Exhibit 10.2


 


EXECUTION VERSION


 




 





SECOND AMENDED AND RESTATED INTERCREDITOR
AGREEMENT


 


among


 


CELLU TISSUE HOLDINGS, INC.


 


and certain of its Subsidiaries,


 


THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A.,


 


as Note Collateral Agent,


 


JPMORGAN CHASE BANK, N.A.,


 


as U.S. 
Administrative Agent,


 


JP MORGAN CHASE BANK, N.A., TORONTO BRANCH,


 


as Canadian Administrative Agent,


 


and


 


THE BANK OF NEW YORK TRUST MELLON COMPANY,
N.A.,


 


as Prior Agent


 


Dated as of June 3, 2009




 





 

















 


SECOND AMENDED AND RESTATED INTERCREDITOR AGREEMENT,
dated as of June 3, 2009, among:


 


(1)                                  CELLU TISSUE HOLDINGS,
INC.  (the “Company”), and certain
of the subsidiaries of the Company specified on the signature pages hereof
or each other subsidiary that becomes a party hereto;


 


(2)                                  THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as collateral agent (in such capacity, together with its
successors and assigns in such capacity, the “Note Collateral Agent”),
under the Note Security Agreement, dated as of June 3, 2009 (as amended,
supplemented or otherwise modified from time to time, the “Note Security
Agreement”), among the Company, certain of its subsidiaries parties thereto
and the Note Collateral Agent for the benefit of the secured parties named
therein;


 


(3)                                  JPMORGAN CHASE BANK, N.A.,
as U.S. administrative agent (in such capacity, together with its successors
and assigns in such capacity, the “Bank Agent”) under the Pledge and
Security Agreement, dated as of June 12, 2006 (as amended, supplemented or
otherwise modified from time to time, the “Bank US Security Agreement”),
among the Company, Cellu Paper Holdings, Inc. (the “Parent”), the other
Bank Guarantors (as defined herein) and the Bank Agent for the benefit of the
secured parties named therein;


 


(4)                                  JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian administrative agent (in such capacity, together
with its successors and assigns in such capacity, the “Bank Canadian Agent”;
and together with the Bank Agent, collectively, the “Bank Administrative
Agent”) under the General Security Agreement, dated as of June 12,
2006 (as amended, supplemented or otherwise modified from time to time, the “Bank
Canadian Security Agreement”; and together with the Bank US Security
Agreement, collectively, the “Bank Security Agreements”), between the
Canadian Borrower (as defined herein) and the Bank Canadian Agent for the
benefit of the secured parties named therein; and


 


(5)                                  THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as collateral agent (in such capacity the “Prior Agent”),
under the Amended and Restated Security Agreement, dated as of June 12,
2006 (as amended, supplemented or otherwise modified from time to time, the “Prior
Note Security Agreement”), among the Company, certain of its subsidiaries
parties thereto and the Prior Agent for the benefit of the secured parties
named therein.


 


W I T N E S S E T H:


 


WHEREAS, pursuant to the Credit Agreement, dated as
of June 12, 2006 (as amended by the First Amendment dated as of March 21,
2007, the Second Amendment dated as of July 2, 2008, the Third Amendment dated
as of September 26, 2008 and the Fourth Amendment dated as of May 19,
2009, and as further amended, supplemented or otherwise modified from time to
time, the “Bank Financing Agreement”), among the Company (as “U.S.
Borrower”), the Parent, Interlake Acquisition Corporation Limited (as “Canadian
Borrower”; and


 

















 


together with the Company
and any other Person that becomes a borrower under the Bank Financing
Agreement, collectively, the “Borrowers”), the other loan party
guarantors party thereto (together with the Company and any other Person that
becomes a guarantor of the Bank Financing Agreement, collectively, the “Bank
Guarantors”), each other financial institution from time to time party
thereto as a lender (the “Bank Lenders”), the Bank Agent, as U.S.
administrative agent, and the Bank Canadian Agent, as Canadian administrative
agent, the Bank Lenders have severally agreed to make extensions of credit and
other financial accommodations from time to time to the Borrowers upon the
terms and subject to the conditions set forth therein and herein;


 


WHEREAS, in connection with the extensions of credit
to the Borrowers under the Bank Financing Agreement and the 93⁄4% Senior Secured
Notes due 2010 (the “Prior Notes”) issued by the Company pursuant to the
Indenture, dated as of March 12, 2004 (as supplemented by the First
Supplemental Indenture dated as of June 2, 2006, the Second Supplemental
Indenture dated as of March 21, 2007, the Third Supplemental Indenture
dated as of July 2, 2008 and the Fourth Supplemental Indenture dated as of
April 8, 2009, the “Prior Note Indenture”), the Company entered
into an Amended and Restated Intercreditor Agreement, dated as of June 12,
2006, among the Company, certain of its subsidiaries, the Parent, The Bank of
New York, as note collateral agent, JPMorgan Chase Bank, N.A., as U.S.
administrative agent, JP Morgan Chase Bank, N.A., Toronto Branch, as Canadian
administrative agent and The CIT Group/Business Credit, Inc., as agent to
the prior bank lenders (the “Original Intercreditor Agreement”) for the
purpose of setting forth the relative priority of the liens created by the
Prior Note Security Agreement and the Bank Security Agreement;


 


WHEREAS, for the purpose of refinancing and
replacing the Prior Notes as permitted under the Bank Financing Agreement, the
Company is entering into an Indenture, dated as of June 3, 2009 (as
amended, supplemented or otherwise modified from time to time, the “Note
Indenture”), among the Company, its subsidiaries party thereto and The Bank
of New York Mellon Trust Company, N.A., as trustee, the Company has agreed to
issue to the holders (the “Holders”) its 111⁄2% Senior Secured Notes due
2014 (the “Notes”), and may issue from time to time additional notes,
upon the terms and subject to the conditions set forth therein and herein;


 


WHEREAS, the Note Collateral Agent, Bank
Administrative Agent, the Company and its subsidiaries party to the Note
Indenture desire to enter into this Agreement to amend and restate the Original
Intercreditor Agreement for the purpose of removing the Prior Agent as a party,
adding the Note Collateral Agent as a party and setting forth the relative
priority of the liens created by the Note Security Agreement and the Bank
Security Agreements and the respective rights of the Note Collateral Agent and
the Bank Administrative Agent in respect of the exercise of the rights and
remedies in respect of the Collateral (as defined herein) and the application
of the proceeds thereof;


 


NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree to amend and restate
the Prior Intercreditor Agreement in its entirety as follows:


 


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SECTION 1.    DEFINED TERMS


 


1.1                                 Definitions.  (a)  Unless otherwise defined herein,
the following terms are used herein as defined in the New York UCC:  Accessions, Account Debtor, Accounts,
Certificated Security, Chattel Paper, Commercial Tort Claims, Documents,
Electronic Chattel Paper, Equipment, Farm Products, Financial Assets, Fixtures,
General Intangibles, Goods, Instruments, Inventory, Letter-of-Credit Rights,
Securities Accounts and Supporting Obligations.


 


(b)                                 The following
terms have the following meanings:


 


“Additional Amounts”: as defined in the Note
Indenture.


 


“Additional Interest”: any additional
interest payable on the Notes pursuant to Section 2(d) of the
Registration Rights Agreement, dated as of June 3, 2009, among the Company,
the Note Guarantors and J.P. Morgan Securities Inc., on behalf of itself and
the other initial purchasers.


 


“Agreement”: this Second Amended and Restated
Intercreditor Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.


 


“Asset Disposition”: as defined in the Note
Indenture.


 


“Asset Swap”: as defined in the Note
Indenture.


 


“Bank Borrower Obligations”: the collective
reference to the unpaid principal of and interest on the loans under the Bank
Financing Agreement, all amounts owing pursuant to Sections 2.16, 2.17 or 2.18
of the Bank Financing Agreement (collectively, the “Increased Costs”)
and all other obligations and liabilities of the Borrowers (including, without
limitation, interest accruing at the then applicable rate provided in the Bank
Financing Agreement after the maturity of the Bank Financing Agreement loans
and interest accruing at the then applicable rate provided in the Bank
Financing Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Parent, the Borrowers or the other Bank Guarantors, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) to the
Bank Administrative Agent or to any Bank Secured Party, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, the Bank Financing Agreement, any other Bank Document or any other
document made, delivered or given in connection with any of the foregoing and
any renewal, replacement, or refinancing thereof, in each case whether on
account of principal, premium, if any, the Increased Costs, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Bank Administrative Agent or to any Bank Secured Party that are required to be
paid by any of Parent, the Borrowers or the other Bank Guarantors pursuant to
the terms of any of the foregoing agreements).


 


“Bank Collateral Account”: shall have the
same meaning as the term “Collateral Account” under the Bank Security
Agreements.


 


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“Bank Documents”: the collective reference to
the Bank Financing Agreement, the Bank Security Agreements, each Bank
Guarantee, the Mortgages in favor of the Bank Administrative Agent for the
benefit of the Bank Secured Parties and each other document or agreement
pursuant to which the Bank Administrative Agent is granted a Lien in any or all
of the Collateral for the benefit of the Bank Secured Parties or is entitled to
exercise, or restricted from exercising, any rights or remedies with respect to
any or all of the Collateral and any other agreement, document or instrument
delivered by or on behalf of any Grantor pursuant to or in connection with any
of the foregoing.


 


“Bank First Priority Lien”: the reference to “First
Priority Interest” and “First Priority Security Interest” as defined in and
granted or purported to be granted pursuant to the Bank US Security Agreement
and Bank Canadian Security Agreement, respectively.


 


“Bank Guarantee”: a guarantee to be executed
and delivered by each Bank Guarantor pursuant to the Bank Financing Agreement.


 


“Bank Guarantor Obligations”: with respect to
each Bank Guarantor, the collective reference to all obligations and
liabilities of such Bank Guarantor which may arise under or in connection with
any Bank Guarantee or any other document related thereto to which such Bank
Guarantor is a party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise in
respect of Bank Obligations (including, without limitation, all fees, charges
and disbursements of counsel to the Bank Administrative Agent or to any other
Bank Secured Party that are required to be paid by such Bank Guarantor pursuant
to the terms of this Agreement, the Bank Financing Agreement or any other
document related hereto to which such Bank Guarantor is a party).


 


“Bank Obligations”: the collective reference
to the Bank Borrower Obligations and the Bank Guarantor Obligations.


 


“Bank Priority Collateral”: with respect to
each Grantor, all such Grantor’s now existing or hereinafter arising (i) Inventory,
(ii) Receivables, (iii) any and all Instruments, Documents, Chattel
Paper (including Electronic Chattel Paper) and other contracts, in each case
evidencing or substituted for any Receivable, (iv) guarantees, Supporting
Obligations, Letter-of-Credit Rights, security and other credit enhancements
for the Receivables, (v) documents of title for any Inventory, (vi) claims
and causes of action in any way relating to any of the Receivables or
Inventory, (vii) Deposit Accounts, including lockbox and securities
accounts, into which any proceeds of Receivables or Inventory are deposited
(including all cash, cash equivalents, Financial Assets and other funds on
deposit therein or credited thereto) but only with respect to and including
such Proceeds of Bank Priority Collateral, (viii) rights to any Goods
represented by any of the foregoing, including rights to returned, reclaimed or
repossessed Goods, (ix) reserves and credit balances arising in connection
with or pursuant thereto, (x) unpaid seller’s or lessor’s rights
(including rescission, replevin, reclamation, repossession and stoppage in
transit) relating to the foregoing or arising therefrom; (xi) insurance
policies or rights relating to any of the foregoing, (xii) General Intangibles
pertaining to any and all of the foregoing (including all rights to payment,
including those arising in connection with bank and non-bank credit cards),
(xiii) promissory notes, deposits or property of Account Debtors securing the
obligations of any such Account Debtors to the Bank Secured Parties or any one
of them and (xiv) all books and 


 


5

















 


records (and any electronic
media and software related thereto) pertaining to any of the foregoing, and all
substitutions, replacements, Accessions, products or Proceeds (including,
without limitation, insurance proceeds, cash and cash equivalents) of any of
the foregoing; provided, however, that any Collateral, regardless
of type, received in connection with an Asset Disposition or Asset Swap of Bank
Priority Collateral or otherwise in exchange for Bank Priority Collateral
pursuant to the terms of the Note Indenture shall be treated as Bank Priority
Collateral under this Agreement, the Note Security Agreement and the Bank
Security Agreements; provided, further, that any Collateral of
the type that constitutes Bank Priority Collateral, if received in connection
with an Asset Disposition or Asset Swap of Note Priority Collateral or
otherwise in exchange for Note Priority Collateral pursuant to the terms of the
Note Indenture, shall be treated as Note Priority Collateral under this
Agreement, the Note Security Agreement and the Bank Security Agreements; provided,
further, that the Bank Priority Collateral shall not include any
Excluded Property (as defined in the Bank Security Agreements) unless such
property is subject to a Lien securing the Notes or any Permitted Refinancing
Indebtedness (as defined in the Bank Financing Agreement).


 


“Bank Second Priority Lien”: the reference to
“Second Priority Interest” and “Second Priority Security Interest” as defined
in and granted or purported to be granted pursuant to the Bank US Security
Agreement and Bank Canadian Security Agreement, respectively.


 


“Bank Secured Parties”: the secured parties
under the Bank Security Agreements.


 


“Borrowing Base”: as of the date of
determination, an amount equal to the sum, without duplication of 85% of the
net book value of the Company’s and its Restricted Subsidiaries’ (as defined in
the Note Indenture) accounts receivable at such date and (2) 65% of the
net book value of the Company’s and its Restricted Subsidiaries’ inventories at
such date.  Net book value shall be
determined in accordance with GAAP and shall be calculated using amounts
reflected on the most recent available balance sheet (it being understood that
the accounts receivable and inventories of an acquired business may be included
if such acquisition has been completed on or prior to the date of
determination).


 


“Business Day”: a day other than a Saturday,
Sunday or other day on which commercial banks in New York City are authorized
or required by law to close.


 


“Collateral”: 
the Note Priority Collateral and the Bank Priority Collateral.


 


“Deposit Account”:  as defined in the Uniform Commercial Code (or
equivalent foreign law, as applicable) of any applicable jurisdiction and, in
any event, including, without limitation; any demand, time, savings, passbook
or like account maintained with a depositary institution.


 


“Governmental Authority”: any nation or
government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory,
supervisory or administrative powers or functions or of pertaining to
government, any securities exchange and any self-regulatory organization
(including the National Association of Insurance Commissioners).


 


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“Grantor”: any of the Company, Cellu Tissue—CityForest
LLC, Cellu Tissue Corporation — Natural Dam, Cellu Tissue Corporation — Neenah,
Cellu Tissue — Long Island, LLC, Cellu Tissue — Thomaston, LLC, Cellu Tissue
LLC, Coastal Paper Company, Interlake Acquisition Corporation Limited,
Menominee Acquisition Corporation, Van Paper Company, Van Timber Company, and
any other subsidiary of the Company that becomes a Bank Guarantor or a Note
Guarantor.


 


“Insolvency Proceeding”: the occurrence of
any of the following: (i) any Grantor shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent entity, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or any
Grantor shall make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against any Grantor any case, proceeding or other action of
a nature referred to in clause (i) above that (A) results in the entry of
an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against any Grantor any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in the
entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Grantor shall take any action indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) any Grantor shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due.


 


“Investment Property”: the collective
reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49)
of the New York UCC (other than, in the case of the Bank Security Agreements,
any Voting Stock of any Non-U.S. Person excluded from the definition of “Pledged
Stock” in the Bank Security Agreements and, in the case of the Note Security
Agreement, any Foreign Subsidiary Voting Stock or other Capital Stock excluded
from the definition of “Pledged Stock” in the Note Security Agreement) and (ii) whether
or not constituting “investment property” as so defined, all Pledged Notes and
all Pledged Stock (each as defined in the Bank Security Agreements and the Note
Security Agreement).


 


“Liens”: any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including any conditional
sale or other title retention agreement or lease in the nature thereof).


 


“Mortgages”: each of the mortgages and deeds
of trust now or hereafter made by any Grantor in favor of, or for the benefit
of, the Note Collateral Agent for the benefit of the Note Secured Parties or
the Bank Administrative Agent for the benefit of the Bank Secured Parties.


 


“New York UCC”: the Uniform Commercial Code
as from time to time in effect in the State of New York; provided that,
with respect to any Grantor not organized or formed 


 


7

















 


under the laws of the United
States of America, any State of the United States or the District of Columbia, “New
York UCC” shall mean the equivalent foreign law to the Uniform Commercial Code
as from time to time in effect in the applicable jurisdiction.


 


“Note Collateral Account”: shall have the
same meaning as the term “Collateral Accounts” under the Note Security
Agreement.


 


“Note Company Obligations”: the collective
reference to the unpaid principal of, premium, if any, Additional Amounts and
interest (including Additional Interest) on the Notes and all other obligations
and liabilities of the Company to the Note Collateral Agent or to any Note
Secured Party, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the Note Indenture, the Note
Security Agreement, any other Note Documents or any other document made,
delivered or given in connection with any of the foregoing, in each case
whether on account of principal, premium, if any, Additional Amounts, interest
(including Additional Interest), reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Note Collateral Agent or to the Note Secured
Parties that are required to be paid by any of the Company or the Note Guarantors
pursuant to the terms of any of the foregoing agreements).


 


“Note Documents”: the collective reference to
the Note Indenture, the Note Security Agreement, each Note Guarantee, the
Registration Rights Agreement, the Mortgages and each other document or
agreement pursuant to which the Note Collateral Agent is granted a Lien in any
or all of the Collateral for the benefit of the Note Secured Parties or is
entitled to exercise, or restricted from exercising, any rights or remedies
with respect to any or all of the Collateral and any other agreement, document
or instrument delivered by or on behalf of any Grantor pursuant to or in
connection with any of the foregoing.


 


“Note First Priority Lien”: the reference to “First
Priority Interest” as defined in and granted or purported to be granted
pursuant to the Note Security Agreement.


 


“Note Guarantee”: a guarantee to be executed
and delivered by a Note Guarantor pursuant to the Note Indenture.


 


“Note Guarantors” the collective reference to
each Grantor other than the Company.


 


“Note Guarantor Obligations”: with respect to
any Note Guarantor, the collective reference to all obligations and liabilities
of such Note Guarantor which may arise under or in connection with any Note
Guarantee or any other document related thereto to which such Note Guarantor is
a party; in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise in
respect of Note Obligations (including, without limitation, all fees, charges
and disbursements of counsel to the Note Collateral Agent or to any other Note
Secured Party that are required to be paid by such Note Guarantor pursuant to
the terms of this Agreement, the Note Indenture or any other document related
hereto to which such Note Guarantor is a party).


 


8

















 


“Note Obligations”: the collective reference
to the Note Company Obligations and the Note Guarantor Obligations.


 


“Note Priority Collateral”: with respect to
each Grantor, any and all property secured by the Mortgages in favor of the
Note Collateral Agent for the benefit of the Note Secured Parties and the
following property now owned or hereafter acquired by such Grantor or in which
such Grantor has now or at any time in the future may acquire any right, title
or interest: all Chattel Paper, Deposit Accounts (except to the extent that
such Deposit Accounts or funds or other amounts credited thereto constitute
Bank Priority Collateral), Documents (other than title documents with respect
to Vehicles), Equipment, General Intangibles, Instruments, Intellectual
Property, Investment Property, Letter-of-Credit Rights, Commercial Tort Claims
and all other property not described above, all books and records pertaining to
the foregoing and, to the extent not otherwise included in the foregoing, all
Proceeds, all Supporting Obligations and all products of any and all of the
foregoing and all collateral security and guarantees given by any Person with
respect to any of the foregoing; but, excluding, however, all Bank Priority
Collateral; provided, however, that any Collateral, regardless of
type, received in connection with an Asset Disposition or Asset Swap of Note
Priority Collateral or otherwise in exchange for Note Priority Collateral, or
any additional issuance of Notes, pursuant to the terms of the Note Indenture
shall be treated as Note Priority Collateral under this Agreement, the Note
Security Agreement and the Bank Security Agreements; provided, further,
that any Collateral of the type that constitutes Note Priority Collateral, if
received in connection with an Asset Disposition or Asset Swap of Bank Priority
Collateral or otherwise in exchange for Bank Priority Collateral pursuant to
the terms of the Note Indenture, shall be treated as Bank Priority Collateral
under this Agreement, the Note Security Agreement and the Bank Security
Agreements.


 


“Note Second Priority Lien”: the reference to
“Second Priority Interest” as defined in and granted or purported to be granted
pursuant to the Note Security Agreement.


 


“Note Secured Parties”: the secured parties
under the Note Security Agreement.


 


“Obligations”: any or all of the Bank
Borrower Obligations, the Bank Guarantor Obligations, the Note Company
Obligations and the Note Guarantor Obligations.


 


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


 


“Proceeds”: all “proceeds” as such term is
defined in Section 9-102(a)(64) of the New York UCC and, in any event,
shall include, without limitation, all dividends or other income from the
Investment Property, collections thereon or distributions or payments with
respect thereto.


 


“Receivables”: all accounts (as defined in
the New York UCC) and any and all other receivables and any other right to
payment for goods sold or leased or for services rendered, including, without
limitation, all accounts created by, or arising from, all of each of the
Grantor’s sales, leases, rentals of goods or renditions of services to their
customers, in each case (i) including, but not limited to, those accounts
arising under any of the Grantors’ trade names or 


 


9

















 


styles, or through any of
the Grantors’ divisions, and (ii) whether or not (x) such right is evidenced by
an Instrument or Chattel Paper, (y) such right has been earned by performance
(including, without limitation, any account) or (z) specifically listed on
schedules furnished to the Bank Administrative Agent.


 


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


 


“Secured Debt Documents”: the collective
reference to the Note Documents and the Bank Documents.


 


“Secured Parties”: the collective reference
to the Note Secured Parties and the Bank Secured Parties.


 


1.2                                 Other
Definitional Provisions.   (a) 
The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.


 


(b)                                 The meanings
given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.


 


(c)                                  Where the
context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the
relevant part thereof.


 


(d)                                 Subject to
Sections 2.2(j) and 2.3(j), the phrases “satisfied in full” or “payment in
full” (or phrases of similar import) when used in this Agreement with respect
to any of the Note Obligations, or the Bank Obligations (or the Liens securing
such obligations), as the case may be, shall mean satisfaction or payment in
full of such applicable obligations other than contingent indemnification
obligations which are not then due and payable (or reasonably expected to
become due and payable in the then foreseeable future).


 


SECTION 2.   RANKING OF SECURITY INTERESTS;
REMEDIES


 


2.1                                 Ranking.  Notwithstanding (i) anything to the
contrary contained in any other document, filing or agreement related to the
creation, attachment, perfection or existence of the security interests granted
in the Note Security Agreement or the Bank Security Agreements, (ii) the time,
place, order or method of attachment or perfection of such security interests, (iii)
the time or order of filing or recording of financing statements or other
documents filed or recorded to perfect such security interests and (iv) the rules for
determining priority under any law governing the relative priorities of secured
creditors, (a) the security interests created or purported to be created by the
Note Security Agreement with respect to the Bank Priority Collateral are
subordinated, and junior in priority to, the security interests created or
purported to be created by the Bank Security Agreements with respect to the
Bank Priority Collateral and (b)


 


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the
security interests created or purported to be created by the Bank Security
Agreements with respect to the Note Priority Collateral are subordinated, and
junior in priority to, the security interests created or purported to be
created by the Note Security Agreement with respect to the Note Priority
Collateral.


 


2.2                                 Remedies with
Respect to Note Priority Collateral. (a)  The Bank
Administrative Agent acknowledges and agrees that, until all of the Note
Obligations have been paid in full, the exercise of rights and remedies in
respect of the Note Priority Collateral by the Bank Administrative Agent shall
be limited to the extent set forth in, and shall be governed by, this
Agreement.


 


(b)                                 Until the Note
Obligations shall have been satisfied in full, other than to the extent
expressly provided in this Agreement, no Bank Secured Party shall exercise any
rights or remedies in respect of the Note Priority Collateral, whether under a
Secured Debt Document, applicable law or otherwise, including, without limitation,
any action to institute any judicial or nonjudicial or similar action or
proceeding in respect of its Lien or to seek relief from the automatic stay
pursuant to Section 362 of the Bankruptcy Code in respect of its Lien; provided,
however, that nothing contained herein shall be construed as preventing
the Bank Administrative Agent or any Bank Secured Party from taking any action
which is reasonably desirable or necessary to perfect and protect the Bank
Second Priority Lien, which action is not adverse to the Note Secured Parties
or the Note First Priority Lien, including, without limitation, the filing of
financing statements under the Uniform Commercial Code in any applicable
jurisdiction, the execution and delivery of account control agreements or similar
agreements entered into for the purpose of obtaining “control” (within the
meaning of the applicable Uniform Commercial Code) of any applicable Note
Priority Collateral (to the extent that it is possible for both the Note
Collateral Agent and the Bank Administrative Agent to have joint “control” of
such item of Note Priority Collateral) and the filing of a claim or statement
of interest in an Insolvency Proceeding in respect of the Bank Second Priority
Lien or any Obligations secured thereby. 
Until the Note Obligations shall have been satisfied in full, the Note
Collateral Agent shall have the exclusive right to exercise rights and remedies
in respect of the Note Priority Collateral and, to enforce the provisions of
and exercise remedies under this Agreement and the Note Documents and under
applicable law (or refrain from enforcing any such rights and exercising any
such remedies), all in such order and in such manner as it may determine in its
discretion.  For the avoidance of doubt,
the parties hereto acknowledge and agree that, notwithstanding the occurrence
and continuation of an event of default as defined under the Bank Financing
Agreement, the Note Collateral Agent shall not have any obligation or duty to
exercise remedies against the Note Priority Collateral.


 


(c)                                  Each Bank
Secured Party hereby consents to and authorizes the sale of all or any part of
the Note Priority Collateral by the Note Collateral Agent in accordance with
the terms of the Note Security Agreement and the other Note Documents and agrees
that when all or any part of the Note Priority Collateral is sold pursuant to
the Note Security Agreement or the applicable Note Document, and otherwise in
accordance with this Agreement, following such sale, such Note Priority
Collateral (but not the Proceeds thereof) shall be free of all of the Bank
Second Priority Liens. The Bank Administrative Agent hereby appoints the Note
Collateral Agent as its attorney-in-fact to execute and deliver in its stead
any releases, termination 


 


11

















 


statements or other documentation reasonably
necessary or requested to evidence the foregoing release of liens on the Note
Priority Collateral.


 


(d)                                 No Bank Secured
Party, by itself or through or with any other Person, shall (i) contest,
protest, object to, interfere with, seek to enjoin or invoke or utilize any
provision of any document, law or equitable principle, or otherwise take any
other action whatsoever which might prevent, delay or impede, any exercise of
rights or remedies by the Note Collateral Agent under the Note Security
Agreement or applicable law in respect of the Note Priority Collateral or (ii) contest
the validity or enforceability of any of the Obligations or the validity,
perfection, priority or enforceability of any of the Liens created hereunder
(it being understood and agreed that the terms of this Agreement shall govern
even if part or all of the Note First Priority Lien or the Bank Second Priority
Lien is avoided, disallowed, set aside or otherwise invalidated in any judicial
proceeding or otherwise).  The Bank
Administrative Agent and the Bank Secured Parties agree that the Note Priority
Collateral may be repossessed or removed by the Note Collateral Agent, subject
to the terms of this Agreement.


 


(e)                                  Notwithstanding
any other provision of this Agreement, the right of each Bank Secured Party to
receive payment of the Obligations held by such Bank Secured Party when due
(whether at the stated maturity thereof, by acceleration or otherwise) as
expressed in the related Secured Debt Document or other instrument evidencing
or agreement governing an Obligation or to institute suit for the enforcement
of such payment on or after such due date, and the obligation of the Grantors
to pay such Obligation when due, shall not be impaired or affected without the
consent of such Bank Secured Party given in the manner prescribed by the
Secured Debt Document under which such Obligation is outstanding.


 


(f)                                    The Note
Secured Parties shall have the right, exercisable in their sole discretion,
without notice or demand and without affecting or impairing the agreements and
obligations of the Bank Secured Parties, from time to time (i) to modify,
extend, amend, restate, compromise, supplement, waive or release the Note Obligations
from time to time, and the aggregate amount of the Note Obligations may be
renewed, replaced or refinanced, all without notice to or consent by the Bank
Administrative Agent or the Bank Secured Parties; provided, however,
that the principal amount of the Note Obligations may only be renewed, replaced
or refinanced in an amount not to exceed the aggregate principal amount of the
Notes (including any additional Notes issued pursuant to the Note Indenture)
and (ii) to exercise or refrain from exercising any powers or rights
conferred on the Note Secured Parties under the Note Documents.  Each of the Bank Secured Parties waives, to
the fullest extent permitted by law, any requirement that the Note Secured
Parties or the Note Collateral Agent protect, secure, perfect or insure the
Note First Priority Lien or exhaust any right or take any action against the
Company or the Note Guarantors.


 


(g)                                 To the fullest
extent permitted by applicable law, each Bank Secured Party waives any claim it
might have against the Note Collateral Agent and any Note Secured Party or
their respective directors, officers, employees or agents with respect to, or
arising out of, any action or failure to act or any error of judgment,
negligence, or mistake or oversight whatsoever, except for claims arising out
of gross negligence or willful misconduct on the part of the Note Collateral
Agent or the Note Secured Parties or their respective directors, officers,
employees or agents with respect to any exercise of rights or remedies hereunder
or under any Note Document 


 


12

















 


or any transaction relating to the Note
Priority Collateral.  None of the Note
Secured Parties or the Note Collateral Agent or their respective directors,
officers, employees or agents shall be liable for failure to collect or realize
upon any of the Note Priority Collateral or for any delay in doing so or shall
be under any obligation to sell or otherwise dispose of any Note Priority
Collateral or to take any other action whatsoever with regard to the Note
Priority Collateral or any part thereof.


 


(h)                                 If, through the
operation of any bankruptcy, reorganization, insolvency or other laws or
otherwise, the Note First Priority Lien is enforced with respect to less than
all of the Note Obligations then outstanding and secured by the Note Security
Agreement (such unenforced portion of the Note Obligations, the “Avoided
Note Obligations”), the Bank Administrative Agent shall apply the Proceeds
of the Note Priority Collateral so that the Note Secured Parties receive an
amount with respect to the Avoided Note Obligations equal to the amount the
Note Secured Parties would have received with respect thereto (as general
unsecured creditors) had the Obligations secured by the Bank Second Priority
Lien not been secured by the Bank Security Agreements.  To the extent that Proceeds collected with
respect to the Obligations held by any of the Bank Secured Parties are
distributed to the Note Secured Parties in accordance with the preceding sentence
and the Liens of such Bank Secured Parties in the Note Priority Collateral are
discharged in whole or in part on the basis that the Obligations held by the
Bank Secured Parties have been satisfied under applicable law, then, to the
extent of the amount of such distribution made by such Bank Secured Parties,
any collections by the Note Secured Parties in respect of its Liens on the Bank
Priority Collateral pursuant to the Note Security Agreement shall, after
discharge in full of the Liens of such Bank Secured Parties (to the extent that
such Liens are senior to Liens of the Note Secured Parties on the Bank Priority
Collateral in accordance with the terms of the applicable Secured Debt
Documents) on the basis that the Obligations secured thereby have been satisfied
under applicable law, be distributed to the Bank Secured Parties upon receipt
thereof by the Note Secured Parties.


 


(i)                                     If at any time
after an event of default under the Note Documents shall have occurred and be
continuing any Bank Secured Party (a “Receiving Party”) shall receive
any payment or distribution on account of the Obligations owed to such
Receiving Party (whether voluntary, involuntary, through the exercise of any
rights of set-off or otherwise, and whether in cash, property or securities)
representing proceeds of any of the Note Priority Collateral and which is in
excess of the payments or distributions such Receiving Party would have
received through the operation of this Agreement and the Bank Security
Agreements and after giving effect to the circumstances described in paragraphs
(h) above and (j) below (such payments or distributions, “Excess
Payments”), then such Receiving Party shall hold such Excess Payments in
trust for the benefit of the Note Secured Parties, shall not commingle such
Excess Payments with any other property of such Receiving Party and shall
promptly pay over such Excess Payments in the form received (duly endorsed, if
necessary, to the Note Collateral Agent) to the Note Collateral Agent, for
distribution by the Note Collateral Agent in accordance with the provisions of
this Agreement and the Note Security Agreement.


 


(j)                                     The Bank
Administrative Agent and the Bank Secured Parties acknowledge that if any
payment made by a Grantor or other Person and applied to the Note Obligations
is at any time annulled, avoided, set aside, rescinded, invalidated, declared
to be fraudulent or preferential or otherwise required to be refunded or
repaid, or the Proceeds of Note 


 


13

















 


Priority Collateral are required to be
returned by any Note Secured Party to such Grantor, its estate, trustee,
receiver or any other Person under any Requirement of Law of any Governmental
Authority, then to the extent of such payment or repayment, any Lien or other
Note Priority Collateral securing such Note Obligation shall be and remain in
full force and effect as fully as if such payment had never been made or, if
prior thereto the Lien granted hereby or by any other Note Priority Collateral
securing such Obligation hereunder shall have been released or terminated by
virtue of such cancellation or surrender, such Lien or other Note Priority
Collateral shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect any Lien or other Note Priority Collateral securing the
Obligations of any Grantor in respect of the amount of such payment.


 


(k)                                  In the event
that the Note Collateral Agent has “control” (within the meaning of the Uniform
Commercial Code of any applicable jurisdiction) of any Investment Property,
Letter-of-Credit Rights, Deposit Accounts or Electronic Chattel Paper included
in the Note Priority Collateral or any other Note Priority Collateral for which
a security interest is perfected by possession of such collateral, the Note
Collateral Agent shall control such Note Priority Collateral for the benefit of
the Note Secured Parties and the Bank Administrative Agent and the Bank Secured
Parties.  Subject to Section 4.6(b),
promptly following the Stated Maturity (as defined in the Note Indenture) of
the Notes, the Note Collateral Agent shall deliver or assign control of the
remainder of the Collateral, if any, in its possession or under its control to
the Bank Administrative Agent unless the Bank Obligations shall have been paid
in full or except as may otherwise be required by applicable law or court
order.


 


2.3                                 Remedies with
Respect to the Bank Priority Collateral.  (a)  The Note Collateral Agent
acknowledges and agrees that, until all of the Bank Obligations have been paid
in full, the exercise of rights and remedies in respect of the Bank Priority
Collateral by the Note Collateral Agent shall be limited to the extent set
forth in, and shall be governed by, this Agreement.


 


(b)                                 Until the Bank
Obligations shall have been satisfied in full, other than to the extent
expressly provided in this Agreement, no Note Secured Party shall exercise any
rights or remedies in respect of the Bank Collateral, whether under a Secured
Debt Document, applicable law or otherwise, including, without limitation, any
action to institute any judicial or nonjudicial or similar action or proceeding
in respect of its Lien or to seek relief from the automatic stay pursuant to Section 362
of the Bankruptcy Code in respect of its Lien; provided, however,
that nothing contained herein shall be construed as preventing the Note
Collateral Agent or any Note Secured Party from taking any action which is
reasonably desirable or necessary to perfect and protect the Note Second
Priority Lien, which action is not adverse to the Bank Secured Parties or the
Bank First Priority Lien, including, without limitation, the filing of
financing statements under the Uniform Commercial Code in any applicable
jurisdiction, the execution and delivery of account control agreements or
similar agreements entered into for the purpose of obtaining “control” (within
the meaning of the applicable Uniform Commercial Code) of any applicable Bank
Priority Collateral (to the extent that it is possible for both the Bank
Administrative Agent and the Note Collateral Agent to have joint “control” of
such item of Bank Collateral) and the filing of a claim or statement of
interest in an Insolvency Proceeding in respect of the Note Second Priority
Lien or any Obligations secured thereby. 
Until the Bank Obligations shall have been satisfied in full, the Bank
Administrative Agent shall have the 


 


14

















 


exclusive right to exercise rights and remedies
in respect of the Bank Priority Collateral and to enforce the provisions of and
exercise remedies under this Agreement and the Bank Documents and under
applicable law (or refrain from enforcing any such rights and exercising any
such remedies), all in such order and in such manner as it may determine in its
discretion.  For the avoidance of doubt,
the parties hereto acknowledge and agree that, notwithstanding the occurrence
and continuation of an event of default as defined under the Note Indenture,
the Bank Administrative Agent shall not have any obligation or duty to exercise
remedies against the Bank Priority Collateral.


 


(c)                                  Each Note
Secured Party hereby consents to and authorizes the sale of all or any part of
the Bank Priority Collateral by the Bank Administrative Agent or any other Bank
Secured Party in accordance with the terms of the Bank Security Agreements and
the other Bank Documents and agrees that when all or any part of the Bank
Priority Collateral is sold pursuant to the Bank Security Agreements or the
applicable Bank Document and otherwise in accordance with this Agreement,
following such sale, such Bank Priority Collateral (but not the Proceeds
thereof) shall be free of the Note Second Priority Lien.  The Note Collateral Agent hereby appoints the
Bank Administrative Agent as its attorney-in-fact to execute and deliver in its
stead any releases, termination statements or other documentation reasonably
necessary or requested to evidence the foregoing release of liens on the Bank
Priority Collateral.


 


(d)                                 No Note Secured
Party, by itself or through or with any other Person, shall (i) contest,
protest, object to, interfere with, seek to enjoin or invoke or utilize any
provision of any document, law or equitable principle, or otherwise take any
other action whatsoever which might prevent, delay or impede, any exercise of
rights or remedies by the Bank Administrative Agent or the other Bank Secured
Parties under the Bank Security Agreements or applicable law in respect of the
Bank Priority Collateral or (ii) contest the validity or enforceability of any
of the Obligations or the validity, perfection, priority or enforceability of
any of the Liens created hereunder (it being understood and agreed that the
terms of this Agreement shall govern even if part or all of the Bank First
Priority Lien or the Note Second Priority Lien is avoided, disallowed, set
aside or otherwise invalidated in any judicial proceeding or otherwise).  The Note Collateral Agent and the Note
Secured Parties agree that the Bank Priority Collateral may be repossessed or
removed by the Bank Administrative Agent or any Bank Secured Parties, subject
to the terms of this Agreement, and, to the extent that such Bank Priority
Collateral is located on property that constitutes Note Priority Collateral,
the Note Collateral Agent and the Note Secured Parties will provide access to
the Bank Administrative Agent and the Bank Secured Parties accordingly.  In addition, the Note Collateral Agent and
the Note Secured Parties agree to permit the Bank Administrative Agent and/or
the Bank Secured Parties to access and use all or any part of the Note Priority
Collateral as may be reasonably necessary to enable the Bank Administrative
Agent and/or the Bank Secured Parties during normal business hours to convert
the Grantors’ raw materials and work-in-process Inventory into saleable
finished goods product, subject to the rights of the Note Collateral Agent and
the Note Secured Parties to repossess and remove the Note Priority Collateral
as provided in Section 2.2(d) above.


 


(e)                                  Notwithstanding
any other provision of this Agreement, the right of each Note Secured Party to
receive payment of the Obligations held by such Note Secured Party when due
(whether at the stated maturity thereof, by acceleration or otherwise) as
expressed in the related Secured Debt Document or other instrument evidencing
or agreement governing an 


 


15

















 


Obligation or to institute suit for the
enforcement of such payment on or after such due date, and the obligation of
the Grantors to pay such Obligation when due, shall not be impaired or affected
without the consent of such Note Secured Party given in the manner prescribed
by the Secured Debt Document under which such Obligation is outstanding.


 


(f)                                    The Bank
Secured Parties shall have the right, exercisable in their sole discretion,
without notice or demand without affecting or impairing the agreements and
obligations of the Note Secured Parties, from time to time (i) to modify,
extend, amend, restate, compromise, supplement, waive or release the Bank
Obligations from time to time, and the aggregate amount of the Bank Obligations
may be renewed, replaced or refinanced, all without notice to or consent by the
Note Collateral Agent or the Note Secured Parties; provided, however,
that the principal amount of the Bank Obligations may only be renewed, replaced
or refinanced in an amount not to exceed the greater of (x) the Borrowing
Base and (y) $60.0 million and (ii) to exercise or refrain from
exercising any powers or rights conferred on the Bank Secured Parties under the
Bank Documents.  Each of the Note Secured
Parties waives, to the fullest extent permitted by law, any requirement that
the Bank Secured Parties or the Bank Administrative Agent protect, secure,
perfect or insure the Bank First Priority Lien or exhaust any right or take any
action against the Borrowers or the Bank Guarantors.


 


(g)                                 To the fullest
extent permitted by applicable law, each Note Secured Party waives any claim it
might have against the Bank Administrative Agent and any Bank Secured Party or
their respective directors, officers, employees or agents with respect to, or
arising out of, any action or failure to act or any error of judgment,
negligence, or mistake or oversight whatsoever, except for claims arising out
of gross negligence or willful misconduct on the part of the Bank
Administrative Agent or the Bank Secured Parties or their respective directors,
officers, employees or agents with respect to any exercise of rights or
remedies hereunder or under any Bank Document or any transaction relating to
the Bank Collateral.  None of the Bank
Secured Parties or the Bank Administrative Agent or their respective directors,
officers, employees or agents shall be liable for failure to collect or realize
upon any of the Bank Priority Collateral or for any delay in doing so or shall
be under any obligation to sell or otherwise dispose of any Bank Priority
Collateral or to take any other action whatsoever with regard to the Bank Priority
Collateral or any part thereof.


 


(h)                                 If, through the
operation of any bankruptcy, reorganization, insolvency or other laws or
otherwise, the Bank First Priority Lien is enforced with respect to less than
all of the Bank Obligations then outstanding and secured by each Bank Security
Agreement (such unenforced portion of the Bank Obligations, the “Avoided
Bank Obligations”), the Note Collateral Agent shall apply the Proceeds of
the Bank Priority Collateral so that the Bank Secured Parties receive an amount
with respect to the Avoided Bank Obligations equal to the amount the Bank
Secured Parties would have received with respect thereto (as general unsecured
creditors) had the Obligations secured by the Note Second Priority Lien not
been secured by the Note Security Agreement. 
To the extent that Proceeds collected with respect to the Obligations
held by any of the Note Secured Parties are distributed to the Bank Secured
Parties in accordance with the preceding sentence and the Liens of such Note
Secured Parties in the Bank Priority Collateral are discharged in whole or in
part on the basis that the Obligations held by the Note Secured Parties have
been satisfied under applicable law, then, to the extent of the amount of such
distribution made by such Note Secured Parties, any collections by the Bank
Secured 


 


16

















 


Parties in respect of its Liens on the Note
Priority Collateral pursuant to the Bank Security Agreements shall, after
discharge in full of the Liens of such Note Secured Parties (to the extent that
such Liens are senior to Liens of the Bank Secured Parties on the Note Priority
Collateral in accordance with the terms of the applicable Secured Debt
Documents) on the basis that the Obligations secured thereby have been
satisfied under applicable law, be distributed to the Note Secured Parties upon
receipt thereof by the Bank Secured Parties.


 


(i)                                     If at any time
after an event of default under the Bank Documents shall have occurred and be
continuing any Note Secured Party (a “Receiving Party”) shall receive
any payment or distribution on account of the Obligations owed to such
Receiving Party (whether voluntary, involuntary, through the exercise of any
rights of set-off or otherwise, and whether in cash, property or securities)
representing proceeds of any of the Bank Priority Collateral and which is in
excess of the payments or distributions such Receiving Party would have
received through the operation of this Agreement and the Note Security
Agreement and after giving effect to the circumstances described in paragraphs (h) above
and (j) below (such payments or distributions, “Excess Payments”),
then such Receiving Party shall hold such Excess Payments in trust for the
benefit of the Bank Secured Parties, shall not commingle such Excess Payments
with any other property of such Receiving Party and shall promptly pay over
such Excess Payments in the form received (duly endorsed, if necessary, to the
Bank Administrative Agent) to the Bank Administrative Agent, for distribution
by the Bank Administrative Agent in accordance with the provisions of this
Agreement and the Bank Security Agreements.


 


(j)                                     The Note
Collateral Agent and the Note Secured Parties acknowledge that if any payment
made by a Grantor or other Person and applied to the Bank Obligations is at any
time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the Proceeds of Bank Priority Collateral are required to be returned by any
Bank Secured Party to such Grantor, its estate, trustee, receiver or any other
Person under any Requirement of Law of any Governmental Authority, then to the
extent of such payment or repayment, any Lien or other Bank Priority Collateral
securing such Bank Obligation shall be and remain in full force and effect as
fully as if such payment had never been made or, if prior thereto the Lien
granted hereby or by any other Bank Priority Collateral securing such
Obligation hereunder shall have been released or terminated by virtue of such
cancellation or surrender, such Lien or other Bank Priority Collateral shall be
reinstated in full force and effect, and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect any Lien or
other Bank Priority Collateral securing the Obligations of any Grantor in
respect of the amount of such payment.


 


(k)                                  In the event
that the Bank Administrative Agent has “control” (within the meaning of the
Uniform Commercial Code of any applicable jurisdiction) of any Investment
Property, Letter-of-Credit Rights, Deposit Accounts or Electronic Chattel Paper
included in the Bank Priority Collateral or any other Bank Priority Collateral
for which a security interest is perfected by possession of such collateral,
the Bank Administrative Agent shall control such Bank Priority Collateral for
the benefit of the Bank Secured Parties and the Note Collateral Agent and the
Note Secured Parties.  Subject to Section 4.6(b),
promptly following the payment in full of the Bank Obligations, each of the
Bank Administrative Agent and the Bank Secured Parties shall deliver or assign
control of the remainder of the Collateral, if any, in its possession or under
its control to the Note Collateral Agent unless the Stated Maturity (as defined
in the 


 


17

















 


Note Indenture) of the Notes shall have
occurred or except as may otherwise be required by applicable law or court
order.


 


2.4                                 Relative Rights
of Parties.  This
Agreement is intended solely for the purpose of defining the relative rights of
the Note Collateral Agent and the Note Secured Parties, on the one hand, and
the Bank Administrative Agent and the Bank Secured Parties, on the other hand,
in respect of (i) the subordination of the Bank Second Priority Lien to
the Note First Priority Lien and (ii) the subordination of the Note Second
Priority Lien to the Bank First Priority Lien. 
No other Person or entity shall have any right, benefit or other interest
under this Agreement.  Nothing contained
in this Agreement is intended to affect or limit, in any way whatsoever, the
Liens and other rights that the Note Secured Parties and the Bank Secured
Parties have under the Note Security Agreement, the Bank Security Agreements
and the other Secured Debt Documents to which they are a party insofar as the
rights of the Company, any other Grantor or any other Person or entity are
involved.


 


SECTION 3.   COLLATERAL ACCOUNT


 


3.1                                 Note
Obligations Satisfied. 
Subject to Section 4.6(b), the Note Collateral Agent shall pay over
to the Bank Administrative Agent all remaining moneys and other property held
by the Note Collateral Agent in the Note Collateral Account or received by the
Note Collateral Agent with respect to the Note Priority Collateral on or prior
to the first Business Day falling after the Note Obligations have been
satisfied in full.  Subject to Section 4.6(b),
the Note Collateral Agent further covenants and agrees that after payment in
full of the Note Obligations, the Note Collateral Agent shall take all actions
and do all things reasonably requested by the Bank Administrative Agent to
promptly transfer or assign any Note Priority Collateral (or interest therein)
to the Bank Administrative Agent for the purpose of perfecting and protecting
the Bank Second Priority Lien.  Without
limiting the generality of the foregoing, the Note Collateral Agent shall (i) notify
the Bank Administrative Agent that the Note First Priority Lien has been
released or terminated and that the Bank Administrative Agent is authorized to
instruct such Person regarding the control, maintenance or disposition of the
Note Priority Collateral, (ii) in the case of Instruments, Certificated
Securities, Chattel Paper (including Electronic Chattel Paper), Deposit
Accounts, Letter-of-Credit Rights and any other relevant Collateral, take any
actions reasonably requested to assign or transfer “control” (within the
meaning of the applicable Uniform Commercial Code) or possession of such Note
Priority Collateral to the Bank Administrative Agent and (iii) authorize
the filing of termination statements under the Uniform Commercial Code (or
other similar laws) in effect in any jurisdiction with respect to the
termination of the Note First Priority Lien. 
With respect to the Note Priority Collateral identified in clause (ii) above,
the Note Collateral Agent shall not transfer to any other Person or return or
reassign to the Grantors possession or control of any such Note Priority
Collateral unless the Bank Administrative Agent shall have consented thereto.


 


3.2                                 Bank
Obligations Satisfied. 
Subject to Section 4.6(b), the Bank Administrative Agent shall pay
over to the Note Collateral Agent all remaining moneys and other property held
by the Bank Administrative Agent in the Bank Collateral Account or received by
the Bank Administrative Agent with respect to the Bank Priority Collateral on
or prior to the first Business Day falling after the Bank Obligations have been
satisfied in full.  Subject to Section 4.6(b),
the Bank Administrative Agent further covenants and agrees that after 


 


18

















 


payment
in full of the Bank Obligations, the Bank Administrative Agent shall take all
actions and do all things reasonably requested by the Note Collateral Agent to
promptly transfer or assign any Bank Priority Collateral (or interest therein)
to the Note Collateral Agent for the purpose of perfecting and protecting the
Note Second Priority Lien.  Without
limiting the generality of the foregoing, the Bank Administrative Agent shall (i) notify
applicable third parties with an interest in the Bank Priority Collateral that
the Bank First Priority Lien has been released or terminated and that the Note
Collateral Agent is authorized to instruct such Person regarding the control,
maintenance or disposition of the Bank Collateral, (ii) in the case of
Instruments, Certificated Securities, Chattel Paper (including Electronic
Chattel Paper), Deposit Accounts, Letter-of-Credit Rights and any other
relevant Collateral, take any actions reasonably requested to assign or
transfer “control” (within the meaning of the applicable Uniform Commercial
Code) or possession of such Bank Priority Collateral to the Note Collateral
Agent and (iii) authorize the filing of termination statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the termination of the Bank First Priority Lien.  With respect to the Bank Priority Collateral
identified in clause (ii) above, the Bank Administrative Agent shall not
transfer to any other Person or return or reassign to the Grantors possession
or control of any such Bank Priority Collateral unless the Note Collateral
Agent shall have consented thereto.


 


SECTION 4.   MISCELLANEOUS


 


4.1                                 Notices.  Unless otherwise specified herein, all
notices, requests, demands or other communications given to any party hereto
shall be given in writing or by facsimile transmission and shall be deemed to
have been duly given when personally delivered or when duly deposited in the
mails, registered or certified mail postage prepaid, or when transmitted by
facsimile transmission, addressed to such party at its address specified on
Schedule I hereof or any other address which such party shall have specified as
its address for the purpose of communications hereunder, by notice given in
accordance with this Section 4.1 to the party sending such communication.


 


4.2                                 Amendments in
Writing.  (a)  The parties hereto
may, from time to time, enter into written agreements supplemental hereto for
the purpose of amending, modifying or adding to, or waiving any provisions of
this Agreement.


 


(b)                                 Without the
consent of any Secured Party, the parties hereto, at any time and from time to
time, may enter into one or more agreements supplemental to cure any ambiguity,
to correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein or therein, or to make any other
provision with respect to matters or questions arising hereunder which shall
not be inconsistent with any provision hereof; provided that any such
action contemplated by this paragraph (b) shall not adversely affect the
interests of Secured Parties.


 


4.3                                 No Waiver by
Course of Conduct; Cumulative Remedies.  None of the Note Collateral Agent, the Bank
Administrative Agent nor any Secured Party shall by any act (except by a
written instrument pursuant to Section 4.2), delay, indulgence, and
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any default or event of default under the Secured Debt
Documents.  No failure to exercise, nor
any 


 


19

















 


delay
in exercising, on the part of the Note Collateral Agent or the Bank
Administrative Agent or any Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof. 
No single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  A
waiver by the Note Collateral Agent, the Bank Administrative Agent or any
Secured Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that the Note Collateral Agent, the
Bank Administrative Agent or such Secured Party would otherwise have on any
future occasion.  The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.


 


4.4                                 Enforcement
Expenses; Indemnification.  (a) 
Each of the Grantors agrees to pay or reimburse each Secured Party, the Note
Collateral Agent and the Bank Administrative Agent for all of their respective
costs and expenses incurred in the preparation and administration of, or the
enforcing or preserving any rights under, this Agreement, including, without
limitation, the fees and disbursements of counsel to each Secured Party
(including, without limitation, counsel to each of the Note Collateral Agent
and the Bank Administrative Agent).


 


(b)                                 Without
limiting the indemnity obligations of each of the Grantors under the Note
Security Agreement, the Bank Security Agreements or any of the other Secured
Debt Documents, each of the Grantors agrees to pay, indemnify, and hold the
Note Collateral Agent, the Bank Administrative Agent and each Secured Party
(and their respective directors, officers, agents and employees) harmless from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation, the
reasonable fees and expenses of counsel, advisors and agents) or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, unless arising
from the gross negligence or willful misconduct of the indemnified party,
including for taxes in any jurisdiction in which the Note Collateral Agent or
the Bank Administrative Agent is subject to tax by reason of actions hereunder,
unless such taxes are imposed on or measured by compensation paid to the Note
Collateral Agent or the Bank Administrative Agent under the Note Security
Agreement or the Bank Security Agreements, respectively.


 


(c)                                  The agreements
in this Section 4.4 shall survive repayment of the Obligations and all
other amounts payable under the Secured Debt Agreements.


 


4.5                                 Further
Assurances.  (a) 
With respect to the Note Priority Collateral, each of the Grantors and the Bank
Administrative Agent, at the Company’s expense and at any time from time to
time, upon the reasonable request of the Note Collateral Agent, will promptly
and duly execute and deliver such further instruments and documents (including
amendments to their financing statements filed against each Grantor stating
that the rights of the Bank Administrative Agent are subject to the terms
hereof) and take such further actions as the Note Collateral Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.


 


(b)                                 With respect to
the Bank Priority Collateral, each of the Grantors and the Note Collateral
Agent, at the Company’s expense and at any time from time to time, upon the


 


20
















 


reasonable request of the Bank
Administrative Agent, will promptly and duly execute and deliver such further
instruments and documents (including amendments to their financing statements
filed against each Grantor stating that the rights of the Note Collateral Agent
are subject to the terms hereof) and take such further actions as the Bank
Administrative Agent may reasonably request for the purposes of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted.


 


4.6           Successors and Assigns.  (a)  This Agreement shall be binding
upon the successors and assigns of each party; provided that each
Grantor may not assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Note Collateral
Agent and the Bank Administrative Agent.


 


(b)           In connection with any redemption,
repurchase, refunding or other refinancing of the indebtedness evidenced by the
Bank Financing Agreement or the Note Indenture, each other party hereto agrees
to execute and deliver an agreement identical to this Agreement (subject to
changing names of parties, documents and addresses, as appropriate) in favor of
any Person who succeeds to, or redeems, repurchases, refunds or otherwise
refinances such indebtedness, and irrespective of whether any such new
financing occurs by transfer, assignment, repayment, refunding, substitution,
amendment and restatement or otherwise.


 


4.7           Insolvency.  This Agreement shall be applicable both
before and after the filing of any petition by or against any of the Grantors
under the U.S. Bankruptcy Code or comparable foreign laws and all converted or
succeeding cases in respect thereof, and all references herein to the Company
or any of its subsidiaries (including any reference to any Borrower) shall be
deemed to apply to the trustee for the Company or such subsidiaries and the
Company or such subsidiaries as debtor-in-possession.  The relative rights of (a) the Bank
Administrative Agent and the other Bank Secured Parties and (b) the Note
Collateral Agent and the other Note Secured Parties in or to any distributions
from or in respect of any Collateral or Proceeds of Collateral, shall continue
after the filing thereof on the same basis as prior to the date of the petition,
subject to any court order approving the financing of, or use of cash
collateral by, the Company or such subsidiaries as debtor-in-possession.


 


4.8           Disclosures; Non-Reliance.  Each of the Secured Parties has the means to
be, and shall in the future remain, fully informed as to the financial
condition and other affairs of the Grantors and their subsidiaries and no
Secured Party shall have any obligation or duty hereunder to disclose any such
information to any other Secured Party. 
Except as expressly set forth in this Agreement, the Secured Parties
have not otherwise made to one another nor do they hereby make to one another
any warranties, express or implied, nor do they assume any liability to one
another, with respect to (a) the enforceability, validity, value or
collectability of any of the Bank Obligations or the Note Obligations or any
guarantee or security which may have been granted to any of them in connection
therewith, (b) any Grantor’s title to or right to transfer any of the
Collateral or (c) any other matter except as expressly set forth in this
Agreement.


 


4.9           Counterparts.  This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.


 


21

















 


4.10         Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


4.11         Section Headings.  The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.


 


4.12         Integration.  This Agreement, the Note Documents, the Bank
Documents and the other Secured Debt Documents represent the agreement of the
Grantors, the Note Collateral Agent, the Bank Administrative Agent and the
Secured Parties with respect to the subject matter hereof and thereof, and
there are no promises, undertakings, representations or warranties by the Note
Collateral Agent, the Bank Administrative Agent or any Secured Party related to
the subject matter hereof and thereof not expressly set forth or referred to
herein or in the Secured Debt Documents.


 


4.13         Termination.  (a)  After the Note Obligations shall
have been satisfied in full, the Note Collateral Agent shall promptly deliver
written notice thereof to the Bank Administrative Agent, and thereafter, any
express or implied limitation set forth herein on the Bank Administrative Agent’s
or the Bank Secured Parties’ exercise of any of their rights and remedies in
respect of the Note Priority Collateral whether under the Bank Security
Agreements or otherwise shall no longer apply or have any force or effect,
subject to Section 2.2(j).


 


(b)           After the Bank Obligations shall have
been satisfied in full, the Bank Administrative Agent shall promptly deliver
written notice thereof to the Note Collateral Agent, and thereafter, any
express or implied limitation set forth herein on the Note Collateral Agent’s
or the Note Secured Parties’ exercise of any of their rights and remedies in
respect of the Bank Priority Collateral whether under the Note Security Agreement
or otherwise shall no longer apply or have any force or effect, subject to Section 2.3(j).


 


4.14         GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


4.15         Submission To Jurisdiction; Waivers.  Each party hereby irrevocably and
unconditionally:


 


(i)            submits
for itself and its property in any legal action or proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State
of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;


 


(ii)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such 


 


22

















 


action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;


 


(iii)          agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor at its address referred
to in Section 4.1 or at such other address of which the Note Collateral
Agent and the Bank Administrative Agent shall have been notified pursuant
thereto;


 


(iv)          agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and


 


(v)           waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.


 


4.16         WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT.


 


4.17         Incorporation by Reference.  In connection with its appointment and acting
hereunder, the Note Collateral Agent is entitled to all rights, privileges,
protections, immunities and indemnities provided to it as Collateral Agent
under the Note Security Agreement.


 


23

















 


IN WITNESS WHEREOF, each of the undersigned
has caused this Intercreditor Agreement to be duly executed and delivered as of
the date first above written.


 


	
   

  	
  CELLU TISSUE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE—CITYFOREST LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE CORPORATION - NATURAL DAM

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE CORPORATION - NEENAH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE — LONG ISLAND, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  



 


[Intercreditor
Agreement Signature Page]


 

















 


	
   

  	
  CELLU TISSUE — THOMASTON, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CELLU TISSUE LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COASTAL PAPER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By: Van Paper Company, its managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INTERLAKE ACQUISITION CORPORATION LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MENOMINEE ACQUISITION CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  



 


[Intercreditor
Agreement Signature Page]


 

















 


	
   

  	
  VAN PAPER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VAN TIMBER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Morris

  
	
   

  	
   

  	
  Name:  David J. Morris

  
	
   

  	
   

  	
  Title:    Chief Financial
  Officer

  



 


[Intercreditor
Agreement Signature Page]


 

















 


	
   

  	
  THE BANK OF NEW YORK MELLON TRUST

  COMPANY, N.A., as Note Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vaneta Bernard

  
	
   

  	
   

  	
  Name:  Vaneta Bernard

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as Bank Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas B. Williams

  
	
   

  	
   

  	
  Name:  Thomas B. Williams

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., TORONTO

  BRANCH, as Bank Canadian Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan Howat

  
	
   

  	
   

  	
  Name:  Dan Howat

  
	
   

  	
   

  	
  Title:  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK MELLON TRUST

  COMPANY, N.A., as Prior Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vaneta Bernard

  
	
   

  	
   

  	
  Name:  Vaneta Bernard

  
	
   

  	
   

  	
  Title:  Vice President

  



 


[Intercreditor
Agreement Signature Page]


 

















 


Schedule I


 


	
  Entity

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  Cellu Tissue
  Holdings, Inc.

  	
   

  	
  c/o Cellu
  Tissue Holdings, Inc.

  1855
  Lockeway Drive, Suite 501

  Alpharetta,
  Georgia 30004

  Telephone:
  (678) 393-2146

  Telecopy:
  (678) 393-2657

  
	
  Cellu
  Tissue—CityForest LLC

  	
   

  	
  1215 East
  Worden Avenue

  Ladysmith,
  WI 54848

  
	
  Cellu Tissue
  Corporation — Natural Dam

  	
   

  	
  4921 Route
  58 North

  Gouverneur,
  NY 13642

  
	
  Cellu Tissue
  Corporation — Neenah

  	
   

  	
  249 North
  Lake Street

  Neenah, WI
  54956

  
	
  Cellu Tissue
  — Long Island, LLC

  	
   

  	
  1855
  Lockeway Drive, Suite 501

  Alpharetta,
  GA 30004

  
	
  Cellu Tissue
  — Thomaston, LLC

  	
   

  	
  1855
  Lockeway Drive, Suite 501

  Alpharetta,
  GA 30004

  
	
  Cellu Tissue
  LLC

  	
   

  	
  2 Forbes
  Street

  East Hartford,
  CT 06108

  
	
  Coastal
  Paper Company

  	
   

  	
  1321 South
  Magnolia Drive

  Wiggins, MS
  39577

  
	
  Interlake
  Acquisition Corporation Limited 

  	
   

  	
  45 Merritt
  Street

  St.
  Catharines, Canada L2T 1J4

  
	
  Menominee
  Acquisition Corporation

  	
   

  	
  144 First
  Street

  Menominee,
  MI 49858

  
	
  Van Paper
  Company

  	
   

  	
  1321 South
  Magnolia Drive

  Wiggins, MS
  39577

  
	
  Van Timber
  Company

  	
   

  	
  1321 South
  Magnolia Drive

  Wiggins, MS
  39577

  
	
   

  	
   

  	
   

  
	
  The Bank of
  New York Mellon Trust Company, N.A., as Note Collateral Agent

  	
   

  	
  222 Berkeley
  Street, 2nd Floor

  Boston, MA
  02116

  Facsimile:
  617-351-2401

  Attention:
  Peter M. Murphy, Vice President

  
	
   

  	
   

  	
   

  
	
  JPMorgan
  Chase Bank, N.A., as Bank Agent

  	
   

  	
  1111 Fannin,
  10th Floor

  Houston,
  Texas 77002

  Facsimile:

  Attention: 

  
	
   

  	
   

  	
   

  
	
  JPMorgan
  Chase Bank, N.A., Toronto Branch, as Bank Canadian Agent

  	
   

  	
  20 Bay
  Street, Suite 1800

  Toronto,
  Ontario M5J 2J2

  Facsimile:
  416-981-9174

  Attention:
  Funding Office

  



 


[Intercreditor
Agreement Signature Page]