Exhibit 10.7


 


THIRD AMENDMENT


 


THIRD
AMENDMENT, dated as of September 26, 2008 (this “Amendment”), to the CREDIT AGREEMENT, dated as of June 12,
2006 (as amended on March 21, 2007 and July 2, 2008 and as further
amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among CELLU PAPER HOLDINGS, INC.,
CELLU TISSUE HOLDINGS, INC. (the “Borrower”), INTERLAKE ACQUISITION CORPORATION LIMITED,
the Loan Guarantors party thereto, the lenders party thereto (the “Lenders”), JPMORGAN CHASE BANK, N.A., as US
Administrative Agent (in such capacity, the “Administrative Agent”) and JPMORGAN
CHASE BANK, N.A., TORONTO BRANCH, as Canadian Administrative Agent (the “Canadian Administrative Agent”).


 


RECITALS


 


A.            WHEREAS, the Borrower has requested that the
Lenders increase the amount of the Canadian Commitments by $2,000,000 and
reduce the amount of the US Commitments by an equal amount;


 


B.            WHEREAS, the Lenders are willing to agree to
such amendments and provide certain other waivers and amendments, in each case
subject to the terms and conditions set forth herein.


 


NOW, THEREFORE, in consideration of the foregoing
Recitals and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:


 


AGREEMENT


 


1.             Defined Terms.
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.


 


2.              Amendments to Section 1.01.
Section 1.01 of the Credit Agreement is hereby amended by:


 


(a) in the definition
of “US Commitment”, deleting the amount “US$57,000,000” and
substituting therefor the amount “US$55,000,000”; and


 


(b) in the definition
of “Canadian
Commitment”, deleting the
amount “US$3,000,000” and substituting therefor the amount “US$5,000,000”.


 


3.             Amendments to Section 5.09.
Section 5.09 of the Credit Agreement is hereby amended by deleting the
word “A+” in the second line thereof and substituting therefor the word “A-”.


 


4.             Waiver. The Lenders hereby
waive for the purpose of Section 2 of this Amendment the requirement under
Section 2.10(c) of the Credit Agreement that each reduction of the US
Commitments be in a minimum amount equal to US$3,000,000.


 


5.             Condition to Effectiveness.
This Amendment shall become effective on the date on which the Administrative
Agent shall have received this Amendment, duly executed and delivered by the
Loan Parties and the Lender.


 

















 


6.             Counterparts.
This Amendment may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.


 


7.             Representations and Warranties.
The Borrower hereby represents and
warrants to the Lenders and the Administrative Agent as follows:


 


(a)           The Borrower has the corporate power and authority and the legal right
to execute, deliver and perform this Amendment and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Amendment. This Amendment has been duly executed and delivered on behalf of the
Borrower and constitutes the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.


 


(b)           The representations and warranties of the Borrower set forth in Article III
of the Credit Agreement as amended hereby are true and correct in all material
respects as of the date hereof.


 


8.             Fees, Costs and Expenses.
The Borrower agrees to (i) pay to the Administrative Agent any amendment fees previously agreed in connection with this Amendment and (ii) reimburse the Administrative
Agent for all reasonable fees, costs and expenses incurred by it in connection
with this Amendment, including but not limited to the reasonable fees, costs
and expenses of counsel.


 


9.             Governing Law.
This Amendment 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.


 


[Signature pages follow]


 

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed by their respective authorized officers as
of the day and year first above written.


 


	
   

  	
  CELLU
  PAPER HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INTERLAKE
  ACQUISITION CORPORATION

  
	
   

  	
  LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE CORPORATION - NATURAL DAM

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  



 


Signature page to Third Amendment


 

















 


	
   

  	
  CELLU
  TISSUE CORPORATION – NEENAH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COASTAL
  PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Van Paper Company,

  
	
   

  	
   

  	
  its Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VAN
  PAPER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VAN
  TIMBER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MENOMINEE
  ACQUISITION CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU
  TISSUE-CITYFOREST LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  



 


Signature page to Third Amendment


 

















 


	
   

  	
  CELLU
  TISSUE - HAUPPAUGE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU
  TISSUE - THOMASTON, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:
  David J. Morris

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial 

  
	
   

  	
   

  	
  Officer

  



 


Signature page to Third Amendment


 

















 


	
   

  	
  JPMORGAN CHASE BANK, N.A„
  individually, as US 

  
	
   

  	
  Administrative Agent, Issuing Bank, Swingline
  Lender 

  
	
   

  	
  and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Hariaczyl

  
	
   

  	
   

  	
  Name:

  	
  John M. Hariaczyl

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., TORONTO 

  
	
   

  	
  BRANCH, individually and as Canadian
  Administrative 

  
	
   

  	
  Agent and a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


Signature page to Third Amendment


 

















 


	
   

  	
  JPMORGAN CHASE BANK, N.A„ individually,
  as US 

  
	
   

  	
  Administrative Agent, Issuing Bank, Swingline
  Lender 

  
	
   

  	
  and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., TORONTO 

  
	
   

  	
  BRANCH, individually and as Canadian
  Administrative 

  
	
   

  	
  Agent and a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael N. Tam

  
	
   

  	
   

  	
  Name:

  	
  Michael N. Tam

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
						



 


Signature page to Third Amendment