Exhibit 4.1





Exhibit
4.1





EXECUTION VERSION




MERCER INTERNATIONAL INC.




9. 5% SENIOR NOTES DUE 2017




INDENTURE




Dated as of November 17, 2010




Wells Fargo Bank, National Association




Trustee




 


 









 






CROSS-REFERENCE TABLE*




	 	 	 	 	 
	Trust Indenture	 
	Act Section	 	Indenture Section
	310	 	(a)(1)
	 	7.10
	 	 	(a)(2)
	 	7.10
	 	 	(a)(3)
	 	N.A.
	 	 	(a)(4)
	 	N.A.
	 	 	(a)(5)
	 	7.10
	 	 	(b)
	 	7.10
	 	 	(c)
	 	N.A.
	311	 	(a)
	 	7.11
	 	 	(b)
	 	7.11.
	 	 	(c)
	 	N.A.
	312	 	(a)
	 	2.05
	 	 	(b)
	 	12.03
	 	 	(c)
	 	12.03
	313	 	(a)
	 	7.06
	 	 	(b)(1)
	 	N.A.
	 	 	(b)(2)
	 	7.06; 7.07
	 	 	(c)
	 	7.06; 12.02
	 	 	(d)
	 	7.06
	314	 	(a)
	 	4.03; 12.05
	 	 	(b)
	 	N.A.
	 	 	(c)(1)
	 	N.A.
	 	 	(c)(2)
	 	N.A.
	 	 	(c)(3)
	 	N.A.
	 	 	(d)
	 	N.A.
	 	 	(e)
	 	12.05
	 	 	(f)
	 	N.A.
	315	 	(a)
	 	N.A.
	 	 	(b)
	 	N.A.
	 	 	(c)
	 	N.A.
	 	 	(d)
	 	N.A.
	 	 	(e)
	 	N.A.
	316	 	(a) (last sentence)
	N.A.
	 	 	(a)(1)(A)
	 	N.A.
	 	 	(a)(1)(B)
	 	N.A.
	 	 	(a)(2)
	 	N.A.
	 	 	(b)
	 	N.A.
	 	 	(c)
	 	N.A.
	317	 	(a)(1)
	 	N.A.
	 	 	(a)(2)
	 	N.A.
	 	 	(b)
	 	N.A.
	318	 	(a)
	 	N.A.
	 	 	(b)
	 	N.A.
	 	 	(c)
	 	12.01






N.A. means not applicable.






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





 


 








 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	 	 
	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Other Definitions
	 	 	21	 
	Section 1.03 Incorporation by Reference of Trust Indenture Act
	 	 	21	 
	Section 1.04 Rules of Construction
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 2

THE NOTES
	 	 	 	 
	 
	 	 	 	 
	Section 2.01 Form and Dating
	 	 	22	 
	Section 2.02 Execution and Authentication
	 	 	23	 
	Section 2.03 Registrar and Paying Agent
	 	 	23	 
	Section 2.04 Paying Agent to Hold Money in Trust
	 	 	24	 
	Section 2.05 Holder Lists
	 	 	24	 
	Section 2.06 Transfer and Exchange
	 	 	24	 
	Section 2.07 Replacement Notes
	 	 	36	 
	Section 2.08 Outstanding Notes
	 	 	36	 
	Section 2.09 Treasury Notes
	 	 	36	 
	Section 2.10 Temporary Notes
	 	 	36	 
	Section 2.11 Cancellation
	 	 	37	 
	Section 2.12 Defaulted Interest
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 3 
REDEMPTION AND PREPAYMENT
	 	 	 	 
	 
	 	 	 	 
	Section 3.01 Notices to Trustee
	 	 	37	 
	Section 3.02 Selection of Notes to Be Redeemed or Purchased
	 	 	38	 
	Section 3.03 Notice of Redemption
	 	 	38	 
	Section 3.04 Effect of Notice of Redemption
	 	 	39	 
	Section 3.05 Deposit of Redemption or Purchase Price
	 	 	39	 
	Section 3.06 Notes Redeemed or Purchased in Part
	 	 	39	 
	Section 3.07 Optional Redemption
	 	 	40	 
	Section 3.08 Mandatory Redemption; No Sinking Fund
	 	 	40	 
	Section 3.09 Offer to Purchase by Application of Excess Proceeds
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 4 
COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 4.01 Payment of Notes
	 	 	42	 
	Section 4.02 Maintenance of Office or Agency
	 	 	42	 
	Section 4.03 Reports
	 	 	43	 
	Section 4.04 Compliance Certificate
	 	 	44	 
	Section 4.05 Taxes
	 	 	44	 
	Section 4.06 Stay, Extension and Usury Laws
	 	 	44	 
	Section 4.07 Restricted Payments
	 	 	45	 
	Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries
	 	 	48	 
	Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock
	 	 	50	 
	Section 4.10 Asset Sales
	 	 	53	 





 


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	 	 	Page	 
	 
	 	 	 	 
	Section 4.11 Transactions with Affiliates
	 	 	55	 
	Section 4.12 Liens
	 	 	56	 
	Section 4.13 Business Activities
	 	 	57	 
	Section 4.14 Corporate Existence
	 	 	57	 
	Section 4.15 Offer to Repurchase Upon Change of Control
	 	 	57	 
	Section 4.16 No Amendment to Subordination Provisions
	 	 	59	 
	Section 4.17 Limitation on Sale and Leaseback Transactions
	 	 	59	 
	Section 4.18 Payments for Consent
	 	 	59	 
	Section 4.19 Limitation on Issuances of Guarantees of Indebtedness
	 	 	59	 
	Section 4.20 Note Guarantees
	 	 	60	 
	Section 4.21 Designation of Restricted and Unrestricted Subsidiaries
	 	 	60	 
	 
	 	 	 	 
	ARTICLE 5 
SUCCESSORS
	 	 	 	 
	 
	 	 	 	 
	Section 5.01 Merger, Consolidation, or Sale of Assets
	 	 	61	 
	Section 5.02 Successor Corporation Substituted
	 	 	61	 
	 
	 	 	 	 
	ARTICLE 6 
DEFAULTS AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	Section 6.01 Events of Default
	 	 	62	 
	Section 6.02 Acceleration
	 	 	63	 
	Section 6.03 Other Remedies
	 	 	64	 
	Section 6.04 Waiver of Past Defaults
	 	 	64	 
	Section 6.05 Control by Majority
	 	 	65	 
	Section 6.06 Limitation on Suits
	 	 	65	 
	Section 6.07 Rights of Holders of Notes to Receive Payment
	 	 	65	 
	Section 6.08 Collection Suit by Trustee
	 	 	65	 
	Section 6.09 Trustee May File Proofs of Claim
	 	 	66	 
	Section 6.10 Priorities
	 	 	66	 
	Section 6.11 Undertaking for Costs
	 	 	66	 
	 
	 	 	 	 
	ARTICLE 7 
TRUSTEE
	 	 	 	 
	 
	 	 	 	 
	Section 7.01 Duties of Trustee
	 	 	67	 
	Section 7.02 Rights of Trustee
	 	 	67	 
	Section 7.03 Individual Rights of Trustee
	 	 	68	 
	Section 7.04 Trustee’s Disclaimer
	 	 	69	 
	Section 7.05 Notice of Defaults
	 	 	69	 
	Section 7.06 Reports by Trustee to Holders of the Notes
	 	 	69	 
	Section 7.07 Compensation and Indemnity
	 	 	69	 
	Section 7.08 Replacement of Trustee
	 	 	70	 
	Section 7.09 Successor Trustee by Merger, etc.
	 	 	71	 
	Section 7.10 Eligibility; Disqualification
	 	 	71	 
	Section 7.11 Preferential Collection of Claims Against Company
	 	 	71	 
	 
	 	 	 	 
	ARTICLE 8 
LEGAL DEFEASANCE AND COVENANT DEFEASANCE 
	 	 	 	 
	 
	 	 	 	 
	Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance
	 	 	71	 
	Section 8.02 Legal Defeasance and Discharge
	 	 	72	 
	Section 8.03 Covenant Defeasance
	 	 	72	 
	Section 8.04 Conditions to Legal or Covenant Defeasance
	 	 	73	 





 


ii









 





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions
	 	 	74	 
	Section 8.06 Repayment to Company
	 	 	74	 
	Section 8.07 Reinstatement
	 	 	74	 
	 
	 	 	 	 
	ARTICLE 9 
AMENDMENT, SUPPLEMENT AND WAIVER
	 	 	 	 
	 
	 	 	 	 
	Section 9.01 Without Consent of Holders of Notes
	 	 	75	 
	Section 9.02 With Consent of Holders of Notes
	 	 	76	 
	Section 9.03 Compliance with Trust Indenture Act
	 	 	77	 
	Section 9.04 Revocation and Effect of Consents
	 	 	77	 
	Section 9.05 Notation on or Exchange of Notes
	 	 	77	 
	Section 9.06 Trustee to Sign Amendments, etc.
	 	 	77	 
	 
	 	 	 	 
	ARTICLE 10 
 NOTE GUARANTEES
	 	 	 	 
	 
	 	 	 	 
	Section 10.01 Guarantee
	 	 	78	 
	Section 10.02 Limitation on Guarantor Liability
	 	 	79	 
	Section 10.03 Execution and Delivery of Note Guarantee
	 	 	79	 
	Section 10.04 Guarantors May Consolidate, etc., on Certain Terms
	 	 	80	 
	Section 10.05 Releases
	 	 	80	 
	 
	 	 	 	 
	ARTICLE 11 
SATISFACTION AND DISCHARGE
	 	 	 	 
	 
	 	 	 	 
	Section 11.01 Satisfaction and Discharge
	 	 	81	 
	Section 11.02 Application of Trust Money
	 	 	82	 
	 
	 	 	 	 
	ARTICLE 12
 MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 12.01 Trust Indenture Act Controls
	 	 	82	 
	Section 12.02 Notices
	 	 	82	 
	Section 12.03 Communication by Holders of Notes with Other Holders of Notes
	 	 	84	 
	Section 12.04 Certificate and Opinion as to Conditions Precedent
	 	 	84	 
	Section 12.05 Statements Required in Certificate or Opinion
	 	 	84	 
	Section 12.06 Rules by Trustee and Agents
	 	 	84	 
	Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders
	 	 	85	 
	Section 12.08 Governing Law
	 	 	85	 
	Section 12.09 Waiver of Jury Trial
	 	 	85	 
	Section 12.10 Force Majeure
	 	 	85	 
	Section 12.11 USA Patriot Act
	 	 	85	 
	Section 12.12 No Adverse Interpretation of Other Agreements
	 	 	85	 
	Section 12.13 Successors
	 	 	85	 
	Section 12.14 Severability
	 	 	86	 
	Section 12.15 Counterpart Originals
	 	 	86	 
	Section 12.16 Table of Contents, Headings, etc.
	 	 	86	 





 


iii








 





EXHIBITS




	 	 	 
	Exhibit A

	 	FORM OF NOTE
	Exhibit B

	 	FORM OF CERTIFICATE OF TRANSFER
	Exhibit C

	 	FORM OF CERTIFICATE OF EXCHANGE
	Exhibit D

	 	FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
	Exhibit E

	 	FORM OF NOTATION OF GUARANTEE
	Exhibit F

	 	FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS





 


iv









 





INDENTURE dated as of November 17, 2010 between Mercer International Inc., a Washington
corporation, and Wells Fargo Bank, National Association, as trustee.



WHEREAS, the Company has duly authorized the creation of a series of its debt securities
denominated as the “9.5% Senior Notes due 2017” (the “Notes”);



WHEREAS, the Company has duly authorized the execution and delivery of this Indenture, to
establish the Notes as provided for in this Indenture, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms.



NOW, THEREFORE, the Company and the Trustee agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders (as defined below) of the Notes:



ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE




Section 1.01 Definitions.




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




“2013 Senior Notes” means the Company’s 9.25% Senior Notes Due 2013.




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




(1) Indebtedness of any other Person existing at the time such other Person is merged
with or into or became a Subsidiary of such specified Person, whether or not such
Indebtedness is incurred in connection with, or in contemplation of, such other Person
merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and




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



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



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



“Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, “control,” as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of more than 20% (measured on a fully diluted basis) of the
Voting Stock of a Person (except as reportable on Form 13-F or Form 13-G of the SEC) will be deemed
to be control. For purposes of this definition, the terms “controlling,” “controlled by” and
“under common control with” have correlative meanings.


 


1









 






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



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




“Asset Sale” means:




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




(2) the issuance of Equity Interests in any of the Company’s Restricted Subsidiaries or
the sale of Equity Interests in any of its Subsidiaries.



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




(1) any single transaction or series of related transactions that involves assets
having a Fair Market Value of less than $2.0 million;




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




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




(4) the sale or lease of products (including electricity and power generated as a
by-product of or from, or utilizing the facilities of, any other Permitted Business),
services, accounts receivable or current assets in the ordinary course of business and any
sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of
business;




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




(6) any release of intangible claims or rights in connection with the loss or
settlement of a bona fide lawsuit, dispute or other controversy;




(7) leases or subleases to third persons not interfering in any material respect with
the business of the Company or any of its Restricted Subsidiaries;




(8) a Restricted Payment that does not violate the provisions of Section 4.07 hereof or
a Permitted Investment; and




(9) purchases, sales or other transfers of pulp, fiber, chemicals and other consumables
between or among the Company or any Restricted Subsidiary and any Unrestricted Subsidiary at
market prices pursuant to arrangements approved by the Company’s Board of Directors as being
fair, from a financial point of view, to the Company or the applicable Restricted
Subsidiary, as the case may be; purchases, sales or other transfers of spare parts or mill
consumables between any Restricted Subsidiary and any Unrestricted Subsidiary at book value;
and other transactions with customers, clients, suppliers or purchasers or sellers of goods
or services, in each case in the ordinary course of business and otherwise in compliance
with the terms of this Indenture, that are
fair to the Company or the Restricted Subsidiary, as the case may be, in the reasonable
determination of the Company’s Board of Directors.


 


2









 





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



“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief
of debtors.



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




“Board of Directors” means:




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




(2) with respect to a partnership, the board of directors of the general partner of the
partnership;




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




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




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




(1) 85% of the face amount of all accounts receivable owned by the Company and its
Restricted Subsidiaries as of the end of the most recent fiscal month preceding such date,
calculated on a consolidated basis and in accordance with GAAP; plus




(2) 60% of the book value of all inventory owned by the Company and its Restricted
Subsidiaries as of the end of the most recent fiscal month preceding such date, calculated
on a consolidated basis and in accordance with GAAP.




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



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


 


3









 





“Capital Lease Obligation” means, at the time any determination is to be made, the amount of
the liability in respect of a capital lease that would at that time be required to be capitalized
on a balance sheet prepared in accordance with GAAP.




“Capital Stock” means:




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




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




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




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




“Cash Equivalents” means:




(1) United States dollars, Canadian dollars or Euros;




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




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




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




(5) commercial paper having one of the two highest ratings obtainable from Moody’s or
S&P and, in each case, maturing within six months after the date of acquisition; and




(6) money market funds at least 95% of the assets of which constitute Cash Equivalents
of the kinds described in clauses (1) through (5) of this definition.


 


4









 






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




(1) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related transactions,
of all or
substantially all of the properties or assets of the Company and its Subsidiaries taken
as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act);




(2) the adoption of a plan relating to the liquidation or dissolution of the Company;




(3) the consummation of any transaction (including, without limitation, any merger or
consolidation), the result of which is that any “person” (as defined above) becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the
Company, measured by voting power rather than number of shares; provided that, however, it
is not a Change in Control if, pursuant to such transaction, all of the Voting Stock of the
Company is changed into or exchanged for securities of a parent corporation that after such
transaction owns all of the Capital Stock of the Company and no person is the Beneficial
Owner, directly or indirectly, of more than 50% of the Voting Stock of such parent
corporation;




(4) during any consecutive two-year period, individuals who at the beginning of that
two-year period constituted the Company’s Board of Directors (together with any new persons
whose election to the Company’s Board of Directors, or whose nomination for election by the
Company’s shareholders, was approved by a vote of a majority of the directors who were
either directors at the beginning of such period or whose election or nomination for
election was approved by the Company’s Board of Directors or the nominating committee
thereof, the majority of the members of which meet the above criteria) cease for any reason
to constitute a majority of the Company’s Board of Directors then in office; or




(5) the Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event pursuant to a
transaction in which any of the outstanding Voting Stock of the Company or such other Person
is converted into or exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock)
of the surviving or transferee Person constituting a majority of the outstanding shares of
such Voting Stock of such surviving or transferee Person (immediately after giving effect to
such issuance).




“Clearstream” means Clearstream Banking, S.A.




“Company” means Mercer International Inc., and any and all successors thereto.



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




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




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




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


 


5









 






(4) depreciation, amortization (including amortization of intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents an accrual of
or reserve for cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income; plus




(5) all expenses including premium and consent payments related to the offering of
these Notes and the tender offer of the 2013 Senior Notes (including, without limitation,
premium and consent fees) to the extent such amounts were deducted in computing such
Consolidated Net Income; plus




(6) the following expenses, losses or gains to the extent such amounts were included in
the computation of Consolidated Net Income:




(i) extraordinary, non-recurring or unusual losses or expenses, including, without
limitation, recruiting, severance and restructuring costs or gains during such period, as
determined in good faith by the Board of Directors of the Company, in each case, without
regard to any limitations of Item 10(e) of Regulation S-K; provided that the total of such
costs added back pursuant to this clause 6(i) shall not exceed $5.0 million in any
twelve-month period;




(ii) foreign exchange gains or losses incurred with respect to receivables (net of the
impact on payables) on product sales; and




(iii) expenses related to equipment failures (including, without limitation, costs of
repair, equipment replacement or addition) where a good faith application for the recovery
of such costs from the vendor or an insurer has been made, less any such recovery and the
amount of any such claim to the extent it has been finally determined to be uncollectible,
the net amount not to exceed $2.0 million in the aggregate over any twelve-month period;
minus




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



in each case, on a consolidated basis for such Person and its Restricted Subsidiaries and
determined in accordance with GAAP.



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


 


6









 





“Consolidated Net Income” means, with respect to any specified Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP; provided that:




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




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




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




(4) any goodwill impairment charges pursuant to Financial Accounting Standards Board
Statement No. 142 or any asset impairment charges pursuant to Financial Accounting Standards
Board Statement No. 144 will be excluded; and




(5) notwithstanding clause (1) above, the Net Income of any Unrestricted Subsidiary
(including, without limitation, the impact of any Hedging Obligations) will be excluded,
whether or not distributed to the specified Person or one of its Subsidiaries.



“continuing” means, with respect to any Default or Event of Default, that such Default or
Event of Default has not been cured or waived.



“Corporate Trust Office of the Trustee” for administration purposes will be at the address of
the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may
give notice to the Company. With respect to presentation of notes or for registration of transfer
or exchange, 625 Marquette Avenue, Minneapolis, MN 55402, Attention Bondholder Communications.



“Credit Agreements” means: (i) that certain Credit Agreement by and among Zellstoff Celgar
Limited Partnership and CIT Business Credit Canada Inc., as Agent, providing for up to C$40.0
million of revolving credit borrowings, including any related Notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, (ii) that certain Credit
Agreement by and among Zellstoff-und Papierfabrik Rosenthal GmbH, D&Z Holding GmBH, D&Z
Beteiligungs GmbH and ZPR Logistik GmbH and Bayerische Hypo-und Vereinsbank AG, as original lender
and issuing bank, providing for up to €25.0 million of revolving credit borrowings, including
any related Notes, Guarantees, collateral documents, instruments and agreements executed in
connection therewith, and, in each case, as amended, restated, modified, renewed, refunded,
replaced (whether upon or after termination or otherwise) or refinanced (including by means of
sales of debt securities to institutional investors) in whole or in part from time to time; (iii)
that Loan Agreement between Zellstoff-und Papierfabrik Rosenthal GmbH, as borrower and Bayerische
Hypo-und Vereinsbank AG for €4.4 million; and (iv) that certain Credit Agreement among
Zellstoff-und Papierfabrik Rosenthal GmbH, D&Z Holding GmbH, D&Z Beteiligungs GmbH and the Company
and Kreissparkasse Saale-Orla, as original lender, providing for up to €3.5 million of revolving
credit borrowings, including any related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, and, in each case, as amended, restated, modified,
renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced
(including by means of sales of debt securities to institutional investors) in whole or in part
from time to time.


 


7









 





“Credit Facilities” means, one or more debt facilities (including, without limitation, the
Credit Agreements) or commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables) or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or
refinanced (including by means of sales of debt securities to institutional investors) in whole or
in part from time to time.



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



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



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



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



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



“Domestic Subsidiary” means any Restricted Subsidiary of the Company that was formed under the
laws of the United States or any state of the United States or the District of Columbia or that
guarantees or otherwise provides direct credit support for any Indebtedness of the Company.



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




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



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


 


8









 





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




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



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



“Existing Indebtedness” means the Indebtedness of the Company and its Restricted Subsidiaries
(other than Indebtedness under the Credit Agreements) in existence on the date of this Indenture,
until such amounts are repaid.



“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated
willing seller in a transaction not involving distress or necessity of either party. In the case
of a transaction not exceeding $10.0 million, Fair Market Value may be determined in good faith by
the Chief Financial Officer, Controller or Treasurer of the Company, and in the case of a
transaction exceeding $10.0 million, Fair Market Value shall be determined in good faith by the
Board of Directors of the Company (unless otherwise provided in this Indenture).



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




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




(1) acquisitions that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers or consolidations, or any Person or any of its
Restricted Subsidiaries acquired by the specified Person or any of its Restricted
Subsidiaries, and including any related financing transactions and including increases in
ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date, or that are to be made on
the Calculation Date, will be given pro forma effect (in accordance with Regulation S-X
under the Securities Act or, if not in accordance with Regulation S-X constituting Pro Forma
Cost Savings not to exceed $5.0 million in any twelve-month period) as if they had occurred
on the first day of the four-quarter reference period;




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




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


 


9









 






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




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




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



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




(1) the consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued, including, without limitation, original issue
discount, non-cash interest payments (but excluding any non-cash interest expense
attributable to the movement in the mark to market valuation of Hedging Obligations in
accordance with GAAP and excluding amortization and write-offs of debt issuance costs), the
interest component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers’ acceptance financings, and net of the effect of all payments
made or received pursuant to Hedging Obligations in respect of interest rates (excluding,
for the avoidance of doubt, amounts due upon settlement of any such Hedging Obligations);
plus




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




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




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




“Foreign Subsidiary” means any Restricted Subsidiary that is not a Domestic Subsidiary.



“GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a significant segment of the
accounting profession, which are in effect on the date of hereof.


 


10









 





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



“Global Notes” means, individually and collectively, each of the Restricted Global Notes and
the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the
Depository or its nominee, substantially in the form of Exhibit A hereto and that bears the Global
Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached
thereto, issued in accordance with Sections 2.01 and 2.06 hereof.



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



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



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



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




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




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




(3) other agreements or arrangements designed to protect such Person against
fluctuations in currency exchange rates (including, without limitation, foreign currency
futures and options, currency swaps, currency forwards and related interest rate swaps
and/or forwards) or commodity prices (including, without limitation, commodity futures,
swaps or options) or energy prices (including forwards and swaps).


 


11









 





“Holder” means a Person in whose name a Note is registered on the books of the Registrar.



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



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




(1) in respect of borrowed money;




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




(3) in respect of banker’s acceptances;




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




(5) representing the balance deferred and unpaid of the purchase price of any property
or services due more than six months after such property is acquired or such services are
completed, except any balance that constitutes an accrual of expenses or trade payable; or




(6) representing any Hedging Obligations (the amount of any such Hedging Obligations to
be equal at any time to the termination value of the agreement or arrangement giving rise to
such Hedging Obligations that would be payable by such Person at such time),



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




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



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



“Initial Notes” means the first $300.0 million aggregate principal amount of Notes issued
under this Indenture on the date hereof.



“Initial Purchasers” means RBC Capital Markets, LLC, Credit Suisse Securities (USA) LLC,
Barclays Capital Inc. and Macquarie Capital (USA) Inc.



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


 


12









 





“Investments” means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other
obligations), advances or capital contributions (excluding commission, travel and similar advances
to officers and employees made in the ordinary course of business), purchases or other acquisitions
for consideration of
Indebtedness, Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of
any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any
such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company will be
deemed to have made an Investment on the date of any such sale or disposition equal to the Fair
Market Value of the Company’s Investments in such Restricted Subsidiary that were not sold or
disposed of in an amount determined as provided in the final paragraph of Section 4.07 hereof. The
acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an
Investment in a third Person will be deemed to be an Investment by the Company or such Subsidiary
in such third Person in an amount equal to the Fair Market Value of the Investments held by the
acquired Person in such third Person in an amount determined as provided in the final paragraph of
Section 4.07 hereof. Except as otherwise provided in this Indenture, the amount of an Investment
will be determined at the time the Investment is made and without giving effect to subsequent
changes in value.



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



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



“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title retention agreement,
any lease in the nature thereof, any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction.




“Moody’s” means Moody’s Investors Service, Inc.



“Net Income” means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding, however:




(1) any gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with:




(i) any Asset Sale; or




(ii) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries;




(2) any extraordinary gain, together with any related provision for taxes on such
extraordinary gain;




(3) any foreign exchange gain (loss) on Indebtedness; and




(4) any marked to market gain (loss) whether realized or accrued, without duplication,
on Hedging Obligations.


 


13









 





“Net Proceeds” means the aggregate cash proceeds received by the Company or any of its
Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration received in any Asset
Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, and sales commissions, and any relocation expenses incurred
as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case,
after taking into account any available tax credits or deductions and any tax sharing arrangements,
and amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under
a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.



“Non-Recourse Debt” means Indebtedness as to which neither the Company nor any of its
Restricted Subsidiaries:




(1) provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness);




(2) is directly or indirectly liable as a guarantor or otherwise; or




(3) constitutes the lender.




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



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



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



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



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



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



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


 


14









 





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



“Permitted Business” means any business conducted by the Company and its Restricted
Subsidiaries on the date of this Indenture, including the pulp and paper manufacturing and sales
business, production and generation and sales of electricity generated as a by-product of or from,
or utilizing the facilities of, any Permitted Business and any business reasonably related thereto,
ancillary or complimentary to reasonable extensions thereof, including, without limitation,
transportation, logistics and wood harvesting and procurement.




“Permitted Investments” means:




(1) any Investment in the Company or in a Restricted Subsidiary of the Company;




(2) any Investment in Cash Equivalents;




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




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




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




(4) any Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;




(5) any acquisition of assets or Capital Stock solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company or out of the net proceeds
of an issue or sale of Equity Interest of the Company (other than Disqualified Stock) so
long as such acquisition occurs within 60 days thereafter;




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




(7) Investments represented by Hedging Obligations;




(8) loans or advances to employees made in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company in an aggregate principal amount not to
exceed $2.0 million at any one time outstanding;




(9) repurchases of the Notes and repurchases and/or redemptions of the 2013 Senior
Notes;




(10) extensions of trade credit or advances to customers and/or suppliers on
commercially reasonable terms in the ordinary course of business;


 


15









 






(11) Guarantees of Indebtedness of the Company or any of its Restricted Subsidiaries
issued in accordance with Section 4.09 hereof;




(12) Investments resulting from payment of consolidated taxes that include Unrestricted
Subsidiaries;




(13) other Investments in any Person (other than an Affiliate of the Company that is
not a Subsidiary of the Company) having an aggregate Fair Market Value (measured on the date
each such Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (13) that are at
the time outstanding not to exceed $20.0 million; and




(14) for the avoidance of doubt, any Restricted Investments existing on the date
hereof.




“Permitted Liens” means:




(1) Liens on assets of the Company or any of its Restricted Subsidiaries securing
Indebtedness and other Obligations under Credit Facilities that was permitted by the terms
of this Indenture to be incurred and/or securing Hedging Obligations related thereto;




(2) Liens in favor of the Company;




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




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




(5) Liens to secure the performance of statutory obligations, surety or appeal bonds,
performance bonds, letters of credit or other obligations of a like nature incurred in the
ordinary course of business;




(6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (4) of the second paragraph of Section 4.09 hereof covering only the assets acquired
with or financed by such Indebtedness;




(7) Liens existing on the date of this Indenture or from contractual commitments
existing on the date of this Indenture;




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




(9) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’
Liens, in each case, incurred in the ordinary course of business;


 


16









 






(10) survey exceptions, easements or reservations of, or rights of others for,
licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of real property that were
not incurred in connection with Indebtedness and that do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in the
operation of the business of such Person;




(11) Liens created for the benefit of (or to secure) the Notes;




(12) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred
under this Indenture; provided, however, that:




(i) the new Lien shall be limited to all or part of the same property and assets that
secured or, under the written agreements pursuant to which the original Lien arose, could
secure the original Lien (plus improvements and accessions to, such property or proceeds or
distributions thereof); and




(ii) the Indebtedness secured by the new Lien is not increased to any amount greater
than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of
the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and
expenses, including premiums, related to such renewal, refunding, refinancing, replacement,
defeasance or discharge;




(13) Liens securing Hedging Obligations made in the ordinary course of business and not
for speculation; provided that such Hedging Obligations are permitted under this Indenture;




(14) Liens resulting from sale and leaseback transactions otherwise permitted by
Section 4.17 hereof at any one time outstanding that do not exceed $15.0 million; and




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



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




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




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


 


17









 






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




(4) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary
who is the obligor on the Indebtedness being renewed, refunded, refinanced, replaced,
defeased or discharged.



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



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



“Pro Forma Cost Savings” means, with respect to any four-quarter period, the reduction in net
costs and expenses that:




(1) were actually implemented prior to the Calculation Date in connection with or as a
result of an acquisition, Investment, disposition, merger, consolidation or discontinued
operation or other specified action and that are supportable and quantifiable by the
underlying accounting records; or




(2) relate to an acquisition, Investment, disposition, merger, consolidation or
discontinued operation or other specified action and that the Company reasonably determines
will actually be realized within 12 months of the date of the closing of the acquisition,
Investment, disposition, merger, consolidation or discontinued operation or specified
action.




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



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




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



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



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


 


18









 






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




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




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



“Restricted Period” means the 40-day distribution compliance period as defined in Regulation
S.



“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an
Unrestricted Subsidiary.



“Rosenthal” means Zellstoff-und Papierfabrik Rosenthal GmbH and any and all successors
thereto.




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




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




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




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




“S&P” means Standard & Poor’s Ratings Group.




“SEC” means the Securities and Exchange Commission.




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



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



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



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




“Subordinated Note Indenture” means the indenture governing the Subordinated Notes.




“Subordinated Notes” means the Company’s 8.5% Convertible Senior Subordinated Notes Due 2012.


 


19









 





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




(1) any corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency and after giving effect to any voting agreement or stockholders’ agreement
that effectively transfers voting power) to vote in the election of directors, managers or
trustees of the corporation, association or other business entity is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and




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




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




“Trading Day” means:




(1) if the Company’s common Capital Stock is quoted on the Nasdaq Global Market, a day
on which trades may be made on the Nasdaq Global Market; or




(2) if the Company’s common Capital Stock is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law, executive order or otherwise to
close.



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



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



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



“Unrestricted Subsidiary” means each of Stendal Pulp Holding GmbH, Zellstoff Stendal GmbH,
Zellstoff Stendal Holz GmbH, Zellstoff Stendal Transport GmbH, ZS Holz Beteiligungs GmbH (or any
successor to any of them) or any other Subsidiary of the Company that is designated by the Board of
Directors of the Company as an Unrestricted Subsidiary pursuant to a resolution of the Board of
Directors, but only to the extent that such Subsidiary:




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




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




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




(4) has not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries.


 


20









 





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



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



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




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




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



Section 1.02 Other Definitions.




	 	 	 	 	 
	 	 	Defined in	 
	Term	 	Section	 
	“Affiliate Transaction”
	 	 	4.11	 
	“Asset Sale Offer”
	 	 	3.09	 
	“Authentication Order”
	 	 	2.02	 
	“Change of Control Offer”
	 	 	4.15	 
	“Change of Control Payment”
	 	 	4.15	 
	“Change of Control Payment Date”
	 	 	4.15	 
	“Covenant Defeasance”
	 	 	8.03	 
	“DTC”
	 	 	2.03	 
	“Event of Default”
	 	 	6.01	 
	“Excess Proceeds”
	 	 	4.10	 
	“incur”
	 	 	4.09	 
	“Legal Defeasance”
	 	 	8.02	 
	“Offer Amount”
	 	 	3.09	 
	“Offer Period”
	 	 	3.09	 
	“Paying Agent”
	 	 	2.03	 
	“Permitted Debt”
	 	 	4.09	 
	“Payment Default”
	 	 	6.01	 
	“Purchase Date”
	 	 	3.09	 
	“Registrar”
	 	 	2.03	 
	“Restricted Payments”
	 	 	4.07	 






Section 1.03 Incorporation by Reference of Trust Indenture Act.




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


 


21









 






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




“indenture securities” means the Notes;




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




“indenture to be qualified” means this Indenture;




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



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



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



Section 1.04 Rules of Construction.





Unless the context otherwise requires:




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




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




(3) “or” is not exclusive;




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




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




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




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



ARTICLE 2

THE NOTES




Section 2.01 Form and Dating.




(a) General. The Notes and the Trustee’s certificate of authentication will be substantially
in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The
Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess thereof.



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


 


22









 





(b) Global Notes. Notes issued in global form will be substantially in the form of Exhibit A
hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the
Global Note” attached thereto). Notes issued in definitive form will be substantially in the form
of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of
Exchanges of Interests in the Global Note” attached thereto). Each Global Note will represent such
of the outstanding Notes as will be specified therein and each shall provide that it represents the
aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.



Section 2.02 Execution and Authentication.





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



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



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



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



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



Section 2.03 Registrar and Paying Agent.




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



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



The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act
as Custodian with respect to the Global Notes.


 


23









 





Section 2.04 Paying Agent to Hold Money in Trust.




The Company will require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the
Paying Agent for the payment of principal of, premium on, if any, or interest or Additional
Interest, if any, on the Notes, and will notify the Trustee of any default by the Company in making
any such payment. While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
the Company or a Subsidiary) will have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee will serve as Paying Agent for the Notes.



Section 2.05 Holder Lists.




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



Section 2.06 Transfer and Exchange.




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




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




(2) subject to any limitations imposed by the Depositary pursuant to its then-current
practices, the Company in its sole discretion determines that the Global Notes (in whole but
not in part) should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee; or




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



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


 


24









 





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




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




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




(A) both:




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




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




(B) both:




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




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


 


25









 





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




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




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




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




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




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




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




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




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


 


26









 






(D) the Registrar receives the following:




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




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




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



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



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




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




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




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




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




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




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




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


 


27









 






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




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



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




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




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




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




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




(D) the Registrar receives the following:




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




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


 


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




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




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




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




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




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




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




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


 


29









 






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




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




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




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




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




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




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




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




(D) the Registrar receives the following:




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




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




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


 


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




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




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



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




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




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




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




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


 


31









 






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




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




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




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




(D) the Registrar receives the following:




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




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




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




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



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




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


 


32









 






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




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



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




(1) Private Placement Legend.




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



“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER
OF THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)) OR (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS NOTE IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 903 OR RULE 904
OF REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), (2) AGREES THAT IT WILL NOT, PRIOR TO
THE DATE THAT IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR
OF THIS NOTE) AND THE LAST DATE ON WHICH MERCER INTERNATIONAL INC. (THE “COMPANY”) OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE OR ANY PREDECESSOR OF THIS NOTE, OFFER, SELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES
IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.”


 


33









 






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




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



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



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



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


 


34









 






(i) General Provisions Relating to Transfers and Exchanges.




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




(2) No service charge will be made to a Holder of a beneficial interest in a Global
Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but
the Company may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 3.09, 4.10, 4.15 and 9.05 hereof).




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




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




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




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




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




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




(6) Prior to due presentment for the registration of a transfer of any Note, the
Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and none of the Trustee,
any Agent or the Company shall be affected by notice to the contrary.




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




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


 


35









 





Section 2.07 Replacement Notes.




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



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



Section 2.08 Outstanding Notes.




The Notes outstanding at any time are all the Notes authenticated by the Trustee except for
those canceled by it, those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof, and those described
in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does
not cease to be outstanding because the Company or an Affiliate of the Company holds the Note;
however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be
outstanding for purposes of Section 3.07(a) hereof.



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



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



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



Section 2.09 Treasury Notes.




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



Section 2.10 Temporary Notes.




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


 


36









 





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



Section 2.11 Cancellation.




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



Section 2.12 Defaulted Interest.




If the Company defaults in a payment of interest on the Notes, it will pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The Company will notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and the date of the
proposed payment. The Company will fix or cause to be fixed each such special record date and
payment date; provided that no such special record date may be less than seven (7) days prior to
the related payment date for such defaulted interest. At least ten (10) days before the special
record date, the Company (or, upon the written request of the Company, the Trustee in the name and
at the expense of the Company) will mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to be paid.



ARTICLE 3

REDEMPTION AND PREPAYMENT




Section 3.01 Notices to Trustee.




If the Company elects to redeem Notes pursuant to the optional redemption provisions of
Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days
before a redemption date, an Officers’ Certificate setting forth:




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




(2) the redemption date;




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




(4) the redemption price.


 


37









 





Section 3.02 Selection of Notes to Be Redeemed or Purchased.



If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any
time, the Trustee will select Notes for redemption or purchase by lot pursuant to the rules of DTC,
if applicable, or on a pro rata basis or some other method as the Trustee deems fair and
appropriate except:




(1) if the Notes are listed on any national securities exchange, in compliance with the
requirements of the principal national securities exchange on which the Notes are listed; or




(2) if otherwise required by law.



In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or
purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption or purchase date by the Trustee from the outstanding Notes not
previously called for redemption or purchase.



The Trustee will promptly notify the Company in writing of the Notes selected for redemption
or purchase and, in the case of any Note selected for partial redemption or purchase, the principal
amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in
amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes
of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such
Holder, provided Notes are redeemed or repurchased in denominations authorized by this Indenture.
Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes
called for redemption or purchase also apply to portions of Notes called for redemption or
purchase.



Section 3.03 Notice of Redemption.




Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days
before a redemption date, the Company will mail or cause to be mailed, by first class mail (in the
case of Notes held in book entry form, by electronic transmission), a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address, except that redemption notices may
be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a
defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or
11 hereof.




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




(1) the redemption date;




(2) the redemption price;




(3) if any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the redemption date upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion will be issued upon
cancellation of the original Note;




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




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




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


 


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(7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the
Notes called for redemption are being redeemed; and




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



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



Section 3.04 Effect of Notice of Redemption.




Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the redemption price. A
notice of redemption may not be conditional.



Section 3.05 Deposit of Redemption or Purchase Price.




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



If the Company complies with the provisions of the preceding paragraph, on and after the
redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes
called for redemption or purchase. If a Note is redeemed or purchased on or after an interest
record date but on or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or purchase is not so paid upon
surrender for redemption or purchase because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or
purchase date until such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.



Section 3.06 Notes Redeemed or Purchased in Part.




Upon surrender of a Note that is redeemed or purchased in part, the Company will issue and,
upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the
expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased
portion of the Note surrendered.


 


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Section 3.07 Optional Redemption.




(a) At any time prior to December 1, 2013, the Company may on any one or more occasions redeem
up to 35% of the aggregate principal amount of Notes issued under this Indenture at a redemption
price of 109.5% of the principal amount thereof, plus accrued and unpaid interest and Additional
Interest,
if any, to the redemption date, with the net cash proceeds of a sale of Equity Interests
(other than Disqualified Stock) of the Company; provided that:




(1) at least 65% of the aggregate principal amount of Notes originally issued under
this Indenture (excluding Notes held by the Company and its Subsidiaries) remains
outstanding immediately after the occurrence of such redemption; and




(2) the redemption occurs within 90 days of the date of the closing of such sale of
Equity Interests.



(b) On or after December 1, 2014, the Company may redeem all or a part of the Notes upon not
less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest (including any Additional
Interest) on the Notes redeemed to the applicable redemption date, if redeemed during the
twelve-month period beginning on December 1 of the years indicated below, subject to the rights of
Holders on the relevant record date to receive interest on the relevant interest payment date:



	 	 	 	 	 
	Year	 	Percentage	 
	2014
	 	 	104.750	%
	2015
	 	 	102.375	%
	2016 and thereafter
	 	 	100.000	%






Unless the Company defaults in the payment of the redemption price, interest will cease to
accrue on the Notes or portions thereof called for redemption on the applicable redemption date.




	 	i)	 	Any redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.






Section 3.08 Mandatory Redemption; No Sinking Fund.




The Company is not required to make mandatory redemption or sinking fund payments with respect
to the Notes or, except as set forth in Sections 4.10 and 4.15 hereof, to repurchase the Notes at
the option of the Holders.



Section 3.09 Offer to Purchase by Application of Excess Proceeds.




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



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


 


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



Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a
notice to the Trustee and each of the Holders. The notice will contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The
notice, which will govern the terms of the Asset Sale Offer, will state:




(1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section
4.10 hereof and the length of time the Asset Sale Offer will remain open;




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




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




(4) that, unless the Company defaults in making such payment, any Note accepted for
payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase
Date;




(5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may
elect to have Notes purchased in denominations of $2,000 or an integral multiple of $1,000
in excess thereof;




(6) that Holders electing to have Notes purchased pursuant to any Asset Sale Offer will
be required to surrender the Note, with the form entitled “Option of Holder to Elect
Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the
Company, a Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;




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




(8) that, if the aggregate principal amount of Notes and other pari passu Indebtedness
surrendered by holders thereof exceeds the Offer Amount, the Company will select the Notes
and other pari passu Indebtedness to be purchased on a pro rata basis based on the principal
amount of Notes and such other pari passu Indebtedness surrendered (with such adjustments as
may be deemed appropriate by the Company so that only Notes in denominations of $2,000, or
an integral multiple of $1,000 in excess thereof, will be purchased); and




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


 


41









 





On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on
a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and will deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’
Certificate stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the
Paying Agent, as the case may be, will promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of
the Notes tendered by such Holder and accepted by the Company for purchase, and the Company will
promptly issue a new Note, and the Trustee, upon written request from the Company, will
authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such
Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note
not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The
Company will publicly announce the results of the Asset Sale Offer on the Purchase Date.



Other than as specifically provided in this Section 3.09, any purchase pursuant to this
Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.



ARTICLE 4

COVENANTS




Section 4.01 Payment of Notes.




The Company will pay or cause to be paid the principal of, premium on, if any, and interest
and Additional Interest, if any, on the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest and Additional Interest, if any, will be considered paid
on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
11:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available
funds and designated for and sufficient to pay all principal, premium, if any, and interest then
due. The Company will pay all Additional Interest, if any, in the same manner on the dates and in
the amounts set forth in the Registration Rights Agreement.



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



Section 4.02 Maintenance of Office or Agency.




The Company will maintain in the Borough of Manhattan, the City of New York, an office or
agency (which may be an office of the Trustee or an affiliate or agent of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Notes and this Indenture may be
served, if and to the extent required by the rules and regulations of the SEC or other relevant
regulatory body. The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company fails to maintain
any such required office or agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office
of the Trustee.



The Company may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or rescission will in any
manner relieve the Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of
New York for such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such other office or
agency.


 


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



Section 4.03 Reports.




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




(1) all quarterly and annual reports that would be required to be filed with the SEC on
Forms 10-Q and 10-K if the Company were required to file such reports; and




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



All such reports shall be prepared in all material respects in compliance with all of the
rules and regulations applicable to such reports. Each annual report on Form 10-K shall include a
report on the Company’s consolidated financial statements by the Company’s certified independent
accountants. In addition, the Company will file a copy of each of the reports referred to in
clauses (1) and (2) above with the SEC for public availability within the time periods specified in
the rules and regulations applicable to such reports (unless the SEC will not accept such a
filing). The Company will at all times comply with TIA § 314(a).



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



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



(c) For so long as any Notes remain outstanding, if at any time they are not required to file
with the SEC the reports required by paragraphs (a) and (b) of this Section 4.03, the Company will
furnish to the Holders and to securities analysts and prospective investors, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. The
Company will be deemed to have provided such information to Holders, securities analysts and
prospective investors if it has filed reports containing such information with the SEC via the
EDGAR filing system and such reports are publicly available.



(d) Delivery of such reports, information and documents to the Trustee to the extent required
hereunder is for informational purposes only, the Trustee has no duty or obligation to investigate
further
and the Trustee’s receipt of such reports, information or documents shall not constitute
constructive notice of any information contained therein or determinable from information contained
therein, including the Company’s compliance with any of the covenants hereunder (as to which the
Trustee is entitled to conclusively rely exclusively on an Officers’ Certificate).


 


43









 





Section 4.04 Compliance Certificate.




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



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



Except with respect to the receipt of Note payments and any Default or Event of Default
information contained in the Officers’ Certificate delivered to it pursuant to this Section 4.04,
the Trustee shall have no duty to monitor or investigate the Company’s compliance with or the
breach of any representation, warranty or covenant made in this Indenture.



Section 4.05 Taxes.




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



Section 4.06 Stay, Extension and Usury Laws.




The Company and each of the Guarantors covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law has been enacted.


 


44









 





Section 4.07 Restricted Payments.




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




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




(2) purchase, redeem or otherwise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company;




(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness of the Company or any Guarantor that is
contractually subordinated to the Notes or to any Note Guarantee (excluding any intercompany
Indebtedness between or among the Company and any of its Restricted Subsidiaries), except a
payment of interest or principal at the Stated Maturity thereof; or




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




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




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




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




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




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


 


45









 






(B) 100% of the aggregate net cash proceeds received by the Company since the
date of this Indenture (i) as a contribution to its common equity capital or from
the issue or sale of Equity Interests of the Company including upon exercise of
stock options whether issued before or after the date of this Indenture (other
than Disqualified Stock) or (ii) from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt securities of
the Company that have been converted into or exchanged for such Equity Interests
(other than Equity Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company); plus




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




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




(E) 50% of (i) any dividends, interest, intercompany loan payments or other
distributions received in cash by the Company or a Restricted Subsidiary of the
Company after the date of this Indenture from an Unrestricted Subsidiary of the
Company, to the extent that such dividends, interest, intercompany loan payments
or other distributions were not otherwise included in the Consolidated Net Income
of the Company for such period; (ii) without duplication, any amounts received in
cash by the Company or a Restricted Subsidiary of the Company after the date of
this Indenture representing the proceeds of any settlement of any Hedging
Obligations, to the extent that such dividends or cash proceeds represent gains
previously recognized under GAAP and were not otherwise included in calculating
the Consolidated Net Income of the Company; and (iii) the amount of any marketing,
administration or other fee received in cash by the Company or a Restricted
Subsidiary from an Unrestricted Subsidiary to the extent such amounts were not
included in the Consolidated Net Income of the Company for such period; less 100%
of any payment made in settlement of any Hedging Obligations of the Company and
its Restricted Subsidiaries to the extent such payment represents cumulative net
losses previously recognized under GAAP and not previously deducted in calculating
the Consolidated Net Income of the Company.



(b) So long as no Default has occurred and is continuing or would be caused thereby, the
provisions of Section 4.07(a) hereof will not prohibit:




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




(2) the making of any Restricted Payment in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company)
of, Equity
Interests of the Company (other than Disqualified Stock) or from the substantially
concurrent contribution of common equity capital to the Company; provided that the amount of
any such net cash proceeds that are utilized for any such Restricted Payment will be
excluded from clause (3)(B) of Section 4.07(a) hereof;


 


46









 






(3) the repurchase, redemption, defeasance or other acquisition or retirement for value
of Indebtedness of the Company or any Guarantor that is contractually subordinated to the
Notes or to any Note Guarantee with (i) the net cash proceeds from a substantially
concurrent incurrence of Permitted Refinancing Indebtedness or (ii) after the completion of
a Change in Control Offer pursuant to the terms of Section 4.15 hereof, to the extent
required pursuant to any similar change of control offer provision of the indenture or other
agreement governing Subordinated Indebtedness (including the Subordinated Notes);




(4) the repurchase, redemption, defeasance or other acquisition or retirement for value
of the Company’s Subordinated Notes in the event that the daily closing sale price per share
of the Company’s common stock on the Nasdaq Global Market (or, if the Company’s common stock
is no longer traded on the Nasdaq Global Market, the principal public trading market,
including the Toronto Stock Exchange, for such common stock) for a period of at least ten
(10) consecutive Trading Days exceeds 120% of the then-applicable conversion price of the
Subordinated Notes, determined in accordance with the terms of the Subordinated Note
Indenture as in effect on the date of this Indenture;




(5) the payment of any dividend (or, in the case of any partnership or limited
liability company, any similar distribution) by a Restricted Subsidiary of the Company to
the holders of its Equity Interests who are not Affiliates of the Company, except Restricted
Subsidiaries of the Company, on a pro rata basis;




(6) the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Restricted Subsidiary of the Company held by any
current or former officer, director or employee of the Company or any of its Restricted
Subsidiaries pursuant to any equity subscription agreement, stock option agreement,
shareholders’ agreement or similar agreement; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests may not exceed $2.0 million
in any twelve-month period;




(7) the repurchase of Equity Interests deemed to occur upon the exercise of stock
options or stock appreciation rights to the extent such Equity Interests represent a portion
of the exercise price of those stock options or stock appreciation rights;




(8) the declaration and payment of regularly scheduled or accrued dividends to holders
of any class or series of Disqualified Stock of the Company issued on or after the date of
this Indenture in accordance with the Fixed Charge Coverage test set forth in Section 4.09
hereof;




(9) payments or distributions to shareholders exercising appraisal or discount rights
pursuant to applicable law pursuant to or in connection with a merger, consolidation or
transfer of all or substantially all of the Company and its Restricted Subsidiary assets
that complies with the provisions of this Indenture;


 


47









 






(10) in the event of a Change of Control, and if no Default or Event of Default shall
have occurred and be continuing, the payment, purchase, redemption, defeasance or other
acquisition or retirement of Indebtedness of the Company or any Guarantor that is
subordinated or junior in right of payment to the Notes or the Guarantee (including the
Exchange Notes and any
Guarantees thereof) of such Guarantor, in each case, at a purchase price not greater
than 101% of the principal amount of such Indebtedness, plus any accrued and unpaid interest
therein; provided that prior or contemporaneously with such payment, purchase, redemption or
defeasance or other acquisition or retirement, the Company (or a third party to the extent
permitted by the indenture) has made the Change of Control Offer with respect to the Notes
(including the Exchange Notes) and has repurchased all Notes (including the Exchange Notes)
validly tendered and not withdrawn in connection with such Change of Control Offer;




(11) in the event of an Asset Sale which requires the Company to make an Asset Sale
Offer, and if no Default or Event of Default shall have occurred and be continuing, the
payment, purchase, redemption, defeasance or other acquisition or retirement of Indebtedness
of the Company or any Guarantor that is subordinated or junior in right of payment to the
Notes or the Guarantee (including the Exchange Notes and any Guarantees thereof) of such
Guarantor, in each case, at a purchase price not greater than 100% of the principal amount
of such Indebtedness, plus any accrued and unpaid interest therein; provided that prior or
contemporaneously with such payment, purchase, redemption or defeasance or other acquisition
or retirement, the Company has made an Asset Sale Offer with respect to the Notes (including
the Exchange Notes) and has repurchased all Notes (including the Exchange Notes) validly
tendered and not withdrawn in connection with such Asset Sale Offer;




(12) the purchase, redemption, acquisition, cancellation or other retirement for a
nominal value per right of any rights granted to all the holders of Common Stock of the
Company pursuant to any shareholders’ rights plan adopted for the purpose of protecting
shareholders from unfair takeover practices; provided that any such purchase, redemption,
acquisition, cancellation or other retirement of such rights shall not be for the purpose of
evading the limitations of this covenant (as determined in good faith by the Board of
Directors of the Company); and




(13) other Restricted Payments in an aggregate amount not to exceed $25.0 million since
the date of this Indenture.



The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the
date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued
by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The Fair Market Value of any assets or securities that are required to be valued by this
Section 4.07 will be determined in good faith (a) in the case of assets or securities of $10.0
million or less by the Chief Financial Officer, Controller or Treasurer of the Company set forth in
a certificate delivered to the Trustee, and (b) in the case of assets or securities valued at more
than $10.0 million by the Board of Directors of the Company, and set forth in an Officers
Certificate delivered to the Trustee. The Board of Directors’ determination must be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking firm of national
standing in the United States or Canada if the Fair Market Value of any such non-cash Restricted
Payment exceeds $30.0 million.



Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.




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




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


 


48









 






(2) make loans or advances to the Company or any of its Restricted Subsidiaries; or




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



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




(1) agreements governing Existing Indebtedness and Credit Facilities as in effect on
the date of this Indenture and any amendments, restatements, modifications, renewals,
supplements, refundings, replacements or refinancings of those agreements; provided that the
amendments, restatements, modifications, renewals, supplements, refundings, replacements or
refinancings are not materially more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in those agreements on the date
of this Indenture;




(2) this Indenture, the Notes and the Note Guarantees;




(3) applicable law, rule, regulation or order;




(4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness or Capital Stock was incurred in connection with or
in contemplation of such acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; provided that, in the case of Indebtedness,
such Indebtedness was permitted by the terms of this Indenture to be incurred;




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




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




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




(8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those contained in the agreements governing the
Indebtedness being refinanced;




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




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


 


49









 






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




(12) agreements governing Indebtedness permitted to be incurred by Restricted
Subsidiaries of the Company under the provisions of Section 4.09 hereof; provided that such
agreements (except those agreements entered into pursuant to clause (14) of the definition
of “Permitted Debt”) are not materially more restrictive, taken as a whole, with respect to
such dividend and other payment restrictions than those contained in the agreements
governing Credit Facilities as in effect on the date of this Indenture.



Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.




(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness
(including Acquired Debt), and the Company will not issue any Disqualified Stock and will not
permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock, and any of the Company’s Restricted Subsidiaries that are Guarantors may incur Indebtedness
(including Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio for the
Company’s most recently ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued, as the case may be, would have been at least 2.0
to 1, determined on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the
preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.



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




(1) the incurrence by the Company and its Restricted Subsidiaries of additional
Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount
at any one time outstanding under this clause (1) (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the Company and its
Restricted Subsidiaries thereunder) not to exceed the greater of (x) $100.0 million less the
aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its
Restricted Subsidiaries since the date of this Indenture to repay any term Indebtedness
under a Credit Facility or to repay any revolving credit Indebtedness under a Credit
Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10
hereof, or (y) the amount of the Borrowing Base on the date of incurrence;




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




(3) the incurrence by the Company of Indebtedness represented by the Notes to be issued
on the date of this Indenture;


 


50









 






(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings, project financing or purchase
money obligations, in each case, incurred for the purpose of financing all or any part of
the purchase price or cost of design, construction, installation or improvement of property,
plant or equipment used in the business of the Company or any of its Restricted
Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing
Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any
Indebtedness incurred pursuant to this clause (4), not to exceed at any time outstanding
$20.0 million plus an amount, not to exceed $10.0 million, equal to all German and/or
Canadian federal and/or state and/or provincial grant receivables in connection therewith;




(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund,
refinance, replace, defease or discharge any Indebtedness that was permitted by this
Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5) or (14)
of this Section 4.09(b);




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




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




(B) (1) any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than the Company or a
Restricted Subsidiary of the Company and (2) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a Restricted
Subsidiary of the Company, will be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as
the case may be, that was not permitted by this clause (6);




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




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




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




will be deemed, in each case, to constitute an issuance of such preferred stock by such
Restricted Subsidiary that was not permitted by this clause (7);




(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging
Obligations (which may, but need not be, under Credit Facilities) in the ordinary course of
business and not for speculation;


 


51









 






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




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




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




(12) Indebtedness of a Restricted Subsidiary incurred and outstanding on or prior to
the date on which such Restricted Subsidiary was acquired by the Company (other than
Indebtedness incurred in contemplation of, or in connection with, the transaction or series
of related transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary of or was otherwise acquired by the Company); provided, however, that for any
such Indebtedness outstanding at any time under this clause (12), on the date that such
Subsidiary is acquired by the Company, the Company would have been able to incur $1.00 of
additional Indebtedness pursuant to Section 4.09(a) hereof and the Company’s Fixed Charge
Coverage Ratio would not be reduced after giving effect to the incurrence of such
Indebtedness pursuant to this clause (12);




(13) Indebtedness arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar obligations, in each
case incurred or assumed in connection with the disposition of any assets or property or
Capital Stock of a Restricted Subsidiary; and




(14) the incurrence by the Company or any of its Restricted Subsidiaries of additional
Indebtedness (which may, but need not, be pursuant to Credit Facilities) in an aggregate
principal amount (or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or
discharge any Indebtedness incurred pursuant to this clause (14), not to exceed $25.0
million.



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


 


52









 





For purposes of determining compliance with this Section 4.09, in the event that an item of
proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt
described in clauses (1) through (14) above or is entitled to be incurred pursuant to Section
4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of
its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner
that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date
on which Notes are first issued and authenticated under this Indenture will initially be deemed to
have been incurred on such date in reliance
on the exception provided by clause (1) of the definition of Permitted Debt. Indebtedness
permitted by this covenant need not be permitted solely by reference to one provision permitting
such Indebtedness but may be permitted in part by one such provision and in part by one or more
other provisions of this covenant permitting such Indebtedness. The accrual of interest, the
accretion or amortization of original issue discount, the payment of interest on any Indebtedness
in the form of additional Indebtedness with the same terms, the reclassification of preferred stock
as Indebtedness due to a change in accounting principles, and the payment of dividends on
Disqualified Stock or preferred stock in the form of additional shares of the same class of
Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09; provided, in
each such case, that the amount of any such accrual, accretion or payment is included in Fixed
Charges of the Company as accrued. For purposes of determining compliance with any U.S.
dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the
relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case
of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided
that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign
currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in effect on the date of such
refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed the principal amount
of such Indebtedness being refinanced. Notwithstanding any other provision of this Indenture, the
maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to
this Section 4.09 shall not be or be deemed to be exceeded as a result of fluctuations in exchange
rates or currency values.




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




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




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




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




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




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



Section 4.10 Asset Sales.




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




(1) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of the Asset Sale at least equal to the Fair Market Value of the
assets or Equity Interests issued or sold or otherwise disposed of (provided that Fair
Market Value shall be determined on the date of contractually agreeing to such Asset Sale);
and


 


53









 






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




(A) Cash Equivalents;




(B) any liabilities, as shown on the Company’s most recent consolidated
balance sheet, of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
any Note Guarantee) that are assumed by the transferee of any such assets pursuant
to an agreement that releases the Company or such Restricted Subsidiary from, or
indemnifies the Company or such Restricted Subsidiary against, further liability;




(C) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are converted within 60 days
by the Company or such Restricted Subsidiary into cash or Cash Equivalents, to the
extent of the cash or Cash Equivalents received in that conversion; and




(D) any stock or assets of the kind referred to in clauses (2) or (4) of the
next paragraph of this Section 4.10.



Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company (or the
applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds:




(1) to permanently repay or prepay Indebtedness and other Obligations under a Credit
Facility and, if the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto;




(2) to acquire (including by way of a purchase of assets or stock, merger,
consolidation or otherwise), or enter into a binding commitment to acquire within 120 days
thereafter, all or substantially all of the assets of, or any Capital Stock of, another
Permitted Business, if, after giving effect to any such acquisition of Capital Stock, the
Permitted Business is or becomes a Restricted Subsidiary of the Company;




(3) to make, or enter into a binding commitment to make within 60 days thereafter, a
capital expenditure; or




(4) to acquire other assets that are not classified as current assets under GAAP and
that are used or useful in a Permitted Business.



Pending the final application of any Net Proceeds, the Company or a restricted Subsidiary may
temporarily reduce revolving credit borrowings (under Credit Facilities or otherwise) or otherwise
invest the Net Proceeds in any manner that is not prohibited by this Indenture.



Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second
paragraph of this Section 4.10 will constitute “Excess Proceeds.” When the aggregate amount of
Excess Proceeds exceeds $15.0 million, within five days thereof, the Company will make an Asset
Sale Offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with
the Notes containing provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets in accordance with Section 3.09 hereof
to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may
be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
100% of the principal amount plus accrued and unpaid interest and Additional Interest, if any, to
the date of purchase, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not
otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale
Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari
passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer,
the amount of Excess Proceeds will be reset at zero.


 


54









 





The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the provisions of
Section 3.09 hereof or this Section 4.10, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations under Section 3.09
hereof or this Section 4.10 by virtue of such compliance.



Section 4.11 Transactions with Affiliates.




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




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




(2) the Company delivers to the Trustee:




(A) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, a
resolution of the Board of Directors of the Company set forth in an Officers’
Certificate certifying that such Affiliate Transaction complies with clause (1) of
this Section 4.11(a) and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors of the Company;
and




(B) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $20.0 million, an
opinion as to the fairness to the Company or such Restricted Subsidiary of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing in the United States or
Canada.



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




(1) any employment agreement, employee benefit plan, trustee or director
indemnification agreement or any similar arrangement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and payments pursuant
thereto;




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


 


55









 






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




(4) payment of reasonable compensation or fees to directors or officers of the Company
and its Restricted Subsidiaries;




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




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




(7) Permitted Investments that are permitted by this Indenture;




(8) provision of corporate-level administrative, marketing, tax, accounting, budgeting,
treasury, finance, employee benefits, legal, risk management and other similar services for
the benefit of Unrestricted Subsidiaries of the Company on substantially the same terms
provided to Restricted Subsidiaries of the Company;




(9) payment of consolidated taxes on behalf of Restricted Subsidiaries and Unrestricted
Subsidiaries;




(10) (a) purchases, sales or other transfers of pulp, fiber, chemicals and other
consumables between or among the Company or any Restricted Subsidiary and any Unrestricted
Subsidiary at market prices pursuant to arrangements approved by the Company’s Board of
Directors as being fair, from a financial point of view, to the Company or the applicable
Restricted Subsidiary, as the case may be; (b) purchases, sales or other transfers of spare
parts or mill consumables between any Restricted Subsidiary and any Unrestricted Subsidiary
at book value; (c) the provision of logistics, planning, transportation and fiber
procurement services between and/or among any Restricted Subsidiary and Unrestricted
Subsidiary at cost; and (d) other transactions with customers, clients, suppliers or
purchasers or sellers of goods or services, in each case in the ordinary course of business
and otherwise in compliance with the terms of this Indenture, that are fair to the Company
or the Restricted Subsidiary, as the case may be, in the reasonable determination of the
Company’s Board of Directors;




(11) payment of sales agency, administration, management and other fees, payment of
interest, principal, dividends or other distributions, in case from an Unrestricted
Subsidiary to the Company or a Restricted Subsidiary to the Company; and




(12) loans or advances to employees in the ordinary course of business not to exceed
$2.0 million in the aggregate at any one time outstanding.



Section 4.12 Liens.




The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly create, incur, assume or suffer to exist any Lien of any kind on any asset now owned or
hereafter acquired, except Permitted Liens, unless all payments due under this Indenture and the
Notes are secured on an equal and ratable basis with the obligations so secured until such time as
such obligations are no longer secured by a Lien.


 


56









 





Section 4.13 Business Activities.



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



Section 4.14 Corporate Existence.




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




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




(2) the rights (charter and statutory), licenses and franchises of the Company and its
Restricted Subsidiaries;



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



Section 4.15 Offer to Repurchase Upon Change of Control.




(a) Upon the occurrence of a Change of Control, the Company will make an offer (a “Change of
Control Offer”) to each Holder to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of that Holder’s Notes at a purchase price in cash equal to
101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and
Additional Interest, if any, on the Notes repurchased to the date of purchase, subject to the
rights of Holders on the relevant record date to receive interest due on the relevant interest
payment date (the “Change of Control Payment”). Within 20 days following any Change of Control, the
Company will mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and stating:




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




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




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




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




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


 


57









 






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




(7) that Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of
$1,000 in excess thereof.



The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a Change in Control. To
the extent that the provisions of any securities laws or regulations conflict with the provisions
of Sections 3.09 or 4.15 hereof, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under Section 3.09 hereof or
this Section 4.15 by virtue of such compliance.




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




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




(2) prior to 10:00 am New York City time, deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all Notes or portions of Notes properly
tendered; and




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



The Paying Agent will promptly mail (but in any case not later than five days after the Change
of Control Payment Date) to each Holder of Notes properly tendered the Change of Control Payment
for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any. The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.



(c) Notwithstanding anything to the contrary in this Section 4.15, the Company will not be
required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.15 and Section 3.09 hereof and purchases all Notes
properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption
has been given pursuant to Section 3.07(c) hereof, unless and until there is a default in payment
of the applicable redemption price.


 


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Section 4.16 No Amendment to Subordination Provisions.




Without the consent of the Holders of at least a majority in aggregate principal amount of the
Notes then outstanding, the Company will not amend, modify or alter the Subordinated Note Indenture
in any way to:




(1) increase the rate of or advance the time for payment of interest on any
Subordinated Notes;




(2) increase the principal of, advance the final maturity date of or shorten the
Weighted Average Life to Maturity of any Subordinated Notes;




(3) alter the redemption provisions, increase the price or otherwise alter terms at
which the Company is required to offer to purchase any Subordinated Notes; or




(4) amend the provisions of Article 5 of the Subordinated Note Indenture (which relate
to subordination);



provided that none of the foregoing shall prohibit amendments to the Subordinated Note Indenture
that provide for satisfaction of any obligation thereunder solely in common stock of the Company.



Section 4.17 Limitation on Sale and Leaseback Transactions.




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




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




(2) the gross cash proceeds of that sale and leaseback transaction are at least equal
to the Fair Market Value of the property that is the subject of that sale and leaseback
transaction; and




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



Section 4.18 Payments for Consent.




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



Section 4.19 Limitation on Issuances of Guarantees of Indebtedness.




The Company will not permit any of its Restricted Subsidiaries, directly or indirectly, to
Guarantee or pledge any assets to secure the payment of any other Indebtedness of the Company
(except Permitted Liens) unless such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for the Guarantee of the payment of the Notes by
such Restricted Subsidiary, which Guarantee will be senior to or pari passu with such Restricted
Subsidiary’s Guarantee of or pledge to secure such other Indebtedness.


 


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Section 4.20 Note Guarantees.



If the Company or any of its Restricted Subsidiaries acquires or creates a Domestic Subsidiary
after the date of this Indenture, then the Company will cause that newly acquired or created
Domestic Subsidiary (other than a Domestic Subsidiary the sole business of which is the direct or
indirect ownership of one or more Foreign Subsidiaries) to execute a Note Guarantee pursuant to a
supplemental indenture in the form and substance of Exhibit F attached hereto and deliver an
Opinion of Counsel, reasonably satisfactory to the Trustee, to the Trustee within 10 Business Days
of the date on which it was acquired or created to the effect that such supplemental indenture has
been duly authorized, executed and delivered by that Domestic Subsidiary and constitutes a valid
and binding agreement of that Domestic Subsidiary, enforceable in accordance with its terms
(subject to customary exceptions); provided that any Domestic Subsidiary that does not constitute a
Significant Subsidiary need not become a Guarantor until such time as it has become a Significant
Subsidiary based on the financial statements of the Company and such Domestic Subsidiary as of and
for the Company’s most recently completed fiscal year. The Company may designate any Restricted
Subsidiary as a Guarantor at any time. The form of such Note Guarantee is attached as Exhibit E
hereto.



Section 4.21 Designation of Restricted and Unrestricted Subsidiaries.




The Board of Directors of the Company may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary
is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding
Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as
Unrestricted will be deemed to be an Investment made as of the time of the designation and will
reduce the amount available for Restricted Payments under Section 4.07 hereof or under one or more
clauses of the definition of Permitted Investments, as determined by the Company. That designation
will only be permitted if the Investment would be permitted at that time and if the Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of
the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that
redesignation would not cause a Default.



Any designation of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary will
be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the
Board of Directors giving effect to such designation and an Officers’ Certificate certifying that
such designation complied with the preceding conditions and was permitted by Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of
this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to
be incurred as of such date under Section 4.09 hereof, the Company will be in default of such
covenant. The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1)
such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence following such designation.


 


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ARTICLE 5

SUCCESSORS




Section 5.01 Merger, Consolidation, or Sale of Assets.



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




(1) either:




(A) the Company is the surviving corporation; or




(B) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer, conveyance or
other disposition has been made is a corporation organized or existing under the
laws of the United States, any state of the United States or the District of
Columbia, or the laws of Canada or any province or territory thereof;




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




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




(4) the Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with this Indenture; and




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



In addition, the Company will not, directly or indirectly, lease all or substantially all of
its properties or assets, in one or more related transactions, to any other Person.




This Section 5.01 will not apply to:




(1) a merger of the Company with an Affiliate solely for the purpose of reincorporating
the Company in another jurisdiction; or




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



Section 5.02 Successor Corporation Substituted.




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


 


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ARTICLE 6

DEFAULTS AND REMEDIES




Section 6.01 Events of Default.





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




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




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




(3) failure by the Company or any of its Restricted Subsidiaries to comply with the
provisions of Sections 4.10, 4.15 or 5.01 hereof;




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




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




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




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




and, in each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $15.0 million
or more;




(6) failure by the Company or any of its Restricted Subsidiaries to pay final judgments
entered by a court or courts of competent jurisdiction aggregating in excess of $15.0
million, which judgments are not paid, discharged or stayed for a period of 60 days;


 


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




(A) commences a voluntary case,




(B) consents to the entry of an order for relief against it in an involuntary
case,




(C) consents to the appointment of a custodian of it or for all or
substantially all of its property, or




(D) makes a general assignment for the benefit of its creditors;




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




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




(B) appoints a custodian of the Company or any of its Restricted Subsidiaries
that is a Significant Subsidiary or any group of Restricted Subsidiaries of the
Company that, taken together, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary; or




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




and the order or decree remains unstayed and in effect for 60 consecutive days; and




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



Section 6.02 Acceleration.




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



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


 


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



If an Event of Default occurs by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law, anything in this Indenture or
in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to December 1,
2014 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding the prohibition on redemption of the Notes prior to such
date, then, upon acceleration of the Notes, an additional premium shall also become and be
immediately due and payable, to the extent permitted by law, in an amount, for each of the years
beginning on December 1 of the years set forth below, as set forth below (expressed as a percentage
of the principal amount of the Notes on the date of payment that would otherwise be due but for the
provisions of this sentence):



	 	 	 	 	 
	Year	 	Percentage	 
	2010
	 	 	109.5000	%
	2011
	 	 	108.3125	%
	2012
	 	 	107.1250	%
	2013
	 	 	105.9375	%






Section 6.03 Other Remedies.




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



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



Section 6.04 Waiver of Past Defaults.




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


 


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Section 6.05 Control by Majority.




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



Section 6.06 Limitation on Suits.





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




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




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




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




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




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



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



Section 6.07 Rights of Holders of Notes to Receive Payment.




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



Section 6.08 Collection Suit by Trustee.




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


 


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Section 6.09 Trustee May File Proofs of Claim.




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



Section 6.10 Priorities.




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




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




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




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



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



Section 6.11 Undertaking for Costs.




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


 


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ARTICLE 7

TRUSTEE




Section 7.01 Duties of Trustee.




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




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




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




(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee will examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated herin).



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




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




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




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



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



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



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



Section 7.02 Rights of Trustee.




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


 


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



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



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



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



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



(g) The Trustee shall not be required to give any note, bond or surety in respect of the
trusts and powers under this Indenture.



(h) The Trustee may request that the Company deliver an Officers’ Certificate setting forth
the names of individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person
authorized to sign an Officers’ Certificate, including any person specified as so authorized in
such certificate previously delivered and not superseded.



(i) In no event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.



(j) The Trustee shall not be deemed to have notice of any Default or Event of Default unless
written notice of any event which is in fact such a default is received by a Responsible Officer
of the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes
and this Indenture.



(k) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and
other Person employed to act hereunder.



Section 7.03 Individual Rights of Trustee.




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


 


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Section 7.04 Trustee’s Disclaimer.




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



Section 7.05 Notice of Defaults.




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



Section 7.06 Reports by Trustee to Holders of the Notes.




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



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



Section 7.07 Compensation and Indemnity.




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



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


 


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



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



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




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



Section 7.08 Replacement of Trustee.




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



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




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




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




(3) a custodian or public officer takes charge of the Trustee or its property; or




(4) the Trustee becomes incapable of acting.



(c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for
any reason, the Company will promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the
Company.



(d) If a successor Trustee does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in
aggregate
principal amount of the then outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.


 


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(e) If the Trustee, after written request by any Holder who has been a Holder for at least six
months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.



(f) A successor Trustee will deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will
become effective, and the successor Trustee will have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee will mail a notice of its succession to
Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the
successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to
the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company’s obligations under Section 7.07 hereof will continue for the
benefit of the retiring Trustee.



Section 7.09 Successor Trustee by Merger, etc.




If the Trustee consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation without any further
act will be the successor Trustee.



Section 7.10 Eligibility; Disqualification.




There will at all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof that is authorized
under such laws to exercise corporate trustee power, that is subject to supervision or examination
by federal or state authorities and that has a combined capital and surplus of at least $50.0
million as set forth in its most recent published annual report of condition.



This Indenture will always have a Trustee who satisfies the requirements of TIA §310(a)(1),
(2) and (5). The Trustee is subject to TIA §310(b).



Section 7.11 Preferential Collection of Claims Against Company.




The Trustee is subject to TIA §311(a), excluding any creditor relationship listed in TIA
§311(b). A Trustee who has resigned or been removed shall be subject to TIA §311(a) to the extent
indicated therein.



ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE




Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.




The Company may at any time, at the option of its Board of Directors evidenced by a resolution
set forth in an Officers’ Certificate, elect to have either Section 8.02 or 8.03 hereof be applied
to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.


 


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Section 8.02 Legal Defeasance and Discharge.



Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section
8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with
respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set
forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance
means that the Company and the Guarantors will be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will
thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all
their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee,
on demand of and at the expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which will survive until otherwise terminated or
discharged hereunder:




(1) the rights of Holders of outstanding Notes to receive payments in respect of the
principal of, or interest or premium or Additional Interest, if any, on, such Notes when
such payments are due from the trust referred to in Section 8.04 hereof;




(2) the Company’s obligations with respect to such Notes under Article 2 and Section
4.02 hereof;




(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company’s and the Guarantors’ obligations in connection therewith; and




(4) this Article 8.



Subject to compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.



Section 8.03 Covenant Defeasance.




Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section
8.03, the Company and each of the Guarantors will, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be released from each of their obligations under the covenants
contained in Sections 4.03, 4.04, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17.,
4.18, 4.19, 4.20, and 4.21 hereof and clause (4) of Section 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are
satisfied (hereinafter, “Covenant Defeasance”), and the Notes will thereafter be deemed not
“outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such covenants, but will continue to be
deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not
be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that,
with respect to the outstanding Notes and Note Guarantees, the Company and the Guarantors may omit
to comply with and will have no liability in respect of any term, condition or limitation set forth
in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein
to any such covenant or by reason of any reference in any such covenant to any other provision
herein or in any other document and such omission to comply will not constitute a Default or an
Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the
Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3) through
6.01(6) hereof will not constitute Events of Default.


 


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Section 8.04 Conditions to Legal or Covenant Defeasance.




In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02
or 8.03 hereof:




(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized
investment bank, appraisal firm, or firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Additional Interest, if any, on, the
outstanding Notes on the stated date for payment thereof or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are being defeased
to such stated date for payment or to a particular redemption date;




(2) in the case of an election under Section 8.02 hereof, the Company must deliver to
the Trustee an Opinion of Counsel, reasonably acceptable to the Trustee, confirming that:




(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling; or




(B) since the date of this Indenture, there has been a change in the
applicable federal income tax law,




in either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had not
occurred;




(3) in the case of an election under Section 8.03 hereof, the Company must deliver to
the Trustee an Opinion of Counsel, reasonably acceptable to the Trustee, confirming that the
Holders of the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;




(4) no Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) and the deposit will not result in a breach or violation of,
or constitute a default under, any other instrument to which the Company or any Guarantor is
a party or by which the Company or any Guarantor is bound;




(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party
or by which the Company or any of its Restricted Subsidiaries is bound;




(6) the Company must deliver to the Trustee an Officers’ Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of Notes over
the other creditors of the Company with the intent of defeating, hindering, delaying or
defrauding any creditors of the Company or others; and




(7) the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.


 


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Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.



Subject to Section 8.06 hereof, all money and non-callable Government Securities (including
the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the
outstanding Notes will be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders
of such Notes of all sums due and to become due thereon in respect of principal, premium, if any,
and interest and Additional Interest, if any, but such money need not be segregated from other
funds except to the extent required by law.



The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the cash or non-callable Government Securities deposited pursuant to Section
8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the outstanding Notes.



Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to
the Company from time to time upon the request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in
excess of the amount thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.



Section 8.06 Repayment to Company.




Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of, premium, if any, or interest or Additional Interest, if
any, on, any Note and remaining unclaimed for two years after such principal, premium, if any, or
interest or Additional Interest, if any, has become due and payable shall be paid to the Company on
its request or (if then held by the Company) will be discharged from such trust; and the Holder of
such Note will thereafter be permitted to look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, will thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date specified therein, which
will not be less than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Company.



Section 8.07 Reinstatement.




If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government
Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company’s and the Guarantors’ obligations under this
Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however,
that, if the Company makes any payment of principal of, premium, if any, or interest or Additional
Interest, if any, on, any Note following the reinstatement of its obligations, the Company will be
subrogated to the rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.


 


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ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER




Section 9.01 Without Consent of Holders of Notes.




Notwithstanding Section 9.02 hereof, the Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Notes or the Note Guarantees without the consent of any Holder of
Note:




(1) to cure any ambiguity, defect or inconsistency;




(2) to provide for uncertificated Notes in addition to or in place of certificated
Notes, in order to comply with any Applicable Procedures, or otherwise alter the provisions
of Article 2 hereof in a manner that does not materially adversely affect any Holder;




(3) to provide for the assumption of the Company’s or a Guarantor’s obligations to the
Holders of the Notes and Note Guarantees by a successor to the Company or such Guarantor
pursuant to Article 5 or Article 10 hereof;




(4) to make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not, in the good faith opinion of the Board of Directors
of the Company, adversely affect the legal rights hereunder of any Holder in any material
respect;




(5) to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA;




(6) to conform the text of this Indenture or the Notes to any provision of the
“Description of Notes” section of the Company’s Offering Memorandum dated November 10, 2010,
relating to the initial offering of the Notes, to the extent that such provision in that
“Description of Notes” was intended to be a verbatim recitation of a provision of this
Indenture, the Note Guarantees or the Notes;




(7) to provide for the issuance of Additional Notes in accordance with the limitations
set forth in this Indenture as of the date hereof; or




(8) to allow any Restricted Subsidiary to execute a supplemental indenture and/or a
Note Guarantee with respect to the Notes.



Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company
and the Guarantors in the execution of any amended or supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee will not be obligated to enter into
such amended or supplemental indenture that affects its own rights, duties or immunities under this
Indenture or otherwise.


 


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Section 9.02 With Consent of Holders of Notes.




Except as provided below in this Section 9.02, the Company and the Trustee may amend or
supplement this Indenture (including, without limitation, Section 3.09, 4.10 and 4.15 hereof) and
the Notes and the Note Guarantees with the consent of the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes (including, without limitation, Additional
Notes, if any) voting as a single class (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium on, if any, or interest or Additional
Interest, if any, on the Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture or the Notes or the Note
Guarantees may be waived with the consent of the Holders of a majority in aggregate principal
amount of the then outstanding Notes (including, without limitation, Additional Notes, if any)
voting as a single class (including, without limitation, consents obtained in connection with the
purchase of, or tender offer or exchange offer for, the Notes). Section 2.08 hereof shall
determine which Notes are considered to be “outstanding” for purposes of this Section 9.02.



Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon the filing with
the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the
Trustee will join with the Company and the Guarantors in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but will not be obligated to, enter into such amended or supplemental indenture.



It is not necessary for the consent of the Holders of Notes under this Section 9.02 to approve
the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such
consent approves the substance thereof.



After an amendment, supplement or waiver under this Section 9.02 becomes effective, the
Company will mail to the Holders of Notes affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect
therein, will not, however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a single class may
waive compliance in a particular instance by the Company with any provision of this Indenture or
the Notes or the Note Guarantees. However, without the consent of each Holder affected, an
amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by
a non-consenting Holder):




(1) reduce the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver;




(2) reduce the principal of or change the fixed maturity of any Note or alter the
provisions with respect to the redemption of the Notes (except as provided above with
respect to Sections 3.09, 4.10 and 4.15 hereof);




(3) reduce the rate of or change the time for payment of interest, including default
interest, on any Note;


 


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(4) waive a Default or Event of Default in the payment of principal of, or premium, if
any, or interest or Additional Interest, if any, on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes and a waiver of the payment default that resulted from
such acceleration);




(5) make any Note payable in money other than that stated in the Notes;




(6) make any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of, or interest
or premium or Additional Interest, if any, on the Notes;




(7) waive a redemption payment with respect to any Note (other than a payment required
by Sections 3.09, 4.10 or 4.15 hereof);




(8) release any Guarantor from any of its obligations under its Note Guarantee or this
Indenture, except in accordance with the terms of this Indenture; or




(9) make any change in the preceding amendment and waiver provisions.



Section 9.03 Compliance with Trust Indenture Act.




Every amendment or supplement to this Indenture or the Notes will be set forth in a amended or
supplemental indenture that complies with the TIA as then in effect.



Section 9.04 Revocation and Effect of Consents.




Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a
Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of
the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written notice of revocation
before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every Holder.



Section 9.05 Notation on or Exchange of Notes.




The Trustee may place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee
shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.



Failure to make the appropriate notation or issue a new Note will not affect the validity and
effect of such amendment, supplement or waiver.



Section 9.06 Trustee to Sign Amendments, etc.




The Trustee will sign any amended or supplemental indenture authorized pursuant to this
Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. The Company may not sign an amended or supplemental indenture until
the Board of Directors of the Company approves it. In executing any amended or supplemental
indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be
fully protected in relying upon, in
addition to the documents required by Section 12.04 hereof, an Officers’ Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and constitutes the legally valid, binding and
enforceable obligation of the Company and (if applicable) the Guarantors, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general equitable principles
including limitations and other restrictions on a party’s rights to specific performance and
indemnification.


 


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ARTICLE 10

NOTE GUARANTEES




Section 10.01 Guarantee.




(a) Subject to this Article 10, each of the Guarantors hereby, jointly and severally,
unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and
to the Trustee and its successors and assigns, irrespective of the validity and enforceability of
this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that:




(1) the principal of, premium on, if any, and interest and Additional Interest, if any,
on the Notes will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of, premium on, if any, and
interest and Additional Interest, if any, on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in accordance with the terms hereof and thereof; and




(2) in case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.



Failing payment when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors will be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.



(b) The Guarantors hereby agree that their obligations hereunder are unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with
respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenant that this Note Guarantee will not be discharged
except by complete performance of the obligations contained in the Notes and this Indenture.



(c) If any Holder or the Trustee is required by any court or otherwise to return to the
Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in
relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such
Holder, this Note Guarantee, to the extent theretofore discharged, will be reinstated in full force
and effect.


 


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(d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation
to the Holders in respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on
the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes
of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any
declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations
(whether or not due and payable) will forthwith become due and payable by the Guarantors for the
purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the rights of the
Holders under the Note Guarantee.



Section 10.02 Limitation on Guarantor Liability.




Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors
hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum
amount that will, after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in
the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer
or conveyance.



Section 10.03 Execution and Delivery of Note Guarantee.




To evidence its Note Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees
that a notation of such Note Guarantee substantially in the form attached as Exhibit E hereto will
be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee
and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.



Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 hereof will
remain in full force and effect notwithstanding any failure to endorse on each Note a notation of
such Note Guarantee.



If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds
that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed,
the Note Guarantee will be valid nevertheless.



The delivery of any Note by the Trustee, after the authentication thereof hereunder, will
constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the
Guarantors.



In the event that the Company or any of its Restricted Subsidiaries creates or acquires any
Domestic Subsidiary after the date of this Indenture, if required by Section 4.20 hereof, the
Company will cause such Domestic Subsidiary to comply with the provisions of Section 4.20 hereof
and this Article 10, to the extent applicable.


 


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Section 10.04 Guarantors May Consolidate, etc., on Certain Terms.



Except as otherwise provided in Section 10.05 hereof, no Guarantor may sell or otherwise
dispose of all or substantially all of its assets to, or consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another Person, other than the Company or
another Guarantor, unless:




(1) immediately after giving effect to such transaction, no Default or Event of Default
exists; and




(2) either:




(A) subject to Section 10.05 hereof, the Person acquiring the property in any
such sale or disposition or the Person formed by or surviving any such
consolidation or merger unconditionally assumes all the obligations of that
Guarantor under this Indenture and its Note Guarantee on the terms set forth
herein or therein, pursuant to a supplemental indenture in the form and substance
set forth in Exhibit F hereto; or




(B) the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of this Indenture, including without
limitation, Section 4.10 hereof.



In case of any such consolidation, merger, sale or conveyance and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the Trustee and in the form
and substance set forth in Exhibit F hereto, of the Note Guarantee endorsed upon the Notes and the
due and punctual performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person will succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all
of the Notes issuable hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Note Guarantees so issued will in all respects have the same
legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter
issued in accordance with the terms of this Indenture as though all of such Note Guarantees had
been issued at the date of the execution hereof.



Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b)
above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or
merger of a Guarantor with or into the Company or another Guarantor, or will prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.



Section 10.05 Releases.




(a) In the event of any sale or other disposition of all or substantially all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all
of the Capital Stock of any Guarantor, in each case to a Person that is not (either before or after
giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, then such
Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the Capital Stock of such Guarantor) or the corporation acquiring the property
(in the event of a sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that
the Net Proceeds of such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof. Upon delivery by
the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.10 hereof, the
Trustee will execute any documents reasonably requested by the Company, at the Company’s
expense, in order to evidence the release of any Guarantor from its obligations under its Note
Guarantee.


 


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(b) Upon designation of by the Company of any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary in accordance with the terms of this Indenture, such Guarantor will be
released and relieved of any obligations under its Note Guarantee.



(c) Upon Legal Defeasance or Covenant Defeasance in accordance with Article 8 hereof or
satisfaction and discharge of this Indenture in accordance with Article 11 hereof, each Guarantor
will be released and relieved of any obligations under its Note Guarantee.



Any Guarantor not released from its obligations under its Note Guarantee as provided in this
Section 10.05 will remain liable for the full amount of principal of, premium on, if any, and
interest and Additional Interest, if any, on the Notes and for the other obligations of any
Guarantor under this Indenture as provided in this Article 10.



ARTICLE 11

SATISFACTION AND DISCHARGE




Section 11.01 Satisfaction and Discharge.




This Indenture will be discharged and will cease to be of further effect as to all Notes
issued hereunder, when:




(1) either:




(A) all Notes that have been authenticated, except lost, stolen or destroyed
Notes that have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust and thereafter repaid to the Company, have
been delivered to the Trustee for cancellation; or




(B) all Notes that have not been delivered to the Trustee for cancellation
have become due and payable by reason of the mailing of a notice of redemption or
otherwise or will become due and payable within one year and the Company has
irrevocably deposited or caused to be deposited with the Trustee as trust funds in
trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, without consideration of any reinvestment of interest, to pay and
discharge the entire Indebtedness on the Notes not delivered to the Trustee for
cancellation for principal, premium and Additional Interest, if any, and accrued
interest to the date of maturity or redemption;




(2) no Default or Event of Default has occurred and is continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing of funds to
be applied to such deposit) and the deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company or any Guarantor is a
party or by which the Company or any Guarantor is bound;




(3) the Company or any Guarantor has paid or caused to be paid all sums payable by it
under this Indenture; and




(4) the Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of the Notes at maturity or on the
redemption date, as the case may be.


 


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In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.



Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited
with the Trustee pursuant to subclause (b) of clause (1) of this Section 11.01, the provisions of
Sections 11.02 and 8.06 hereof will survive. In addition, nothing in this Section 11.01 will be
deemed to discharge those provisions of Section 7.07 of this Indenture, that, by their terms,
survive the satisfaction and discharge of this Indenture.



Section 11.02 Application of Trust Money.




Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal, premium, if any, and interest and Additional Interest,
if any, for whose payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.



If the Trustee or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof;
provided that if the Company has made any payment of principal of, premium on, if any, or interest
or Additional Interest, if any, on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from
the money or Government Securities held by the Trustee or Paying Agent.



ARTICLE 12

MISCELLANEOUS




Section 12.01 Trust Indenture Act Controls.




If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by
TIA §318(c), the imposed duties will control.



Section 12.02 Notices.




Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly
given if in writing and delivered in Person or by first class mail (registered or certified, return
receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery,
to the others’ address:




If to the Company and/or any Guarantor:




Mercer International Inc.

14900 Interurban Avenue South, Suite 282

Seattle, Washington 98168

Attention: Chief Financial Officer

Facsimile No.: (604) 683-3205




 


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with copies to:




Mercer International Inc.

Suite 2840

650 West Georgia Street

Vancouver, British Columbia

Canada V6B 4N8

Attention: Chief Financial Officer

Facsimile No.: (604) 684-1094




and




Sangra, Moller

Barristers & Solicitors

1000 Cathedral Place

925 West Georgia Street

Vancouver, British Columbia

Canada V6C 3L2

Attention: Harjit Sangra

Facsimile No.: (604) 669-8803




If to the Trustee:




Wells Fargo Bank, National Association

707 Wilshire Blvd, 17th Floor

Los Angeles, CA 90017

Attention: Corporate Trust Services

Facsimile No.: (213) 614-3355



The Company, any Guarantor or the Trustee, by notice to the others, may designate additional
or different addresses for subsequent notices or communications.



All notices and communications (other than those sent to Holders) will be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by
facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.



Any notice or communication to a Holder will be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. Any notice or communication will also be
so mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with
respect to other Holders.


 


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If a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.



If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee
and each Agent at the same time.



Section 12.03 Communication by Holders of Notes with Other Holders of Notes.




Holders may communicate pursuant to TIA §312(b) with other Holders with respect to their
rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA §312(c).



Section 12.04 Certificate and Opinion as to Conditions Precedent.




Upon any request or application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:




(1) an Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee (which must include the statements set forth in Section 12.05 hereof) stating that,
in the opinion of the signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied; and




(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
(which must include the statements set forth in Section 12.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants have been satisfied.



Section 12.05 Statements Required in Certificate or Opinion.




Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA §314(a)(4)) must comply
with the provisions of TIA §314(e) and must include:




(1) a statement that the Person making such certificate or opinion has read such
covenant or condition;




(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;




(3) a statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been satisfied; and




(4) a statement as to whether or not, in the opinion of such Person, such condition or
covenant has been satisfied.



Section 12.06 Rules by Trustee and Agents.




The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar
or Paying Agent may make reasonable rules and set reasonable requirements for its functions.


 


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Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders.



No director, officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, will have any liability for any obligations of the Company or the Guarantors under the
Notes, this Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the consideration for issuance of
the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.



Section 12.08 Governing Law.




THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE,
THE NOTES AND EACH NOTE GUARANTEE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.



Section 12.09 Waiver of Jury Trial.




EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE OR THE NOTES.



Section 12.10 Force Majeure.




In no event shall the Trustee be responsible or liable for any failure or delay in the
performance of its obligations under this Indenture arising out of or caused by, directly or
indirectly, forces beyond its reasonable control, including without limitation strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural
catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications
or computer (software or hardware) services.



Section 12.11 USA Patriot Act.




The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act,
the Trustee, like all financial institutions and in order to help fight the funding of terrorism
and money laundering, is required to obtain, verify, and record information that identifies each
person or legal entity that establishes a relationship or opens an account with the Trustee. The
parties to this Indenture agree that they will provide the Trustee with such information as it may
reasonably require in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.



Section 12.12 No Adverse Interpretation of Other Agreements.




This Indenture may not be used to interpret any other indenture, loan or debt agreement of the
Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.



Section 12.13 Successors.




All agreements of the Company in this Indenture and the Notes will bind its successors. All
agreements of the Trustee in this Indenture will bind its successors. All agreements of each
Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 10.05
hereof.


 


85









 





Section 12.14 Severability.




In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not in any way be
affected or impaired thereby.



Section 12.15 Counterpart Originals.




The parties may sign any number of copies of this Indenture. Each signed copy will be an
original, but all of them together represent the same agreement.



Section 12.16 Table of Contents, Headings, etc.




The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part of
this Indenture and will in no way modify or restrict any of the terms or provisions hereof.



[Signatures on following page]




 


86









 







SIGNATURES




	 	 	 	 	 
	Dated as of November 17, 2010




	 	MERCER INTERNATIONAL INC.

 	 
	 	By:  	/s/ David Gandossi
 	 
	 	 	Name:  	David Gandossi 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	WELLS FARGO BANK, National Association



As Trustee,

 	 
	 	By:  	/s/ Maddy Hall
 	 
	 	 	Name:  	Maddy Hall 	 
	 	 	Title:  	Vice President 	 



 


 









 





EXHIBIT A




[Face of Note]




CUSIP/CINS                     




9.5% Senior Notes due 2017




			
	 	 	 
	No.
 _____ 

	 	$                    






MERCER INTERNATIONAL INC.




promises to pay to [                    ] or registered assigns,




the principal sum of                                                                  
                DOLLARS on December
1, 2017.



Interest Payment Dates: June 1 and December 1




Record Dates: May 15 and November 15




Dated:                     , ____




	 	 	 	 	 
	 	MERCER INTERNATIONAL INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



This is one of the Notes referred to

in the within-mentioned Indenture:




Wells Fargo Bank, National Association,

as Trustee




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signatory
	 	 





 


A-1









 







[Back of Note]

9.5% Senior Notes due 2017




[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]




Capitalized terms used herein have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.




(1) Interest. Mercer International Inc., a Washington corporation (the
“Company”), promises to pay interest on the principal amount of this Note at 9.5% per annum
from November 17, 2010 until maturity and shall pay the Additional Interest, if any, payable
pursuant to the Registration Rights Agreement referred to below. The Company will pay
interest and Additional Interest, if any, semi-annually in arrears on June 1 and December 1
of each year, or if any such day is not a Business Day, on the next succeeding Business Day
(each, an “Interest Payment Date”). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided further that the first Interest Payment Date shall be June 1, 2011.
The Company will pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a
rate that is 1% per annum in excess of the rate then in effect to the extent lawful; it will
pay interest (including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Additional Interest, if any (without regard to any
applicable grace periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day months.




(2) Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Additional Interest, if any, to the Persons who are registered
Holders of Notes at the close of business on the May 15 or November 15 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Notes will be payable as to principal, premium, if any,
and interest and Additional Interest, if any, at the office or agency of the Company
maintained for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Additional Interest, if any, may be made by
check mailed to the Holders at their addresses set forth in the register of Holders;
provided that payment by wire transfer of immediately available funds will be required with
respect to principal of, premium on, if any, and interest and Additional Interest, if any,
on all Global Notes and all other Notes the Holders of which will have provided wire
transfer instructions to the Company or the Paying Agent. Such payment will be in such coin
or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts.




(3) Paying Agent and Registrar. Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.


 


A-2









 






(4) Indenture. The Company issued the Notes under an Indenture dated as of
November 17, 2010 (the “Indenture”) between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture by
reference to the TIA. The Notes are subject to all such terms, and Holders are referred to
the Indenture and such Act for a statement of such terms. To the extent any provision of
this Note is inconsistent with or conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling. The Notes are unsecured
obligations of the Company. The Indenture does not limit the aggregate principal amount of
Notes that may be issued thereunder.




(5) Optional Redemption.




	 	(a)	 	Except as set forth in subparagraph (b) of this Paragraph 5,
the Company will not have the option to redeem the Notes prior to December 1,
2014. On or after December 1, 2014, the Company will have the option to redeem
all or a part of the Notes upon not less than 30 nor more than 60 days’ notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest (including Additional Interest, if
any) on the Notes redeemed to the applicable redemption date, if redeemed
during the twelve-month period beginning on December 1 of the years indicated
below, subject to the rights of Holders on the relevant record date to receive
interest on the relevant interest payment date:






	 	 	 	 	 
	Year	 	Percentage	 
	2014
	 	 	104.750	%
	2015
	 	 	102.375	%
	2016 and thereafter
	 	 	100.000	%







Unless the Company defaults in the payment of the redemption price, interest will cease
to accrue on the Notes or portions thereof called for redemption on the applicable
redemption date.




	 	(b)	 	Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to December 1, 2013, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of Notes
issued under the Indenture with the net cash proceeds of a sale of Equity
Interests (other than Disqualified Stock) of the Company at a redemption price
equal to 109.5% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Additional Interest, if any, to the redemption date;
provided that at least 65% in aggregate principal amount of the Notes
originally issued under the Indenture (excluding Notes held by the Company and
its Subsidiaries) remains outstanding immediately after the occurrence of such
redemption and that such redemption occurs within 90 days of the date of the
closing of such sale of Equity Interests.







(6) Mandatory Redemption. The Company is not required to make mandatory
redemption or sinking fund payments with respect to the Notes.




(7) Repurchase at the Option of Holders.




	 	(a)	 	If there is a Change of Control, as and to the extent required
by Section 4.15 of the Indenture, the Company will be required to make an offer
(a “Change of Control Offer”) to each Holder to repurchase all or any part
(equal to $2,000 or an integral multiple of $1,000 in excess thereof) of each
Holder’s Notes at a purchase price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Additional
Interest, if any, thereon to the date of purchase, subject
to the rights of Holders on the relevant record date to receive interest due on
the relevant interest payment date (the “Change of Control Payment”). Within 20
days following any Change of Control, the Company will mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as
required by the Indenture.




 


A-3









 











	 	(b)	 	If the Company or a Restricted Subsidiary of the Company
consummates any Asset Sales, within five days of each date on which the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will
commence an offer to all Holders of Notes and all holders of other Indebtedness
that is pari passu with the Notes containing provisions similar to those set
forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an “Asset Sale Offer”) pursuant to Section 3.09 of
the Indenture to purchase the maximum principal amount of Notes (including any
Additional Notes) and such other pari passu Indebtedness that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Additional
Interest, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes (including any Additional Notes) and other pari passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company (or such Restricted Subsidiary) may use such deficiency for any purpose
not otherwise prohibited by the Indenture. If the aggregate principal amount
of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other pari passu Indebtedness to be purchased on a pro rata basis.
Holders of Notes that are the subject of an offer to purchase will receive an
Asset Sale Offer from the Company prior to any related purchase date and may
elect to have such Notes purchased by completing the form entitled “Option of
Holder to Elect Purchase” attached to the Notes.







(8) Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose Notes are to
be redeemed at its registered address, except that redemption notices may be mailed more
than 60 days prior to a redemption date if the notice is issued in connection with a
defeasance of the Notes or a satisfaction or discharge of the Indenture. Notes in
denominations larger than $2,000 may be redeemed in part but only in whole multiples of
$1,000 in excess thereof, unless all of the Notes held by a Holder are to be redeemed.




(9) Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $2,000 and integral multiples of $1,000 in excess
thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may require a Holder
to pay any taxes and fees required by law or permitted by the Indenture. The Company need
not exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the
Company need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.


 


A-4









 






(10) Persons Deemed Owners. The registered Holder of a Note may be treated as
its owner for all purposes.




(11) Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes or the Note Guarantees may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes including Additional Notes, if any, voting as a single class, and any
existing Default or Event or Default or compliance with any provision of the Indenture or
the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority
in aggregate principal amount of the then outstanding Notes including Additional Notes, if
any, voting as a single class. Without the consent of any Holder of a Note, the Indenture
or the Notes or the Note Guarantees may be amended or supplemented: (i) to cure any
ambiguity, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to
or in place of certificated Notes, or in order to comply with any Applicable Procedures, or
otherwise alter the provisions of Article 2 of the Indenture in a manner that does not
materially adversely affect any Holder; (iii) to provide for the assumption of the Company’s
or a Guarantor’s obligations to Holders of the Notes and Note Guarantees in case of a merger
or consolidation; (iv) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not, in the good faith opinion of the
Board of Directors of the Company, adversely affect the legal rights under the Indenture of
any Holder in any material respect; (v) to comply with the requirements of the SEC in order
to effect or maintain the qualification of the Indenture under the TIA; (vi) to conform the
text of the Indenture or the Notes to any provision of the “Description of Notes” section of
the Company’s Offering Memorandum dated November 10, 2010 relating to the initial offering
of the Notes, to the extent that such provision in that “Description of Notes” was intended
to be a verbatim recitation of a provision of the Indenture, the Note Guarantees or the
Notes; (vii) to provide for the issuance of Additional Notes in accordance with the
limitations set forth in the Indenture; or (viii) to allow any Restricted Subsidiary to
execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to
the Notes.




(12) Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest or Additional Interest, if any, on the Notes; (ii)
default in the payment when due of the principal of, or premium, if any, on the Notes when
the same becomes due and payable at maturity, upon redemption (including in connection with
an offer to purchase) or otherwise, (iii) failure by the Company or any of its Restricted
Subsidiaries to comply with Section 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the
Company or any of its Restricted Subsidiaries for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount of the Notes including
Additional Notes, if any, then outstanding voting as a single class to comply with any of
the other agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company or its Restricted Subsidiaries which
default is caused by a failure to pay principal of, or interest or premium, if any, on, such
Indebtedness prior to the expiration of the grace period provided in such Indebtedness on
the date of such default, or results in the acceleration of such Indebtedness prior to its
express maturity; (vi) certain final judgments for the payment of money that remain
undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary; and (viii) except as permitted by the Indenture, any Note Guarantee
is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason
to be in full force and effect or any Guarantor or any Person acting on its behalf denies or
disaffirms its obligations under such Guarantor’s Note Guarantee. If any Event of Default
occurs and is continuing, the Trustee or the Holders


 


A-5









 






of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable immediately without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in aggregate principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of principal, premium,
if any, or interest or Additional Interest, if any) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount of the then
outstanding Notes by notice to the Trustee may, on behalf of the Holders of all of the
Notes, rescind an acceleration or waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default in the
payment of interest or Additional Interest, if any, or premium, if any, on, or the principal
of, the Notes. The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon becoming aware of
any Default or Event of Default, to deliver to the Trustee a statement specifying such
Default or Event of Default.




(13) Trustee Dealings with Company. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if
it were not the Trustee.




(14) No Recourse Against Others. A director, trustee, officer,
employee, incorporator or stockholder of the Company or any of the Guarantors, as such, will
not have any liability for any obligations of the Company or the Guarantors under the Notes,
the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for the issuance
of the Notes.




(15) Authentication. This Note will not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.




(16) Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).




(17) Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of Notes
under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes will
have all the rights set forth in the Registration Rights Agreement dated as of November 17,
2010, among the Company and the other parties named on the signature pages thereof or, in
the case of Additional Notes, Holders of Restricted Global Notes and Restricted Definitive
Notes will have the rights set forth in one or more registration rights agreements, if any,
among the Company and the other parties thereto, relating to rights given by the Company and
the Guarantors to the purchasers of any Additional Notes (collectively, the “Registration
Rights Agreement”).


 


A-6









 






(18) CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of
redemption as a
convenience to Holders. No representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of redemption, and reliance may
be placed only on the other identification numbers placed thereon.




(19) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND
BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND EACH NOTE GUARANTEE WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.



The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture. Requests may be made to:




Mercer International Inc.

14900 Interurban Avenue South, Suite 282

Seattle, Washington 98168

Attention: Chief Financial Officer




with a copy to:




Mercer International Inc.

Suite 2840

650 West Georgia Street

Vancouver, British Columbia

Canada V6B 4N8

Attention: Chief Financial Officer


 


A-7









 





Assignment Form




Mercer International Inc. 9.5% Senior Notes due 2017





To assign this Note, fill in the form below:



	 	 	 
	(I) or (we) assign and transfer this Note to:
	 	 
	 

	 	 
	 

	 	(Insert assignee’s legal name)






 





(Insert assignee’s soc. sec. or tax I.D. no.)




 





 





 





 





(Print or type assignee’s name, address and zip code)




and irrevocably appoint                                                                  
               
to transfer this Note on the books of the Company. The agent may substitute another to act for
him.



Date:                     




	 	 	 	 	 
	 

	 	Your Signature:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name appears on the face of this Note)






Signature Guarantee*:                                                             






	 	 	 
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).



 


A-8









 









Option of Holder to Elect Purchase




Mercer International Inc. 9.5% Senior Notes due 2017




If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or
4.15 of the Indenture, check the appropriate box below:



	 	 	 
	ØSection 4.10
	 	ØSection 4.15






If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:



$                    




Date:                     




	 	 	 	 	 
	 

	 	Your Signature: 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name appears on the face of this Note)






	 	 	 	 	 
	 

	 	Tax Identification No.:	 	 
	 

	 	 	 	 






Signature Guarantee*:                                                             






	 	 	 
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).



 


A-9









 









Schedule of Exchanges of Interests in the Global Note *




The following exchanges of a part of this Global Note for an interest in another Global Note
or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an
interest in this Global Note, have been made:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal Amount	 	 
	 	 	Amount of decrease in	 	Amount of increase in	 	of this Global Note	 	Signature of authorized
	 	 	Principal Amount of	 	Principal Amount of	 	following such	 	officer of Trustee or
	Date of Exchange	 	this Global Note	 	this Global Note	 	decrease (or increase)	 	Custodian
	 

	 	 
	 	 
	 	 
	 	 








	 	 	 
	*	 	This schedule should be included only if the Note is issued in global form.





 


A-10









 







EXHIBIT B




FORM OF CERTIFICATE OF TRANSFER




[Company address block]




Wells Fargo Bank — DAPS Reorg.

MAC N9303-121

608 2nd Avenue South

Minneapolis, MN 55479

Telephone No.: (877) 872-4605

Fax No.: (866) 969-1290

Email: DAPSReorg@wellsfargo.com





Re: 9.5% Senior Notes due 2017



Reference is hereby made to the Indenture, dated as of November 17, 2010 (the “Indenture”),
among Mercer International Inc., as issuer (the “Company”), the Guarantors party thereto and Wells
Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.



                                        , (the “Transferor”) owns and proposes to transfer the Note[s] or interest
in such Note[s] specified in Annex A hereto, in the principal amount of $                     in such
Note[s] or interests (the “Transfer”), to                                          (the “Transferee”), as
further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby
certifies that:



[CHECK ALL THAT APPLY]




1. o Check if Transferee will take delivery of a beneficial interest in the 144A
Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer is being
effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believes is purchasing the beneficial interest or Definitive Note for its own account,
or for one or more accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a “qualified institutional buyer” within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in
compliance with any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted
Definitive Note and in the Indenture and the Securities Act.



2. o Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a Person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the
Securities Act (iii) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being made prior to
the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the
Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Definitive
Note and in the Indenture and the Securities Act.


 


B-1









 





3. o Check and complete if Transferee will take delivery of a beneficial interest
in the IAI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities
Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with
the transfer restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any
applicable blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):




(a) o such Transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;



or





(b) o such Transfer is being effected to the Company or a subsidiary thereof;



or





(c) o such Transfer is being effected pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus delivery
requirements of the Securities Act;



or





(d) o such Transfer is being effected to an Institutional Accredited Investor
and pursuant to an exemption from the registration requirements of the Securities Act
other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further
certifies that it has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed, which certification is
supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the IAI Global Note and/or the Restricted
Definitive Notes and in the Indenture and the Securities Act.


 


B-2









 





4. o Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.



(a) o Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected
pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the
transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement
Legend are not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on
Restricted Definitive Notes and in the Indenture.



(b) o Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in
compliance with the transfer restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to maintain compliance
with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.



(c) o Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being
effected pursuant to and in compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities laws of any State of
the United States and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.



This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.



	 	 	 	 	 
	 	[Insert Name of Transferor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





Dated:                                         



Signature Guarantee*:                                         






	 	 	 
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).





 


B-3









 







ANNEX A TO CERTIFICATE OF TRANSFER





1. The Transferor owns and proposes to transfer the following:



[CHECK ONE OF (a) OR (b)]





(a) o a beneficial interest in the:




(i) o 144A Global Note (CUSIP                     ), or




(ii) o Regulation S Global Note (CUSIP                     ), or




(iii) o IAI Global Note (CUSIP                     ); or




(b) o a Restricted Definitive Note.




2. After the Transfer the Transferee will hold:



[CHECK ONE]





(a) o a beneficial interest in the:




(i) o 144A Global Note (CUSIP                     ), or




(ii) o Regulation S Global Note (CUSIP                     ), or




(iii) o IAI Global Note (CUSIP                     ); or




(iv) o Unrestricted Global Note (CUSIP                     ); or




(b) o a Restricted Definitive Note; or




(c) o an Unrestricted Definitive Note,




in accordance with the terms of the Indenture.



 


B-4









 







EXHIBIT C




FORM OF CERTIFICATE OF EXCHANGE




[Company address block]




Wells Fargo Bank — DAPS Reorg.

MAC N9303-121

608 2nd Avenue South

Minneapolis, MN 55479

Telephone No.: (877) 872-4605

Fax No.: (866) 969-1290

Email: DAPSReorg@wellsfargo.com





Re: 9.5% Senior Notes due November 17, 2010



(CUSIP [          ])




Reference is hereby made to the Indenture, dated as of November 17, 2010 (the “Indenture”),
among Mercer International Inc., as issuer (the “Company”), the Guarantors party thereto and Wells
Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.



                                        , (the “Owner”) owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of $                     in such Note[s]
or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:



1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global
Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note



(a) o Check if Exchange is from beneficial interest in a Restricted Global Note to
beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in
accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the beneficial interest
in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.



(b) o Check if Exchange is from beneficial interest in a Restricted Global Note to
Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest
in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.


 


C-1









 





(c) o Check if Exchange is from Restricted Definitive Note to beneficial interest in an
Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note
for
a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are not required in order
to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired
in compliance with any applicable blue sky securities laws of any state of the United States.



(d) o Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive
Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.



2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global
Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes



(a) o Check if Exchange is from beneficial interest in a Restricted Global Note to
Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in
a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner
hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account
without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the
Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and
in the Indenture and the Securities Act.



(b) o Check if Exchange is from Restricted Definitive Note to beneficial interest in a
Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note
for a beneficial interest in the [CHECK ONE] o 144A Global Note, o Regulation S Global
Note, o IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.



This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.



	 	 	 	 	 
	 	[Insert Name of Transferor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Dated:                                         




Signature Guarantee*:                                         






	 	 	 
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).





 


C-2









 







EXHIBIT D




FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR




[Company address block]




Wells Fargo Bank — DAPS Reorg.

MAC N9303-121

608 2nd Avenue South

Minneapolis, MN 55479

Telephone No.: (877) 872-4605

Fax No.: (866) 969-1290

Email: DAPSReorg@wellsfargo.com






Re: 9.5% Senior Notes due 2017



Reference is hereby made to the Indenture, dated as of November 17, 2010 (the “Indenture”),
among Mercer International Inc., as issuer (the “Company”), the Guarantors party thereto and Wells
Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.




In connection with our proposed purchase of $                     aggregate principal amount of:




(a) o a beneficial interest in a Global Note, or




(b) o a Definitive Note,




we confirm that:



1. We understand that any subsequent transfer of the Notes or any interest therein is subject
to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be
bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except
in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended
(the “Securities Act”).



2. We understand that the offer and sale of the Notes have not been registered under the
Securities Act, and that the Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell the Notes or any interest
therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with
Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C)
to an institutional “accredited investor” (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a
signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance with the Securities
Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree to provide to any
Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a
transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising
such purchaser that resales thereof are restricted as stated herein.


 


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3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we
will be required to furnish to you and the Company such certifications, legal opinions and other
information as you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.



4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear the economic risk of
our or its investment.



5. We are acquiring the Notes or beneficial interest therein purchased by us for our own
account or for one or more accounts (each of which is an institutional “accredited investor”) as to
each of which we exercise sole investment discretion.



You and the Company are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.



	 	 	 	 	 
	 	[Insert Name of Accredited Investor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Dated:                                                            




Signature Guarantee*:                                                             






	 	 	 
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).





 


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EXHIBIT E




FORM OF NOTATION OF GUARANTEE





For value received, each Guarantor (which term includes any successor Person under the
Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture dated as of November 17, 2010 (the
“Indenture”) between Mercer International Inc. (the “Company”) and Wells Fargo Bank, National
Association, as trustee (the “Trustee”), (a) the due and punctual payment of the principal of,
premium on, if any, and interest and Additional Interest, if any, on the Notes, whether at
maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on
overdue principal of and interest on the Notes, if any, if lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the Trustee all in accordance
with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the
Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 10 of
the Indenture and reference is hereby made to the Indenture for the precise terms of the Note
Guarantee.



Capitalized terms used but not defined herein have the meanings given to them in the
Indenture.



	 	 	 	 	 
	 	[Name of Guarantor(s)]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



 


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EXHIBIT F




FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS





Supplemental Indenture (this “Supplemental Indenture”), dated as of                     ,
200___, among                      (the “Guaranteeing Subsidiary”), a subsidiary of
                     (or its permitted successor), a                      corporation (the “Company”), the
Company, the other Guarantors (as defined in the Indenture referred to herein) and
                    , as trustee under the Indenture referred to below (the “Trustee”).



W I T N E S S E T H




WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the
“Indenture”), dated as of November 17, 2010, providing for the issuance of 9.5% Senior Notes due
2017 (the “Notes”);



WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”), which
constitutes a valid, legally binding obligation of the Company and the Guaranteeing Subsidiary,
enforceable against them in accordance with its terms;



WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and
deliver this Supplemental Indenture.



NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the
Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes
as follows:



1. Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.



2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an
unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee
and in the Indenture including but not limited to Article 10 thereof.



4. No Recourse Against Others. No past, present or future director, officer,
employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have
any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes,
any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the SEC that such a waiver is against
public policy.


 


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5. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.



6. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement.



7. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.



8. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary
and the Company.



IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written.




Dated:                     , 20____




	 	 	 	 	 
	 	[Guaranteeing Subsidiary]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Mercer International Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[Existing Guarantors]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[Trustee],

as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 


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