaulting Lender’s LC Exposure shall be payable to such
Fronting Bank until such LC Exposure is cash collateralized or reallocated;


 


(d)           so
long as any Lender is a Defaulting Lender, no Fronting Bank shall be required
to issue, amend or increase any Letter of Credit, unless it is satisfied that
the related 


 


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exposure will
be 100% covered by the Commitments of the non-Defaulting Lenders or cash
collateral will be provided by the Borrowers in accordance with Section 2.33(c),
and participating interests in any such newly issued or increased Letter of
Credit shall be allocated among non-Defaulting Lenders in a manner consistent
with Section 2.33(c)(i) (and Defaulting Lenders shall not
participate therein); and


 


(e)           any
amount payable to such Defaulting Lender hereunder (whether on account of
principal, interest, fees or otherwise and including any amount that would
otherwise be payable to such Defaulting Lender pursuant to Section 2.26
but excluding Section 2.32(b)) shall, in lieu of being distributed
to such Defaulting Lender, be retained by the Applicable Agent in a segregated
account and, subject to any applicable requirements of law, be applied at such
time or times as may be determined by the Applicable Agent (i) first,
to the payment of any amounts owing by such Defaulting Lender to the Applicable
Agent hereunder, (ii) second, pro rata, to the payment of any
amounts owing by such Defaulting Lender to any Fronting Bank hereunder, (iii) third,
if so determined by the Applicable Agent or requested by a Fronting Bank, to be
held in such account as cash collateral for future funding obligations of the
Defaulting Lender of any participating interest in any Letter of Credit, (iv) fourth,
to the funding of any Loan in respect of which such Defaulting Lender has
failed to fund its portion thereof as required by this Agreement, as determined
by the Applicable Agent, (v) fifth, if so determined by the
Applicable Agent and the Borrowers, held in such account as cash collateral for
future funding obligations of the Defaulting Lender of any Loans under this
Agreement, (vi) sixth, to the payment of any amounts owing to the
Lenders or a Fronting Bank as a result of any judgment of a court of competent
jurisdiction obtained by any Lender or such Fronting Bank against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement, (vii) seventh, to the payment of
any amounts owing to the Borrowers as a result of any judgment of a court of
competent jurisdiction obtained by the Borrowers against such Defaulting Lender
as a result of such Defaulting Lender’s breach of its obligations under this
Agreement, and (viii) eighth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if such
payment is (x) a prepayment of the principal amount of any Loans or
reimbursement obligations in respect of Letter of Credit disbursements for
which a Defaulting Lender has funded its participation obligations and (y) made
at a time when the conditions set forth in Section 4.2 are
satisfied, such payment shall be applied solely to prepay the Loans of, and
reimbursement obligations owed to, all non-Defaulting Lenders pro rata prior to
being applied to the prepayment of any Loans, or reimbursement obligations owed
to, any Defaulting Lender.


 


In the event that the Applicable
Agent, the Borrowers and each Fronting Bank each agrees that a Defaulting
Lender has adequately remedied all matters that caused such Lender to be a
Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted to
reflect the inclusion of such Lender’s Revolving Commitment and on such date
such Lender shall purchase at par such of the Loans of the other Lenders as the
Applicable Agent shall determine may be necessary in order for such Lender to
hold such Loans in accordance with its Applicable Percentage.


 


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ARTICLE 3. REPRESENTATIONS AND
WARRANTIES


 


In order to induce the Lenders to make Loans and issue or participate
in Letters of Credit hereunder, the Loan Parties, jointly and severally,
represent and warrant as follows:


 


Section 3.1                                      Organization
and Authority.  Each of the Loan
Parties and its respective Subsidiaries (i) is duly organized, validly
existing and in good standing under the law of its jurisdiction of
organization; (ii) is duly qualified to do business and in good standing
in each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect; (iii) subject to the entry of the Orders (as applicable),
has the requisite power and authority to effect the transactions contemplated
hereby, and by the other Loan Documents to which it is a party, and (iv) subject
to the entry by the Bankruptcy Court or the Canadian Court, as applicable, of
the Orders, has all requisite power and authority and the legal right to own
and operate its properties, and to conduct its business as now or currently
proposed to be conducted.


 


Section 3.2                                      Due
Execution.  Upon the entry by the
Bankruptcy Court and the Canadian Court, as applicable, of the Orders, the
execution, delivery and performance by each of the Loan Parties of each of the
Loan Documents to which it is a party, including, without limitation, the grant
of the Liens by each of the Loan Parties hereunder and under the Collateral
Documents, (i) are within the respective powers of each of the Loan
Parties, have been duly authorized by all necessary action, including the
consent of shareholders, partners or members, where required, and do not (A) contravene
the Organizational Documents of any of the Loan Parties, (B) violate any
Requirement of Law that could reasonably be expected to result in a Material
Adverse Effect, (C) conflict with or result in a breach of, or constitute
a default under, any indenture, mortgage or deed of trust entered into after
the Filing Date or any material lease, agreement or other instrument entered
into after the Filing Date binding on the Loan Parties or any of their
respective properties, or (D) result in or require the creation or
imposition of any Lien under any document described in clause (C) upon any
of the property of any of the Loan Parties other than Liens granted pursuant to
this Agreement and the Collateral Documents; and (ii) do not require the
consent, authorization by or approval of or notice to or filing or registration
with any Governmental Authority other than the entry of the Interim Order (or
the Final Order, as applicable).  Except
for the entry of the Interim Order (or the Final Order, as applicable), no
authorization, approval or other action by, and no notice to or filing with,
any Governmental Authority or regulatory body is required for the perfection of
the security interests or the exercise by the Agents or the Lenders of their
respective rights and remedies under the Loan Documents.  Upon the entry by the Bankruptcy Court and
the Canadian Court, as applicable, of the Orders, this Agreement shall have
been duly executed and delivered by each of the Loan Parties.  Upon the entry by the Bankruptcy Court and
the Canadian Court, as applicable, of the Orders, this Agreement, and each of
the other Loan Documents to which the Loan Parties are or will be a party, when
delivered hereunder or thereunder, will be, a legal, valid and binding
obligation of each Loan Party, enforceable against the Loan Parties in
accordance with its terms and the Orders subject to general principles of
equity.


 


Section 3.3                                      Statements
Made.  The information that has been
delivered in writing by any of the Loan Parties to the Agents, the Bankruptcy
Court or the Canadian Court (other than projections and information of a
general economic nature) taken as a whole, as of the date such information was
so furnished, does not contain any untrue statement of a material fact or omit
to 


 


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state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, taken as a whole, not materially misleading; and, to the extent that
any such information constitutes projections, such projections were prepared in
good faith on the basis of assumptions, methods, data, tests and information
believed by the Loan Parties to be reasonable at the time such projections were
furnished.  All representations and
warranties, as made or deemed made as of a particular time, shall survive
execution of each of the Loan Documents and the making of each Loan or issuance
of each Letter of Credit, and may be relied upon by the Agents and the Lenders
as being true and correct as of the date when made or deemed made until all of
the Loan Parties’ Obligations are fully and indefeasibly paid.


 


Section 3.4                                      Financial
Statements.  The Loan Parties have
furnished the Lenders with copies of the audited consolidated financial
statements and schedules of the Parent and its consolidated Subsidiaries for
the fiscal year ended December 31, 2007 and the unaudited financial
statements for each succeeding fiscal quarter thereafter through and including
the fiscal quarter ending September 30, 2008.  Such financial statements present fairly in
all material respects the financial condition and results of operations of the
Parent and its consolidated Subsidiaries on a consolidated basis as of such
dates and for such periods, except, in the case of unaudited financial
statements, for the absence of footnote disclosure and for normal year-end
audit adjustments; such balance sheets and the notes thereto disclose all
liabilities, direct or contingent, of the Loan Parties and their Subsidiaries
as of the dates thereof required to be disclosed by GAAP and such financial
statements were prepared in a manner consistent with GAAP.  Since the fiscal year ended December 31,
2007, and the fiscal quarter ended September 30, 2008, there has been no
event or condition that has had, or could reasonably be expected to have, a
Material Adverse Effect other than those which customarily occur as a result of
events and circumstances leading up to and following the commencement the
Cases.


 


Section 3.5                                      Ownership.  Each of the Persons listed on Schedule 3.5
is a direct or indirect Subsidiary of the Parent and Schedule 3.5 correctly sets
forth the ownership interest of each of the Loan Parties in their respective
Subsidiaries, in each case as of the Closing Date, and the jurisdiction of
organization of each Subsidiary.  None of
the Loan Parties owns any other Subsidiaries, whether directly or indirectly, other
than as set forth on Schedule 3.5, as
may be updated by the Loan Parties from time to time.  The Loan Parties have valid title to all
assets included from time to time in the Canadian PP&E Component and the
U.S. PP&E Component and to all other material properties and possessions
under lease.


 


Section 3.6                                      Liens.  There are no Liens of any nature whatsoever
on any assets of any of the Loan Parties or their Subsidiaries other than
Permitted Liens.  Except as set forth on Schedule
3.6, none of the Loan Parties is a party to any contract, agreement, lease
or instrument the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of a Lien on any
assets of any Loan Party or any of their Subsidiaries or otherwise result in a
violation of this Agreement other than the Liens granted to the Applicable
Agents (for the benefit of the Secured Parties) as provided for in this
Agreement.  The aggregate amount of
claims secured by the Non-Primed Liens, other than the Calpine Debt, does not
exceed US$60,000,000.


 


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Section 3.7                                     Compliance
with Law.


 


(a)                                  The
operations of the Loan Parties and their Subsidiaries comply in all material
respects with all Environmental Laws; (i) except as set forth on Schedule
3.7, to the knowledge of the Loan Parties, none of the operations of the
Loan Parties or their Subsidiaries is the subject of any Governmental Authority
investigation evaluating whether any violation of Environmental Laws has
occurred or remedial action involving a material expenditure by the Loan
Parties is needed to respond to the presence or release of any Hazardous Waste
or Hazardous Substance in or into the environment which, in each case, would be
reasonably likely to result in a Material Adverse Effect; and (ii) the
Loan Parties and their Subsidiaries do not have any contingent liability in
connection with any violation of Environmental Laws or release of any Hazardous
Waste or Hazardous Substance into the environment that is reasonably likely to
result in a Material Adverse Effect.


 


(b)                                 None
of the Loan Parties or their Subsidiaries is in violation of any law, rule or
regulation, or in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority the violation of which, or a default with
respect to which, would have a Material Adverse Effect.


 


Section 3.8                                      Insurance.  All policies of insurance of any kind or
nature owned by or issued to the Loan Parties and their Subsidiaries, including,
without limitation, policies of life, fire, theft, product liability, public
liability, property damage, other casualty, employee fidelity, workers’
compensation, employee health and welfare, title, property and liability
insurance, are in full force and effect and are of a nature and provide such
coverage as (i) is customarily carried by companies of the size and
character of the Loan Parties and their Subsidiaries or (ii) was carried
by the Loan Parties and their Subsidiaries prior to commencement of the Cases.


 


Section 3.9                                      The
Orders.  On the date of the making of
the initial Loans or the issuance of the initial Letters of Credit hereunder,
whichever first occurs, the Interim Order will have been entered and will not
have been stayed, amended, vacated, reversed or rescinded except as approved by
the Administrative Agent, in its exclusive discretion in writing.  On the date of the making of any Loan or the
issuance of any Letter of Credit, the Interim Order (or the Final Order, as
applicable), shall have been entered and shall not have been amended, stayed,
vacated or rescinded except as approved in writing by the Administrative Agent,
in its exclusive discretion.  Upon the
maturity (whether by the acceleration or otherwise) of any of the obligations
of the Loan Parties hereunder and under the other Loan Documents, the Lenders
shall, subject to the provisions of Section 7.1 and the Orders, be
entitled to immediate payment of such obligations, and to enforce the remedies
provided for hereunder, without further application to or order by the
Bankruptcy Court or the Canadian Court.


 


Section 3.10                                Use
of Proceeds.  The proceeds of the
Loans will be used for (i) working capital, Letters of Credit and Capital
Expenditures; (ii) other general corporate purposes of the Loan Parties
(including intercompany loans to the extent permitted by this Agreement); (iii) for
the refinancing in full of the Indebtedness outstanding under the Receivables
Securitization Programs; (iv) payment of any related transaction costs,
fees and expenses; and (v) the costs of administration of the Cases.  The Letters of Credit will be issued for
purposes consistent with the ordinary course of business of the Loan Parties,
as determined by the Loan Parties in their reasonable judgment, or for such
other purposes as are acceptable to the Administrative Agent.  The proceeds of Loans may not be used in
connection with the investigation (including discovery 


 


95

















 


proceedings), initiation or prosecution of
any claims, causes or action, adversary proceedings or other litigation against
the Lenders or the Administrative Agent; provided, however, that no more
than US$100,000 of the proceeds of the Loans or the Collateral may be used by
any statutory committee of unsecured creditors to investigate, and by the
monitor in the Canadian Cases to review, the pre-petition liens and claims of
the Pre-Petition Agent and the Pre-Petition Lenders.


 


Section 3.11                                Litigation.  There are no unstayed actions, suits or
proceedings pending or, to the knowledge of the Loan Parties threatened,
against or affecting any Loan Party or any of their respective Subsidiaries or
any of their respective properties, before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that are reasonably likely to have a Material Adverse Effect.


 


Section 3.12                                Intellectual
Property. Set forth on Schedule 3.12 hereto is a complete and accurate list
of all registered patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and licenses thereof, of each Loan
Party or any of their Subsidiaries, showing as of the Closing Date the
jurisdiction in which registered, the registration number, the date of registration
and the expiration date.


 


Section 3.13                                Taxes.  Except to the extent permitted by Section 5.4
hereof, each Loan Party has filed or caused to be filed all federal, state,
provincial, regional and other material tax returns, reports, elections and filings
or other documents that are required to be filed and has paid all taxes, fees,
levies, withholdings or charges shown to be due and payable on said returns or
on any assessments made against it or any of its property and all other
material taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves, if any, in conformity with GAAP have been provided
on the books of such Loan Party); other than deemed trusts and statutory liens
and charges in favor of a Governmental Authority in respect of amounts accrued
but not yet due in the usual and ordinary course of the business of the Loan
Party, no material tax Lien has been filed, and, to the knowledge of the Loan
Parties, no material claim is being asserted, with respect to any such tax, fee
or other charge (other than a claim the amount or validity of which is being
contested in good faith by the Loan Party and with respect to which reserves,
if any, in conformity with GAAP have been provided on the books of such Loan
Party), and for greater certainty taxes includes all taxes, charges, fees,
levies, imposts and other assessments, including all income, sales, use, goods
and services, harmonized sales, value added, capital, capital gains,
alternative, net worth, transfer, profits, withholding, payroll, employer
health, excise, real property and personal property taxes, and any other taxes,
customs duties, fees, assessments, or similar charges in the nature of a tax,
including Canada Pension Plan and provincial pension plan contributions,
unemployment insurance payments and workers’ compensation premiums, together
with any installments with respect thereto, and any interest, fines and
penalties with respect thereto, imposed by any Governmental Authority
(including federal, state, provincial, municipal and foreign Governmental
Authorities), and whether disputed or not.


 


Section 3.14                                Investment
Company Act; Other Regulations. 
Neither the Parent nor any other Loan Party is an “investment company”,
or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. 
The Loan 


 


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Parties are not subject to any organizational
or governing document, or any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority that
prohibits its ability to incur Indebtedness, other than the Orders.


 


Section 3.15                                ERISA;
Employee Matters.


 


(a)                                  The
Loan Parties and each of their ERISA Affiliates are in substantial compliance
with all applicable provisions and requirements of ERISA with respect to each
Plan, and have substantially performed all their obligations under each Plan,
except to the extent that any non-compliance with ERISA or any such failure to
perform would not have a Material Adverse Effect on the Loan Parties or any of
their ERISA Affiliates.


 


(b)                                 No
Termination Event has occurred which has resulted, or is reasonably likely to
result, in any liability to the PBGC or to any other Person that would have a
Material Adverse Effect.


 


(c)                                  Except
to the extent required under Section 4980B of the Code or Section 601
of ERISA, none of the Loan Parties maintains or contributes to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employees of the Loan Parties, except to
the extent that the provision of such benefits would not have a Material
Adverse Effect.


 


(d)                                 No
Pension Plan has an Unfunded Current Liability in an amount that would have a
Material Adverse Effect.


 


(e)                                  The
Canadian Pension Plans are duly registered under the ITA and any other
applicable laws which require registration, have been administered in all
material respects in accordance with their terms and with the ITA and such
other applicable laws, and, to the knowledge of the Canadian Borrower, no event
has occurred which could reasonably be expected to cause the loss of such
registered status.  The Canadian Benefit
Plans have been administered in all material respects in accordance with their
terms and applicable laws.


 


(f)                                    All
material obligations of the Canadian Borrower and the other Canadian Loan
Parties required to be performed by the Canadian Borrower or the other Canadian
Loan Parties in connection with the Canadian Pension Plans and the funding agreements
therefor and the Canadian Benefit Plans have been performed on a timely basis.


 


(g)                                 As
of the Closing Date, there are no outstanding disputes, investigations,
examinations or other legal proceedings concerning the assets of the Canadian
Pension Plans or the Canadian Benefit Plans.


 


(h)                                 No
promises of benefit improvements under the Canadian Pension Plans or the
Canadian Benefit Plans have been made, except where such improvement could not
reasonably be expected to have a Material Adverse Effect.


 


(i)                                     All
contributions or premiums required to be made or paid by the Canadian Borrower
or any of its Subsidiaries to the Canadian Pension Plans or the Canadian 


 


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Benefit Plans
have been made on a timely basis in accordance with the terms of such plans and
all applicable laws.


 


(j)                                     To
the knowledge of the Canadian Borrower, there have been no improper withdrawals
or applications of the assets of the Canadian Pension Plans or the Canadian
Benefit Plans.


 


Section 3.16                                Material
Subsidiaries.  As of the Filing Date,
the only Material Subsidiary (as such term is defined in the Pre-Petition
Credit Agreement) of the Parent that is a Domestic Subsidiary is the U.S.
Borrower.


 


Section 3.17                                Receivables
Securitization Indebtedness.  All
indebtedness evidenced by the notes issued pursuant to that certain Series 2004-2
Indenture Supplement to Master Indenture, dated as of November 23, 2004,
between SSCE Funding, LLC and Deutsche Bank Trust Company Americas, as
Indenture Trustee, as amended, restated, modified or waived from time to time,
was indefeasibly paid in full prior to the Filing Date.


 


ARTICLE 4. CONDITIONS OF LENDING


 


Section 4.1                                      Conditions
Precedent to Initial Loans.  The
obligation of the Lenders to make the initial Loans or issue Letters of Credit
on the Closing Date is subject to the following conditions precedent:


 


(a)                                  Supporting Documents.  The Administrative Agent shall have received
for each of the Loan Parties:


 


(i)                                   Organizational
Documents, to the extent applicable, certified as of a recent date prior to the
Closing Date by the applicable Governmental Authority;


 


(ii)                                signature
and incumbency certificates of the officers of such Loan Party executing the
Loan Documents to which it is a party, dated as of the Closing Date;


 


(iii)                             duly
adopted resolutions of the board of directors or similar governing body of each
Loan Party approving and authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party or by which
it or its assets may be bound as of the Closing Date, certified as of the
Closing Date by its secretary or assistant secretary as being in full force and
effect without modification or amendment;


 


(iv)                            a good
standing certificate or equivalent thereof from the applicable Governmental
Authority of each Loan Party’s jurisdiction of incorporation, organization or
formation and in each jurisdiction in which it is qualified as a foreign
corporation or other entity to do business, each dated a recent date prior to
the Closing Date; and


 


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(v)                               such
other documents as the Administrative Agent may reasonably request.


 


(b)                                 Interim Order.  Not later than five (5) days following
the Filing Date, the Administrative Agent and the Lenders shall have received a
certified copy of each Interim Order approving the Loan Documents and granting
the Superpriority Claim status and senior priming and other Liens described in Section 2.24
and the CCAA DIP Lenders’ Charge, in the case of the Initial Order, which
Interim Order (i) shall have been entered upon an application or motion of
the applicable Loan Parties, in form and substance satisfactory to the
Administrative Agent and the Co-Lead Arrangers and on such prior notice to such
parties as may be satisfactory to the Administrative Agent and the Co-Lead
Arrangers, (ii) shall authorize extensions of credit in amounts
satisfactory to the Administrative Agent and the Co-Lead Arrangers, (iii) shall
approve the payment by the Loan Parties of all of the Fees set forth in Section 2.20,
Section 2.21 and Section 2.22, (iv) shall be in
full force and effect, (v) shall not have been stayed, reversed, modified
or amended in any respect without the written consent of the Administrative Agent
and the Co-Lead Arrangers, (vi) shall be entered with the consent or
non-objection of a preponderance (as determined by the Administrative Agent and
the Co-Lead Arrangers in their exclusive discretion) of the secured creditors
of any of the Loan Parties under the Pre-Petition Credit Agreement, and (vii) if
the Interim Order is the subject of a pending appeal in any respect, neither
the making of such Loan nor the issuance of such Letter of Credit nor the
performance by any of the Loan Parties of any of their obligations hereunder or
under the Loan Documents or under any other instrument or agreement referred to
herein shall be the subject of a presently effective stay pending appeal.


 


(c)                                  Loan Documents.  The Administrative Agent shall have received (i) this
Agreement, duly executed and delivered by the Administrative Agent, each Loan
Party and each Lender, (ii) the Security and Pledge Agreement in
substantially the form of Exhibit B-1 (the “Security and Pledge Agreement”),
duly executed by each Loan Party and delivered to the Administrative Agent, (iii) the
Canadian Security Agreement in substantially the form of Exhibit B-2,
and (iv) each of the other Loan Documents listed on Schedule 4.1
hereto.


 


(d)                                 First Day Orders.  All of the “first day orders” entered by the
Bankruptcy Court and by the Canadian Court at the time of the commencement of
the U.S. Cases, including but not limited to in respect of amounts of critical
vendor payments, if any, shall be reasonably satisfactory in form and substance
to the Administrative Agent and the Co-Lead Arrangers.


 


(e)                                  Opinions of Counsel.  The Administrative Agent and the Lenders
shall have received the favorable written opinions of counsel to the Loan
Parties, acceptable to the Administrative Agent, substantially in the forms of Exhibit D.


 


(f)                                    Payment of Fees.  The Loan Parties shall have paid to the
Applicable Agents and the Co-Lead Arrangers the then unpaid balance of all
accrued and unpaid Fees due under and pursuant to this Agreement and the
letters referred to in Section 2.20, which payments due on the
Closing Date may be made with the proceeds of Loans.


 


(g)                                 Corporate and
Judicial Proceedings. 
All corporate and judicial proceedings and all instruments and
agreements in connection with the transactions among the 


 


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Loan Parties,
the Administrative Agent and the Lenders contemplated by this Agreement shall
be satisfactory in form and substance to the Administrative Agent in its
exclusive discretion, and the Administrative Agent shall have received all
information and copies of all documents and papers, including records of
corporate and judicial proceedings, which the Administrative Agent may have
requested in connection therewith, such documents and papers where appropriate
to be certified by proper corporate, governmental or judicial authorities.


 


(h)                                 Information.  The Administrative Agent and the Lenders
shall have received all information required by the Patriot Act or any other “know-your-customer”
or anti-money laundering rules and regulations and such other information
(financial or otherwise) as may be reasonably requested by the Administrative
Agent and shall have discussed such information with the Loan Parties’
management and shall be satisfied with the nature and substance of such
discussions.


 


(i)                                     Availability.  The sum of (i) Excess Availability plus
(ii) aggregate amounts on deposit in the Investment Accounts, after giving
effect to the Loans and disbursements to be made on the Closing Date, shall be
at least US$150,000,000.


 


(j)                                     Budget.  The Administrative Agent and
the Lenders shall have received a forecast on a consolidated
basis of the Loan Parties’ income statement, balance sheet and cash flows for
each month of fiscal years 2009 and 2010, including information consolidated
solely as to the U.S. Loan Parties and solely 
as to the Canadian Loan Parties and the material assumptions on which
such forecasts were based, and setting forth the anticipated disbursements and
uses of the Commitments, in form and substance satisfactory to the
Administrative Agent and the Co-Lead Arrangers (as updated from time to time
pursuant to Section 5.1(f), the “Budget”).


 


(k)                                  Cash Flow Forecast.  The
Administrative Agent and the Lenders shall have received a
forecast of sources and uses of cash by the U.S. Loan Parties and the Canadian
Loan Parties on a weekly basis covering the 13 calendar weeks succeeding the
Filing Date, in form and substance satisfactory to the Administrative Agent and
the Co-Lead Arrangers (as updated from time to time pursuant to Section 5.1(e),
the “Cash Flow Forecast”).


 


(l)                                     Compliance with Laws.  The Loan Parties shall have granted the
Administrative Agent access to and the right to inspect all reports, audits and
other internal information of the Loan Parties relating to environmental and
employee health and safety matters and any third party verification of certain
matters relating to compliance with applicable laws and regulations requested
by the Administrative Agent and the Administrative Agent shall be reasonably
satisfied that the Loan Parties are in compliance in all material respects with
all applicable Environmental Laws and be satisfied with the reasonably
estimated costs of maintaining compliance.


 


(m)                               Lien Searches.  The
Administrative Agent shall have received lien searches conducted in the
jurisdictions in which the Loan Parties are organized or conduct business,
satisfactory to the Administrative Agent (dated as of a date reasonably
satisfactory to the Administrative Agent), reflecting the absence of Liens and
encumbrances on the assets of the Loan Parties other than Permitted Liens.


 


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(n)                                 Securitization
Documents.  The Administrative Agent
shall have received the most recent reports prepared by the Loan Parties in
respect of the Receivables Securitization Programs satisfactory in form and
substance to the Administrative Agent in its exclusive discretion.


 


(o)                                 Field
Examinations.  The Administrative
Agent shall have received field examinations of the Loan Parties’ accounts
receivable, inventory and equipment and appraisals of all or such portions of
the Loan Parties’ assets the Administrative Agent may deem appropriate, which
field examinations and appraisals shall be satisfactory in form and substance
to the Administrative Agent.


 


(p)                                 Evidence
of Insurance.  The Administrative
Agent shall have received evidence of insurance policies for the Loan Parties
and their Subsidiaries satisfactory in form and substance to the Administrative
Agent.


 


(q)                                 Closing Documents.  The Administrative Agent shall have received
all documents required by this Agreement satisfactory in form and substance to
the Administrative Agent and the Co-Lead Arrangers.


 


(r)                                    Other
Conditions.  Such other conditions as
are satisfactory to the Administrative Agent.


 


Section 4.2                                      Conditions
Precedent to Each Loan and Each Letter of Credit.  The obligation of the Lenders to make each
Loan and of each Fronting Bank to issue, amend, renew or extend any Letter of
Credit, is subject to the following conditions precedent:


 


(a)                                  Notice.  The Applicable Agent (and to the
Administrative Agent if it is not the Applicable Agent) shall have received a
notice with respect to each Borrowing or the issuance of each Letter of Credit,
as the case may be, as required by ARTICLE 2.


 


(b)                                 Representations and
Warranties.  All
representations and warranties contained in this Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the
date of each Borrowing or the issuance of each Letter of Credit hereunder with
the same effect as if made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date.


 


(c)                                  No Default.  On the date of each Borrowing or the issuance
of each Letter of Credit hereunder, no Default or Event of Default shall have
occurred and be continuing.


 


(d)                                 Orders.  The Interim Order shall be in full force and
effect and shall not have been stayed, reversed, modified or amended in any
respect without the prior written consent of the Administrative Agent, provided
that at the time of the making of any Loan or the issuance of any Letter of
Credit the aggregate amount of either of which, when added to the sum of the
principal amount of all Loans then outstanding and the Letter of Credit
Outstandings, would exceed the amount authorized by the Interim Order
(collectively, the “Additional Credit”),
the Administrative Agent and each of the Lenders shall have received a
certified copy of the order of the Bankruptcy Court and an order of the
Canadian Court if deemed necessary in the Administrative Agent’s exclusive
discretion approving continued lending (collectively, the 


 


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“Final
Order”) in substantially the form set forth on Exhibit A-3
or such other form as may be agreed by the Administrative Agent and the Loan
Parties, which, in any event, shall have been entered by the Bankruptcy Court
(and Canadian Court, as applicable) no later than forty-five (45) days after
the entry of the Interim Order, and at the time of the extension of any
Additional Credit the Final Order shall be in full force and effect, and shall
not have been stayed, reversed, modified or amended in any respect without the
prior written consent of the Administrative Agent; and, if either the Interim
Order or the Final Order is the subject of a pending appeal in any respect,
neither the making of the Loans nor the issuance of any Letter of Credit nor
the performance by any of the Loan Parties of any of their obligations under
any of the Loan Documents or under any other instrument or agreement referred
to herein shall be the subject of a presently effective stay pending appeal.


 


(e)                                  Payment of Fees and
Expenses.  The Loan
Parties shall have paid to the Applicable Agent the then unpaid balance of all
accrued and unpaid Fees and expenses then due and payable under and pursuant to
this Agreement and the letters referred to in Section 2.20.


 


(f)                                    Borrowing
Base Certificate.  The Administrative
Agent shall have received a Borrowing Base Certificate in accordance with Section 5.8
dated no more than seven (7) days prior to each Borrowing or the issuance
of each Letter of Credit, which Borrowing Base Certificate shall include
supporting schedules as required by the Administrative Agent.


 


(g)                                 Other Conditions.  Such other
conditions as are satisfactory to the Administrative Agent.


 


Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
the Loan Parties on the date thereof that the conditions specified above have
been satisfied or waived.


 


ARTICLE 5. AFFIRMATIVE COVENANTS


 


From the Closing Date and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account and the
Canadian Letter of Credit Account, or in excess of the face amount of
back-to-back letters of credit delivered, in each case pursuant to Section 2.4(c)),
or any amount shall remain outstanding or unpaid under this Agreement, each of
the Loan Parties and their respective Subsidiaries agree that, unless the
Required Lenders shall otherwise consent in writing:


 


Section 5.1                                      Financial
Statements, Reports, etc.  The Loan
Parties will, and will cause their Subsidiaries to, deliver to the
Administrative Agent and each of the Lenders:


 


(a)                                  within
seventy-five (75) days after the end of each fiscal year, (i) consolidated
balance sheets and related statements of income, stockholders’ equity, and cash
flows, showing the financial condition of the Loan Parties and their
Subsidiaries as of the close of such fiscal year and the results of their
respective operations during such year, the consolidated statements to be
audited for the Loan Parties and their respective Subsidiaries by their current
independent auditors or other independent public accountants of recognized
national standing and accompanied by an opinion of such accountants (which
shall not be qualified other 


 


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than with
respect to the Cases) and (ii) such statements consolidated solely as to
U.S. Loan Parties and consolidated solely as to Canadian Loan Parties (on an
unaudited basis and without footnotes), in each case to be certified by a
Financial Officer of Parent to the effect that such consolidated financial
statements fairly present in all material respects, the financial condition and
results of operations of the Loan Parties and their Subsidiaries on a
consolidated basis in accordance with GAAP;


 


(b)                                 within
forty-five (45) days after the end of the first three fiscal quarters of each
fiscal year of the Loan Parties, and within seventy-five (75) days after the
end of the fourth fiscal quarter of each fiscal year, (i) consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows, showing the financial condition of the Loan Parties and their
Subsidiaries on a consolidated basis, in each case as of the close of such
fiscal quarter and the results of their operations during such fiscal quarter
and the then elapsed portion of the fiscal year, and (ii) such statements
consolidated solely as to U.S. Loan Parties and consolidated solely as to Canadian
Loan Parties, in each case certified by a Financial Officer of the Parent as
fairly presenting in all material respects, the financial condition and results
of operations of the Loan Parties and their Subsidiaries on a consolidated
basis in accordance with GAAP, subject to normal year-end audit adjustments and
the absence of footnotes;


 


(c)                                  within
twenty-five (25) days after the end of each fiscal month (forty-five (45) days
after the end of the fiscal month ended January 31, 2009), (i) unaudited
monthly consolidated balance sheets and related statements of income and cash
flows of the Loan Parties and their Subsidiaries (including the amount of
Available Cash balances at the end of each such fiscal month), and (ii) such
statements consolidated solely as to U.S. Loan Parties and consolidated solely
as to Canadian Loan Parties, in each case in form and scope satisfactory to the
Administrative Agent and showing the results of the Loan Parties’ and their
Subsidiaries’ operations during such fiscal month and the then elapsed portion
of the fiscal year, which shall include a summary of the results of the Loan
Parties’ business operations for the preceding month as compared to the
corresponding period in the Budget, including a discussion of significant
variances, which summary shall describe the results of the Loan Parties and
their respective Subsidiaries on a consolidated basis;


 


(d)                                 (i) concurrently
with any delivery of financial statements under (a), (b) or (c) above
as applicable, a certificate of a Financial Officer of the Parent on behalf of
each of the Loan Parties in the form of Exhibit G (A) certifying
that no Event of Default or Default has occurred, or, if such an Event of
Default or Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and (B) setting
forth computations in reasonable detail satisfactory to the Administrative
Agent demonstrating compliance with the provisions of Section 6.3, Section 6.4,
Section 6.5, Section 6.6, Section 6.11, and
Section 6.12 and (ii) accompanying the audited consolidated
financial statements delivered under (a)(i) above a certificate of the
accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines);


 


(e)                                  on
the last Business Day of each week, (i) an updated Cash Flow Forecast
covering the next succeeding thirteen (13) calendar weeks, and (ii) and a
report comparing the 


 


103

















 


preceding week’s
actual sources and uses of cash by the Loan Parties to each  Cash Flow Forecast for such week, in each
case in form and substance satisfactory to the Administrative Agent in its
exclusive discretion;


 


(f)                                    no
later than forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Loan Parties, and within seventy-five (75)
days from the end of the last fiscal quarter of each fiscal year of the Loan
Parties, an update of the Budget satisfactory in form and substance to the
Administrative Agent in its exclusive discretion, and Loan Parties shall be available
to discuss such updated Budget with the Administrative Agent upon the
Administrative Agent’s reasonable request;


 


(g)                                 promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by any Loan Party with the
Securities and Exchange Commission, or any governmental authority succeeding to
any of or all the functions of said commission, or with any national or
provincial securities commission or exchange, as the case may be;


 


(h)                                 as
soon as available and in any event (A) within thirty (30) days after any
Loan Party, or any of their ERISA Affiliates knows or has reason to know that
any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Single Employer Plan of any of the Loan
Parties or such ERISA Affiliate has occurred and (B) within ten (10) days
after any of the Loan Parties or any of their ERISA Affiliates knows or has
reason to know that any other Termination Event with respect to any such Plan
has occurred, a statement of a Financial Officer of such Loan Party describing
such Termination Event and the action, if any, which such Loan Party or such
ERISA Affiliate proposes to take with respect thereto;


 


(i)                                     promptly
and in any event within ten (10) days after receipt thereof by any of the
Loan Parties or any of their ERISA Affiliates from the PBGC copies of each
notice received by such Loan Party or any such ERISA Affiliate of the PBGC’s
intention to terminate any Single Employer Plan of such Loan Party or such
ERISA Affiliate or to have a trustee appointed to administer any such Plan;


 


(j)                                     if
requested by the Administrative Agent, promptly and in any event within thirty
(30) days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each Single Employer Plan of any of the Loan Parties or
any of their ERISA Affiliates;


 


(k)                                  within
ten (10) days after notice is given or required to be given to the PBGC
under Section 302(f)(4)(A) of ERISA of the failure of any of the Loan
Parties or any of their ERISA Affiliates to make timely payments to a Plan, a
copy of any such notice filed and a statement of a Financial Officer of such
Loan Party setting forth (A) sufficient information necessary to determine
the amount of the Lien under Section 302(f)(3), (B) the reason for
the failure to make the required payments and (C) the action, if any,
which the Loan Parties or any of their ERISA Affiliates proposed to take with
respect thereto;


 


104
















 


(l)                                     promptly
and in any event within ten (10) days after receipt thereof by any of the
Loan Parties or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy
of each notice received by such Loan Party or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the
termination of a Multiemployer Plan within the meaning of Title IV of ERISA, or
(D) the amount of liability incurred, or which may be incurred, by the
Loan Parties or any ERISA Affiliate in connection with any event described in
clause (A), (B) or (C) above;


 


(m)                               promptly
and in any event within ten (10) days after receipt thereof by any of the
Canadian Loan Parties (A) copies of each annual and other return, report,
or valuation with respect to each registered pension plan as filed with any
applicable Governmental Authority, (B) copies of any direction, order,
notice, ruling or opinion received from any applicable Governmental Authority
with respect to any registered pension plan, and (C) notice of any
increases having a cost to one or more of the Canadian Loan Parties in excess
of US$5,000,000 per annum in the aggregate, in the benefits of any existing
pension plan or employee benefit plan or the establishment of any new pension
plan or employee benefit plan or the commencement of contributions to any such
plan to which any Canadian Loan Party was not previously contributing;


 


(n)                                 within
twenty-five (25) days after the end of each fiscal month, a schedule detailing
the balance of all accrued but unpaid Priority Payables;


 


(o)                                 promptly,
from time to time, such other information (including, without limitation,
projections) regarding the operations, business affairs and financial condition
of any Loan Party or any of its Subsidiaries, or compliance with the terms of
any material loan or financing agreement, as the Administrative Agent, at the
request of any Lender, may reasonably request;


 


(p)                                 promptly
after the same is available, copies of all pleadings, motions, applications,
judicial information, financial information and other documents filed in the
Cases by or on behalf of any of the Loan Parties with the Bankruptcy Court or
the Canadian Court, or distributed by or on behalf of any of the Loan Parties
to any monitor or official committee appointed in any of the Cases, providing
copies of same to counsel for the Administrative Agent;


 


(q)                                 promptly
and in any event within thirty (30) days after any Canadian Loan Party becomes
aware or has reason to become aware of any event which may give rise to the
full termination of any Canadian Pension Plan or partial termination of any
Canadian Pension Plan which could reasonably be expected to have a Material
Adverse Effect, a statement of a Financial Officer of such Loan Party
describing such event and the action, if any, which such Loan Party proposes to
take with respect thereto; and


 


(r)                                    within
ten (10) days after the failure of any of the Canadian Loan Parties to
make current service contributions to any Canadian Pension Plan, a copy of any
such notice filed and a statement of a Financial Officer of such Loan Party
setting forth (A) sufficient information necessary to determine the amount
of any corresponding Lien, (B) the reason for the 


 


105

















 


failure to
make the required payments and (C) the action, if any, which the Loan
Parties propose to take with respect thereto.


 


Section 5.2                                      Existence.  The Loan Parties will, and will cause their
Subsidiaries to,  preserve and maintain
in full force and effect all governmental rights, privileges, qualifications,
permits, licenses and franchises necessary or desirable in the normal conduct
of their businesses except (i) (A) if in the reasonable business
judgment of such Loan Party it is in its best economic interest not to preserve
and maintain such rights, privileges, qualifications, permits, licenses and
franchises, and (B) such failure to preserve the same could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) as
otherwise permitted in connection with sales of assets permitted by Section 6.12.


 


Section 5.3                                      Insurance.  The Loan Parties will, and will cause their
Subsidiaries to:  (a) keep their
insurable properties insured at all times, against such risks, including fire
and other risks insured against by extended coverage, as is customary with
companies of the same or similar size in the same or similar businesses; and
maintain in full force and effect public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by any
Loan Party in such amounts and with such deductibles as are customary with
companies of the same or similar size in the same or similar businesses and in
the same geographic area, with financially sound and responsible insurance
companies; and (b) maintain such other insurance or self insurance as may
be required by law, with financially sound and responsible insurance companies.


 


Section 5.4                                      Obligations
and Taxes.  Except with the express
written consent of the Administrative Agent in each instance, each Loan Party
will pay all its material obligations arising after the Filing Date promptly
and in accordance with their terms and pay and discharge promptly all material
taxes, assessments, governmental charges, levies, fees, imposts and withholding
obligations imposed upon it or upon its income or profits or in respect of its
property arising after the Filing Date, before the same shall become in
default, as well as all material lawful claims for labor, materials and
supplies or otherwise arising after the Filing Date which, if unpaid, would
become a Lien or charge upon such properties or any part thereof; provided,
however,
that no Loan Party shall be required to pay and discharge or to cause to be
paid and discharged any such obligation, tax, assessment, charge, levy, fees,
imposts and withholding obligations or claim so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings (if the
Loan Parties shall have set aside on their books adequate reserves therefor).


 


Section 5.5                                      Notice
of Event of Default, etc.  The Loan
Parties will promptly give to the Administrative Agent notice in writing of:


 


(i)                                     any
Default or Event of Default; and


 


(ii)                                any
litigation, proceedings or material investigations which may exist at any time
between any Loan Party and any Governmental Authority.


 


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Section 5.6                                      Access
to Books and Records; Collateral Reviews and Appraisals.


 


(a)                                  The
Loan Parties will, and will cause their Subsidiaries to, maintain or cause to
be maintained at all times true and complete books and records in accordance
with GAAP of the financial operations of the Loan Parties and their respective
Subsidiaries; and provide the Administrative Agent and its representatives
access to all such books and records during regular business hours, in order
that the Administrative Agent may examine and make abstracts from such books,
accounts, records and other papers for the purpose of verifying the accuracy of
the various reports delivered by the Loan Parties to the Administrative Agent
or the Lenders pursuant to this Agreement or for otherwise ascertaining
compliance with this Agreement, all at such reasonable times and as often as
reasonably requested and in any event no less frequently than two (2) times
during any calendar year and, so long as no Default or Event of Default shall
have occurred and be continuing, no more than four (4) times during any
calendar year.  The Loan Parties will
permit (and will cause their Subsidiaries to permit) any representatives
designated by the Administrative Agent to discuss their affairs, finances and
condition with their officers and independent accountants, all at such
reasonable times and as often as reasonably requested.


 


(b)                                 The
Loan Parties will, and will cause their Subsidiaries to, permit any
representatives designated by the Administrative Agent (including any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) to conduct evaluations and appraisals of the Loan Parties’ computation
of the Borrowing Bases and the assets included in the Borrowing Bases and such
other assets and properties of the Loan Parties or their Subsidiaries as the
Administrative Agent or Required Lenders may require, all at such reasonable times
and as often as reasonably requested and in any event no less frequently than
two (2) times during any calendar year and, so long as no Default or Event
of Default shall have occurred and be continuing, no more than four (4) times
during any calendar year.  The Loan
Parties shall pay the reasonable fees (including reasonable and customary
internally allocated fees of employees of the Administrative Agent as to which
invoices have been furnished) and expenses of any such representatives retained
by the Administrative Agent as to which invoices have been furnished to conduct
any such evaluation or appraisal, including the reasonable fees and expenses
associated with collateral monitoring services performed by the ABL Portfolio
Management Group of the Administrative Agent. 
To the extent required by the Administrative Agent in its Permitted
Discretion as a result of any such evaluation, appraisal or monitoring, the
Loan Parties also agree to modify or adjust the computation of the Borrowing
Bases (which may include maintaining additional reserves, modifying the advance
rates or modifying the eligibility criteria for the components of the Borrowing
Bases).


 


(c)                                  In
the event that historical accounting practices, systems or reserves relating to
the components of the Borrowing Bases are modified in a manner that is adverse
to the Lenders in any material respect, the Loan Parties will agree to maintain
such additional reserves (for purposes of computing the Borrowing Bases) in
respect to the  components of the Borrowing
Bases and make such other adjustments to its parameters for including the
components of the Borrowing Bases as the Administrative Agent shall reasonably
require based upon such modifications.


 


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(d)                                 The
Loan Parties will, and will cause their Subsidiaries to, grant the
Administrative Agent access to and the right to inspect all reports, audits and
other internal information of the Loan Parties relating to environmental
matters upon reasonable notice, and obtain any third party verification of
matters relating to compliance with Environmental Laws reasonably requested by
the Administrative Agent at any time and from time to time.


 


Section 5.7                                      Maintenance
of Concentration Account; Cash Dominion.


 


(a)                                  Within
sixty (60) days of the Closing Date (or such later date as the Administrative
Agent may approve in its exclusive discretion), the U.S. Loan Parties will, and
will cause their Domestic Subsidiaries to, maintain with the Administrative
Agent an account or accounts to be used by the U.S. Loan Parties as their
principal domestic concentration or sweep account(s) into which shall be
deposited the available balances from the collection accounts of the U.S. Loan
Parties (other than Calpine or Smurfit-Stone Puerto Rico, Inc.) at the end
of each Business Day (as contemplated by Article 7 of the Security and
Pledge Agreement), net of disbursements paid in the ordinary course of business
during such Business Day and all of the U.S. Loan Parties’ and their Domestic Subsidiaries’
accounts shall be subject to a cash management system satisfactory to the
Administrative Agent in its exclusive discretion, including from and after such
sixtieth (60th) day, (i) weekly
sweeps of Available Cash in excess of US$50,000,000, such cash to be applied to
outstanding U.S. Revolving Loans (without a permanent reduction of the U.S.
Revolving Commitment), and (ii) full cash dominion, including daily cash
sweeps (other than cash of Calpine and other than with respect to up to
$2,000,000 held in deposit accounts of Smurfit-Stone Puerto Rico, Inc.) to
the Concentration Account if Excess Availability is less than US$150,000,000
for three consecutive days, such cash to be applied to outstanding U.S.
Revolving Loans (without a permanent reduction of the U.S. Revolving
Commitment).  The obligation of the U.S.
Loan Parties to comply with clause (ii) of the preceding sentence shall
continue until Excess Availability has exceeded US$150,000,000 for sixty (60)
consecutive days.  Upon the occurrence of
an Event of Default, all of the collections and account balances of the U.S.
Loan Parties and their Domestic Subsidiaries (other than Calpine) shall be
swept on a daily basis into the Concentration Account.


 


(b)                                 Within
sixty (60) days of the Closing Date (or such later date as the Administrative
Agent may approve in its exclusive discretion), the Canadian Loan Parties will,
and will cause their Canadian Subsidiaries to, maintain with JPMorgan Chase
Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian Administrative
Agent, an account or accounts to be used by the Canadian Loan Parties as their
principal domestic concentration or sweep account(s) into which shall be
deposited the available balances from the collection accounts of the Canadian
Loan Parties at the end of each Business Day (as contemplated by the Canadian
Security Agreement), net of disbursements paid in the ordinary course of
business during such Business Day and all of the Canadian Loan Parties’ and
their Canadian Subsidiaries’ accounts shall be subject to a cash management
system satisfactory to the Canadian Administrative Agent in its exclusive
discretion, including from and after such sixtieth (60th) day, full cash dominion, including
daily cash sweeps to the Canadian Concentration Account if Excess Availability
is less than US$150,000,000 for three consecutive days, such cash to be applied
to outstanding Canadian Revolving Loans (without a permanent reduction of the
Canadian Revolving Commitment).  The
obligation of the Canadian Loan Parties to remain in full cash dominion shall
continue until Excess Availability has exceeded US$150,000,000 for 


 


108

















 


sixty (60)
consecutive days.  Upon the occurrence of
an Event of Default, all of the collections and account balances of the
Canadian Loan Parties and their Canadian Subsidiaries shall be swept on a daily
basis into the Canadian Concentration Account.


 


Section 5.8                                  Borrowing
Base Certificate.  The Loan Parties
will furnish to the Administrative Agent, no later than (i) the last
Business Day of each week with respect to the immediately preceding week, a
completed Borrowing Base Certificate showing the Borrowing Bases, each as of
the close of business on the last day of such period, (ii) fifteen (15)
days following the last day of the immediately preceding fiscal month, a
completed Borrowing Base Certificate showing the Borrowing Bases, each as of
the close of business on the last day of such period, (iii) if requested
by the Administrative Agent at any other time when the Excess Availability is
less than 20% of the Total Revolving Commitment, as soon as reasonably
available but in no event later than three (3) Business Days after such
request and (iv) at such other times as the Loan Parties may elect, a
completed Borrowing Base Certificate showing the Borrowing Bases, each as of
the date so requested, in each case with the information supporting the
Borrowing Base calculations required by Exhibit C-1 and Exhibit C-2
hereto, including the information set forth on the schedule of reporting
requirements attached thereto (in each case, as modified from time to time by
the Administrative Agent in its Permitted Discretion), all delivered
electronically in a file reasonably acceptable to the Administrative Agent; provided
that until the Receivables Securitization Termination Date, the Loan Parties
will deliver daily and monthly (by the 15th day of each month
with respect to the immediately preceding fiscal month) Borrowing Base
Certificates.


 


Section 5.9                                    Compliance
with Laws.  Comply with requirements
of all applicable laws, rules, regulations and orders of any Governmental
Authority (including, without limitation, ERISA), except to the extent that
failure to comply herewith could not, in the aggregate, have a Material Adverse
Effect.


 


Section 5.10                              Environmental
Laws.


 


(a)                                  Exercise
all reasonable due diligence in order to comply in all material respects, and
cause (i) all tenants under any leases or occupancy agreements affecting
any portion of the Facilities and (ii) all other Persons on or occupying
such property under the control of any Loan Party, to comply in all material
respects with all Environmental Laws.


 


(b)                                 Promptly
take any and all necessary remedial action in connection with the presence, storage,
use, disposal, transportation or release of any Hazardous Waste or Hazardous
Substance on or under any Facility required to comply with all applicable
Environmental Laws and Governmental Authorizations unless the failure to so
comply could not reasonably be expected to have a Material Adverse Effect and (ii) in
the event the Loan Parties take any remedial action with respect to any
Hazardous Waste or Hazardous Substance on or under any Facility, conduct and
complete such remedial action in material compliance with all applicable
Environmental Laws and in accordance with the policies, orders and directives
of any applicable Governmental Authorities except when, and only to the extent
that, the Loan Parties’ liability for such presence, storage, use, disposal,
transportation or release of any such Hazardous Waste or Hazardous Substance is
being contested in good faith by the Loan Parties.


 


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Section 5.11                              Additional
Collateral; Further Assurances.


 


(a)                                  The
U.S. Borrower and each other U.S. Loan Party shall cause each of its Domestic
Subsidiaries formed or acquired after the Closing Date in accordance with the
terms of this Agreement to become a U.S. Guarantor, and the Canadian Borrower
and each other Canadian Loan Party shall cause each Canadian Subsidiary formed
or acquired after the Closing Date to become a Canadian Guarantor, in each
case, by executing the Loan Party Joinder Agreement set forth as Exhibit F
hereto (the “Loan Party Joinder Agreement”)
on or before the twentieth (20th) day following the date of such acquisition or
formation. Upon execution and delivery thereof, each such Person (i) shall
automatically become a Guarantor hereunder and thereupon shall have all of the
rights, benefits, duties, and obligations in such capacity under the Loan
Documents and (ii) will grant Liens to the Applicable Agent, for the
benefit of the Applicable Agent and the Secured Parties, in any property of
such Loan Party which constitutes Collateral.


 


(b)                                 Without
limiting the foregoing, each Loan Party will, and will cause each Subsidiary
to, execute and deliver, or cause to be executed and delivered, to the
Applicable Agent such documents, agreements and instruments, and will take or
cause to be taken such further actions (including the filing and recording of
financing statements and other documents and such other actions or deliveries
of the type required by Section 4.1, as applicable), which may be
required by law or which the Applicable Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents and to ensure perfection and priority of the Liens
created or intended to be created by the Collateral Documents, all at the
expense of the Loan Parties.


 


(c)                                  Each
Loan Party will, and will cause each Subsidiary to, execute and deliver, or
cause to be executed and delivered, to the Administrative Agent such documents,
agreements and instruments, and will take or cause to be taken such further
actions, which may be required by law or which the Administrative Agent may,
from time to time, reasonably request to carry out the terms and conditions of
this Agreement and the other Loan Documents, all at the expense of the Loan
Parties.


 


Section 5.12                              Material
Contracts.  Each Loan Party will, and
will cause their Subsidiaries to, preserve and maintain in full force and
effect all contracts necessary or desirable in the normal conduct of their
businesses except where failure to preserve the same could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


Section 5.13                              Receivables
Securitization Programs.  On or
before April 1, 2009 or such later date as the Administrative Agent may
approve in writing in its exclusive discretion, each Loan Party will, and will
cause their Subsidiaries to, (a) terminate the Receivables Securitization
Programs, repay all Indebtedness outstanding thereunder, and provide evidence
of such termination and payment in full, as applicable, satisfactory to the
Administrative Agent in its exclusive discretion, (b) with respect to each
Receivables Securitization Entity, either (i) transfer all Accounts or
other assets owned by such Receivables Securitization Entity to a U.S. Loan
Party free and clear of all Liens (other than Liens in favor of the Agents on
behalf of the Secured Parties and Liens in favor of the Pre-Petition Agent on
behalf of the Pre-Petition Secured Lenders and other Permitted Liens that do
not have priority over the Lien in favor of the 


 


110

















 


Applicable Agent for the benefit of the
Secured Parties), or (ii) merge such Receivables Securitization Entity
with and into a U.S. Loan Party, with such U.S. Loan Party being the surviving
entity of such merger, in each case, on terms satisfactory to the
Administrative Agent in its exclusive discretion, and (c) cause
Smurfit-MBI, an Ontario limited partnership, to acquire all of the interests of
Computershare Trust Company of Canada, in its capacity as trustee of King
Street Funding Trust, in all outstanding Accounts and other related assets that
were purchased by Computershare Trust Company of Canada, in its capacity as
trustee of King Street Funding Trust, from Smurfit-MBI, and such Accounts and other
related assets shall be acquired by Smurfit-MBI free and clear of all Liens
(other than Liens in favor of the Agents on behalf of the Secured Parties and
Liens in favor of the Pre-Petition Agent on behalf of the Pre-Petition Secured
Lenders and other Permitted Liens that do not have priority over the Lien in
favor of the Applicable Agent for the benefit of the Secured Parties), on terms
satisfactory to the Administrative Agent in its exclusive discretion.


 


Section 5.14                              Restructuring
Advisors.  Retain PriceWaterhouse
Coopers and Lazard Ltd. or such other third party financial restructuring
advisors as are reasonably satisfactory to the Administrative Agent in its
Permitted Discretion.


 


Section 5.15                              Ratings.   Obtain a rating from S&P and Moody’s on
the Loans no later than ninety (90) days after the Closing Date.


 


Section 5.16                              Use
of Proceeds.


 


(a)                                  The
proceeds of the Loans and the Letters of Credit (including disbursements from
the U.S. Investment Account, Canadian Investment Account, U.S. Term Loan Collateral
Account or the Canadian Term Loan Collateral Account) will be used only in
accordance with the purposes set forth in Section 3.10, and such
use or uses shall be substantially consistent with the Budget, as updated from
time to time.


 


(b)                                 No
part of the proceeds of any Loan and no Letter of Credit will be used, whether
directly or indirectly, for any purpose that constitutes a violation of any of
the regulations of the Board, including Regulations T, U and X.


 


ARTICLE 6. NEGATIVE COVENANTS


 


From the Closing Date and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.4(c)) or any amount shall remain
outstanding or unpaid under this Agreement, unless the Required Lenders shall
otherwise consent in writing:


 


Section 6.1                                    Liens.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, incur, create, assume or suffer to exist
any Lien or encumbrance on any asset of the Loan Parties now owned or hereafter
acquired by any Loan Party other than Permitted Liens.


 


Section 6.2                                    Merger,
etc.  Each of the Loan Parties will
not (and will not apply to the Bankruptcy Court or the Canadian Court for
authority to), and will cause their Subsidiaries not 


 


111

















 


to, consolidate, amalgamate, wind-up or merge
with or into another Person, except that, if at the time thereof and
immediately after giving effect thereto no Default or Event of Default shall
have occurred and be continuing (i) any Foreign Subsidiary (other than a
Loan Party) may merge with any other Foreign Subsidiary (other than a Loan
Party) and (ii) any Receivables Securitization Entity may merge into a
U.S. Loan Party in a transaction in which the U.S. Loan Party is the surviving
entity.


 


Section 6.3                                    Indebtedness.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, contract, create, incur, assume or suffer
to exist any Indebtedness, except for (i) the Secured Obligations; (ii) Indebtedness
incurred prior to the Filing Date (including existing Capital Lease
Obligations) of the Loan Parties, including the Indebtedness listed on Schedule 6.3;
(iii) Indebtedness incurred subsequent to the Filing Date secured by
purchase money Liens and Capital Lease Obligations in an aggregate amount not
in excess of US$10,000,000 to the extent permitted by Section 6.4; (iv) Indebtedness
allowed under Section 6.7; (v) other unsecured Indebtedness
incurred subsequent to the Filing Date in an aggregate amount not to exceed
US$5,000,000; (vi) Indebtedness of Foreign Subsidiaries (other than
Canadian Loan Parties) in an aggregate amount not to exceed US$20,000,000
outstanding at any time, provided that such Indebtedness is non-recourse
to all of the Loan Parties; (vii) Indebtedness permitted by Section 6.11;
and (vii) Indebtedness permitted by Section 6.16; and (viii) Indebtedness
incurred to pay annual premiums for property and casualty insurance policies
maintained by the Parent or any Subsidiary not exceeding in an aggregate amount
at any time outstanding US$10,000,000.


 


Section 6.4                                    Capital
Expenditures.  Each of the Loan
Parties will not (and will not apply to the Bankruptcy Court or the Canadian
Court for authority to), and will cause each of their respective Subsidiaries
not to, make Capital Expenditures during the periods set forth below, in an
aggregate amount (calculated on a consolidated basis) in excess of the amount
specified opposite such period:


 




	
  Period

  	
   

  	
  Maximum Capital Expenditures

  	
   

  
	
  February 1,
  2009 to March 31, 2009

  	
   

  	
  US$

  	
  45,000,000

  	
   

  
	
  February 1,
  2009 to June 30, 2009

  	
   

  	
  US$

  	
  90,000,000

  	
   

  
	
  February 1,
  2009 to September 30, 2009

  	
   

  	
  US$

  	
  155,000,000

  	
   

  
	
  February 1,
  2009 to December 31, 2009

  	
   

  	
  US$

  	
  205,000,000

  	
   

  
	
  12-month
  period ended March 31, 2010

  	
   

  	
  US$

  	
  220,000,000

  	
   

  
	
  12-month
  period ended June 30, 2010

  	
   

  	
  US$

  	
  220,000,000

  	
   

  






 


Section 6.5                                      EBITDA.


 


(a)                                  As
of the end of each fiscal month of the Loan Parties, commencing with the fiscal
month ending February 28, 2009, the Loan Parties will not permit
Consolidated EBITDA for any two (2) consecutive calendar months to be
negative (with each month measured separately and without giving effect to any
Downtime Credit).


 


(b)                                 As
of the end of each fiscal period of the Loan Parties, commencing with the
fiscal month ending February 28, 2009, the Loan Parties will not permit
Consolidated 


 


112

















 


EBITDA for (i) each
fiscal period beginning on February 1, 2009 and ending on a date set forth
below on or before December 31, 2009, to be less than the respective
amounts specified opposite such fiscal period, and (ii) for each
twelve-month period ending on a date set forth below after December 31,
2009, to be less than the respective amounts specified opposite such period:


 


	
  Period Ending

  	
   

  	
  Cumulative Consolidated EBITDA

  	
   

  
	
  February 28,
  2009

  	
   

  	
  US$

  	
  17,900,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  US$

  	
  40,600,000

  	
   

  
	
  April 30,
  2009

  	
   

  	
  US$

  	
  59,000,000

  	
   

  
	
  May 31,
  2009

  	
   

  	
  US$

  	
  82,300,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  US$

  	
  112,900,000

  	
   

  
	
  July 31,
  2009

  	
   

  	
  US$

  	
  144,300,000

  	
   

  
	
  August 31,
  2009

  	
   

  	
  US$

  	
  188,200,000

  	
   

  
	
  September 30,
  2009

  	
   

  	
  US$

  	
  221,200,000

  	
   

  
	
  October 31,
  2009

  	
   

  	
  US$

  	
  261,000,000

  	
   

  
	
  November 30,
  2009

  	
   

  	
  US$

  	
  288,000,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  US$

  	
  314,400,000

  	
   

  
	
  January 31,
  2010

  	
   

  	
  US$

  	
  344,100,000

  	
   

  
	
  February 28,
  2010

  	
   

  	
  US$

  	
  349,400,000

  	
   

  
	
  March 31,
  2010

  	
   

  	
  US$

  	
  355,400,000

  	
   

  
	
  April 30,
  2010

  	
   

  	
  US$

  	
  357,300,000

  	
   

  
	
  May 31,
  2010

  	
   

  	
  US$

  	
  361,100,000

  	
   

  
	
  June 30,
  2010

  	
   

  	
  US$

  	
  366,100,000

  	
   

  



 


Section 6.6                                  Minimum
Liquidity.  The Loan Parties will not
permit the sum of Excess Availability plus Available Cash held by the
Loan Parties to be less than US$50,000,000 for any period of three (3) consecutive
days, provided that such amount shall not be less than US$30,000,000 on
any day.


 


Section 6.7                                  Guarantees
and Other Liabilities.  Each of the
Loan Parties will not (and will not apply to the Bankruptcy Court or the
Canadian Court for authority to), and will cause their Subsidiaries not to,
purchase or repurchase (or agree, contingently or otherwise, so to do) the
Indebtedness of, or assume, guarantee (directly or indirectly or by an
instrument having the effect of assuring another’s payment or performance of
any obligation or capability of so doing, or otherwise), endorse or otherwise
become liable, directly or indirectly, for the obligations, stock or dividends
of any Person, except (i) for any guaranty of Indebtedness or other
obligations (or otherwise becoming liable for any of the obligations) of any of
the Loan Parties in the ordinary course of business and consistent with the
past business practices with trade vendors if such Indebtedness or the
obligations are permitted by this Agreement, (ii) by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, and (iii) any guaranty of Indebtedness of a Foreign Subsidiary
that is not a Loan Party by another Foreign Subsidiary that is not a Loan
Party.


 


Section 6.8                                  Chapter
11/CCAA Claims.  Each of the Loan
Parties will not (and will not apply to the Bankruptcy Court or the Canadian
Court for authority to), and will cause their Subsidiaries not to, incur,
create, assume, suffer to exist or permit (i) any other Superpriority 


 


113

















 


Claim which is pari  passu
with or senior to the claims of the Administrative Agent and the Lenders
against the Loan Parties hereunder, except for the Carve-Out or (ii) any
court ordered superpriority charge which is pari  passu with or
senior to the CCAA DIP Lenders’ Charge against the Canadian Loan Parties,
except for the CCAA Charges.


 


Section 6.9                                  Dividends;
Capital Stock.  Each of the Loan
Parties will not (and will not apply to the Bankruptcy Court or the Canadian
Court for authority to), and will cause their Subsidiaries not to, declare or
pay, directly or indirectly, any dividends or make any other distribution or
payment, whether in cash, property, securities or a combination thereof, with
respect to (whether by reduction of capital or otherwise) any shares of capital
stock (or any options, warrants, rights or other equity securities or
agreements relating to any capital stock), or set apart any sum for the
aforesaid purposes on anything other than an arm’s-length basis, except for
dividends or distributions paid in cash by a Subsidiary to a Loan Party or any
other Person that owns capital stock or other equity interests in such
Subsidiary, ratably according to their respective holdings of the type of
capital stock or other equity interests in respect of which such dividend or
distribution is being made.


 


Section 6.10                            Transactions
with Affiliates.  Each of the Loan
Parties will not (and will not apply to the Bankruptcy Court or the Canadian
Court for authority to), and will cause their Subsidiaries not to, sell or
transfer any property or assets to, or otherwise engage in or permit to exist
any other material transactions with, any of its Affiliates (other than
transactions (i) among Loan Parties or (ii) among Subsidiaries that
are not Loan Parties) other than in the ordinary course of the Loan Parties’
businesses in good faith and at commercially reasonable prices and on
commercially reasonable terms and conditions not less favorable to the Loan
Parties than could be obtained on an arm’s-length basis from a non-Affiliate.


 


Section 6.11                            Investments,
Loans and Advances.  Each of the Loan
Parties will not (and will not apply to the Bankruptcy Court or the Canadian
Court for authority to), and will cause their Subsidiaries not to, purchase,
hold or acquire any capital stock, evidences of Indebtedness or other
securities of, make or permit to exist any loans or advances to, or make or
permit to exist any investment in, any other Person (all of the foregoing, “Investments”), except for (i) Investments
by U.S. Loan Parties in the Canadian Borrower or in the U.S. Loan Parties other
than Calpine; (ii) Investments by Canadian Loan Parties in the Canadian
Borrower or in the U.S. Loan Parties other than Calpine; (iii) Permitted
Investments; (iv) Indebtedness owed by any Foreign Subsidiaries (other
than the Canadian Loan Parties) in an aggregate amount not to exceed
US$5,000,000 outstanding at any time; (v) Indebtedness owing, or to be
owed by the Canadian Loan Parties (other than the Canadian Borrower) to the
U.S. Loan Parties other than Calpine in an aggregate amount not to exceed
US$10,000,000 outstanding at any time; (vi) Indebtedness owed by the
Canadian Guarantors to the Canadian Borrower in an aggregate amount not to
exceed at any time the lesser of (a) Total Canadian Outstandings and (b) the
Canadian Borrowing Base; (vii) Indebtedness owed by the Canadian Borrower
to the U.S. Loan Parties other than Calpine; (viii) Investments listed on Schedule
6.11; (ix) additional investments in Foreign Subsidiaries (other than
Loan Parties) and in joint ventures listed on Schedule 6.11 in an
aggregate amount not to exceed US$5,000,000, plus up to an additional
US$20,000,000 to the extent not distributed to Foreign Subsidiaries in the
thirty (30) days prior to the Filing Date; (x) additional investments in
Calpine in an aggregate amount not to exceed US$10,000,000; (xi) Investments
consisting of securities or notes received in settlement of accounts receivable



 


114

















 


incurred in the ordinary course of business
from a customer that such Loan Party has reasonably determined is unable to
make cash payments in accordance with the terms of such account receivable;
(xii) Investments by Foreign Subsidiaries (other than Canadian Subsidiaries) in
other Foreign Subsidiaries (other than Canadian Subsidiaries); and (xiii) other
Investments in an aggregate amount not to exceed US$1,000,000.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, invest amounts on deposit in the U.S.
Term Loan Collateral Account or the U.S. Investment Account in any investment
product other than Permitted Investments described in clauses (i) through (vi) of
the definition thereof.


 


Section 6.12                            Disposition
of Assets.  Except as may be
authorized by orders of the Bankruptcy Court or the Canadian Court, as
applicable, and on terms and conditions acceptable to the Administrative Agent,
each of the Loan Parties will not, and will cause their Subsidiaries not to,
sell or otherwise dispose of any assets (including, without limitation, the
capital stock of any Subsidiary of the Loan Parties) except for (i) sales
of Inventory in the ordinary course of business, (ii) sales of surplus
assets of the Loan Parties no longer used in the Loan Parties’ business
operations, (iii) sales of assets listed on Schedule 6.12, (iv) sales
and other dispositions from one Loan Party to another Loan Party, provided,
that any such sales or dispositions shall be in the ordinary course of such Loan
Parties’ business, made in good faith, at commercially reasonable prices and on
commercially reasonable terms and conditions, unless such transactions are
between (A) U.S. Loan Parties and the Canadian Borrower or (B) Canadian
Guarantors, (v) sales and other dispositions from one Foreign Subsidiary
(other than Canadian Subsidiaries) to another Foreign Subsidiary (other than
Canadian Subsidiaries), and (vi) sales of assets having a fair market
value not in excess of US$25,000,000 in the aggregate.


 


Section 6.13                            Nature
of Business.  Each of the Loan
Parties will not (and will not apply to the Bankruptcy Court or the Canadian
Court for authority to), and will cause their Subsidiaries not to, modify or
alter in any material manner the nature and type of its business as conducted
at or prior to the Filing Date or the manner in which such business is
conducted (except as required by the Bankruptcy Code or CCAA).


 


Section 6.14                            Restrictive
Agreements among Loan Parties.  Each
of the Loan Parties will not (and will not apply to the Bankruptcy Court or the
Canadian Court for authority to), and will cause their Subsidiaries not to,
except for this Agreement or to the extent existing on the Filing Date and
disclosed on Schedule
6.14, permit, place or agree to permit or place any
restrictions on the payment of dividends or other distributions among the Loan
Parties or their Subsidiaries or Affiliates or the making of advances or any
other cash payments among the Loan Parties or their Subsidiaries or Affiliates.


 


Section 6.15                            Right
of Subrogation among Loan Parties. 
Each of the Loan Parties will not (and will not apply to the Bankruptcy
Court or the Canadian Court for authority to), and will cause their
Subsidiaries not to, assert any right of subrogation against any other Loan
Party until all Borrowings and all Letters of Credit are paid in full and the
Commitments are terminated.


 


Section 6.16                            Derivative
Agreements.  Each of the Loan Parties
will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority
to), and will cause their 


 


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Subsidiaries not to, enter into any Swap
Agreement, except (a) Swap Agreements entered into to hedge or mitigate
risks to which any Loan Party or any Subsidiary has actual exposure (other than
those in respect of capital stock of any Person), and (b) Swap Agreements
entered into in order to effectively cap, collar or exchange interest rates
(from fixed to floating rates, from one floating rate to another floating rate
or otherwise) with respect to any interest-bearing liability or investment of
any Loan Party or any Subsidiary, provided that in each case such Swap
Agreements may only be entered into in the ordinary course of the Loan Parties’
business, consistent with past practices.


 


Section 6.17                            Reorganization
Plan.  The Loan Parties will not (and
will not apply to the Bankruptcy Court or the Canadian Court for authority to),
file any Reorganization Plan that does not provide for the repayment in full in
cash on the effective date thereof of all outstanding Secured Obligations.


 


ARTICLE 7. EVENTS OF DEFAULT


 


Section 7.1                                  Events
of Default.  In the case of the
happening of any of the following events and the continuance thereof beyond the
applicable period of grace (if any) set forth below (each, an “Event of Default”):


 


(a)                                  any
representation or warranty made by any Loan Party in this Agreement or in any
Loan Document or in connection with this Agreement or the credit extensions
hereunder or any statement or representation made in any report, financial
statement, certificate or other document furnished by any Loan Party to the
Lenders under or in connection with this Agreement, shall prove to have been
false or misleading in any material respect when made or delivered; or


 


(b)                                 default
shall be made in the payment of any principal of the Loans or any reimbursement
obligation or cash collateralization in respect of Letters of Credit, when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise; or


 


(c)                                  default
shall be made in the payment of any fees or interest on the Loans or other
amounts payable by the Loan Parties hereunder (other than any amounts referred
to in clause (b) of this Section), when and as the same shall become due
and payable, and such failure shall continue unremedied for more than one (1) Business
Day; or


 


(d)                                 default
shall be made by any Loan Party, or any of their respective Subsidiaries, in
the due observance or performance of any covenants, conditions or agreements
contained in ARTICLE 6 hereof; or


 


(e)                                  default
shall be made by any Loan Party, or any of their respective Subsidiaries, in
the due observance or performance of any covenant, condition or agreement
(other than the covenants, conditions or agreements contained in ARTICLE 6
hereof) to be observed or performed pursuant to the terms of this Agreement or
any of the other Loan Documents and such default shall continue unremedied for
more than ten (10) days following the earlier of (i) notice of such
breach by the Administrative Agent or any Lender or (ii) any Loan Party
having knowledge of such breach; or


 


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(f)            any
of the Cases shall be dismissed or converted to a case under Chapter 7 of the
Bankruptcy Code, or any Loan Party shall file a motion or other pleading
seeking the dismissal of any of the Cases under Section 1112 of the
Bankruptcy Code or otherwise; a trustee under Chapter 7 or Chapter 11 of the
Bankruptcy Code, a responsible officer or an examiner with enlarged powers
relating to the operation of the business (powers beyond those set forth in Section 1106(a)(3) and
(4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code shall be appointed in any of the Cases and the order appointing
such trustee, responsible officer or examiner shall not be reversed or vacated
within thirty (30) days after the entry thereof; or a trustee in bankruptcy,
receiver, interim receiver, receiver and manager or official with similar
powers shall be appointed with respect to any Canadian Loan Party or its
assets; or an application shall be filed by any Loan Party for the approval of
any other Superpriority Claim (other than the Carve-Out) in any of the Cases
which is pari  passu with or senior to the
claims of the Administrative Agent and the Lenders against any Loan Party
hereunder, or there shall arise or be granted any such pari  passu
or senior Superpriority Claim without the consent of the Administrative Agent
in its exclusive discretion (provided that the Administrative Agent’s
discretion with respect to the foregoing claims shall be limited to claims for
less than $1,000,000); or the Bankruptcy Court shall enter an order terminating
the use of cash collateral for the purposes described in Section 3.10;
or a motion shall be filed by any Loan Party in any of the Canadian Cases for
the approval of any other superpriority charge other than the CCAA Charges against
any of the Canadian Loan Parties, or there shall arise any such pari  passu
or senior charge without the consent of the Administrative Agent in its
exclusive discretion (provided that the Administrative Agent’s discretion with
respect to the foregoing claims shall be limited to claims for less than
$1,000,000); or


 


(g)           the
Bankruptcy Court or the Canadian Court shall enter an order or orders granting
relief from the automatic stay applicable under Section 362 of the
Bankruptcy Code or the stay in the Initial Order, as applicable, to the holder
or holders of any security interest to permit foreclosure or enforcement of any
kind (or the granting of a deed in lieu of foreclosure or the like) on any
assets of any of the Loan Parties which have a value in excess of US$5,000,000  in the aggregate; or


 


(h)           a
Change of Control shall occur; or


 


(i)            the
Loan Parties shall fail to deliver any certified Borrowing Base Certificate
when due and such default shall continue unremedied for more than (i) one (1) Business
Day with respect to a daily Borrowing Base Certificate, (ii) three (3) Business
Days with respect to a weekly Borrowing Base Certificate and (iii) five (5) Business
Days with respect to a monthly Borrowing Base Certificate; or


 


(j)            any
Loan Document shall not be for any reason, or any of the Loan Parties shall so
assert in a pleading filed in any court, in full force and effect and
enforceable in all material respects in accordance with its terms; or


 


(k)           an
order of the Bankruptcy Court or the Canadian Court shall be entered reversing,
amending, supplementing, staying for a period in excess of ten (10) days,
vacating or otherwise modifying any of the Orders without the prior written
consent of the Administrative Agent; or


 


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(l)            any
judgment or order as to a post-petition liability or debt for the payment of
money in excess of US$1,000,000  shall
be rendered against any of the Loan Parties or any of their Subsidiaries and
such judgment shall remain undischarged and there shall be any period of thirty
(30) consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or


 


(m)          any
non-monetary judgment or order with respect to a post-petition event shall be
rendered against any Loan Party, or any of their respective Subsidiaries, which
does or would reasonably be expected to cause a Material Adverse Effect; or


 


(n)           the
Loan Parties or any of their Subsidiaries shall make any Pre-Petition Payment
(whether by way of adequate protection or otherwise) of principal or interest
or otherwise on account of any pre-petition Indebtedness or payables
(including, without limitation, reclamation claims) other than Pre-Petition
Payments authorized by the Bankruptcy Court or Canadian Court in respect of (i) accrued
payroll and related employee benefit expenses as of the Filing Date, (ii) reclamation
claims in such amounts as determined by the Loan Parties and agreed to by the
Administrative Agent; (iii) materialmen’s, shippers, warehousemen’s and
other similar liens and certain other pre-petition claims permitted by the
Administrative Agent and authorized by the Bankruptcy Court or Canadian Court
in an aggregate amount not to exceed $46,000,000, (iv) the payment of
current interest and letter of credit fees (and the payment of all interest and
fees that are accrued and unpaid as of the Filing Date) at the applicable
non-default rates provided for pursuant to the Pre-Petition Credit Agreement,
all as described in the Loan Parties’ “Motion for an Order (I) Authorizing
Debtors to Obtain Post-Petition Financing; (II) Granting Liens, Including
Priming Liens, and Superpriority Claims Pursuant to 11 U.S.C. § 364; (III) Authorizing
Use of Proceeds to Effectuate Payout of Securitization Facilities (IV) Authorizing
Use of Cash Collateral Pursuant to 11 U.S.C. § 363; (V) Granting Adequate
Protection Pursuant to 11 U.S.C. §§ 363 and 364; and (VI) Scheduling a
Final Hearing,” and as authorized by the Orders, (v) payments in
respect of prepetition claims of taxing authorities in an aggregate amount not
to exceed $23,100,000 as described in the Loan Parties’ “Motion for an Order
Authorizing the Payment of Prepetition Sales, Use, Property, and Other Taxes
and Governmental Charges;” (vi) the payment of pre-petition claims to
certain critical vendors in an aggregate amount not to exceed $60,000,00 as
described in the Loan Parties’ “Motion for an Order Authorizing the Payment
of Prepetition Claims of Certain Critical Vendors;” (vii) the payment
of certain pre-petition obligations owed to customers and brokers in an
aggregate amount not to exceed $23,000,000 as described in the Loan Parties’ “Motion
for an Order Authorizing the Debtors to Honor Certain Prepetition Obligations
to Customers and Brokers and to Otherwise Continue Prepetition Customer and
Broker Programs and Practices in the Ordinary Course of Business;” (viii) payment
of pre-petition obligations in respect of insurance programs in an aggregate
amount not to exceed $7,000,000 as described in the Loan Parties’ “Motion
for an Order Authorizing the Debtors to (I) Make Installment Payments
Under Prepetition Insurance Premium Financing Agreements, (II) Continue
Prepetition Insurance Programs in the Ordinary Course of Business, and (III) Pay
All Prepetition Obligations in Respect Thereof;” or (ix) such other
orders which are satisfactory in form and substance to the Administrative
Agent; or


 


(o)           any
Termination Event described in clauses (iii) or (iv) of the
definition of such term shall have occurred and shall continue unremedied for
more than ten (10) days and the sum (determined as of the date of
occurrence of such Termination Event) of the Insufficiency of 


 


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the Plan in
respect of which such Termination Event shall have occurred and be continuing
and the Insufficiency of any and all other Plans with respect to which such a
Termination Event (described in such clauses (iii) or (iv)) shall have
occurred and then exist is equal to or greater than US$1,000,000; or


 


(p)           (i) any
Loan Party or any ERISA Affiliate thereof shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan, (ii) such Loan Party or such ERISA Affiliate does
not have reasonable grounds to contest such Withdrawal Liability and is not in
fact contesting such Withdrawal Liability in a timely and appropriate manner,
and (iii) the amount of such Withdrawal Liability specified in such notice,
when aggregated with all other amounts required to be paid to Multiemployer
Plans in connection with Withdrawal Liabilities (determined as of the date of
such notification), exceeds US$1,000,000  allocable
to post-petition obligations or requires payments exceeding US$100,000  per annum in excess of the annual payments
made with respect to such Multiemployer Plans by such Loan Party or such ERISA
Affiliate for the plan year immediately preceding the plan year in which such
notification is received; or


 


(q)           any
Loan Party or any ERISA Affiliate thereof shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of such Loan Party and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the Closing Date by an amount exceeding US$1,000,000; or


 


(r)            any
Loan Party or any ERISA Affiliate thereof shall have committed a failure
described in Section 302(f)(1) of ERISA (other than the failure to make
any contribution accrued and unpaid as of the Filing Date) and the amount
determined under Section 302(f)(3) of ERISA is equal to or greater
than US$1,000,000; or


 


(s)           any
Loan Party shall have failed to make current service contributions to a
Canadian Pension Plan (other than the failure to make any contribution accrued
and unpaid as of the Filing Date); or


 


(t)            it
shall be determined (whether by the Bankruptcy Court, the Canadian Court or by
any other judicial or administrative forum) that any Loan Party is liable for
the payment of claims arising out of any failure to comply (or to have
complied) with applicable Environmental Laws the payment of which will have a
Material Adverse Effect and the enforcement thereof shall not have been stayed;


 


then, and in every such event and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders, shall, take one or more of the following actions without
further order of or application to the Bankruptcy Court or the Canadian Court, provided
that with respect to item (iv) below and the enforcement of liens or other
remedies with respect to collateral referred to in item (v) below, the
Administrative Agent shall provide the Borrowers (with a copy to counsel for
the Official Creditors’ Committee appointed in any of the U.S. Cases, to the
United States Trustee for the Bankruptcy Court’s 


 


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District, and to any monitor in the Canadian Cases) with five (5) business
days’ prior written notice (the “Default Notice”),
and, solely to the extent required in the Canadian Cases, with leave of the
Canadian Court:  (i) terminate
forthwith the Commitments; (ii) declare the Loans then outstanding to be
forthwith due and payable, whereupon the principal of the Loans together with
accrued interest thereon and any unpaid accrued Fees and all other liabilities
of the Loan Parties accrued hereunder and under any other Loan Document, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the Loan
Parties, anything contained herein or in any other Loan Document to the
contrary notwithstanding; (iii) require the Loan Parties upon demand to
forthwith deposit in the Letter of Credit Account or Canadian Letter of Credit
Account, as the case may be, cash in an amount, taken together with any amounts
then held in the Letter of Credit Account or Canadian Letter of Credit Account,
as the case may be, is equal to the greater of (A) an amount, as
determined by the Fronting Banks and the Applicable Agents, equal to the face
amount of all outstanding Letters of Credit issued by the Fronting Banks plus
the sum of all projected contractual obligations to the Applicable Agents, the
Fronting Banks and the Lenders of the Borrowers thereunder through the
expiration date(s) of such Letters of Credit, and (B) 105% of the
aggregate Letter of Credit Outstandings issued by the Fronting Banks  (and to the extent the Loan Parties shall fail to furnish
such funds as demanded by the Administrative Agent, the Administrative Agent
shall be authorized to debit the accounts of the Loan Parties maintained with
the Administrative Agent in such amount five (5) Business Days after the
giving of the Default Notice (the “Default Notice Period”));
(iv) set-off amounts in any Collateral Account or any other accounts
maintained with the Administrative Agent or any other Lender or their
Affiliates and apply such amounts to the obligations of the Loan Parties
hereunder and in the other Loan Documents; or (v) exercise any and all
remedies (including, without limitation, with respect to the Liens in favor of
the Agents and the Secured Parties) under the Loan Documents and under
applicable law available to the Administrative Agent and the Lenders.


 


ARTICLE 8. THE AGENTS


 


Section 8.1             Administration.  The general administration of the Loan
Documents shall be performed by the Administrative Agent.  Each Lender hereby irrevocably authorizes
each Agent, at its discretion, to take or refrain from taking such actions as
agent on its behalf and to exercise or refrain from exercising such powers
under the Loan Documents as are delegated by the terms hereof or thereof, as
appropriate, together with all powers reasonably incidental thereto (including
the release of Collateral in connection with any transaction that is expressly
permitted by the Loan Documents).  The
Agents shall not have any duties or responsibilities except as set forth in
this Agreement and the remaining Loan Documents.


 


Section 8.2             Advances
and Payments.  On the date of each
Loan, the Applicable Agent shall be authorized (but not obligated) to advance,
for the account of each of the Lenders, the amount of the Loan to be made by it
in accordance with its Commitment hereunder. 
Should the Applicable Agent do so, each of the Lenders agrees forthwith
to reimburse such Agent in immediately available funds for the amount so
advanced on its behalf by such Agent, together with interest at the Federal
Funds Effective Rate if not so reimbursed on the date due from and including
such date but not including the date of reimbursement.


 


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Section 8.3            Sharing
of Setoffs.


 


(a)           Each
U.S. Lender agrees that if it shall, through the exercise of a right of banker’s
lien, setoff or counterclaim against the U.S. Loan Parties and the Canadian
Borrower, including, but not limited to, a secured claim or other security or
interest arising from, or in lieu of, such secured claim and received by such
U.S. Lender under any applicable bankruptcy, insolvency or other similar law,
or otherwise, obtain payment in respect of its U.S. Loans as a result of which
the unpaid portion of its U.S. Loans is proportionately less than the unpaid
portion of the U.S. Loans of any other U.S. Lender (a) it shall promptly
purchase at par (and shall be deemed to have thereupon purchased) from such
other U.S. Lender a participation in the U.S. Loans of such other U.S. Lender,
so that the aggregate unpaid principal amount of each U.S. Lender’s U.S. Loans
and its participation in U.S. Loans of the other U.S. Lenders shall be in the
same proportion to the aggregate unpaid principal amount of all U.S. Loans then
outstanding as the principal amount of its U.S. Loans prior to the obtaining of
such payment was to the principal amount of all U.S. Loans outstanding prior to
the obtaining of such payment and (b) such other adjustments shall be made
from time to time as shall be equitable to ensure that the U.S. Lenders share
such payment pro-rata, provided that if any such non-pro-rata payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be rescinded (without interest). 
Each of the U.S. Loan Parties expressly consents to the foregoing
arrangements and agrees that any U.S. Lender holding (or deemed to be holding)
a participation in a U.S. Loan may exercise any and all rights of banker’s
lien, setoff (in each case, subject to the same notice requirements as pertain
to clause (iv) of the remedial provisions of Section 7.1) or
counterclaim with respect to any and all moneys owing by the U.S. Loan Parties
to such U.S. Lender as fully as if such U.S. Lender held a promissory note and
was the original obligee thereon, in the amount of such participation.


 


(b)           Each
Canadian Lender agrees that if it shall, through the exercise of a right of
banker’s lien, setoff or counterclaim against the Canadian Loan Parties and the
U.S. Borrower, including, but not limited to, a secured claim or other security
or interest arising from, or in lieu of, such secured claim and received by
such Canadian Lender under any applicable bankruptcy, insolvency or other
similar law, or otherwise, obtain payment in respect of its Canadian Loans as a
result of which the unpaid portion of its Canadian Loans is proportionately
less than the unpaid portion of the Canadian Loans of any other Canadian Lender
(a) it shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from such other Canadian Lender a participation in the
Canadian Loans of such other Canadian Lender, so that the aggregate unpaid
principal amount of each Canadian Lender’s Canadian Loans and its participation
in Canadian Loans of the other Canadian Lenders shall be in the same proportion
to the aggregate unpaid principal amount of all Canadian Loans then outstanding
as the principal amount of its Canadian Loans prior to the obtaining of such
payment was to the principal amount of all Canadian Loans outstanding prior to
the obtaining of such payment and (b) such other adjustments shall be made
from time to time as shall be equitable to ensure that the Canadian Lenders
share such payment pro-rata, provided that if any such non-pro-rata payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be rescinded (without interest). 
Each of the Canadian Loan Parties expressly consents to the foregoing
arrangements and agrees that any Canadian Lender holding (or deemed to be holding)
a participation in a Canadian Loan may exercise any and all rights of banker’s
lien, setoff (in each case, subject to the same notice requirements as pertain
to clause (iv) of the remedial provisions of Section 7.1) or
counterclaim with respect to


 


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any and all
moneys owing by the Canadian Loan Parties to such Canadian Lender as fully as
if such Canadian Lender held a promissory note and was the original obligee
thereon, in the amount of such participation.


 


Section 8.4            Agreement
of Required Lenders.  Upon any
occasion requiring or permitting an approval, consent, waiver, election or
other action on the part of the Required Lenders, action shall be taken by the
Agents for and on behalf or for the benefit of all Lenders upon the direction
of the Required Lenders, and any such action shall be binding on all
Lenders.  No amendment, modification,
consent, or waiver shall be effective except in accordance with the provisions
of Section 9.10.


 


Section 8.5            Liability of Agents.


 


(a)           Each
Agent, when acting on behalf of the Lenders, may execute any of its respective
duties under this Agreement by or through any of its respective officers,
agents, and employees, and neither the Agents nor their directors, officers,
agents, employees or Affiliates shall be liable to the Lenders or any of them
for any action taken or omitted to be taken in good faith, or be responsible to
the Lenders or to any of them for the consequences of any oversight or error of
judgment, or for any loss, unless the same shall happen through its gross
negligence or willful misconduct.  The
Agents and their respective directors, officers, agents, employees and
Affiliates  shall in no event be liable
to the Lenders or to any of them for any action taken or omitted to be taken by
them pursuant to instructions received by them from the Required Lenders or in
reliance upon the advice of counsel selected by it.  Without limiting the foregoing, neither the
Agents, nor any of their respective directors, officers, employees, agents or
Affiliates shall be responsible to any Lender for the due execution, validity,
genuineness, effectiveness, sufficiency, or enforceability of, or for any
statement, warranty, or representation in, this Agreement, any Loan Document or
any related agreement, document or order, or shall be required to ascertain or
to make any inquiry concerning the performance or observance by the Loan
Parties of any of the terms, conditions, covenants, or agreements of this
Agreement or any of the Loan Documents.


 


(b)           Neither
the Agents nor any of their respective directors, officers, employees, agents
or Affiliates shall have any responsibility to the Loan Parties on account of
the failure or delay in performance or breach by any Lender or by the Loan
Parties of any of their obligations under this Agreement or any of the Loan
Documents or in connection herewith or therewith.


 


(c)           The
Agents, in their capacity as Agents hereunder, shall be entitled to rely on any
communication, instrument, or document reasonably believed by such person to be
genuine or correct and to have been signed or sent by a person or persons
believed by such person to be the proper person or persons, and such person
shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by such
person.


 


Section 8.6             Reimbursement
and Indemnification.  Each Lender
agrees (i) to reimburse (x) the Agents for such Lender’s Applicable
Percentage of any expenses and fees incurred for the benefit of the Lenders
under this Agreement and any of the Loan Documents,


 


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including, without limitation, counsel fees
and compensation of agents and employees paid for services rendered on behalf
of the Lenders, and any other expense incurred in connection with the
operations or enforcement thereof not reimbursed by the Loan Parties and (y) the
Agents for such Lender’s Applicable Percentage of any expenses of the Agents
incurred for the benefit of the Lenders that the Loan Parties have agreed to
reimburse pursuant to Section 9.5 and has failed to so reimburse
and (ii) to indemnify and hold harmless the Agents and any of their
directors, officers, employees, agents or Affiliates, on demand, in the amount
of its proportionate share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against it or any of them in any way
relating to or arising out of this Agreement or any of the Loan Documents or
any action taken or omitted by it or any of them under this Agreement or any of
the Loan Documents to the extent not reimbursed by the Loan Parties (except
such as shall result from their respective gross negligence or willful
misconduct).


 


Section 8.7             Rights
of Agents.  It is understood and
agreed that the Agents shall have the same rights and powers hereunder
(including the right to give such instructions) as the other Lenders and may
exercise such rights and powers, as well as its rights and powers under other
agreements and instruments to which it is or may be party, and engage in other
transactions with any Loan Party, as though it were not an Agent hereunder.


 


Section 8.8             Other
Duties, etc.  Anything herein to the
contrary notwithstanding, none of the Co-Lead Arrangers, joint bookrunners,
syndication agents, or documentation agents shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents,
except in its capacity, as applicable, as an Agent, a Lender or Fronting Bank
hereunder.


 


Section 8.9             Independent
Lenders.  Each Lender acknowledges
that it has decided to enter into this Agreement and to make the Loans
hereunder based on its own analysis of the transactions contemplated hereby and
of the creditworthiness of the Loan Parties and agrees that the Agents shall
bear no responsibility therefor.


 


Section 8.10           Notice
of Transfer.  The Administrative
Agent may deem and treat a Lender party to this Agreement as the owner of such
Lender’s portion of the Loans for all purposes, unless and until a written
notice of the assignment or transfer thereof executed by such Lender shall have
been received by the Administrative Agent.


 


Section 8.11           Successor
Agents.  Each Agent may resign at any
time by giving written notice thereof to the Lenders and the Loan Parties.  Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent, which shall be
reasonably satisfactory to the Loan Parties. 
If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment, within thirty (30) days after
the retiring Agent’s giving of notice of resignation, the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of a least
US$100,000,000, which shall be reasonably satisfactory to the Loan
Parties.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent


 


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shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under
this Agreement.  After any retiring Agent’s
resignation hereunder as Agent, the provisions of this ARTICLE 8 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.


 


Section 8.12          Quebec
Security.


 


(a)           For
greater certainty, and without limiting the powers of any Agent, each of the
Agents, the Lenders and the Fronting Banks, for themselves, and each Lender for
each of its Affiliates, hereby irrevocably constitutes JPMorgan Chase Bank,
N.A., Toronto Branch as the holder of an irrevocable power of attorney (fondé de pouvoir within the meaning of Article 2692 of
the Civil Code of Québec) in order to hold
hypothecs and security granted by any Loan Party on property pursuant to the
laws of the Province of Québec in order to secure obligations of any Loan Party
under any bond, debenture or similar title of indebtedness, issued by any Loan
Party, and hereby agrees that JPMorgan Chase Bank, N.A., Toronto Branch may act
as the bondholder and mandatary (i.e. agent) with respect to any bond,
debenture or similar title of indebtedness that may be issued by any Loan Party
and pledged in favour of JPMorgan Chase Bank, N.A., Toronto Branch, for the
benefit of the Secured Parties. The execution by JPMorgan Chase Bank, N.A.,
Toronto Branch, acting as fondé de pouvoir,
bondholder and mandatary, prior to the execution of this Agreement of any deeds
of hypothec or other security documents is hereby ratified and confirmed.


 


(b)           Notwithstanding
the provisions of Section 32 of An Act respecting the
special powers of legal persons (Québec), JPMorgan Chase Bank, N.A.,
Toronto Branch may acquire and be the holder of any bond, debenture or similar
title of indebtedness issued by any Loan Party (i.e. the fondé de
pouvoir may acquire and hold the first bond, debenture or similar
title of indebtedness issued under any deed of hypothec by any Loan Party).


 


(c)           The
constitution of JPMorgan Chase Bank, N.A., Toronto Branch as fondé de pouvoir, and as bondholder and mandatary with
respect to any bond, debenture, or similar title of indebtedness that may be
issued and pledged from time to time to JPMorgan Chase Bank, N.A., Toronto
Branch for the benefit of the Secured Parties, shall be deemed to have been
ratified and confirmed by each Person accepting an assignment of, a
participation in or an arrangement in respect of, all or any portion of any
Secured Parties’ rights and obligations under this Agreement by the execution
of an assignment, including an Assignment and Acceptance, or other agreement
pursuant to which it becomes such assignee or participant, and by each
successor Agent by the execution of an Assignment and Acceptance  or other agreement, or by the compliance
with other formalities, as the case may be, pursuant to which it becomes a
successor Agent under this Agreement.


 


(d)           JPMorgan
Chase Bank, N.A., Toronto Branch acting as fondé de pouvoir,
bondholder or mandatary shall have the same rights, powers, immunities,
indemnities and exclusions from liability as are prescribed in favour of the
Agents in this Agreement, which shall apply mutatis mutandis to
JPMorgan Chase Bank, N.A., Toronto Branch, acting as fondé de
pouvoir, bondholder or mandatary.


 


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ARTICLE 9. MISCELLANEOUS


 


Section 9.1            Notices.


 


(a)           Except
in the case of notices and other communications expressly permitted to be given
by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:


 


(i)            if to the Loan
Parties, to Smurfit-Stone Container Corporation at Six CityPlace Drive, 10th Floor, St. Louis, MO 63141, Attention of Chief
Financial Officer (Fax No. (314) 787-6162);


 


(ii)           if to the
Administrative Agent or the Collateral Agent, to JPMorgan Chase Bank, Loan and
Agency Services Group, 1111 Fannin Street, 10th Floor, Houston, Texas 77002,
Attention of Christian Cho (Telecopy No. 713-427-6307) and Sylvia
Gutierrez (Telecopy No. 713-427-6307), with a copy to JPMorgan Chase Bank,
N.A., 277 Park Avenue, 8th Floor, New York, NY 10172, Attention of Ann
Kurinskas (Telecopy No. 212-622-4556);


 


(iii)          if to the Canadian
Administrative Agent or the Canadian Collateral Agent, to JPMorgan Chase Bank,
N.A., Toronto Branch 200 Bay Street, Suite 1800, Toronto, Ontario
M5J 2J2, Attention of Amanda Vidulich (Telecopy No. 416-981-9128);


 


(iv)          if to JPMCB, as Fronting
Bank with respect to any U.S. Revolving Facility Letter of Credit, to it at
JPMorgan Chase Bank, N.A., 300 South Riverside Plaza, L/C Department, Mail
code: IL1-0236, Chicago, IL 60606, Attention of Floro Alcantara (Telephone:
312-954-1910) and Annette Bond (Telephone: 312-954-3240) Fax: 312-954-0203,
with a copy to JPMorgan Chase Bank, N.A., 277 Park Avenue, 8th Floor, New York,
NY 10172, Attention of Ann Kurinskas (Telecopy No. 212-622-4556); and


 


(v)           if to JPMCB, as
Fronting Bank with respect to any Canadian Revolving Facility Letter of Credit,
to it at JPMorgan Chase Bank, N.A., Toronto Branch L/C Department, 200 Bay
Street, Floor 18 Toronto, M5J 2J2, Canada, Attention of Jennifer McLaughlin
(Telephone: 416-981-2324; Fax: 416-981-2375), with a copy to JPMorgan Chase
Bank, N.A., 277 Park Avenue, 8th Floor, New York, NY 10172, Attention of Ann
Kurinskas (Telecopy No. 212-622-4556); and


 


(vi)          if to any Lender, to it
at its address (or telecopy number) set forth in its Administrative
Questionnaire.


 


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(b)           Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to ARTICLE
2 unless otherwise agreed by the Administrative Agent and the
applicable Lender.  The Administrative
Agent or the Loan Parties may, in their respective discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by them; provided that approval of such
procedures may be limited to particular notices or communications.


 


(c)           Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.


 


Section 9.2            Survival
of Agreement, Representations and Warranties, etc.  All warranties, representations and covenants
made by any Loan Party herein or in any certificate or other instrument
delivered by it or on its behalf in connection with this Agreement shall be
considered to have been relied upon by the Lenders and shall survive the making
of the Loans herein contemplated regardless of any investigation made by any
Lender or on its behalf and shall continue in full force and effect so long as
any amount due or to become due hereunder is outstanding and unpaid and so long
as the Commitments have not been terminated. 
All statements in any such certificate or other instrument shall
constitute representations and warranties by the Loan Parties hereunder with
respect to the Loan Parties.


 


Section 9.3            Successors and Assigns.


 


(a)           The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of a Fronting Bank that issues any Letter of Credit),
except that (i) the Borrowers may not assign or otherwise transfer any of
their rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrowers without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of a Fronting Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section)
and, to the extent expressly contemplated hereby, the Related Parties of each
of the Administrative Agent, the Fronting Bank(s) and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.


 


(b)


 


(i)            Subject to the
conditions set forth in paragraph (b)(ii) below, any Lender may assign to
one or more assignees (other than a Loan Party or an Affiliate of a Loan Party)
all or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans at the time owing to it) with the 


 


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prior written
consent (such consent not to be unreasonably withheld) of:


 


(A)          the Administrative
Agent, provided that no consent of the Administrative Agent shall be required
for an assignment of all or any portion of a Term Loan to a Lender, an
Affiliate of a Lender or an Approved Fund; and


 


(B)           each Fronting Bank,
provided that no consent of any Fronting Bank shall be required for an
assignment of all or any portion of a Term Loan.


 


(ii)           Assignments
shall be subject to the following additional conditions:


 


(A)          except in the case of an
assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender’s Commitment or Loans of any
Class, the amount of the Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 unless the Administrative Agent otherwise consents;


 


(B)           each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement, provided that this clause
shall not be construed to prohibit the assignment of a proportionate part of
all the assigning Lender’s rights and obligations in respect of one Class of
Commitments or Loans;


 


(C)           the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500;


 


(D)          the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire in which the assignee designates one or more credit contacts to
whom all syndicate-level information (which may contain material non-public
information about the Loan Parties and their Related Parties or their
respective securities) will be made available and who may receive such
information in accordance with the assignee’s compliance procedures and
applicable laws, including Federal and state securities laws;


 


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(E)           no such assignment shall
be made to a Loan Party or any Affiliate of a Loan Party; and


 


(F)           with the exception of
assignments from the Converting Lenders necessary to effect further allocations
of the Commitments and the Loans, and except as directed by the Administrative
Agent pursuant to Section 9.3(e), no such assignments shall be made
prior to the earlier of (I) the date the Bankruptcy Court enters the Final
Order or (II) the date the Administrative Agent declares in writing the
syndication of the Commitments to be complete.


 


For the
purposes of this Section 9.3(b), the term “Approved Fund” has the
following meaning:


 


“Approved Fund” means any Person
(other than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.


 


(iii)          Subject to acceptance
and recording thereof pursuant to paragraph (b)(iv) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Section 2.15, Section 2.16,
Section 2.19, Section 9.5, Section 9.6).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 9.3
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.


 


(iv)          The Administrative
Agent, acting for this purpose as an agent of the Borrowers, shall maintain at
one of its offices a copy of each Assignment and Acceptance delivered to it and
a register for the recordation of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the Loans and payments made by the
Fronting Bank(s) pursuant to a Letter of Credit owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent, the Fronting Bank(s) and



 


128

















 


the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.  The Register shall be
available for inspection by the Borrowers, the Fronting Bank(s) and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.


 


(v)           Upon its receipt of a
duly completed Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register; provided that if either the
assigning Lender or the assignee shall have failed to make any payment required
to be made by it under this Agreement, the Administrative Agent shall have no
obligation to accept such Assignment and Acceptance and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.


 


(c)           Any
Lender may, without the consent of the Borrowers, the Administrative Agent, or
the Fronting Banks, sell participations to one or more banks or other entities
(a “Participant”) in all or
a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrowers, the Administrative Agent, the Fronting Bank(s) and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.10(a) that affects
such Participant.  The Loan Parties agree
that each Participant shall be entitled to the benefits of Section 2.15,
Section 2.16 and Section 2.19 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section.  To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 2.26 as though it were a Lender, provided such
Participant agrees to be subject to Section 8.3 as though it were a
Lender.


 


(d)           Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including 


 


129

















 


without
limitation any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of
a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.


 


(e)           Each
Lender having a Commitment on the Closing Date (a “Closing Date Lender”), hereby agrees to
execute and deliver, at any time and from time to time on or prior to the date
the Bankruptcy Court enters the Final Order, such Assignments and Acceptances
as the Administrative Agent may direct in order to effect secondary allocations
of the Commitments to other Persons who shall become Lenders hereunder.  The Closing Date Lenders shall effect such
assignments with the payment of a corresponding amount of fees to market as the
Administrative Agent may direct, but which fees, as paid by a Closing Date
Lender, shall be no greater than the amount of fees to market received by such
Closing Date Lender in connection with such Closing Date Lender’s initial
Commitments under this Agreement.


 


Section 9.4            Confidentiality.  Each Agent, the Fronting Banks and each of
the Lenders 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 counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential in accordance
herewith), (b) to the extent requested by any regulatory authority, (c) to
the extent required by Requirement of Laws or by any subpoena or similar legal
process, (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or participant in, or any prospective assignee of or participant in, any of
its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Loan Parties and their obligations, (g) with
the consent of the Borrowers or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) becomes
available to any Agent, any Fronting Bank or any Lender on a non-confidential
basis from a source other than the Borrowers. For the purposes of this Section,
“Information” means all information
received from the Borrowers or any of their Subsidiaries relating to the
Borrowers or any of their Subsidiaries or any of their respective businesses,
other than any such information that is available to any Agent, any Fronting
Bank or any Lender on a non-confidential basis and not known by such Person to
be in contravention of any applicable confidentiality or similar provision
prior to disclosure by the Borrowers. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.


 


EACH AGENT, EACH FRONTING BANK AND EACH OF THE LENDERS ACKNOWLEDGES
THAT INFORMATION FURNISHED TO IT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING ANY OF THE LOAN


 


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PARTIES OR
THEIR SUBSIDIARIES AND THEIR RESPECTIVE RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING
THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH
MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.


 


ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS,
FURNISHED BY THE LOAN PARTIES OR THE AGENTS PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RELATED
PARTIES OR THEIR RESPECTIVE SECURITIES. 
ACCORDINGLY, EACH LENDER REPRESENTS TO THE LOAN PARTIES AND THE AGENTS
THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO
MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION
IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING
FEDERAL AND STATE SECURITIES LAWS.


 


Section 9.5            Expenses.  Whether or not the transactions hereby
contemplated shall be consummated, the Loan Parties’ agree to pay all reasonable
expenses incurred by each Agent and the Co-Lead Arrangers (including, without
limitation, the reasonable fees and disbursements of Bryan Cave LLP, counsel
for the Administrative Agent, any other local counsel that such Agent shall
retain (including Canadian and Delaware counsel) and any internal or
third-party appraisers, consultants and auditors advising such Agent and the
Co-Lead Arrangers and their counsel) in connection with the preparation,
execution, delivery and administration of this Agreement and the other Loan
Documents, the making of the Loans and the issuance of the Letters of Credit,
the perfection of the Liens contemplated hereby, the syndication of the
transactions contemplated hereby, the costs, fees and expenses of each Agent
and the Co-Lead Arrangers in connection with the initial and periodic
collateral reviews and appraisals, field audits, monitoring of assets
(including collateral monitoring fees of or incurred by the Administrative
Agent) and publicity expenses, and, following the occurrence of an Event of
Default, all expenses incurred by the Lenders and each Agent in the enforcement
or protection of the rights of any one or more of the Lenders or such Agent in
connection with this Agreement or the other Loan Documents, including but not
limited to the fees and disbursements of any counsel for the Lenders or such
Agent.  Such payments by the Loan Parties
shall be made upon delivery of a statement setting forth such costs and
expenses.  Whether or not the
transactions hereby contemplated shall be consummated, the Loan Parties agree
to reimburse the Administrative Agent and the Co-Lead Arrangers for the
expenses set forth in the Commitment Letter and the reimbursement provisions
thereof are hereby incorporated herein by reference.  The obligations of the Loan Parties under
this Section shall survive the termination of this Agreement or the
payment of the Loans.


 


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Section 9.6            Indemnity.


 


(a)           Each
of the Loan Parties agree to indemnify and hold harmless each Agent, the
Co-Lead Arrangers and the Lenders and their directors, officers, employees,
trustees, advisors, agents and Affiliates (each an “Indemnified Party”)
from and against any and all expenses, losses, claims, damages and liabilities
incurred by such Indemnified Party arising out of claims made by any Person in
any way relating to the transactions contemplated hereby, but excluding
therefrom all expenses, losses, claims, damages, and liabilities to the extent
that they are determined by the final judgment of a court of competent
jurisdiction to have resulted from (i) the willful misconduct or gross
negligence of such Indemnified Party or (ii) an action commenced by such
Indemnified Party against a Loan Party and which action results in a final
judgment in favor of such Loan Party. 
The obligations of the Loan Parties under this Section shall
survive the termination of this Agreement and the payment of the Loans.


 


(b)           To
the extent that a Borrower fails to pay any amount required to be paid by it to
the Applicable Agent or a Fronting Bank under Section 9.5 or
paragraph (a) of this Section, each Lender severally agrees to pay to the
Applicable Agent or the Fronting Bank, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Applicable Agent or the Fronting Bank in its capacity as such.


 


(c)           To
the extent permitted by applicable law, no Loan Party, Agent or any of the
Lenders shall assert, and each Loan Party, Agent and Lender hereby waives, any
claim against any other Loan Party, Agent or any Lender, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, any Loan
or Letter of Credit or the use of the proceeds thereof except to the extent
such damages would otherwise be subject to indemnity hereunder.


 


Section 9.7            Choice
of Law.  THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL, UNLESS OTHERWISE SPECIFIED THEREIN, IN ALL RESPECTS
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE
AND THE BANKRUPTCY CODE.


 


Section 9.8            No
Waiver.  No failure on the part of
any Agent or any of the Lenders to exercise, and no delay in exercising, any
right, power or remedy hereunder or any of the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.


 


Section 9.9            Extension
of Maturity.  Should any payment of
principal of or interest or any other amount due hereunder become due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, in the case of principal,
interest shall be payable thereon at the rate herein specified during such
extension.


 


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Section 9.10                                Amendments,
etc.


 


(a)                                  No
modification, amendment or waiver of any provision of this Agreement, the
Security and Pledge Agreement or any other Loan Document, and no consent to any
departure by the Loan Parties therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given; provided, however, that no such
modification or amendment shall without the written consent of each Lender
affected thereby (x) increase the Commitment of such Lender (it being
understood that a waiver of an Event of Default shall not constitute an
increase in the Commitment of a Lender), or (y) reduce the principal
amount of any Loan (or any unreimbursed Letter of Credit) or the rate of
interest payable thereon, or extend any date for the payment of interest,
principal or fees hereunder or reduce any Fees payable hereunder or extend the
final maturity of the Loan Parties’ obligations hereunder (subject to Section 2.30
and Section 2.31); and, provided, further,
that no such modification or amendment shall without the written consent of (A) all
of the Lenders (i) amend or modify any provision of this Agreement which
provides for the unanimous consent or approval of the Lenders or the consent or
approval of each affected Lender, (ii) amend this Section 9.10
or the definition of Required Lenders or Super-majority Lenders, (iii) amend
or modify the Superpriority Claim status of the Lenders contemplated by Section 2.24,
(iv) increase the Total Revolving Commitment by an amount in excess of
US$100,000,000, (v) release all or substantially all of the Collateral
from the Liens created hereunder and under the other Loan Documents or (B) the Super-majority Lenders (i) release
any material portion (but less than all or substantially all) of the Collateral
from the Liens created hereunder and under the other Loan Documents (other than
with respect to asset sales permitted under Section 6.12), (ii) release
any Loan Party from its joint and several obligations under ARTICLE 10, (iii) alter
the eligibility standards or amend any of the component definitions used in
determining the Borrowing Bases in a manner which would increase the amount of
the Borrowing Bases, (iv) increase the Total Revolving Commitment by an
amount up to US$100,000,000, (v) increase the advance rates in calculation
of the Borrowing Bases, (vi) change Section 7.1(f) or (vii) change
Section 2.33.  No such
amendment or modification may adversely affect the rights and obligations of
the Agents or any Fronting Bank hereunder without its prior written
consent.  No notice to or demand on any
Loan Party shall entitle any Loan Party to any other or further notice or demand
in the same, similar or other circumstances. 
Each assignee under Section 9.3 shall be bound by any
amendment, modification, waiver, or consent authorized as provided herein, and
any consent by a Lender shall bind any Person subsequently acquiring an interest
on the Loans held by such Lender.  No
amendment to this Agreement shall be effective against any Loan Party unless in
writing and signed by such Loan Party. 
The Administrative Agent shall provide written notice to the monitor in
the Canadian Cases promptly following any request from the Canadian Loan
Parties pursuant to this Agreement or any of the other Loan Documents for the
consent of the Lenders to release any material portion of or all or
substantially all of the Collateral from the Liens in favor of the Agents on
behalf of the Secured Parties or for the release of the proceeds of such
Collateral from such Liens.


 


(b)                                 Notwithstanding
anything to the contrary contained in Section 9.10(a), in the event
that any Loan Party requests that this Agreement be modified or amended in a
manner which would require the unanimous consent of all of the Lenders or the
consent of the Super-majority Lenders and such modification or amendment is
agreed to by the Consenting Lenders


 


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(as hereinafter defined), then
with the consent of the Loan Parties and the Consenting Lenders, the Loan
Parties and the Consenting Lenders shall be permitted to amend the Agreement
without the consent of the Lender or Lenders which did not agree to the
modification or amendment requested by such Loan Party (such Lender or Lenders,
collectively the “Minority Lenders”) to
provide for (w) the termination of the Commitment of each of the Minority
Lenders, (x) the addition to this Agreement of one or more other financial
institutions (each of which shall be an Eligible Assignee), or an increase in
the Revolving Commitment of one or more of the Consenting Lenders, so that the
Total Revolving Commitment after giving effect to such amendment shall be in
the same amount as the Total Revolving Commitment immediately before giving
effect to such amendment, (y) if any Loans are outstanding at the time of
such amendment, the making of such additional Loans by such new financial
institutions or Consenting Lender or Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans of the Minority Lenders
immediately before giving effect to such amendment and (z) such other
modifications to this Agreement as may be appropriate.  As used herein, the term “Consenting Lenders” shall mean, at any
time, Lenders having aggregate Total Canadian Outstandings, Total U.S.
Outstandings and unused Commitments representing more than 66-2/3% of the
aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused
Commitments at such time.


 


Section 9.11                                Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


Section 9.12                                Headings.
Section headings used herein are for convenience only and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.


 


Section 9.13                                Execution
in Counterparts.  This Agreement may
be executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument.


 


Section 9.14                                Prior
Agreements; Inconsistencies.  This
Agreement represents the entire agreement of the parties with regard to the
subject matter hereof and the terms of any letters and other documentation
entered into between any Loan Party and any Lender or the Administrative Agent
prior to the execution of this Agreement which relate to Loans to be made
hereunder shall be replaced by the terms of this Agreement (except as otherwise
expressly provided herein with respect to the Commitment Letter and the fee
letter referred to therein, including without limitation the provisions of Section 2.20).  In the event of any conflicts between the
express provisions of this Agreement and the Orders, the provisions of the
Orders shall control to the extent of any such inconsistency.  In the event of any conflicts between the
express provisions of this Agreement and the Security Agreement, the provisions
of this Agreement shall control to the extent of any such inconsistency.


 


Section 9.15                                Further
Assurances.  Whenever and so often as
reasonably requested by an Agent, the Loan Parties will promptly execute and
deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or


 


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cause to be done all such other and further things as may be necessary
and reasonably required in order to further and more fully vest in the Agents
all rights, interests, powers, benefits, privileges and advantages conferred or
intended to be conferred by this Agreement and the other Loan Documents.


 


Section 9.16                                Waiver
of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.


 


Section 9.17                                Subordination
of Intercompany Indebtedness.  Each
of the Loan Parties agree that any and all Intercompany Indebtedness owed to
any Loan Party shall be subordinate and subject in right of payment to the
prior payment, in full and in cash, of all Secured Obligations.  Notwithstanding any right of any Loan Party
to ask, demand, sue for, take or receive any payment in respect of any
Intercompany Indebtedness owed to any Loan Party, any and all rights, liens and
security interests of any Loan Party, whether now or hereafter arising and
howsoever existing, in any assets of any other Subsidiary of Parent (whether
constituting part of the Collateral given to the Agents for the benefit of the
Secured Parties to secure payment of all or any part of the Secured Obligations
or otherwise) shall be and are subordinated to the rights of the Agents and the
Secured Parties in those assets.  No Loan
Party shall have any right to possession of any such asset or to foreclose upon
any such asset, whether by judicial action or otherwise, unless and until all
of the Secured Obligations (other than unasserted contingent indemnity
obligations) shall have been fully paid and satisfied and all financing
arrangements among the Loan Parties and the Lenders have been terminated.  So long as any Event of Default shall have
occurred and be continuing, then, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any Intercompany Indebtedness owed by
any Loan Party shall be paid or delivered directly to the Administrative Agent
for application on any of the Secured Obligations, due or to become due, until
such Secured Obligations (other than contingent indemnity obligations) shall
have first been fully paid and satisfied. 
Each of the Loan Parties irrevocably authorize and empower the
Administrative Agent to demand, sue for, collect and receive every such payment
or distribution and give acquittance therefor and to make and present for and
on behalf of any Loan Party such proofs of claim and take such other action, in
the Administrative Agent’s own name or in the name of the applicable Loan Party
or otherwise, as the Administrative Agent may deem necessary or advisable for
the enforcement of this Section 9.17.  The Administrative Agent may vote such proofs
of claim in any such proceeding, receive and collect any and all dividends or
other payments or disbursements made thereon in whatever form the same may be
paid or issued and apply the same on account of any of the Secured Obligations.  Should any payment, distribution, security or
instrument or proceeds thereof be received by any Loan Party upon or with
respect to the Intercompany Indebtedness at any time an Event of Default shall
have occurred and be continuing and prior to the satisfaction of all of the
Secured Obligations and the termination of all financing arrangements among the
Loan Parties and the Lenders, the applicable Loan Party shall receive and hold
the same in trust, as trustee, for the benefit of the Lenders and shall so long
as any Event of Default shall have occurred and be continuing promptly deliver
the same to the Administrative Agent, for the benefit of the Lenders, in
precisely the form received (except for the endorsement or assignment of the
applicable Loan Party where necessary), for application to any of the Secured
Obligations,


 


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due or not due, and, until so delivered, the same shall be held in
trust by the applicable Loan Party as the property of the Lenders.  If any Loan Party fails to make any such
endorsement or assignment to the Administrative Agent, the Administrative Agent
or any of its officers or employees are irrevocably authorized to make the
same.  So long as any Event of Default
shall have occurred and be continuing, the Loan Parties agree that until the
Secured Obligations have been paid in full (in cash) and satisfied and all
financing arrangements among the Loan Parties and the Lenders have been
terminated, the Loan Parties will neither assign nor transfer to any Person
(other than the Administrative Agent) any claim the Loan Parties have or may
have against any other Subsidiary of the Parent.


 


Section 9.18                                Certain
Post Closing Matters.


 


(a)                                  Notwithstanding
anything to the contrary contained in this Agreement, within the time periods
set forth below or such later date to which the Administrative Agent may, in
its exclusive discretion, agree in writing, the Loan Parties shall deliver to
the Administrative Agent:


 


(i)                                     within
ninety (90) days after the Closing Date, mortgages in favor of the Applicable
Agent and in form and substance reasonably satisfactory to the Administrative
Agent on such Eligible Real Property of the Loan Parties as may then constitute
all or any part of the U.S. PP&E Component or the Canadian PP&E
Component, together with such updated title commitments and related real estate
due diligence materials as the Administrative Agent may request in accordance
with the definition of Eligible Real Property;


 


(ii)                                  within
sixty (60) days after the Closing Date, account control agreements in favor of
the Applicable Agent and in form and substance reasonably satisfactory to the
Administrative Agent on deposit accounts and securities accounts of the Loan
Parties maintained with any institution other than such Applicable Agent;


 


(iii)                               within
ten (10) days after the Closing Date, the form of Final Order, in form and
substance satisfactory to the Administrative Agent in is exclusive discretion,
which shall be attached hereto as Exhibit A-3, delivery of which
was temporarily waived by the Lenders for the purposes of effectuating the
Closing Date;


 


(iv)                              within
three (3) Business Days after the Bankruptcy Court enters the U.S. Interim
Order, orders shall have been made in the Recognition Cases recognizing the
U.S. Cases of Smurfit-MBI and SLP Finance General Partnership and granting
charges over the assets of each of Smurfit-MBI and SLP Finance General
Partnership and otherwise in form satisfactory to the Administrative Agent,
which orders shall be in full force and effect and shall not have been stayed,
reversed, modified, or amended in 


 


136

















 


any respect without the prior written consent
of the Administrative Agent;


 


(v)                               within
fifteen (15) days after the Closing Date, certificates representing ownership
interests in Pledged Collateral (as defined in the Security and Pledge
Agreement) that are required to be delivered to the Administrative Agent
pursuant to the Security and Pledge Agreement, together with an update to Exhibit E
to the Security and Pledge Agreement providing the information contemplated by
but not included on such Exhibit E as of the Closing Date;


 


(vi)                            on or
before March 27, 2009, (A) evidence satisfactory to the
Administrative Agent in its exclusive discretion that Smurfit-Stone Puerto Rico, Inc.
has remedied its failure to be in good standing under the law of its
jurisdiction of organization and until the Administrative Agent receives such
evidence, no assets of Smurfit-Stone Puerto Rico, Inc. will be included in
the U.S. Borrowing Base and (B) the Organizational Documents and
certificate of good standing or similar certificate for Smurfit-Stone Puerto
Rico, Inc.;


 


(vii)                         within
ninety (90) days after the Closing Date, (A) a mortgage granted by MBI
Limited/Limitée, in its capacity as general partner of Smurfit-MBI, in favour
of the Canadian Collateral Agent in respect of the property municipally known
as 8150 Parkhill Drive, Milton, Ontario, and (B) a deed of hypothec and
issue of bonds by the Canadian Borrower in favour of the Canadian Collateral
Agent, as fondé de pouvoir, in respect of the property municipally known as
15400 Sherbrooke Street East, Montreal, Quebec, and such other documents
related thereto, in each case in form and substance reasonably satisfactory to
the Canadian Administrative Agent, together with such title insurance policies
and related real estate due diligence materials and other materials as the
Canadian Administrative Agent may request;


 


(viii)                      within
fifteen (15) days after the Closing Date, (A) Pledged Security
Certificates (as defined in the Canadian Security Agreement) required to be
delivered to the Canadian Collateral Agent pursuant to the Canadian Security
Agreement and other materials as may be required to provide the Canadian Collateral
Agent with control over such Pledged Security Certificates, and (B) each
Instrument evidencing obligations owing to any Canadian Loan Party in a
principal amount in excess of $1,000,000 included in or related to the
Collateral (as defined in the Canadian Security Agreement) endorsed and/or
accompanied by such instruments of assignment and transfer in such form and
substance as the Canadian Collateral Agent may reasonably request pursuant to
the


 


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Canadian Security Agreement, together with an
update to Schedule A of the Canadian Security Agreement providing the
information contemplated by but not included on such Schedule A as of the
Closing Date;


 


(ix)                             within
one (1) day after the Closing Date, copies certified by the Secretary of
State of the State of Delaware of (x) the Certificate of Merger of SSCE
Funding, LLC with and into Stone Receivables LLC and (y) the Certificate
of Merger of Stone Receivables LLC with and into Smurfit-Stone Container Enterprises, Inc.;


 


(x)                                within
three (3) Business Days after the Closing Date, the Termination and
Reassignment Agreement with respect to the termination of the Canadian
Receivables Securitization Program in form and substance reasonably
satisfactory to the Administrative Agent;


 


(xi)                             within
three (3) Business Days after the Closing Date, the amended and restated
Initial Order in form and substance reasonably satisfactory to the
Administrative Agent; and


 


(xii)                         on
or before the date the Bankruptcy Court enters the Final Order, a cross border
protocol with respect to proceedings in the Cases before the Canadian Court and
the Bankruptcy Court in form and substance reasonably satisfactory to the
Administrative Agent.


 


(b)                                 All
conditions precedent and representations contained in the Loan Documents shall
be deemed modified to the extent necessary to effect the foregoing (and to
permit the taking of the actions described above within the time periods
required above); provided, that to the extent any representation and
warranty would not be true because the foregoing actions were not taken on the
Closing Date, the respective representation and warranty shall be required to
be true and correct at the time the respective action is taken in accordance
with the foregoing provisions of this Section 9.18.  The acceptance of the benefits of the making
of each Loan and the issuance of each Letter of Credit shall constitute a
representation, warranty and covenant by the Loan Parties to each of the
Lenders that the actions required pursuant to this Section 9.18
will be taken within the relevant time periods referred to in this Section 9.18
and that, at such time, all representations and warranties contained in this
Agreement shall then be true and correct without any modification pursuant to
this Section 9.18.


 


Section 9.19                                USA
Patriot Act.  Each Lender hereby
notifies the Loan Parties that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to
obtain, verify and record information that identifies the Loan Parties, which
information includes the name and address of the Loan Parties and other
information that will allow such Lender to identify the Loan Parties in
accordance with the Patriot Act.


 


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Section 9.20                                Judgment
Currency.  (a)           Except as otherwise provided in Section 11.3,
the Loan Parties’ obligations hereunder and under the other Loan Documents to
make payments in Dollars or in Canadian Dollars (the “Obligation Currency”) shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation Currency,
except to the extent that such tender or recovery results in the effective
receipt by the Applicable Agent, the applicable Fronting Bank or the applicable
Lender of the full amount of the Obligation Currency expressed to be payable to
the Applicable Agent, the applicable Fronting Bank or the applicable Lender
under this Agreement or the other Loan Documents.  If, for the purpose of obtaining or enforcing
judgment against any Loan Party in any court or in any jurisdiction, it becomes
necessary to convert into or from any currency other than the Obligation
Currency (such other currency being hereinafter referred to as the “Judgment Currency”) an amount due in
the Obligation Currency, the conversion shall be made, at the Exchange Rate, in
the case of Canadian Dollars or Dollars, and, in the case of other currencies,
the rate of exchange (as quoted by the Administrative Agent or if the
Administrative Agent does not quote a rate of exchange on such currency, by a
known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the date immediately preceding the day on which
the judgment is given (such Business Day being hereinafter referred to as the “Judgment Currency Conversion Date”).


 


(b)                                 If
there is a change in the rate of exchange prevailing between the Judgment
Currency Conversion Date and the date of actual payment of the amount due, the
Loan Parties covenant and agree to pay, or cause to be paid, such additional
amounts, if any (but in any event not a lesser amount), as may be necessary to
ensure that the amount paid in the Judgment Currency, when converted at the
rate of exchange prevailing on the date of payment, will produce the amount of
the Obligation Currency which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial award at the rate of
exchange prevailing on the Judgment Currency Conversion Date.


 


(c)                                  For
purposes of determining the amount of any payment in the Obligation Currency
under this Section 9.20, the rate of exchange used shall take into
account any premium and costs payable in connection with the purchase of the
Obligation Currency.


 


Section 9.21                                Several
Obligations; Nonreliance; Violation of Law. The respective obligations of
the Lenders hereunder are several and not joint and the failure of any Lender
to make any Loan or perform any of its obligations hereunder shall not relieve
any other Lender from any of its obligations hereunder. Each Lender hereby
represents that it is not relying on or looking to any margin stock for the
repayment of the Borrowings provided for herein. Anything contained in this
Agreement to the contrary notwithstanding, neither any Fronting Bank nor any
Lender shall be obligated to extend credit to the Borrowers in violation of any
Requirement of Law.


 


Section 9.22                                Canadian
Anti-Money Laundering Legislation.


 


(a)                                  Each
of the Canadian Loan Parties acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)  and other applicable anti-money laundering, anti-terrorist
financing, government sanction and “know your client” laws, whether within
Canada or elsewhere (collectively, including any guidelines or


 


139

















 


orders thereunder, “AML Legislation”), the Applicable Agent
and the Lenders may be required to obtain, verify and record information
regarding such Canadian Loan Party, its directors, authorized signing officers,
direct or indirect shareholders or other Persons in control of such Canadian
Loan Party, and the transactions contemplated hereby. Each of the Canadian Loan
Parties shall promptly provide all such information, including supporting
documentation and other evidence, as may be reasonably requested by any Lender
or the Applicable Agent, or any prospective assign or participant of a Lender
or the Applicable Agent, in order to comply with any applicable AML
Legislation, whether now or hereafter in existence.


 


(b)                                 If
the Applicable Agent has ascertained the identity of any Canadian Loan Party or
any authorized signatories of such Canadian Loan Party for the purposes of
applicable AML Legislation, then the Applicable Agent:


 


 (i)                                  shall be deemed to
have done so as an agent for each Lender, and this Agreement shall constitute a
“written agreement” in such regard between each Lender and such Applicable
Agent within the meaning of applicable AML Legislation; and


 


(ii)                                  shall
provide to each Lender copies of all information obtained in such regard
without any representation or warranty as to its accuracy or completeness.


 


Notwithstanding
the preceding sentence and except as may otherwise be agreed in writing, each
of the Lenders agrees that the Applicable Agent has no obligation to ascertain
the identity of any Canadian Loan Party or any authorized signatories of
such Canadian Loan Party on behalf of any Lender, or to confirm the
completeness or accuracy of any information it obtains from such Canadian Loan
Party or any such authorized signatory in doing so.


 


Section 9.23                                Conversion.


 


(a)                                  In
connection with the completion of syndication efforts, on a date designated by
the Administrative Agent on not less than one (1) Business Days notice to
the U.S. Borrower, the Converting Lenders and Bank of America, N.A., and which
date shall be no later than the later of (i) the date the Bankruptcy Court
enters the Final Order and (ii) forty (40) days after the Closing Date
(the “Conversion Date”), to
the extent the percentage obtained by dividing the U.S. Revolving Commitment of
a Converting Lender on the Closing Date by the aggregate Commitments of such
Converting Lender on the Closing Date (immediately prior to the initial funding
of the Term Loans) is greater than 33.333%, the Converting Lenders may elect to
decrease their U.S. Tranche A Revolving Commitments by an amount to be
specified by each such Converting Lender and increase their outstanding U.S.
Term Loans by the amount of such decrease (each, a “U.S. Term Loan Conversion”), provided,
that the amount of a U.S. Term Loan Conversion by a Converting Lender shall not
result in the percentage obtained by dividing the U.S. Revolving Commitment of
a Converting Lender (after giving effect to such U.S. Term Loan Conversion) by
the aggregate Revolving Commitments and Term Loans of such Converting Lender at
the time of such conversion (after giving effect to any assignments by such
Converting Lender after the Closing Date and on or prior to such date, the “U.S. Revolving Credit Hold Percentage”)
to be less than 33.333%; provided, further, that no U.S. Term
Loan


 


140

















 


Conversion shall result in the
aggregate principal amount of the U.S. Tranche A Revolving Loans to be greater
than (x) prior to the expiration of the Interim Period, the Interim U.S.
Tranche A Revolving Commitment (after giving effect to such conversion), and (y) from
and after the expiration of the Interim Period, the U.S. Tranche A Revolving
Commitment (as such U.S. Tranche A Revolving Commitment may be reduced from
time to time pursuant to the terms of this Agreement and after giving effect to
such conversion); and provided, further, that if the U.S.
Revolving Credit Hold Percentage of the Converting Lenders is less than the
percentage obtained by dividing the U.S. Revolving Commitment of Bank of
America, N.A. by the aggregate Revolving Commitments and Term Loans of Bank of
America, N.A. at the time of such conversion, Bank of America, N.A. shall be
deemed to be a Converting Lender and may decrease such amount of its U.S.
Tranche A Revolving Commitment (and thereby increase its outstanding U.S. Term
Loans by such amount) as may be necessary to reduce its U.S. Revolving Credit
Hold Percentage to not less than the U.S. Revolving Credit Hold Percentage of
the other Converting Lenders.  To effect
a U.S. Term Loan Conversion, a Converting Lender shall provide written notice
(a “U.S. Conversion Notice”)
to the U.S. Borrower, the other Converting Lenders and the Administrative Agent
on or prior to the Conversion Date setting forth the percentage of such
Converting Lender’s U.S. Tranche A Revolving Commitment that will be converted
to a U.S. Term Loan.  On the date of the
Administrative Agent’s delivery of notice regarding the establishment of the
Conversion Date, JPMCB and Deutsche Bank Trust Company Americas shall advise
Bank of America, N.A. of the U.S. Revolving Credit Hold Percentage.  Each U.S. Conversion Notice received by the
Administrative Agent shall be irrevocable.


 


(b)                                 Subject
to the limitations set forth in Section 9.23(a) above, on the
conversion date specified by a Converting Lender in its U.S. Conversion Notice:


 


(i)                                     such
Converting Lender shall make an amount available to the Administrative Agent at
its office most recently designated for such purpose, no later than 12:00 Noon,
New York City time, in U.S. Dollars and in immediately available funds, equal
to (A) the percentage of such Converting Lender’s U.S. Tranche A Revolving
Commitment that will be converted to a U.S. Term Loan multiplied by (B) the
difference between (x) the U.S. Tranche A Revolving Commitment of such
Converting Lender on such date (as determined immediately prior to any U.S.
Term Loan Conversions on such date), minus (y) the aggregate
outstanding U.S. Tranche A Revolving Loans of such Converting Lender on such
date (prior to giving effect to any conversion of U.S. Tranche A Revolving
Loans to U.S. Term Loans as provided in clause (ii)(y) below); provided,
that, if the foregoing amount is zero, the Converting Lender shall not be
required to make any amount available to the Administrative Agent;


 


(ii)                                  upon
the Administrative Agent’s receipt of funds pursuant to clause (i) above,
if applicable, (x) the Administrative Agent shall deposit such funds in
the U.S. Term Loan Collateral Account and such funds shall be deemed to be an
outstanding U.S. Term Loan (subject to disbursement to the U.S. Borrower as
provided in


 


141

















 


Section 2.7(c)),
(y) an amount equal to (A) the percentage of such Converting Lender’s
U.S. Tranche A Revolving Commitment that will be converted to a U.S. Term Loan
multiplied by (B) the aggregate outstanding U.S. Tranche A Revolving Loans
of such Converting Lender on such date (prior to giving effect to any
conversion of U.S. Tranche A Revolving Loans to U.S. Term Loans as provided in
this clause (y)) shall be deemed to be an outstanding U.S. Term Loan and shall
cease to be a U.S. Tranche A Revolving Loan, and (z) the U.S. Tranche A
Revolving Commitment of such Converting Lender shall be reduced permanently in
an amount equal to the amount of such Converting Lender’s U.S. Tranche A
Revolving Commitment that was converted to a U.S. Term Loan; and


 


(iii)                               each
U.S. Term Loan made pursuant to clause (i) above or deemed to be made
pursuant to clause (ii) above shall be an ABR Loan (which ABR Loan may be
converted in accordance with the terms of this Agreement).


 


(c)                                  In
connection with the completion of syndication efforts, on the Conversion Date,
to the extent the percentage obtained by dividing the Canadian Revolving
Commitment of a Converting Lender on the Closing Date by the aggregate
Commitments of such Converting Lender on the Closing Date (immediately prior to
the initial funding of the Term Loans) is greater than 8.666%, the Converting
Lenders may elect to decrease their Canadian Revolving Commitments by an amount
to be specified by each such Converting Lender and increase their outstanding
Canadian Term Loans by the amount of such decrease (each, a “Canadian Term Loan Conversion”), provided,
that the amount of a Canadian Term Loan Conversion by a Converting Lender shall
not result in the percentage obtained by dividing the Canadian Revolving
Commitment of a Converting Lender (after giving effect to such Canadian Term
Loan Conversion) by the aggregate Revolving Commitments and Term Loans of such
Converting Lender at the time of such conversion (after giving effect to any
assignments by such Converting Lender after the Closing Date and on or prior to
such date, the “Canadian Revolving Credit
Hold Percentage”) to be less than 8.666%; provided, further,
that no Canadian Term Loan Conversion shall result in the Canadian Revolving
Credit Utilization to be greater than (x) prior to the expiration of the
Interim Period, the Interim Canadian Revolving Commitment (after giving effect
to such conversion), and (y) from and after the expiration of the Interim
Period, the Canadian Revolving Commitment (as such Canadian Revolving
Commitment may be reduced from time to time pursuant to the terms of this
Agreement and after giving effect to such conversion); and provided, further,
that if the Canadian Revolving Credit Hold Percentage of the Converting Lenders
is less than the percentage obtained by dividing the Canadian Revolving
Commitment of Bank of America, N.A., Canada Branch, by the aggregate Revolving
Commitments and Term Loans of Bank of America, N.A., Canada Branch, at the time
of such conversion, Bank of America, N.A., Canada Branch, shall be deemed to be
a Converting Lender and may decrease such amount of its Canadian Revolving
Commitment (and thereby increase its outstanding Canadian Term Loans by such
amount) as may be necessary to reduce its Canadian Revolving Credit Hold
Percentage to not less than the Canadian Revolving Credit Hold Percentage of
the other Converting Lenders.  To effect
a Canadian Term Loan Conversion,


 


142

















 


a Converting Lender shall
provide written notice (a “Canadian
Conversion Notice”) to the Canadian Borrower, the other
Converting Lenders and the Canadian Administrative Agent on or prior to the
Conversion Date setting forth the percentage of such Converting Lender’s
Canadian Revolving Commitment that will be converted to a Canadian Term
Loan.  On the date of the Administrative
Agent’s delivery of notice regarding the establishment of the Conversion Date,
JPMCB and Deutsche Bank Trust Company Americas shall advise Bank of America,
N.A., Canada Branch, of the Canadian Revolving Credit Hold Percentage.  Each Canadian Conversion Notice received by
the Canadian Administrative Agent shall be irrevocable.


 


(d)                                 Subject
to the limitations set forth in Section 9.23(c) above, on the
conversion date specified by a Converting Lender in its Canadian Conversion
Notice:


 


(i)                                     such
Converting Lender shall make an amount available to the Canadian Administrative
Agent at its office most recently designated for such purpose, no later than
12:00 Noon, New York City time, in U.S. Dollars and in immediately available
funds, equal to (A) the percentage of such Converting Lender’s Canadian
Revolving Commitment that will be converted to a Canadian Term Loan multiplied
by (B) the difference between (x) the Canadian Revolving Commitment
of such Converting Lender on such date (as determined immediately prior to any
Canadian Term Loan Conversions on such date), minus (y) the
aggregate outstanding Canadian Revolving Loans of such Converting Lender on
such date (prior to giving effect to any conversion of Canadian Revolving Loans
to Canadian Term Loans as provided in clause (ii)(y) below); provided,
that, if the foregoing amount is zero, the Converting Lender shall not be
required to make any amount available to the Canadian Administrative Agent;


 


(ii)                                  upon
the Canadian Administrative Agent’s receipt of funds pursuant to clause (i) above,
if applicable, (x) the Canadian Administrative Agent shall deposit such
funds in the Canadian Term Loan Collateral Account and such funds shall be
deemed to be an outstanding Canadian Term Loan (subject to disbursement to the
Canadian Borrower as provided in Section 2.7(d)), (y) an
amount equal to (A) the percentage of such Converting Lender’s Canadian
Revolving Commitment that will be converted to a Canadian Term Loan multiplied
by (B) the aggregate outstanding Canadian Revolving Loans of such
Converting Lender on such date (prior to giving effect to any conversion of Canadian
Revolving Loans to Canadian Term Loans as provided in this clause (y)) shall be
deemed to be an outstanding Canadian Term Loan and shall cease to be a Canadian
Revolving Loan, and (z) the Canadian Revolving Commitment of such
Converting Lender shall be reduced permanently in an amount equal to the amount
of such Converting Lender’s Canadian Revolving Commitment that was converted to
a Canadian Term Loan;


 


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(iii)                               each
Canadian Term Loan made pursuant to clause (i) above or deemed to be made
pursuant to clause (ii) above shall be an ABR Loan (which ABR Loan may be
converted in accordance with the terms of this Agreement); and


 


(iv)                              each
Canadian Revolving Lender’s undivided interest and participation in each
Canadian Revolving Facility Letter of Credit pursuant to Section 2.4(f) shall
be adjusted to account for the reduction in the aggregate Canadian Revolving
Commitment.


 


Section 9.24                                Restated
Agreement.  Each reference to the
Prior Agreement in any other Loan Document shall, without further amendment, be
deemed to be a reference to this Agreement.


 


ARTICLE 10. GUARANTY


 


Section 10.1                                U.S.
Guaranty.  Each of the Borrowers and
the U.S. Guarantors, each in its capacity as a Guarantor, hereby agrees that it
is jointly and severally liable for, and, as primary obligor and not merely as
surety, absolutely and unconditionally guarantees to the Administrative Agent
(for the benefit of the Secured Parties) the prompt payment when due, whether
at stated maturity, upon acceleration or otherwise, and at all times
thereafter, of the Secured Obligations and all costs and expenses including,
without limitation, all court costs and attorneys’ and paralegals’ fees
(including allocated costs of in-house counsel and paralegals) and expenses
paid or incurred by the Secured Parties in endeavoring to collect all or any
part of the Secured Obligations from, or in prosecuting any action against, any
Borrower, any other Guarantor or any other guarantor of all or any part of the
Secured Obligations (such costs and expenses, together with the Secured
Obligations, collectively the “U.S. Guaranteed
Obligations”).  Each of
the Borrowers and the U.S. Guarantors further agrees that the U.S. Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal. All terms of this Guaranty apply
to and may be enforced by or on behalf of any domestic or foreign branch or
Affiliate of any Lender that extended any portion of the Secured Obligations.


 


Section 10.2                                Canadian
Guaranty.  Each of the Canadian
Guarantors, each in its capacity as a Guarantor, hereby agrees that it is
jointly and severally liable for, and, as primary obligor and not merely as
surety, absolutely and unconditionally guarantees to the Canadian
Administrative Agent (for the benefit of the Secured Parties) the prompt
payment when due, whether at stated maturity, upon acceleration or otherwise,
and at all times thereafter, of the Canadian Secured Obligations and all costs
and expenses including, without limitation, all court costs and attorneys’ and
paralegals’ fees (including allocated costs of in-house counsel and paralegals)
and expenses paid or incurred by the Secured Parties in endeavoring to collect
all or any part of the Canadian Secured Obligations from, or in prosecuting any
action against, the Canadian Borrower, any other Canadian Guarantor or any
other guarantor of all or any part of the Canadian Secured Obligations (such
costs and expenses, together with the Canadian Secured Obligations,
collectively the “Canadian Guaranteed
Obligations”, and, together with the U.S. Guaranteed
Obligations, the “Guaranteed Obligations”).
Each of the Canadian Guarantors


 


144

















 


further agrees that the Canadian Guaranteed Obligations may be extended
or renewed in whole or in part without notice to or further assent from it, and
that it remains bound upon its guarantee notwithstanding any such extension or
renewal. All terms of this Guaranty apply to and may be enforced by or on
behalf of any domestic or foreign branch or Affiliate of any Lender that
extended any portion of the Canadian Secured Obligations.


 


Section 10.3                                Guaranty
of Payment.  This Guaranty is a
guaranty of payment and not of collection. Each Guarantor waives any right to
require any Secured Party to sue any Loan Party, any other guarantor, or any
other person obligated for all or any part of the Guaranteed Obligations (each,
an “Obligated Party”), or otherwise to
enforce its payment against any collateral securing all or any part of the
Guaranteed Obligations.


 


Section 10.4                                No
Discharge or Diminishment of Guaranty.


 


(a)                                  Except
as otherwise provided for herein, the obligations of each Guarantor hereunder
are unconditional and absolute and not subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment
in full in cash of the Guaranteed Obligations), including:  (i) any claim of waiver, release,
extension, renewal, settlement, surrender, alteration, or compromise of any of
the Guaranteed Obligations, by operation of law or otherwise; (ii) any
change in the corporate existence, structure or ownership of any Loan Party or
any other guarantor of or other person liable for any of the Guaranteed
Obligations; (iii) any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Obligated Party, or their assets or any
resulting release or discharge of any obligation of any Obligated Party; or (iv) the
existence of any claim, setoff or other rights which any Guarantor may have at
any time against any Obligated Party, the Agents, any Fronting Bank, any
Lender, or any other person, whether in connection herewith or in any unrelated
transactions.


 


(b)                                 The
obligations of each Guarantor hereunder are not subject to any defense or
setoff, counterclaim, recoupment, or termination whatsoever by reason of the
invalidity, illegality, or unenforceability of any of the Guaranteed
Obligations or otherwise, or any provision of applicable law or regulation
purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.


 


(c)                                  Further,
the obligations of any Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of any Secured Party to assert any
claim or demand or to enforce any remedy with respect to all or any part of the
Guaranteed Obligations; (ii) any waiver or modification of or supplement
to any provision of any agreement relating to the Guaranteed Obligations; (iii) any
release, non-perfection, or invalidity of any indirect or direct security for
the obligations of any Loan Party for all or any part of the Guaranteed
Obligations or any obligations of any other guarantor of or other person liable
for any of the Guaranteed Obligations; (iv) any action or failure to act
by any Secured Party with respect to any collateral securing any part of the
Guaranteed Obligations; or (v) any default, failure or delay, willful or
otherwise, in the payment or performance of any of the Guaranteed Obligations,
or any other circumstance, act, omission or delay that might in any manner or
to any extent vary the risk of such Guarantor or that would otherwise operate
as a discharge of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).


 


145

















 


Section 10.5                                Defenses
Waived.  To the fullest extent
permitted by applicable law, each Guarantor hereby waives any defense based on
or arising out of any defense of any Borrower or any other Guarantor or the
unenforceability of all or any part of the Guaranteed Obligations from any
cause, or the cessation from any cause of the liability of any Borrower or any
other Guarantor, other than the indefeasible payment in full in cash of the
Guaranteed Obligations. Without limiting the generality of the foregoing, each
Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any Obligated Party, or any other person.  Each Agent may, at its election, foreclose on
any Collateral held by it by one or more judicial or nonjudicial sales, accept
an assignment of any such Collateral in lieu of foreclosure or otherwise act or
fail to act with respect to any collateral securing all or a part of the
Guaranteed Obligations, compromise or adjust any part of the Guaranteed
Obligations, make any other accommodation with any Obligated Party or exercise
any other right or remedy available to it against any Obligated Party, without
affecting or impairing in any way the liability of such Guarantor under this
Guaranty except to the extent the Guaranteed Obligations have been fully and
indefeasibly paid in cash.  To the
fullest extent permitted by applicable law, each Guarantor waives any defense
arising out of any such election even though that election may operate,
pursuant to applicable law, to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of any Guarantor against any Obligated
Party or any security.


 


Section 10.6                                Rights
of Subrogation.  No Guarantor will
assert any right, claim or cause of action, including, without limitation, a
claim of subrogation, contribution or indemnification that it has against any
Obligated Party, or any Collateral, until the Guaranteed Obligations have been
paid in full and the Commitments have been terminated.


 


Section 10.7                                Reinstatement;
Stay of Acceleration.  If at any time
any payment of any portion of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, or
reorganization of any Loan Party or otherwise, each Guarantor’s obligations
under this Guaranty with respect to that payment shall be reinstated at such time
as though the payment had not been made and whether or not any Secured Party is
in possession of this Guaranty.  If
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of any Loan Party, all
such amounts otherwise subject to acceleration under the terms of any agreement
relating to the Guaranteed Obligations shall nonetheless be payable by the
Guarantors forthwith on demand by the Lender.


 


Section 10.8                                Information.  Each Guarantor assumes all responsibility for
being and keeping itself informed of the Borrowers’ financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Guarantor assumes and incurs under this Guaranty, and agrees that no
Secured Party shall have any duty to advise any Guarantor of information known
to it regarding those circumstances or risks.


 


Section 10.9                                Termination.  Each Guarantor acknowledges and agrees that
this Guaranty is irrevocable until the Guaranteed Obligations have been paid in
full and the Commitments have been terminated. The Lenders may continue to make
loans or extend credit


 


146

















 


to the Borrowers based on this Guaranty. Each Guarantor will continue
to be liable to the Lenders for any Guaranteed Obligations created, assumed or
committed from time to time, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any
part of that Guaranteed Obligations.


 


Section 10.10                          Taxes.  All payments of the Guaranteed Obligations
will be made by each Guarantor free and clear of and without deduction for any
Taxes in accordance with Section 2.19.


 


Section 10.11                          Maximum
Liability.  The provisions of this
Guaranty are severable, and in any action or proceeding involving any corporate
law of any Governmental Authority, or any state, provincial, regional, federal
or foreign bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of any Guarantor under this
Guaranty would otherwise be held or determined to be avoidable, invalid or
unenforceable on account of the amount of such Guarantor’s liability under this
Guaranty, then, notwithstanding any other provision of this Guaranty to the
contrary, the amount of such liability shall, without any further action by the
Guarantors or the Lenders, be automatically limited and reduced to the highest
amount that is valid and enforceable as determined in such action or proceeding
(such highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”.  This Section with respect to the Maximum
Liability of each Guarantor is intended solely to preserve the rights of the
Lenders to the maximum extent not subject to avoidance under applicable law,
and no Guarantor nor any other person or entity shall have any right or claim
under this Section with respect to such Maximum Liability, except to the
extent necessary so that the obligations of any Guarantor hereunder shall not
be rendered voidable under applicable law. Each Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Liability of each Guarantor without impairing this Guaranty or affecting the
rights and remedies of the Lenders hereunder, provided that, nothing in this
sentence shall be construed to increase any Guarantor’s obligations hereunder
beyond its Maximum Liability.


 


Section 10.12                          Contribution.  In the event any Guarantor (a “Paying Guarantor”) shall make any
payment or payments under this Guaranty or shall suffer any loss as a result of
any realization upon any collateral granted by it to secure its obligations under
this Guaranty, each other Guarantor (each a “Non-Paying
Guarantor”) shall contribute to such Paying Guarantor an amount
equal to such Non-Paying Guarantor’s “Contribution Percentage” of such payment
or payments made, or losses suffered, by such Paying Guarantor.  For purposes of this ARTICLE 10, each
Non-Paying Guarantor’s “Contribution Percentage” with respect to any such
payment or loss by a Paying Guarantor shall be determined as of the date on
which such payment or loss was made by reference to the ratio of (i) such
Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder) or,
if such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrowers after the Closing Date (whether by loan, capital infusion or by other
means) to (ii) the aggregate Maximum Liability of all Guarantors hereunder
(including such Paying Guarantor) as of such date (without giving effect to any
right to receive, or obligation to make, any contribution hereunder), or to the
extent that a Maximum Liability has not been determined for any Guarantor, the
aggregate amount of all monies received by such Guarantors from the Borrowers
after the Closing Date (whether by loan, capital infusion or by other
means).  Nothing in this


 


147

















 


provision shall affect any Guarantor’s several liability for the entire
amount of the Guaranteed Obligations (up to such Guarantor’s Maximum
Liability).  Each of the Guarantors
covenants and agrees that its right to receive any contribution under this
Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right
of payment to the payment in full in cash of the Guaranteed Obligations.  This provision is for the benefit of both the
Agents, the Fronting Banks, the Lenders and the Guarantors and may be enforced
by any one, or more, or all of them in accordance with the terms hereof.


 


Section 10.13                          Liability
Cumulative.  The liability of each
Loan Party as a Guarantor under this ARTICLE 10 is in addition to and
shall be cumulative with all liabilities of each Loan Party to the Agents, the
Fronting Banks and the Lenders under this Agreement and the other Loan
Documents to which such Loan Party is a party or in respect of any obligations
or liabilities of the other Loan Parties, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.


 


ARTICLE 11. COLLECTION
ALLOCATION MECHANISM


 


Section 11.1                                Implementation
of CAM.


 


(a)                                  On
the Termination Date, the Lenders shall automatically and without further act
(and without regard to the provisions of 
Section 9.3) be deemed to have exchanged interests in the
Credit Facilities such that in lieu of the interest of each Lender in each
Credit Facility in which it shall participate as of such date (including such
Lender’s interest in the Obligations of each Loan Party in respect of each such
Credit Facility), such Lender shall hold an interest in every one of the Credit
Facilities (including the Obligations of each Loan Party in respect of each
such Credit Facility), whether or not such Lender shall previously have
participated therein, equal to such Lender’s CAM Percentage thereof.  Each Lender and each Loan Party hereby
consents and agrees to the CAM Exchange, and each Lender agrees that the CAM
Exchange shall be binding upon its successors and assigns and any Person that
acquires a participation in its interests in any Credit Facility.  Each Loan Party agrees from time to time to
execute and deliver to the Administrative Agent all instruments and documents
as the Administrative Agent shall reasonably request to evidence and confirm
the respective interests of the Lenders after giving effect to the CAM
Exchange.


 


(b)                                 As
a result of the CAM Exchange, upon and after the Termination Date, each payment
received by the Administrative Agent pursuant to any Loan Document in respect
of the Obligations, and each distribution made by the Administrative Agent in
respect of the Obligations, shall be distributed to the Lenders pro rata in
accordance with their respective CAM Percentages.  Any direct payment received by a Lender upon
or after the Termination Date, including by way of setoff, in respect of the
Obligations shall be paid over to the Administrative Agent for distribution to
the Lenders in accordance herewith.


 


Section 11.2                                Letters
of Credit.


 


(a)                                  In
the event that on the Termination Date any Letter of Credit shall be
outstanding and undrawn in whole or in part, or any amount drawn under any such
Letter of Credit shall not have been reimbursed by the applicable Borrower or
with the proceeds of a


 


148

















 


Revolving Loan, each Lender
having, on such date and prior to giving effect to the CAM Exchange, Letter of
Credit Outstandings with respect to such Letter of Credit shall promptly pay
over to the Administrative Agent, in immediately available funds, in the case
of any undrawn amount, and in Dollars, in the case of any unreimbursed amount,
an amount equal to such Lender’s Applicable Percentage of such undrawn face
amount or (to the extent it has not already done so) such unreimbursed drawing,
as the case may be, together with interest thereon from the Termination Date to
the date on which such amount shall be paid to the Administrative Agent at the
rate that would be applicable at the time to an ABR Loan in a principal amount
equal to such amount.  The Administrative
Agent shall establish a separate account or accounts for each Lender (each, an “LC Reserve Account”) for the amounts
received with respect to each such Letter of Credit pursuant to the preceding
sentence.  The Administrative Agent shall
deposit in each Lender’s LC Reserve Account such Lender’s CAM Percentage of the
amounts received from the Lenders as provided above.  The Administrative Agent shall have sole
dominion and control over each LC Reserve Account, and the amounts deposited in
each LC Reserve Account shall be held in such LC Reserve Account until
withdrawn as provided in  paragraph
(b),  (c),  (d)  or 
(e)  below.  The
Administrative Agent shall maintain records enabling it to determine the
amounts paid over to it and deposited in the LC Reserve Accounts in respect of
each Letter of Credit and the amounts on deposit in respect of each Letter of
Credit attributable to each Lender’s CAM Percentage.  The amounts held in each Lender’s LC Reserve
Account shall be held as a reserve against the outstanding Letter of Credit
Outstandings, shall be the property of such Lender, shall not constitute Loans
to or give rise to any claim of or against any Loan Party and shall not give
rise to any obligation on the part of either Borrower to pay interest to such
Lender, it being agreed that the reimbursement obligations in respect of
Letters of Credit shall arise only at such times as drawings are made
thereunder, as provided in  ARTICLE 2.


 


(b)                                 In
the event that on or after the Termination Date any drawing shall be made in
respect of a Letter of Credit, the Administrative Agent shall, at the request
of the applicable Fronting Bank, withdraw from the LC Reserve Account of each
Lender any amounts, up to the amount of such Lender’s CAM Percentage of such
drawing, deposited in respect of such Letter of Credit and remaining on deposit
and deliver such amounts to the applicable Fronting Bank in satisfaction of the
reimbursement obligations of the Lenders under Section 2.4(g) (but
not of either Borrower under  Section 2.4(e)).  In the event any Lender shall default on its
obligation to pay over any amount to the Administrative Agent in respect of any
Letter of Credit as provided in this Section 11.2, the applicable
Fronting Bank shall, in the event of a drawing thereunder, have a claim against
such Lender to the same extent as if such Lender had defaulted on its
obligations under Section 2.4(g), but shall have no claim against
any other Lender in respect of such defaulted amount, notwithstanding the
exchange of interests in the applicable Borrower’s reimbursement obligations
pursuant  Section 11.1.  Each other Lender shall have a claim against
such defaulting Lender for any damages sustained by it as a result of such
default, including, in the event such Letter of Credit shall expire undrawn,
its CAM Percentage of the defaulted amount.


 


(c)                                  In
the event that after the Termination Date any Letter of Credit shall expire
undrawn, the Administrative Agent shall withdraw from the LC Reserve Account of
each Lender the amount remaining on deposit therein in respect of such Letter
of Credit and distribute such amount to such Lender.


 


149

















 


(d)                                 With
the prior written approval of the Administrative Agent and the applicable
Fronting Bank (not to be unreasonably withheld), any Lender may withdraw the
amount held in its LC Reserve Account in respect of the undrawn amount of any
Letter of Credit.  Any Lender making such
a withdrawal shall be unconditionally obligated, in the event there shall
subsequently be a drawing under such Letter of Credit, to pay over to the
Administrative Agent, for the account of the applicable Fronting Bank, on
demand, its CAM Percentage of such drawing.


 


(e)                                  Pending
the withdrawal by any Lender of any amounts from its LC Reserve Account as
contemplated by the above paragraphs, the Administrative Agent will, at the
direction of such Lender and subject to such rules as the Administrative
Agent may prescribe for the avoidance of inconvenience, invest such amounts in
Permitted Investments.  Each Lender which
has not withdrawn its CAM Percentage of amounts in its LC Reserve Account as
provided in  paragraph (d)  above
shall have the right, at intervals reasonably specified by the Administrative
Agent, to withdraw the earnings on investments so made by the Administrative
Agent with amounts in its LC Reserve Account and to retain such earnings for
its own account.


 


Section 11.3                                Conversion.  In the event the Termination Date shall
occur, Obligations owed by the Loan Parties denominated in any currency other
than Dollars (other than, for the avoidance of doubt, obligations in respect of
undrawn Canadian Revolving Facility Letters of Credit denominated in Canadian
Dollars) shall, automatically and with no further act required, be converted to
obligations of the same Loan Parties denominated in Dollars.  Such conversion shall be effected based upon
the Exchange Rates in effect with respect to the relevant currencies on the Termination
Date.  On and after any such conversion,
all amounts accruing and owed to any Lender in respect of its Obligations shall
accrue and be payable in Dollars at the rates otherwise applicable hereunder
(and, in the case of interest on Loans, at the default rate applicable to ABR
Loans hereunder).  Notwithstanding the
foregoing provisions of this Section 11.3, any Lender may, by
notice to the Borrowers and the Administrative Agent prior to the Termination
Date, elect not to have the provisions of this  Section 11.3 apply with respect to
all Obligations owed to such Lender immediately following the Termination Date,
and, if such notice is given, all Obligations owed to such Lender immediately
following the Termination Date shall remain designated in their original
currencies.


 


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BLANK]


 


150
















 


	
  Exhibit A-1

  
	
   

  
	
  Form of U.S. Interim Order

  
	
   

  
	
  Exhibit A-2

  
	
   

  
	
  Form of Initial Order

  
	
   

  
	
  Exhibit A-3

  
	
   

  
	
  Form of Final Order

  
	
   

  
	
  Exhibit B-1

  
	
   

  
	
  Form of Security and Pledge Agreement

  
	
   

  
	
  Exhibit B-2

  
	
   

  
	
  Form of Canadian Security Agreement

  
	
   

  
	
  Exhibit C-1

  
	
   

  
	
  Form of Weekly Borrowing Base
  Certificate

  
	
   

  
	
  Exhibit C-2

  
	
   

  
	
  Form of Monthly Borrowing Base
  Certificate

  
	
   

  
	
  Exhibit D

  
	
   

  
	
  Form of Opinion of Counsel

  



 

















 


Exhibit E


 


Form of Assignment and Acceptance


 


This Assignment and Acceptance (the “Assignment and Acceptance”)
is dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein
shall have the meanings given to them in the Amended and Restated Credit
Agreement identified below (as amended, modified or restated from time to time,
the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee.  The
Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby
agreed to and incorporated herein by reference and made a part of this
Assignment and Acceptance as if set forth herein in full.


 


For
an agreed consideration, the Assignor hereby irrevocably sells and assigns to
the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit and guarantees
included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights
and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Acceptance, without representation or warranty by the Assignor.


 


	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [and
  is an Affiliate/Approved Fund of [identify Lender]]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrowers:

  	
   

  	
  SMURFIT-STONE
  CONTAINER ENTERPRISES, INC. and SMURFIT-STONE CONTAINER CANADA INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative
  Agent:

  	
   

  	
  JPMORGAN
  CHASE BANK, N.A., as the administrative agent under the Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit
  Agreement:

  	
   

  	
  The
  US$750,000,000 Amended and Restated Credit Agreement dated as of
  February [     ], 2009 among SMURFIT-STONE

  



 

















 


CONTAINER ENTERPRISES, INC., SMURFIT-STONE CONTAINER CANADA INC., the
other Loan Parties parties thereto, the Lenders parties thereto, JPMORGAN CHASE
BANK, N.A., as Administrative Agent, and the other agents parties thereto


 


6.                                       Assigned Interest:


 


	
  Facility Assigned

  (e.g. “U.S. Tranche A

  Revolving Commitment,”

  “U.S. Tranche B Revolving

  Commitment,” “Canadian

  Revolving Commitment,”

  “U.S. Term Loans,” or

  “Canadian Term Loans”)

  	
   

  	
  Aggregate Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned

  of

  Commitment/Loans

  set forth, to at least 9

  decimals, as a

  percentage of the

  Commitment/Loans

  of all Lenders

  thereunder

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  



 


Effective
Date:
                                
       , 20


 


The Assignee agrees to
deliver to the Administrative Agent a completed Administrative Questionnaire in
which the Assignee designates on or more credit contacts to whom all
syndicate-level information (which may contain material non-public information
about the Company, the Loan Parties and their Related Parties or their
respective securities) will be made available and who may receive such information
in accordance with the Assignee’s compliance procedures and applicable laws,
including Federal and state securities laws.


 


The terms set forth in this
Assignment and Acceptance are hereby agreed to:


 


	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  



 

















 


	
  [Consented
  to and] Accepted:

  	
   

  
	
   

  	
   

  
	
  [JPMORGAN
  CHASE BANK, N.A., as

  	
   

  
	
  Administrative Agent]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Consented
  to:]

  	
   

  
	
   

  	
   

  
	
  [JPMORGAN
  CHASE BANK, N.A., as Fronting Bank]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  



 
















 


ANNEX 1


 


STANDARD TERMS AND CONDITIONS FOR


ASSIGNMENT AND ACCEPTANCE


 


1.  Representations and
Warranties.


 


1.1  Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of any Borrower, any of their
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by any Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.


 


1.2.  Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender, (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, (iv) it has received a
copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.1 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) attached to the
Assignment and Acceptance is any documentation required to be delivered by it
pursuant to the terms of Section 2.19(f), duly completed and
executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.


 


2.   Payments.    From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, 


 

















 


fees
and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.


 


3.  General Provisions.
This Assignment and Acceptance shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns.  This Assignment and Acceptance may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of
this Assignment and Acceptance by facsimile shall be effective as delivery of a
manually executed counterpart of this Assignment and Acceptance.  This Assignment and Acceptance shall be
governed by, and construed in accordance with, the law of the State of New York
applicable to contracts made and to be performed wholly within such state and
the Bankruptcy Code.


 

















 


Exhibit F


 


Form of Loan Party Joinder Agreement


 


THIS LOAN PARTY JOINDER
AGREEMENT (this “Agreement”),
dated as of
                                    ,
is entered into between                       ,
a
                      
(the “New Subsidiary”) and JPMORGAN CHASE BANK, N.A., in its
capacity as administrative agent (the “Administrative
Agent”) under that certain Amended and Restated Credit
Agreement, dated as of February [    ], 2009, among SMURFIT-STONE CONTAINER ENTERPRISES, INC., a Delaware corporation,
SMURFIT-STONE CONTAINER CANADA INC., a
corporation continued under the Companies Act (Nova Scotia) (collectively, the “Borrowers”), SMURFIT-STONE CONTAINER
CORPORATION, a Delaware corporation, the other Loan Parties party
thereto, the Lenders party thereto, the
Administrative Agent and JPMORGAN CHASE BANK N.A., TORONTO BRANCH, as
Canadian Administrative Agent (as the
same may be amended, modified, extended or restated from time to time, the “Credit Agreement”). All capitalized
terms used herein and not otherwise defined shall have the meanings set forth
in the Credit Agreement.


 


The New Subsidiary and the
Administrative Agent, for the benefit of the Lenders, hereby agree as follows:


 


1.             [Use for
Domestic Subsidiaries:  The New Subsidiary hereby
acknowledges, agrees and confirms that, by its execution of this Agreement, the
New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and
a “U.S. Guarantor” for all
purposes of the Credit Agreement and shall have all of the obligations of a
Loan Party and a U.S. Guarantor thereunder as if it had executed the Credit
Agreement.  The New Subsidiary hereby
ratifies, as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Credit Agreement, including without
limitation (a) all of the representations and warranties of the Loan
Parties set forth in Article III of the Credit Agreement, (b) all
of the covenants set forth in Articles V and VI of the Credit
Agreement, and (c) all of the guaranty obligations applicable to U.S.
Guarantors set forth in Article X of the Credit Agreement.  Without limiting the generality of the
foregoing terms of this paragraph 1, the New Subsidiary, subject to the
limitations set forth in Section 10.11 of the Credit Agreement,
hereby guarantees, jointly and severally with the Borrowers and other U.S.
Guarantors, to the Administrative Agent and the Lenders, as provided in Article X
of the Credit Agreement, the prompt payment and performance of the U.S.
Guaranteed Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise) strictly in accordance with
the terms thereof and agrees that if any of the U.S. Guaranteed Obligations are
not paid or performed in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise), the New Subsidiary will,
jointly and severally together with the Borrowers and other U.S. Guarantors,
promptly pay and perform the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
U.S. Guaranteed Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.]


 


1.             [Use for
Canadian Subsidiaries:  The New Subsidiary hereby
acknowledges, agrees and confirms that, by its execution of this Agreement, the
New Subsidiary will be deemed 


 

















 


to be a Loan Party under the
Credit Agreement and a “Canadian
Guarantor” for all purposes of the Credit Agreement and shall have all
of the obligations of a Loan Party and a Canadian Guarantor thereunder as if it
had executed the Credit Agreement.  The
New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound
by, all of the terms, provisions and conditions contained in the Credit
Agreement, including without limitation (a) all of the representations and
warranties of the Loan Parties set forth in Article III of the
Credit Agreement, (b) all of the covenants set forth in Articles V
and VI of the Credit Agreement, and (c) all of the guaranty
obligations applicable to the Canadian Guarantors set forth in Article X
of the Credit Agreement.  Without
limiting the generality of the foregoing terms of this paragraph 1, the New
Subsidiary, subject to the limitations set forth in Section 10.11
of the Credit Agreement, hereby guarantees, jointly and severally with the
other Canadian Guarantors, to the Administrative Agent and the Lenders, as
provided in Article X of the Credit Agreement, the prompt payment
and performance of the Canadian Guaranteed Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof and agrees that if any
of the Canadian Guaranteed Obligations are not paid or performed in full when
due (whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise), the New Subsidiary will, jointly and severally together with the
other Canadian Guarantors, promptly pay and perform the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Canadian Guaranteed Obligations, the same will
be promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.]


 


2.             If required, the New Subsidiary is, simultaneously with
the execution of this Agreement, executing and delivering such Collateral
Documents (and such other documents and instruments) as requested by the
Administrative Agent in accordance with the Credit Agreement.


 


3.             The address of the New Subsidiary for purposes of Section 9.1
of the Credit Agreement is as follows:


 


 


Attention:


 


4.             The New Subsidiary hereby waives acceptance by the
Administrative Agent and the Lenders of the guaranty by the New Subsidiary upon
the execution of this Agreement by the New Subsidiary.


 


5.             This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.


 


6.             THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 

















 


IN WITNESS WHEREOF, the New
Subsidiary has caused this Agreement to be duly executed by its authorized
officer, and the Administrative Agent, for the benefit of the Lenders, has
caused the same to be accepted by its authorized officer, as of the day and
year first above written.


 


 


	
   

  	
  [NEW SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


 


	
  Acknowledged and accepted:

  	
   

  
	
   

  	
   

  
	
  JPMORGAN CHASE BANK, N.A.,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					



 

















 


Exhibit G


 


Form of Compliance Certificate


 


To:                              The Administrative Agent and the Lenders


parties to the Credit Agreement described below


 


This Compliance Certificate (this “Certificate”) is furnished pursuant
to that certain Amended and Restated Credit Agreement dated as of February [    ],
2009 (as amended, modified,
restated, renewed or extended from time to time, the “Agreement”) among
Smurfit-Stone Container Enterprises, Inc., a Delaware corporation (the “U.S.
Borrower”), Smurfit-Stone Container Canada Inc., a company continued under the
Companies Act (Nova Scotia) (the “Canadian Borrower”), Smurfit-Stone Container
Corporation, a Delaware corporation (the “Parent”), the other Loan Parties
party thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent and Collateral Agent for the Lenders, and JPMorgan Chase
Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian
Collateral Agent for the Lenders.  Unless
otherwise defined herein, capitalized terms used in this Compliance Certificate
have the meanings ascribed thereto in the Agreement.


 


THE UNDERSIGNED HEREBY CERTIFIES, ON ITS BEHALF AND ON BEHALF OF EACH
LOAN PARTY, THAT:


 


1.     I am the duly elected
              
of the Parent;


 


2.     I have reviewed the terms
of the Agreement and I have made, or have caused to be made under my
supervision, a detailed review of the transactions and conditions of the Loan
Parties and their Subsidiaries during the accounting period covered by the
attached financial statements [for
quarterly or monthly financial statements add: and such
financial statements present fairly in all material respects the financial condition
and results of operations of the Loan Parties and their consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes];


 


3.     The examinations described
in paragraph 2 did not disclose, except as set forth below, and I have no
knowledge of (i) the existence of any condition or event which constitutes
a Default or Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate or (ii) any change in GAAP or in the application thereof that
has occurred since the date of the audited financial statements referred to in Section 3.4
of the Agreement;


 


4.     I hereby certify that no
Loan Party has changed (i) its name, (ii) its chief executive office,
(iii) principal place of business, (iv) the type of entity it is or (v) its
state of incorporation or organization without having given the Administrative
Agent the notice required by Section 4.15 of the Security and
Pledge Agreement and/or Section 6 of the Canadian Security Agreement, as
applicable; and


 

















 


5. Schedule I attached hereto sets forth financial data and
computations evidencing the Loan Parties’ compliance with certain covenants of
the Agreement, all of which data and computations are true, complete and
correct.


 


Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the (i) nature of the condition or event, the period during
which it has existed and the action which the Loan Parties have taken, are
taking, or propose to take with respect to each such condition or event or (ii) the
change in GAAP or the application thereof and the effect of such change on the
attached financial statements:


 


 


The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered
this          day of
                        ,
20    .


 


	
   

  	
  SMURFIT-STONE CONTAINER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: