Document:

EXHIBIT
10(a)

 

FIFTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT

 

THIS
FIFTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT, dated as of December 17,
2009 (this “Agreement”), is entered into among Cantel Medical Corp., a
Delaware corporation (the “Borrower”), the Guarantors party to the Subsidiary
Guaranty, the Lenders party hereto and Bank of America, N.A., as Administrative
Agent (in such capacity, the “Administrative Agent”).  Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Credit
Agreement (as defined below).

 

RECITALS

 

A.                                   The Borrower,
the Lenders and the Administrative Agent entered into that certain Amended and
Restated Credit Agreement, dated as of August 1, 2005 (as previously
amended or modified, the “Credit Agreement”).

 

B.                                     The Borrower has requested
that the Lenders consent to (a) the sale by Minntech B.V of its building
pursuant to a sale and leaseback transaction (the “Netherlands Sale and
Leaseback”) for $1,669,000 (the “Netherlands Proceeds”) and (b) the
prepayment of the Revolving Credit Advances with the Netherlands Proceeds instead
of the Term A Facility, as required by Section 2.6(b)(v) of the
Credit Agreement.

 

C.                                     The Borrower has requested that
the Lenders amend the Credit Agreement as provided herein.

 

D.                                    The Lenders hereby (a) consent
to the Netherlands Sale and Leaseback and the application of the Netherlands
Proceeds to the Revolving Credit Advances and (b) agree to amend the
Credit Agreement as provided herein.

 

E.                                      In
consideration of the agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows.

 

AGREEMENT

 

1.                                       Consent.  Notwithstanding Sections 2.6(b)(v) and
6.5 of the Credit Agreement, the Lenders hereby consent to the Netherlands Sale
and Leaseback and the use of the Netherlands Proceeds to prepay the Revolving
Credit Advances.  Such consent is
retroactive to the date of the Netherlands Sale and Leaseback.

 

2.                                       Amendments.

 

(a)                                  Section 6.2.  Section 6.2 of the Credit Agreement is
amended to replace the “; and” at the end of clause (d) with “;”, to
replace the “.” at the end of clause (e) with “;” and to add new clauses (f) and
(g) immediately following clause (e) to read as follows:

 

(f)            Guarantees Obligations permitted
under Section 6.19; and

 

(g)                                 to the extent
constituting Debt, surety or performance bonds with respect to contracts for
the performance of work entered into by Mar Cor Purification, Inc.

 

 

(b)                                 Section 6.6.  Section 6.6 of the Credit Agreement is
amended to replace the “; and” at the end of clause (i) with “;”, to
replace the “.” at the end of clause (j) with “; and” and to add a new
clause (k) immediately following clause (j) to read as follows:

 

(k)                                  Investments
consisting of loans and advances to Biosafe, Inc., a Pennsylvania
corporation, in an aggregate principal amount not to exceed $500,000.

 

(c)                                  Section 6.7.                                   Section 6.7
of the Credit Agreement is amended to replace the “; and” at the end of clause (e) with
“;”, to replace the “.” at the end of clause (f) with “; and” and to add a
new clause (g) immediately following clause (f) to read as follows:

 

(g)                                 the Borrower
may pay cash dividends to the Borrower’s shareholders in an aggregate annual
amount not to exceed $1,800,000 so long as (i) no Default exists or would
result therefrom and (ii) after giving effect to such dividends, the
Borrower is in compliance with the financial covenants set forth in Article VIII
on a pro forma basis (assuming such transactions occurred on the first day of
the most recently ended four fiscal quarter period for which the Borrower has
delivered the financial statements pursuant to Section 7.2 or 7.3,
as applicable).

 

(d)                                 Section 6.16.  Section 6.16(c) of the Credit
Agreement is amended to read as follows:

 

(c) Hedge Agreements used by the Borrower or its Subsidiaries to
mitigate the financial risk of currency fluctuations which shall not exceed
twelve (12) months in duration and shall be in an aggregate notional
amount not to exceed $12,000,000 outstanding at any time.

 

(e)                                  Section 6.19.  Section 6.19 of the Credit Agreement is
amended to read as follows:

 

Section 6.19                            Guaranteed
Obligations.

 

Create, incur, assume or permit to exist any Guaranteed Obligations
except (a) by endorsement of instruments or items of payment for deposit
to the general account of any Loan Party, (b) for Guaranteed Obligations
set forth on Schedule 6.19 and (c) for guarantees of obligations
of Subsidiaries under Operating Leases.

 

3.                                       Effectiveness;
Conditions Precedent.  This Agreement shall be effective as of the date hereof when all of the conditions set
forth in this Section 3 shall have been satisfied in form and substance
satisfactory to the Administrative Agent.

 

(a)                                  Execution and Delivery of
Agreement.  The
Administrative Agent shall have received copies of this Agreement duly executed
by the Borrower, the Guarantors, the Required Lenders and the Administrative
Agent.

 

(b)                                 Fees and Expenses.  The Borrower shall have paid (i) to the
Administrative Agent, for the account of each Lender, a nonrefundable fee equal
to $10,000 which shall be deemed fully earned upon the effectiveness of this
Agreement and (ii) all other fees and expenses that are owing, if any,
from the Borrower to the Administrative Agent.

 

4.                                       Ratification of
Credit Agreement.  The Loan
Parties acknowledge and consent to the terms set forth herein and agree that
this Agreement does not impair, reduce or limit any of their obligations under
the Loan Documents and all of which are hereby ratified and confirmed.

 

5.                                       Authority/Enforceability.  Each of the Loan Parties represents and
warrants as follows:

 

2

 

(a)                                  It has taken all necessary
action to authorize the execution, delivery and performance of this Agreement.

 

(b)                                 This Agreement has been duly
executed and delivered by such Person and constitutes such Person’s legal,
valid and binding obligations, enforceable in accordance with its terms, except
as such enforceability may be subject to (i) Federal Bankruptcy Code or
any similar debtor relief laws and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity).

 

(c)                                  No consent, approval,
authorization or order of, or filing, registration or qualification with, any
court or governmental authority or third party is required in connection with
the execution, delivery or performance by such Person of this Agreement.

 

(d)                                 The execution and delivery
of this Agreement does not (i) violate, contravene or conflict with any
provision of its or its Subsidiaries’ organization documents (e.g., articles of
incorporation and bylaws) or (ii) materially violate, contravene or
conflict with any laws applicable to it or any of its Subsidiaries.

 

6.                                       Representations
and Warranties of the Loan Parties.  The Loan Parties represent and warrant to the
Lenders that (a) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of the date hereof, as though
made on and as of the date hereof, other than any such representations or
warranties that, by their terms, refer to a specific date other than the date
hereof, in which case, such representations and warranties are correct in all
material respects as of such specific date, and  (b) no
event has occurred and is continuing which constitutes a Default.

 

7.                                       Release.  In consideration of the Lenders entering into
this Agreement, the Loan Parties hereby release the Administrative Agent, the
Lenders and the Administrative Agent’s and the Lenders’ respective officers,
employees, representatives, agents, counsel and directors from any and all
actions, causes of action, claims, demands, damages and liabilities of whatever
kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected to the extent that any of the foregoing arises from any action or
failure to act solely in connection with the Loan Documents on or prior to the
date hereof.

 

8.                                       Counterparts/Telecopy.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.  Delivery of executed counterparts of this
Agreement by telecopy or .pdf shall be effective as an original.

 

9.                                       GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[remainder of page intentionally left blank]

 

3

 

IN
WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above written.

 

	
  BORROWER:

  	
   

  
	
   

  	
  CANTEL
  MEDICAL CORP.,

  
	
   

  	
  as
  Borrower

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Andrew A. Krakauer

  
	
   

  	
  Name:

  	
  Andrew
  A. Krakauer

  
	
   

  	
  Title:
  

  	
  President
  and CEO

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Craig A. Sheldon

  
	
   

  	
  Name:

  	
  Craig
  A. Sheldon

  
	
   

  	
  Title:

  	
  Senior VP, CFO and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
  GUARANTORS:

  	
   

  
	
   

  	
  MINNTECH CORPORATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Kevin B. Finkle

  
	
   

  	
  Name: 

  	
  Kevin B. Finkle

  
	
   

  	
  Title:

  	
  Senior VP, Finance and Administration

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAR COR PURIFICATION, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Kathryn D. McIsaac

  
	
   

  	
  Name: 

  	
  Kathryn D. McIsaac

  
	
   

  	
  Title: 

  	
  Vice President, Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CROSSTEX INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Douglas T. Carpenter

  
	
   

  	
  Name: 

  	
  Douglas T. Carpenter

  
	
   

  	
  Title: 

  	
  Vice President, Finance and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BIOLAB EQUIPMENT ATLANTIC, LTD.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Craig A. Sheldon

  
	
   

  	
  Name: 

  	
  Craig A. Sheldon

  
	
   

  	
  Title: 

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STRONG DENTAL PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Douglas T. Carpenter

  
	
   

  	
  Name: 

  	
  Douglas T. Carpenter

  
	
   

  	
  Title:

  	
  Vice President, Finance and Treasurer

  

 

CANTEL MEDICAL CORP.

FIFTH AMENDMENT TO CREDIT
AGREEMENT AND CONSENT

 

 

	
  ADMINSTRATIVE

  	
   

  
	
  AGENT &
  LENDERS:

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
  as
  Administrative Agent,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  George S. Carey

  
	
   

  	
  Name:

  	
  George
  S. Carey

  
	
   

  	
  Title:

  	
  Assistant
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
  as
  Issuing Bank,

  
	
   

  	
  as
  Swing Line Bank and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Jana L. Baker

  
	
   

  	
  Name:

  	
  Jana
  L. Baker

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Kenneth E. LaChance

  
	
   

  	
  Name:

  	
  Kenneth
  E. LaChance

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Patricia D. Georges

  
	
   

  	
  Name:

  	
  Patricia
  D. Georges

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

CANTEL MEDICAL CORP.

FIFTH AMENDMENT TO CREDIT
AGREEMENT AND CONSENTExhibit
10.34

 

 

AMENDED
AND RESTATED CREDIT AGREEMENT

 

made and entered into

as of November 5, 2009

by and among

 

NEENAH
PAPER, INC.,

CERTAIN SUBSIDIARIES OF NEENAH PAPER, INC.,

as joint and several borrowers,

 

CERTAIN
SUBSIDIARIES OF NEENAH PAPER, INC.,

as guarantors,

 

EACH
OF THE FINANCIAL INSTITUTIONS WHICH IS

A SIGNATORY HERETO OR

WHICH MAY FROM TIME TO TIME

BECOME A PARTY HERETO,

 

JPMORGAN
CHASE BANK, N.A.,

as Agent for such Financial Institutions

 

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

as Canadian Collateral Agent for such Financial Institutions

 

BANK
OF AMERICA, N.A.,

as Syndication Agent

 

and

 

J.P.
MORGAN SECURITIES INC. and BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arrangers and Joint Bookrunners

 

 

INDEX TO CREDIT AGREEMENT

 

	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions

  	
  2

  
	
   

  	
  1.1

  	
  Certain Defined Terms

  	
  2

  
	
   

  	
  1.2

  	
  Accounting Terms and Determinations

  	
  42

  
	
   

  	
  1.3

  	
  UCC Changes

  	
  43

  
	
   

  	
  1.4

  	
  Joint and Several Obligations; Borrowers’ Agent

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

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

  	
  43

  
	
   

  	
  2.1

  	
  Commitments

  	
  43

  
	
   

  	
  2.2

  	
  Loans

  	
  44

  
	
   

  	
  2.3

  	
  Commitment Fees

  	
  46

  
	
   

  	
  2.4

  	
  Termination and Reductions of Revolving Commitments

  	
  47

  
	
   

  	
  2.5

  	
  Mandatory and Voluntary Prepayments

  	
  47

  
	
   

  	
  2.6

  	
  Notes; Payments; Accounts

  	
  49

  
	
   

  	
  2.7

  	
  Application of Payments and Prepayments

  	
  50

  
	
   

  	
  2.8

  	
  Interest Rates for Loans

  	
  52

  
	
   

  	
  2.9

  	
  Special Provisions Applicable to LIBOR Borrowings

  	
  54

  
	
   

  	
  2.10

  	
  Letters of Credit

  	
  57

  
	
   

  	
  2.11

  	
  Swingline Loans

  	
  62

  
	
   

  	
  2.12

  	
  Pro-Rata Treatment

  	
  65

  
	
   

  	
  2.13

  	
  Sharing of Payments, Etc.

  	
  66

  
	
   

  	
  2.14

  	
  Recapture

  	
  66

  
	
   

  	
  2.15

  	
  Increase of Revolving Commitments

  	
  67

  
	
   

  	
  2.16

  	
  Defaulting Lenders

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Collateral

  	
  69

  
	
   

  	
  3.1

  	
  Security Documents

  	
  69

  
	
   

  	
  3.2

  	
  Filing and Recording

  	
  69

  
	
   

  	
  3.3

  	
  Special Cash Collateral Account

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Conditions

  	
  70

  
	
   

  	
  4.1

  	
  All Loans

  	
  70

  
	
   

  	
  4.2

  	
  First Loan or Letter of Credit

  	
  71

  
	
   

  	
  4.3

  	
  Post-Closing Deliveries

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Representations and Warranties

  	
  76

  
	
   

  	
  5.1

  	
  Organization

  	
  76

  
	
   

  	
  5.2

  	
  Financial Statements

  	
  76

  
	
   

  	
  5.3

  	
  Enforceable Obligations; Authorization

  	
  76

  
	
   

  	
  5.4

  	
  Other Debt

  	
  77

  
	
   

  	
  5.5

  	
  Litigation

  	
  77

  
	
   

  	
  5.6

  	
  Taxes

  	
  77

  
	
   

  	
  5.7

  	
  No Material Misstatements; Full Disclosure

  	
  78

  
	
   

  	
  5.8

  	
  Subsidiaries and Offshore Entities

  	
  78

  

 

i

 

	
   

  	
  5.9

  	
  Representations by Others

  	
  78

  
	
   

  	
  5.10

  	
  Permits, Licenses, Etc.

  	
  78

  
	
   

  	
  5.11

  	
  ERISA

  	
  79

  
	
   

  	
  5.12

  	
  Title to Properties; Possession Under Leases

  	
  79

  
	
   

  	
  5.13

  	
  Assumed Names

  	
  80

  
	
   

  	
  5.14

  	
  Investment Company Act

  	
  80

  
	
   

  	
  5.15

  	
  Public Utility Holding Company Act

  	
  80

  
	
   

  	
  5.16

  	
  Agreements

  	
  80

  
	
   

  	
  5.17

  	
  Environmental Matters

  	
  80

  
	
   

  	
  5.18

  	
  No Change in Credit Criteria or Collection Policies

  	
  81

  
	
   

  	
  5.19

  	
  Solvency

  	
  82

  
	
   

  	
  5.20

  	
  Status of Receivables and Other Collateral

  	
  83

  
	
   

  	
  5.21

  	
  Transactions with Related Parties

  	
  83

  
	
   

  	
  5.22

  	
  Intellectual Property

  	
  83

  
	
   

  	
  5.23

  	
  [RESERVED]

  	
  84

  
	
   

  	
  5.24

  	
  Canadian Pension and Benefit Plan Matters

  	
  84

  
	
   

  	
  5.25

  	
  Related Businesses

  	
  84

  
	
   

  	
  5.26

  	
  Material Leasehold Properties

  	
  84

  
	
   

  	
  5.27

  	
  Security Interests

  	
  84

  
	
   

  	
  5.28

  	
  [RESERVED]

  	
  85

  
	
   

  	
  5.29

  	
  Deposit Accounts

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Affirmative Covenants

  	
  85

  
	
   

  	
  6.1

  	
  Businesses and Properties

  	
  85

  
	
   

  	
  6.2

  	
  Taxes

  	
  86

  
	
   

  	
  6.3

  	
  Financial Statements and Information

  	
  86

  
	
   

  	
  6.4

  	
  Inspections; Field Examinations; Inventory Appraisals
  and Physical Counts

  	
  88

  
	
   

  	
  6.5

  	
  Further Assurances

  	
  90

  
	
   

  	
  6.6

  	
  Books and Records

  	
  90

  
	
   

  	
  6.7

  	
  Insurance

  	
  90

  
	
   

  	
  6.8

  	
  ERISA

  	
  91

  
	
   

  	
  6.9

  	
  Use of Proceeds

  	
  92

  
	
   

  	
  6.10

  	
  Borrowers; Guarantors; Joinder Agreements

  	
  92

  
	
   

  	
  6.11

  	
  Notice of Events

  	
  93

  
	
   

  	
  6.12

  	
  Environmental Matters

  	
  94

  
	
   

  	
  6.13

  	
  End of Fiscal Year

  	
  94

  
	
   

  	
  6.14

  	
  Pay Obligations and Perform Other Covenants

  	
  94

  
	
   

  	
  6.15

  	
  Collection of Receivables; Application of
  Receivables Proceeds

  	
  95

  
	
   

  	
  6.16

  	
  Receivables and Other Collateral Matters

  	
  96

  
	
   

  	
  6.17

  	
  Agreements

  	
  97

  
	
   

  	
  6.18

  	
  Hedging Strategy

  	
  97

  
	
   

  	
  6.19

  	
  Canadian Pension Plans; Canadian Benefit Plans

  	
  97

  
	
   

  	
  6.20

  	
  Conforming Leasehold Interests; Matters Relating to
  Additional Real Property Collateral

  	
  98

  

 

ii

 

	
  7.

  	
  Negative Covenants

  	
  100

  
	
   

  	
  7.1

  	
  Indebtedness

  	
  100

  
	
   

  	
  7.2

  	
  Liens

  	
  103

  
	
   

  	
  7.3

  	
  Contingent Liabilities

  	
  105

  
	
   

  	
  7.4

  	
  Mergers, Consolidations and Dispositions and
  Acquisitions of Assets

  	
  105

  
	
   

  	
  7.5

  	
  Nature of Business

  	
  109

  
	
   

  	
  7.6

  	
  Transactions with Related Parties

  	
  109

  
	
   

  	
  7.7

  	
  Investments, Loans

  	
  110

  
	
   

  	
  7.8

  	
  ERISA Compliance

  	
  110

  
	
   

  	
  7.9

  	
  Trade Credit Extensions

  	
  111

  
	
   

  	
  7.10

  	
  Change in Accounting Method

  	
  111

  
	
   

  	
  7.11

  	
  Redemption, Dividends, Stock Issuance, Distributions
  and Payments

  	
  111

  
	
   

  	
  7.12

  	
  Fixed Charge Coverage Ratio

  	
  112

  
	
   

  	
  7.13

  	
  Sale of Receivables

  	
  112

  
	
   

  	
  7.14

  	
  Sale and Lease-Back Transactions

  	
  112

  
	
   

  	
  7.15

  	
  Change of Name or Place of Business

  	
  113

  
	
   

  	
  7.16

  	
  Restrictive Agreements

  	
  113

  
	
   

  	
  7.17

  	
  Tax Classification

  	
  113

  
	
   

  	
  7.18

  	
  Deposit Accounts

  	
  113

  
	
   

  	
  7.19

  	
  Organizational Documents; Tax Sharing Agreements

  	
  114

  
	
   

  	
  7.20

  	
  Limitation on Indebtedness of Offshore Entities

  	
  114

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Events of Default and Remedies

  	
  114

  
	
   

  	
  8.1

  	
  Events of Default

  	
  114

  
	
   

  	
  8.2

  	
  Remedies Cumulative

  	
  117

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  The Agent; the Canadian Collateral Agent

  	
  117

  
	
   

  	
  9.1

  	
  Appointment, Powers and Immunities

  	
  117

  
	
   

  	
  9.2

  	
  Reliance

  	
  118

  
	
   

  	
  9.3

  	
  Defaults

  	
  119

  
	
   

  	
  9.4

  	
  Rights as a Lender

  	
  119

  
	
   

  	
  9.5

  	
  Indemnification

  	
  119

  
	
   

  	
  9.6

  	
  Non-Reliance on Agent and Other Lenders

  	
  120

  
	
   

  	
  9.7

  	
  Failure to Act

  	
  120

  
	
   

  	
  9.8

  	
  Resignation or Removal of Agent

  	
  120

  
	
   

  	
  9.9

  	
  Syndication Agent; Joint Lead Arrangers; Joint
  Bookrunners

  	
  121

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Miscellaneous

  	
  121

  
	
   

  	
  10.1

  	
  No Waiver

  	
  121

  
	
   

  	
  10.2

  	
  Notices

  	
  121

  
	
   

  	
  10.3

  	
  Governing Law

  	
  122

  
	
   

  	
  10.4

  	
  Survival; Parties Bound

  	
  122

  
	
   

  	
  10.5

  	
  Counterparts

  	
  122

  
	
   

  	
  10.6

  	
  Limitation of Interest

  	
  122

  
	
   

  	
  10.7

  	
  Survival

  	
  123

  
	
   

  	
  10.8

  	
  Captions

  	
  123

  
	
   

  	
  10.9

  	
  Expenses, Etc.

  	
  123

  

 

iii

 

	
   

  	
  10.10

  	
  Indemnification

  	
  123

  
	
   

  	
  10.11

  	
  Amendments, Waivers, Etc.

  	
  124

  
	
   

  	
  10.12

  	
  Successors and Assigns

  	
  125

  
	
   

  	
  10.13

  	
  Entire Agreement

  	
  129

  
	
   

  	
  10.14

  	
  Severability

  	
  129

  
	
   

  	
  10.15

  	
  Disclosures

  	
  129

  
	
   

  	
  10.16

  	
  Capital Adequacy

  	
  129

  
	
   

  	
  10.17

  	
  Taxes

  	
  131

  
	
   

  	
  10.18

  	
  Waiver of Claim

  	
  134

  
	
   

  	
  10.19

  	
  Right of Setoff

  	
  134

  
	
   

  	
  10.20

  	
  Waiver of Right to Jury Trial

  	
  134

  
	
   

  	
  10.21

  	
  Additional Provisions Regarding Collection of
  Receivables and other Collateral

  	
  135

  
	
   

  	
  10.22

  	
  Bank Product Obligations

  	
  137

  
	
   

  	
  10.23

  	
  Construction

  	
  140

  
	
   

  	
  10.24

  	
  Joint and Several Obligations

  	
  140

  
	
   

  	
  10.25

  	
  USA Patriot Act

  	
  140

  
	
   

  	
  10.26

  	
  Judgment

  	
  140

  
	
   

  	
  10.27

  	
  Jurisdiction; Service of Process

  	
  141

  
	
   

  	
  10.28

  	
  Confidentiality

  	
  141

  
	
   

  	
  10.29

  	
  No Fiduciary Duty/Conflicts

  	
  142

  

 

LIST OF EXHIBITS AND
SCHEDULES

 

	
  Exhibit A

  	
  -

  	
  Form of Revolving Credit Note

  
	
  Exhibit B

  	
  -

  	
  Form of Swingline Note

  
	
  Exhibit C

  	
  -

  	
  Form of Term Note

  
	
  Exhibit D

  	
  -

  	
  Form of Compliance Certificate

  
	
  Exhibit E

  	
  -

  	
  Form of Request for Extension of Credit

  
	
  Exhibit F

  	
  -

  	
  Form of Rate of Section Notice

  
	
  Exhibit G

  	
  -

  	
  Form of Borrowing Base Compliance Certificate

  
	
  Exhibit H

  	
  -

  	
  Form of Receivables Report

  
	
  Exhibit I

  	
  -

  	
  Form of Inventory Designation Report

  
	
  Exhibit J

  	
  -

  	
  Form of Solvency Certificate

  
	
  Exhibit K

  	
  -

  	
  Form of Canadian Guaranty

  
	
  Exhibit L

  	
  -

  	
  Form of Perfection Certificate

  
	
  Exhibit M

  	
  -

  	
  Form of US Patent Security Agreement

  
	
  Exhibit N

  	
  -

  	
  Form of US Trademark Security Agreement

  
	
  Exhibit O

  	
  -

  	
  Form of US Copyright Security Agreement

  
	
  Exhibit P

  	
  -

  	
  Form of Assignment And Acceptance

  
	
  Exhibit Q

  	
  -

  	
  Form of Commitment Increase Agreement

  
	
  Exhibit R

  	
  -

  	
  Form of New Lender Agreement

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1A

  	
  -

  	
  Revolving Credit Commitments

  
	
  Schedule 1.1B

  	
  -

  	
  Material Leasehold Properties

  
	
  Schedule 1.1C

  	
  -

  	
  Equipment Component

  

 

iv

 

	
  Schedule 1.1D

  	
  -

  	
  Quarterly Equipment Component Amortization Amount

  
	
  Schedule 1.1E

  	
  -

  	
  Quarterly Real Estate Component Amortization Amount

  
	
  Schedule 1.1F

  	
  -

  	
  Real Estate Component

  
	
  Schedule 1.4

  	
  -

  	
  Responsible Officers of Neenah

  
	
  Schedule 2.10(a)

  	
  -

  	
  Existing Letters of Credit

  
	
  Schedule 4.2(n)

  	
  -

  	
  Access Agreement and Waivers, Subordinations or Landlord and
  Warehouse Waivers

  
	
  Schedule 4.2(r)-1

  	
  -

  	
  List of Closing Date Mortgaged Properties

  
	
  Schedule 4.2(r)-2

  	
  -

  	
  List of Endorsements

  
	
  Schedule 5.3

  	
  -

  	
  Governmental Authorization

  
	
  Schedule 5.5

  	
  -

  	
  Material Litigation

  
	
  Schedule 5.8

  	
  -

  	
  Subsidiaries, Jurisdictions of Foreign Qualification; Capitalization

  
	
  Schedule 5.10

  	
  -

  	
  Permits, Licenses, Etc.

  
	
  Schedule 5.12(b)

  	
  -

  	
  Real Property Leases

  
	
  Schedule 5.13

  	
  -

  	
  Assumed Names

  
	
  Schedule 5.16

  	
  -

  	
  Indebtedness

  
	
  Schedule 5.17

  	
  -

  	
  Environmental Matters

  
	
  Schedule 5.22

  	
  -

  	
  Intellectual Property

  
	
  Schedule 5.27

  	
  -

  	
  Financing Statements

  
	
  Schedule 5.29

  	
  -

  	
  Deposit Accounts

  
	
  Schedule 7.2

  	
  -

  	
  Liens

  
	
  Schedule 7.6

  	
  -

  	
  Permitted Affiliated Transactions

  

 

v

 

LIST OF DEFINED TERMS

 

	
   

  	
  Page No.

  
	
   

  	
   

  
	
  $

  	
  42

  
	
  10 percent shareholder

  	
  133

  
	
  Act

  	
  140

  
	
  Additional Mortgage

  	
  98

  
	
  Additional Mortgage Policies

  	
  99

  
	
  Additional Mortgaged Property

  	
  98

  
	
  Additional Mortgages

  	
  98

  
	
  Additional Senior Indenture

  	
  2

  
	
  Additional Senior Note Documents

  	
  2

  
	
  Additional Senior Notes

  	
  2

  
	
  Adjusted LIBOR Rate

  	
  2

  
	
  Affiliate

  	
  2

  
	
  Agent

  	
  1

  
	
  Agreement

  	
  1

  
	
  Alternate Base Rate

  	
  3

  
	
  Alternate Base Rate Borrowing

  	
  3

  
	
  Annual Audited Financial Statements

  	
  3

  
	
  Annualized Basis

  	
  4

  
	
  Applicable Commitment Fee Percentage

  	
  4

  
	
  Applicable Lending Office

  	
  4

  
	
  Applicable Margin

  	
  4

  
	
  Applications

  	
  5

  
	
  Approved Fund

  	
  5

  
	
  Assignment and Acceptance

  	
  127

  
	
  Availability

  	
  5

  
	
  bank

  	
  133

  
	
  Bank Product Amount

  	
  6

  
	
  Bank Products

  	
  6

  
	
  Borrower

  	
  1

  
	
  Borrowers

  	
  1

  
	
  Borrowers’ Agent

  	
  7

  
	
  Borrowing Base

  	
  7

  
	
  Borrowing Base Compliance Certificate

  	
  7

  
	
  Borrowing Base Deficiency

  	
  7

  
	
  Business Day

  	
  7

  
	
  Business Entity

  	
  7

  
	
  Canadian Benefit Plans

  	
  8

  
	
  Canadian Collateral Agent

  	
  8

  
	
  Canadian Dollars

  	
  8

  
	
  Canadian Licenses

  	
  8

  
	
  Canadian Pension Plans

  	
  8

  
	
  Canadian Subsidiary

  	
  8

  
	
  Capital Expenditures

  	
  8

  

 

vi

 

	
  Capital Lease Obligations

  	
  8

  
	
  Cash Dividends

  	
  8

  
	
  Cash Officer

  	
  8

  
	
  Cdn.$

  	
  8

  
	
  Change of Control

  	
  8

  
	
  Closing Date

  	
  9

  
	
  Closing Date Mortgage

  	
  73

  
	
  Closing Date Mortgage Policy

  	
  73

  
	
  Closing Date Mortgaged Property

  	
  73

  
	
  Closing Date Mortgages

  	
  73

  
	
  Code

  	
  9

  
	
  Collateral

  	
  9

  
	
  Collection Account

  	
  9

  
	
  Commitment

  	
  10

  
	
  Commitment Fee

  	
  46

  
	
  Commitment Increase Agreement

  	
  10

  
	
  Commitment Percentage

  	
  10

  
	
  Compliance Certificate

  	
  10

  
	
  Concentration Limit

  	
  10

  
	
  Consequential Loss

  	
  10

  
	
  Consolidated

  	
  11

  
	
  Contingent Obligation

  	
  11

  
	
  Contribution Agreement

  	
  11

  
	
  Controlled Account

  	
  11

  
	
  controlled foreign corporation

  	
  133

  
	
  Copyrights

  	
  24

  
	
  Credit Parties

  	
  11

  
	
  Current Sum

  	
  11

  
	
  Default

  	
  16

  
	
  Default Rate

  	
  11

  
	
  Defaulting Lender

  	
  12

  
	
  Designated Timber Agent

  	
  137

  
	
  Disbursement/Pass-Through Account

  	
  113

  
	
  Discontinued Operations

  	
  12

  
	
  Disposition

  	
  12

  
	
  Dollar

  	
  12

  
	
  dollars

  	
  42

  
	
  Domestic Lending Office

  	
  12

  
	
  Domestic Subsidiary

  	
  12

  
	
  Dominion Event

  	
  95

  
	
  Dominion Termination Event

  	
  95

  
	
  EBITDA

  	
  13

  
	
  Eligible Assignee

  	
  13

  
	
  Eligible Equipment

  	
  13

  
	
  Eligible Inventory

  	
  14

  
	
  Eligible Real Estate

  	
  14

  

 

vii

 

	
  Eligible Receivables

  	
  14

  
	
  Environmental Claim

  	
  15

  
	
  Environmental Law

  	
  15

  
	
  Environmental Liabilities

  	
  15

  
	
  Environmental Permit

  	
  16

  
	
  Equipment

  	
  16

  
	
  Equipment Component

  	
  16

  
	
  ERISA

  	
  16

  
	
  ERISA Affiliate

  	
  16

  
	
  Event of Default

  	
  16

  
	
  Excess Interest Amount

  	
  16

  
	
  Excluded Foreign Subsidiary

  	
  16

  
	
  Existing Credit Agreement

  	
  1

  
	
  Existing Indebtedness

  	
  1

  
	
  Existing Lenders

  	
  1

  
	
  Existing Letters of Credit

  	
  16

  
	
  Extended Facility Letter of Credit

  	
  62

  
	
  Federal Funds Effective Rate

  	
  17

  
	
  Financial Officer

  	
  17

  
	
  FinCo

  	
  17

  
	
  Fixed Charge Coverage Ratio

  	
  17

  
	
  Flood Hazard Property

  	
  18

  
	
  Foreign Lender

  	
  18

  
	
  GAAP

  	
  18

  
	
  Governmental Authority

  	
  18

  
	
  Grantor

  	
  18

  
	
  guarantor

  	
  11

  
	
  Guarantors

  	
  18

  
	
  Guaranty

  	
  18

  
	
  Hazardous Substance

  	
  19

  
	
  Hedging Obligation Amount

  	
  19

  
	
  Hedging Obligations

  	
  19

  
	
  Hedging Obligations Aggregate Amount

  	
  19

  
	
  Highest Lawful Rate

  	
  19

  
	
  Indebtedness

  	
  19

  
	
  Indemnifiable Tax

  	
  131

  
	
  Indenture Cap

  	
  20

  
	
  Ineligible Inventory

  	
  20

  
	
  Ineligible Receivables

  	
  22

  
	
  Initial Pledged Inter-Company Loan

  	
  24

  
	
  Intellectual Property

  	
  24

  
	
  Intellectual Property Security Agreements

  	
  84

  
	
  interest

  	
  122

  
	
  Interest Expense

  	
  25

  
	
  Interest Option

  	
  52

  
	
  Interest Options

  	
  52

  

 

viii

 

	
  Interest Payment Dates

  	
  25

  
	
  Interest Period

  	
  25

  
	
  Inventory

  	
  25

  
	
  Investment

  	
  26

  
	
  IRS

  	
  26

  
	
  Issuing Bank

  	
  26

  
	
  ITA

  	
  26

  
	
  Joinder Agreement

  	
  26

  
	
  JPMorgan

  	
  1

  
	
  Judgment Currency

  	
  140

  
	
  Kimberly-Clark

  	
  26

  
	
  LC Collateral Account

  	
  62

  
	
  Leasehold Property

  	
  26

  
	
  Legal Requirement

  	
  26

  
	
  Lender

  	
  1

  
	
  Lender or Lenders

  	
  26

  
	
  Lender Party

  	
  26

  
	
  Lenders

  	
  1

  
	
  Letter of Credit Advances

  	
  27

  
	
  Letter of Credit Exposure Amount

  	
  27

  
	
  Letters of Credit

  	
  26

  
	
  LIBOR Borrowing

  	
  27

  
	
  LIBOR Lending Office

  	
  27

  
	
  LIBOR Rate

  	
  27

  
	
  Lien

  	
  27

  
	
  Loan Documents

  	
  28

  
	
  Loans

  	
  28

  
	
  Material Adverse Effect

  	
  28

  
	
  Material Lease

  	
  28

  
	
  Material Leasehold Property

  	
  28

  
	
  Mill Properties

  	
  28

  
	
  Monthly Unaudited Financial Statements

  	
  28

  
	
  Mortgage

  	
  29

  
	
  Mortgaged Property

  	
  29

  
	
  Mortgages

  	
  29

  
	
  Neenah Germany

  	
  29

  
	
  Net Income

  	
  29

  
	
  Net Recovery Value Percentage

  	
  30

  
	
  New Lender

  	
  68

  
	
  New Lender Agreement

  	
  30

  
	
  Non-Reporting Lender Party

  	
  6

  
	
  Notes

  	
  30

  
	
  Notice of Default

  	
  119

  
	
  Nova Scotia Woodlands

  	
  30

  
	
  NP International

  	
  30

  
	
  NP International HoldCo

  	
  30

  

 

ix

 

	
  Obligation Currency

  	
  140

  
	
  Obligations

  	
  30

  
	
  Obligees

  	
  137

  
	
  Offshore Entities

  	
  31

  
	
  Organizational Documents

  	
  31

  
	
  Original Closing Date

  	
  1

  
	
  Other Tax

  	
  131

  
	
  Parent

  	
  1

  
	
  Parties

  	
  31

  
	
  Patents

  	
  24

  
	
  PBGC

  	
  31

  
	
  Perfection Certificate

  	
  32

  
	
  Permitted Affiliate Transactions

  	
  32

  
	
  Permitted Investment Securities

  	
  32

  
	
  Permitted Overadvances

  	
  46

  
	
  Person

  	
  33

  
	
  Plan

  	
  33

  
	
  Pledged Cash

  	
  33

  
	
  Pledged Inter-Company Loan

  	
  33

  
	
  Pledged Inter-Company Note

  	
  33

  
	
  PPSA (Nova Scotia)

  	
  33

  
	
  primary obligations

  	
  11

  
	
  primary obligor

  	
  11

  
	
  Prime Rate

  	
  33

  
	
  Principal Office

  	
  34

  
	
  Prior Term Loan Agreement

  	
  34

  
	
  Prohibited Transaction

  	
  34

  
	
  Proper Form

  	
  34

  
	
  Property

  	
  34

  
	
  PUHCA

  	
  80

  
	
  purpose credit

  	
  92

  
	
  Quarterly Equipment Component Amortization Amount

  	
  34

  
	
  Quarterly Real Estate Component Amortization Amount

  	
  34

  
	
  Quarterly Unaudited Financial Statements

  	
  34

  
	
  Rate Selection Date

  	
  34

  
	
  Rate Selection Notice

  	
  52

  
	
  Reaffirmation Agreement

  	
  35

  
	
  Real Estate Component

  	
  35

  
	
  Real Property Asset

  	
  35

  
	
  Receivables

  	
  35

  
	
  Refinancing Indebtedness

  	
  35

  
	
  Reg U

  	
  92

  
	
  Register

  	
  128

  
	
  Regulation D

  	
  36

  
	
  Regulatory Change

  	
  36

  
	
  Related Obligations

  	
  137

  

 

x

 

	
  Reportable Event

  	
  36

  
	
  Request for Extension of Credit

  	
  36

  
	
  Required Lenders

  	
  36

  
	
  Requirements of Environmental Law

  	
  36

  
	
  Reserves

  	
  36

  
	
  Responsible Officer

  	
  36

  
	
  Revolving Commitment

  	
  36

  
	
  Revolving Commitment Increase Notice

  	
  67

  
	
  Revolving Credit Alternate Base Rate Borrowing

  	
  37

  
	
  Revolving Credit LIBOR Borrowing

  	
  37

  
	
  Revolving Credit Notes

  	
  37

  
	
  Revolving Exposure

  	
  37

  
	
  Revolving Loans

  	
  37

  
	
  Scheduled Principal Payments

  	
  37

  
	
  Security Agreements

  	
  37

  
	
  Security Documents

  	
  38

  
	
  Senior Note Documents

  	
  38

  
	
  Senior Note Indenture

  	
  38

  
	
  Senior Notes

  	
  38

  
	
  Settlement

  	
  64

  
	
  Settlement Date

  	
  64

  
	
  Special Cash Collateral Account

  	
  39

  
	
  Standby Letters of Credit

  	
  39

  
	
  Statutory Reserves

  	
  39

  
	
  Stock

  	
  39

  
	
  Subordinated Indebtedness

  	
  39

  
	
  Subsidiary

  	
  39

  
	
  Swingline Exposure

  	
  39

  
	
  Swingline Lender

  	
  40

  
	
  Swingline Loan

  	
  62

  
	
  Swingline Loans

  	
  40

  
	
  Swingline Note

  	
  40

  
	
  Synthetic Lease

  	
  40

  
	
  Tax

  	
  131

  
	
  Term Lenders

  	
  40

  
	
  Term Loan Alternate Base Rate Borrowing

  	
  40

  
	
  Term Loan Commitment

  	
  40

  
	
  Term Loans

  	
  40

  
	
  Term Notes

  	
  40

  
	
  Termination Date

  	
  40

  
	
  Timberland Properties

  	
  41

  
	
  Title Company

  	
  41

  
	
  Total Commitment

  	
  41

  
	
  Total Revolving Commitment

  	
  41

  
	
  Trade Letters of Credit

  	
  41

  
	
  Trademarks

  	
  24

  

 

xi

 

	
  Tri-Party Agreements

  	
  41

  
	
  UCC

  	
  41

  
	
  Unpledged Inter-Company Loan

  	
  41

  
	
  Unused Commitment

  	
  41

  

 

xii

 

AMENDED AND RESTATED CREDIT
AGREEMENT

 

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

 

W  I  T
N  E  S  S  E  T  H:

 

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

 

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

 

WHEREAS, after giving effect to the amendment and restatement
of the Existing Credit Agreement pursuant to the terms hereof, the Commitment
Percentage of each Lender hereunder will be as set forth on Schedule 1.1A
hereto; and

 

NOW, THEREFORE, in consideration of the premises, the
representations, warranties, covenants and agreements contained herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and subject to the satisfaction of each condition
precedent contained in Section 4.2 hereof, the Existing Credit
Agreement shall be amended and restated as of the Closing Date in the form of
this Agreement.  It is the intention of
the Borrowers, Guarantors, the Agent, the Canadian Collateral Agent and
Lenders, and such parties hereby agree, that this Agreement supersedes and
replaces the Existing Credit Agreement in its entirety, and that (a) such
amendment and restatement shall operate to renew, amend and modify certain of
the rights and obligations of the parties under the Existing Credit Agreement
as provided herein, but shall not act as a novation thereof, and (b) the
Liens securing the “Obligations” under and as defined in the Existing Credit
Agreement shall not be extinguished, but shall be carried forward and shall
secure such obligations and Indebtedness as renewed, amended, restated and
modified hereby.  The parties hereto
further agree as follows:

 

1

 

1.             Definitions

 

1.1           Certain Defined
Terms.  Unless a particular word or
phrase is defined therein or the context otherwise requires, capitalized words
and phrases used in the other Loan Documents have the meanings provided
below.  As used in this Agreement, the
following terms shall have the following meanings:

 

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

 

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

 

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

 

“Additional
Senior Indenture” shall mean a trust indenture between the
Parent and a financial institution serving as trustee thereunder, having
covenants (but not necessarily economic terms) substantially consistent with
those in the Senior Note Indenture (and if relating to senior subordinated
Additional Senior Notes, having subordination provisions customary for similar
financings and satisfactory to the Agent and its counsel).

 

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

 

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

 

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

 

“Affiliate” of any Person shall mean any other Person which
controls or is controlled by or under common control with such Person.  For purposes of this definition, “control”
(including “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person through the ownership of
securities or by contract.  Without
limiting the generality of the foregoing, control of the right to vote of ten
percent (10%) or more of all voting securities of a Person or beneficial
ownership of ten percent (10%) of the outstanding equity interests in such

 

2

 

Person shall be deemed to be control for purposes of
compliance with the provisions of Section 7.6 hereof.  The Credit Parties and Kimberly-Clark shall
not be deemed to be under common control for purposes hereof solely due to the
fact that Parent and Kimberly-Clark have common shareholders.

 

“Agent” shall have the meaning specified in the preamble to
this Agreement.

 

“Alternate Base Rate” shall mean, for any day, a rate per
annum (rounded upwards to the nearest 1/16 of 1%) equal to the sum of (a) the
greatest of (i) the Prime Rate (computed on the basis of the actual number
of days elapsed over a 360-day year) in effect on such day, (ii) the
Federal Funds Effective Rate (computed on the basis of the actual number of
days elapsed over a 360-day year) in effect for such day plus 1⁄2 of 1%,
and (iii) the Adjusted LIBOR Rate (determined without regard to clause (b) in
the definition thereof) for a one month Interest Period on such day (or if such
day is not a Business Day, the immediately preceding Business Day) plus
2.50%, and (b) the Applicable Margin. 
For purposes of this Agreement, any change in the Alternate Base Rate
due to a change in the Prime Rate, Federal Funds Effective Rate or the Adjusted
LIBOR Rate shall be effective on the effective date of such change in the Prime
Rate, Federal Funds Effective Rate or the Adjusted LIBOR Rate,
respectively.  If for any reason the
Agent shall have determined (which determination shall be conclusive and
binding, absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate or the Adjusted LIBOR Rate for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (a)(i) and/or (a)(iii), as applicable, until the
circumstances giving rise to such inability no longer exist.

 

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

 

“Annual Audited Financial Statements” shall mean (a) the
annual financial statements of the Parent and its Subsidiaries, including all
notes thereto, which statements shall include, on a Consolidated basis, a
balance sheet as of the end of such fiscal year and a statement of operations,
a retained earnings statement and a statement of cash flows for such fiscal
year, all setting forth in comparative form the corresponding figures from the
previous fiscal year and accompanied by a report and opinion of independent
certified public accountants with Deloitte & Touche LLP or an
accounting firm of national standing reasonably acceptable to the Agent, which
report shall not contain any qualification (and be without comment as to the
accountants’ opinion whether such Person is a “going concern” or can continue
to be a “going concern”), except that such report may contain qualification
with respect to new accounting principles mandated by the Financial Accounting
Standards Board (or its successor organization), and shall state that such
financial statements, in the opinion of such accountants, present fairly, in
all material respects, the financial position of such Person as of the date
thereof and the results of its operations and cash flows for the period covered
thereby in conformity with GAAP and (b) annual consolidating financial
statements of the Credit Parties and their Subsidiaries containing a balance
sheet as of the end of such fiscal year and a statement of operations for such
fiscal year prepared in reasonable detail. 
Such statements shall be accompanied by a certificate of such
accountants that in making the appropriate audit and/or investigation in
connection with such report and opinion, such accountants did not become aware
of any Default or Event of Default

 

3

 

with respect to a breach of Section 7.12, or if
in the opinion of such accountant any such Default or Event of Default exists
with respect to a breach of Section 7.12, a description of the
nature and status thereof.

 

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

 

provided, that the cash
Interest Expense paid on the Senior Notes shall be $4,148,437.50 during the
first fiscal quarter ending December 31, 2009 (regardless of when such
expense is actually paid); provided, further, that the Borrowers shall
provide the Agent with the calculation of the Annualized Basis in form and
substance reasonably satisfactory to the Agent.

 

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

 

“Applicable Lending Office” shall mean, with respect to
each Lender, such Lender’s Domestic Lending Office in the case of an Alternate
Base Rate Borrowing and such Lender’s LIBOR Lending Office in the case of a
LIBOR Borrowing.

 

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

 

4

 

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

 

	
  Availability

  	
   

  	
  Per Annum Percentage

  for Revolving Credit

  LIBOR Borrowings

  	
   

  	
  Per Annum Percentage

  for Revolving Credit

  Alternate Base Rate

  Borrowings

  	
   

  
	
  Category 1:

  Less than $25,000,000

  	
   

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  
	
  Category 2:

  Less than $70,000,000, but greater than or equal to $25,000,000

  	
   

  	
  3.75

  	
  %

  	
  2.25

  	
  %

  
	
  Category 3:

  Greater than or equal to $70,000,000

  	
   

  	
  3.50

  	
  %

  	
  2.00

  	
  %

  

 

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

 

“Approved Fund” shall mean any Person (other than a natural
person) that is engaged in making, purchasing, holding or investing in bank
loans and similar extensions of credit in the ordinary course of its business
and that is administered or managed by (a) a Lender, (b) an Affiliate
of a Lender or (c) an entity or an Affiliate of an entity that administers
or manages a Lender.

 

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

 

“Availability” shall mean at any time (a) the lesser
at such time of (i) the Total Revolving Commitment (as such amount may
have been reduced or increased in accordance with the provisions of this
Agreement) and (ii) (A) the Borrowing Base as of such time, less
(B) all applicable Reserves, less (b) the sum of the
following:

 

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

 

(ii)           the
aggregate amount of due and payable interest outstanding under the Loans at
such time; and

 

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

 

5

 

“Bank Product Amount” shall mean, with respect to any Bank
Product at any time, the applicable Credit Party’s or Subsidiary’s net payment
obligation with respect to such Bank Product as of the end of the preceding
calendar month (or other period as provided herein), as determined utilizing
the methodology agreed to with respect to such Bank Product between the
applicable Lender Party and Credit Party and reported to the Agent pursuant to
the terms hereof.  In the event that no
Bank Product Amount is reported as provided herein for any Bank Product for any
period, the Agent may use the most recently reported Bank Product Amount for
such Bank Product, as adjusted in the Agent’s reasonable credit judgment.

 

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

 

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

 

(b)           any
deposit, lockbox or other cash management arrangement; or

 

(c)           any other
commercial bank product, service or agreement pursuant to which a Credit Party
or Subsidiary of a Credit Party may be indebted or owe obligations to a Lender
or one of its Affiliates, including, without limitation, credit cards for
commercial customers (including, without limitation, “commercial credit cards”,
E-Payables and purchasing cards), stored value cards and treasury management
services (including, without limitation, controlled disbursement, automated
clearinghouse transactions, returned items, overdrafts and interstate
depository network services);

 

provided  that for any of the foregoing to be included as a “Bank
Product” hereunder:  (a) except in
the case of Bank Products provided by or owing to JPMorgan Chase Bank, N.A. or
any of its Affiliates, the applicable Lender Party and Borrowers’ Agent must
have provided the Agent written notice of: 
(i) the existence of such Bank Product and (ii) the
methodology agreed upon by the Lender Party and the applicable Credit Party or
Subsidiary to determine, from time to time, the Bank Product Amount and, with
respect to Bank Products constituting Hedging Obligations, the Hedging
Obligation Amount, (b) the applicable Credit Party must otherwise be
permitted to enter into such arrangement under this Agreement or must not be
restricted from entering into such arrangement under this Agreement (including
in each case Section 7.1 hereof), and (c) the applicable
Lender Party must remain a Lender Party; provided  further, that
each Lender Party other than JPMorgan Chase Bank, N.A. and its Affiliates shall
notify the Agent in writing, as soon as available and in any event within
fifteen (15) days after the end of each calendar month (or at more
frequent intervals, and with such reporting dates, as the Agent may require in
its discretion), of the Bank Product Amount and, with respect to Bank Products
constituting Hedging Obligations, the Hedging Obligation Amount, in respect of
its Bank Products as of the end of such calendar month (or other interval), and
any Lender Party that fails to make such notification by the last day of the
month in which due (or, with respect to any interval more frequent than
monthly, within 10 Business Days of the date when due) and any Affiliate
thereof (each, a “Non-Reporting Lender Party”)
shall be subject to the provisions of Section 2.7(d) with
respect to Bank Products owed to Non-Reporting Lender Parties.

 

6

 

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

 

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

 

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

 

(a)           85% of Eligible
Receivables; plus

 

(b)           the lesser
of (i) 75% of the value of Eligible Inventory (valued at the lower of cost
or fair market value), and (ii) 85% of the applicable Net Recovery Value
Percentage of Eligible Inventory; plus

 

(c)           the
Equipment Component; plus

 

(d)           the Real
Estate Component; plus

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

 

“Canadian Benefit Plans” shall mean all material employee
benefit plans of any nature or kind whatsoever that are not Canadian Pension
Plans and are maintained or contributed to by any Credit Party having employees
in Canada.

 

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

 

“Canadian Dollars” and the sign “Cdn.$” shall mean lawful currency of
Canada.

 

“Canadian Licenses” shall have the meaning specified for
such term in Section 5.10.

 

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

 

“Canadian Subsidiary” shall mean any Subsidiary of a Credit
Party that is created or organized under the laws of Canada or a province or
territory of Canada.

 

“Capital Expenditures” shall mean, with respect to any
Person for any period, all capital expenditures of such Person, on a
Consolidated basis, for such period (including without limitation, the
aggregate amount of Capital Lease Obligations incurred during such period which
are required to be capitalized and reported as a liability on the consolidated
balance sheet of such Person), determined in accordance with GAAP, consistently
applied.

 

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

 

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

 

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

 

“Change of Control” shall mean (a) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules of
the Securities and Exchange Commission thereunder as in effect on the date of
this Agreement), of Stock representing more than 30% of the aggregate ordinary voting
power represented by the issued and outstanding Stock of the Parent; (b) occupation
of a

 

8

 

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

 

“Closing Date” shall mean the date on which the conditions
specified in Section 4.2 are satisfied (or waived in accordance
with Section 10.11).

 

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

 

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

 

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

 

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

 

“Collateral” shall mean all collateral and security as
described in the Security Documents.

 

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

 

9

 

“Commitment” shall mean, as to any Lender, the obligation
of such Lender subject to the terms and conditions of this Agreement to make
Term Loans in a principal amount not exceeding such Lender’s Term Loan
Commitment, and to make Revolving Loans and incur liability for the Letter of
Credit Exposure Amount and the Swingline Loans in an aggregate principal amount
at any one time outstanding up to, but not exceeding, the amount set forth as
such Lender’s Revolving Commitment.  The
initial amount of each Lender’s Commitment is set forth on Schedule 1.1A
attached hereto, as each may be adjusted from time to time pursuant to other
provisions of this Agreement, and Commitments shall mean all such Commitments
of the Lenders, as so adjusted.

 

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

 

“Commitment
Increase Agreement” shall mean a Commitment Increase Agreement
entered into by a Revolving Lender in accordance with Section 2.15(c) and
accepted by the Agent in the form of Exhibit Q attached hereto, or
any other form approved by the Agent.

 

“Commitment Percentage” shall mean, with respect to any
Lender, (a) with respect to Revolving Loans, Letter of Credit Exposure
Amount or Swingline Exposure, (i) prior to the termination of the Total
Revolving Commitment, the ratio, expressed as a percentage, of such Lender’s
Revolving Commitment to the Total Revolving Commitment, and (ii) after the
termination of the Total Revolving Commitment, the ratio, expressed as a
percentage, of the amount of such Revolving Lender’s outstanding Revolving
Loans and its portion of the Letter of Credit Exposure Amount and the Swingline
Exposure to the aggregate amount of all outstanding Revolving Loans and the
total Letter of Credit Exposure Amount and the Swingline Exposure, and (b) with
respect to the Term Loans, a percentage equal to a fraction of the numerator of
which is such Term Lender’s outstanding principal amount of the Term Loans and
the denominator of which is the aggregate outstanding amount of the Term Loans
of all Term Lenders; provided  that when a Defaulting Lender shall
exist, any such Defaulting Lender’s Commitment shall be disregarded in the
calculation in both clauses (a) and (b) hereof, subject to Section 10.11
hereof.

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

“Copyrights” shall have the meaning specified for such term
in the definition of “Intellectual Property.”

 

“Credit Parties” shall mean the Borrowers and the
Guarantors.

 

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

 

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

 

11

 

the applicable principal amount shall only be calculated with
reference to the applicable Adjusted LIBOR Rate until the Interest Period
applicable thereto expires, and upon the expiration of such applicable Interest
Period, the Default Rate for such applicable principal amount shall be computed
on the basis of the Alternate Base Rate for such day plus two percent
per annum), and (b) with respect to accrued interest, fees and other
Obligations (other than past due principal outstanding under any Note), the sum
of the Alternate Base Rate for such day plus two percent per annum.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

“Eligible Assignee” shall mean (a) a Lender, (b) an
Affiliate of a Lender, (c) an Approved Fund, or (d) any other
commercial lender, finance company, insurance company, financial institution or
fund reasonably acceptable to the Agent and the Borrowers’ Agent; provided,
however, that if an Event of Default has occurred which has not
been waived or cured, such approval by the Borrowers’ Agent shall not be
required.

 

“Eligible Equipment” shall mean Equipment of a Credit Party
which meets all of the following specifications; provided  that
such specifications may be revised from time to time by the Agent to account
for events, conditions, contingencies and risks that the Agent becomes actually
aware of after the Closing Date that, in the Agent’s reasonable credit
judgment, could adversely affect any Equipment or the Agent’s (or the Canadian
Collateral Agent’s, as applicable) interest therein:

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

“Eligible Inventory” shall mean all raw materials, rolled
and uncut or sheeted paper, or finished goods Inventory of the Credit Parties
which complies with all of the following requirements:  (a) such Inventory is owned by and
recorded on the books and records of the applicable Credit Party in the
ordinary course of business; (b) such Inventory is valued in accordance
with GAAP at the lower of fair market value or cost; and (c) such
Inventory does not otherwise constitute Ineligible Inventory.  Standards of eligibility and Reserves for
Eligible Inventory may be fixed and revised from time to time by the Agent in
its reasonable credit judgment based on events, conditions or other
circumstances that the Agent becomes actually aware of after the Original
Closing Date that, in the Agent’s reasonable credit judgment, adversely affect
or could reasonably be expected to adversely affect Eligible Inventory.

 

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

 

(a)           one of the
Credit Parties is the record owner of and has good fee title to such Real
Property Asset;

 

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

 

(c)           such Real
Property Asset is not subject to any agreement or condition which could
restrict or otherwise adversely effect the Agent’s (or the Canadian Collateral
Agent, as applicable) ability to sell or otherwise dispose of such Real
Property Asset; and

 

(d)           such
parcel of real property shall comply with all the requirements for a Closing
Date Mortgaged Property set forth in Section 4.2(s).

 

“Eligible Receivables” shall mean, as at any date of
determination thereof, all Receivables of the Credit Parties which comply with
all of the following requirements:  (a) all
payments due on the Receivable have been billed and invoiced in a timely
fashion and in the normal course of business; (b) no payment is
outstanding on the Receivable for more than one hundred (100) days after
the date of invoice (except for Receivables fully insured or backed by a letter
of credit in all respects acceptable to the Agent in its reasonable discretion)
or more than

 

14

 

sixty (60) days past due; and (c) the Receivables
do not otherwise constitute Ineligible Receivables.  Standards of eligibility and Reserves for
Eligible Receivables may be fixed and revised from time to time by the Agent in
its reasonable credit judgment based on events, conditions or other
circumstances that the Agent becomes actually aware of after the Original
Closing Date that, in the Agent’s reasonable credit judgment, adversely affect
or could reasonably be expected to adversely affect the Eligible
Receivables.  Additionally, in
calculating Eligible Receivables, each of the following shall be excluded (to
the extent the same are otherwise included in Eligible Receivables):  (i) unpaid sales, excise or similar
taxes owed by any of the Credit Parties (to the extent the same are included in
Receivables); and (ii) returns, discounts, claims, credits and allowances
of any nature asserted or taken by account debtors of any of the Credit
Parties.

 

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

 

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

 

“Environmental Liabilities” shall mean all liabilities
arising from any Environmental Claim, Environmental Permit or Requirements of
Environmental Law, at law or in equity, and whether based on negligence, strict
liability or otherwise, including: 
remedial, removal, response, abatement, restoration (including natural
resources), investigative, or monitoring liabilities, personal injury and
damage to property, natural resources or injuries to persons, and any other
related costs, expenses, losses, damages, penalties, fines, liabilities and
obligations, and all costs and expenses necessary to cause the issuance,
reissuance or renewal of any Environmental Permit reasonably necessary for the
conduct of any material aspect of the

 

15

 

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

 

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

 

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

 

“Equipment
Component” shall have the meaning specified for such term on Schedule
1.1C.

 

“ERISA” shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and all rules, regulations, rulings
and interpretations adopted by the Internal Revenue Service or the Department
of Labor thereunder.

 

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

 

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

 

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

 

“Excluded
Foreign Subsidiary” has the meaning assigned to such term in Section 6.10.

 

“Existing
Credit Agreement” shall have the meaning specified in the
recitals of this Agreement.

 

“Existing
Indebtedness” shall have the meaning specified in the recitals
of this Agreement.

 

“Existing
Lenders” shall have the meaning specified in the recitals of
this Agreement.

 

“Existing
Letters of Credit” shall mean the letters of credit issued under
the Existing Credit Agreement that are outstanding on the Closing Date.

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

Equipment Component Amortization Amount and the Quarterly
Real Estate Component Amortization Amount shall be calculated on a pro forma
basis as if such amortization commenced on April 30, 2009 and continued at
the end of each third calendar month thereafter, and (4) for the first
fiscal quarter ended following the Closing Date (the first such fiscal quarter
being the fiscal quarter in which the Closing Date occurs), the Fixed Charge
Coverage Ratio shall be determined on an Annualized Basis.

 

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

 

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

 

“GAAP” shall mean, as to a particular Person, those
principles and practices (a) which are recognized as such by the Financial
Accounting Standards Board or successor organization, and (b) which are
consistently applied (or with respect to which any change in principles and
practice mandated by the Financial Accounting Standards Board or successor
organization are disclosed in writing to the Agent) for all periods after the
date of this Agreement in a manner consistent with the manner in which such
principles and practices were applied to the most recent audited financial
statements of the relevant Person furnished to the Agent and the Lenders prior
to the Closing Date (or with respect to which any change in principles and
practice mandated by the Financial Accounting Standards Board or successor
organization are disclosed in writing to the Agent).

 

“Governmental Authority” shall mean the United States of
America, Canada, any state of the United States or province of Canada, and any
political subdivision of any of the foregoing, any foreign governmental or
supranational authority, and any agency, instrumentality, department,
commission, board, bureau, central bank, authority, court or other tribunal, in
each case whether executive, legislative, judicial, regulatory or
administrative, having jurisdiction over the Agent, the Canadian Collateral
Agent, any of the Lenders, any Credit Party, any Subsidiary of any Credit
Party, or their respective Property.

 

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

 

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

 

“Guaranty” shall mean each and every guaranty of the
Obligations from time to time executed and delivered to the Canadian Collateral
Agent by any Guarantor, as amended, supplemented, modified, joined in pursuant
to a Joinder Agreement and restated from time to

 

18

 

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

 

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

 

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

 

“Hedging Obligation Amount”
shall mean, with respect to any Hedging Obligation, the “derivative risk
equivalent” (or equivalent figure) for such Hedging Obligation as of the end of
the preceding calendar month (or other period as provided herein), being a
figure calculated to provide an exposure measure for derivative obligations
comparable with that of loans, in each case calculated based upon a methodology
reported to the Agent in accordance with the terms hereof and acceptable to the
Agent in its reasonable credit judgment. 
In the event that no Hedging Obligation Amount is reported as provided
herein for any Hedging Obligation for any period, the Agent may use the most
recently reported Hedging Obligation Amount for such Hedging Obligation, as
adjusted in the Agent’s reasonable credit judgment.

 

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

 

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

 

“Indebtedness” shall mean, as to any Person, without
duplication:  (a) all indebtedness
of such Person for borrowed money; (b) any other indebtedness which is
evidenced by a bond,

 

19

 

debenture or similar instrument or upon which interest
charges are traditionally paid; (c) all Capital Lease Obligations of such
Person; (d) all obligations of such Person for the deferred purchase price
of Property or services (except current trade accounts payable arising in the
ordinary course of business and current accrued expenses, not the result of
borrowing, arising in the ordinary course of business); (e) all
reimbursement obligations of such Person in respect of outstanding letters of
credit, acceptances and similar obligations created for the account of such
Person; (f) all indebtedness, liabilities, and obligations secured by any
Lien on any Property owned by such Person even though such Person has not
assumed or has not otherwise become liable for the payment of any such
indebtedness, liabilities or obligations secured by such Lien, but only to the
extent of the value of the Property subject to such Lien (or, if less, the
amount of the underlying indebtedness, liability or obligation); (g) net
liabilities of such Person in respect of Hedging Obligations (calculated on a
basis satisfactory to the Agent and in accordance with accepted practice); (h) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person; (i) all
obligations of such Person to pay rent or other amounts under any Synthetic
Lease; (j) all Indebtedness of another entity to the extent such Person is
liable therefor (including any partnership in which such Person is a general
partner and including any unlimited liability corporation) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor; and (k) all
Contingent Obligations of such Person with respect to Indebtedness of others; provided,
that such term shall not mean or include (i) any Indebtedness in
respect of which monies sufficient to pay and discharge the same in full
(either on the expressed date of maturity thereof or on such earlier date as
such Indebtedness may be duly called for redemption and payment) shall be
deposited with a depository, agency or trustee acceptable to the Agent in trust
for the payment thereof, or (ii) any operating leases entered into in the
ordinary course of business (to the extent such operating leases do not
constitute Capital Lease Obligations or Synthetic Leases).

 

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

 

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

 

“Ineligible Inventory” shall mean, as at any date of
determination thereof, any Inventory of any Credit Party which does not comply
with all of the following requirements:

 

(a)           such
Inventory is Collateral hereunder and is subject to a first priority perfected
Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable)
for the ratable

 

20

 

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

 

(b)           such
Inventory meets all applicable laws and standards imposed by any Governmental
Authority having regulatory authority over it;

 

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

 

(d)           such
Inventory is not “slow moving”;

 

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

 

(f)            such Inventory
must not be in transit and must be housed or stored in the United States or
Canada at either (i) a real Property location either owned or leased by a
Credit Party; so long as such leased facility is covered by a landlord’s waiver
or subordination agreement received by the Agent (or the Canadian Collateral
Agent, as applicable) from the owner of such leased facility pursuant to which
such owner waives or subordinates any Lien it may claim against such Inventory,
whether contractual or statutory, to the Lien in favor of the Agent (or the
Canadian Collateral Agent, as applicable) against such Inventory pursuant to a
written waiver or subordination and access agreement acceptable to the Agent
(or the Canadian Collateral Agent, as applicable) in all respects, or (ii) a
public warehouse facility utilized by a Credit Party, so long as such warehouse
facility is covered by a warehousemen’s waiver or subordination and access
agreement received by the Agent (or the Canadian Collateral Agent, as
applicable) from the operator of such warehouse facility pursuant to which such
operator waives or subordinates any Lien it may claim against such Inventory,
whether contractual or statutory, to the Lien in favor of the Agent (or the
Canadian Collateral Agent, as applicable) against such Inventory and
acknowledges that it holds and controls such Inventory for the benefit of the
Agent (or the Canadian Collateral Agent, as applicable) for purposes of
perfecting the Agent’s (or the Canadian Collateral Agent’s, as applicable) Lien
therein pursuant to a written waiver or subordination agreement reasonably
acceptable to the Agent (or the Canadian Collateral Agent, as applicable) in
all respects;

 

(g)           such
Inventory is not in the possession of or control of any bailee (other than a
warehouseman as described above) or any agent or processor for or customer of
any Credit Party or any of their Subsidiaries, unless such bailee, agent or
processor has executed and delivered to the Agent (or the Canadian Collateral
Agent, as applicable) an access/subordination agreement in form and substance
reasonably acceptable to the Agent (or the Canadian Collateral Agent, as
applicable) subordinating any Lien it may claim in such Inventory and
acknowledging that it holds and controls such Inventory for the benefit of the
Agent (or the Canadian Collateral Agent, as applicable) for purposes of
perfecting the Agent’s (or the Canadian Collateral Agent’s, as applicable) Lien
therein;

 

21

 

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

 

(i)            such
Inventory must not be on consignment;

 

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

 

(k)           such
Inventory does not constitute seedlings;

 

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

 

(m)          the Agent
has not deemed such Inventory ineligible because the Agent in its reasonable
credit judgment considers such Inventory to be unmarketable or the value
thereof to be impaired or its ability to realize such value to be insecure.

 

Notwithstanding anything to the
contrary contained in this Agreement or any other Loan Document, no Inventory
purchased or otherwise acquired through any acquisition or other investment
permitted hereunder after the Closing Date shall be included within the
Borrowing Base for purposes hereof unless and until the Agent shall have
conducted a field examination (which shall be conducted within a reasonable
time (in the Agent’s judgment) after Borrower’s request at the Borrowers’ cost
and expense) of the applicable books, records and operations for the assets or
Subsidiary so acquired in order to reasonably satisfy the Agent that the
Inventory so acquired generally satisfies the above-described standards of
eligibility.

 

“Ineligible Receivables” shall mean, as at any date of
determination thereof, any Receivables of any Credit Party which do not comply
with all of the following requirements:

 

(a)           the
Receivable has been created by the applicable Credit Party in the ordinary
course of business from a completed, outright and lawful sale of goods,
pursuant to which ownership has passed to the applicable account debtor on an
absolute sales basis, or from the rendering of services by or on behalf of the
applicable Credit Party and is deemed “earned” under the applicable service
contract or other agreement or arrangement between the applicable Credit Party
and the applicable account debtor;

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

(h)           the
applicable account debtor is not any Governmental Authority, unless such
account debtor is the United States of America or Canada (or any agency,
instrumentality, department or other political subdivision thereof) and there
has been compliance satisfactory to the Agent in all respects with the U.S. Federal
Assignment of Claims Act or, as applicable, the Canadian Financial
Administration Act or any applicable provincial legislation;

 

(i)            the
applicable account debtor is not an Affiliate of any Credit Party or any of
their Subsidiaries;

 

(j)            the
applicable account debtor must have its principal place of business located
within the United States or Canada, except for Receivables fully insured or
backed by a letter of credit in all respects acceptable to the Agent in its
reasonable discretion;

 

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

 

(l)            the
Receivable complies with all material Legal Requirements (including without
limitation, all usury laws, fair credit reporting and billing laws, fair debt
collection practices and rules, and regulations relating to truth in lending
and other similar matters);

 

(m)          the
Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the applicable account debtor enforceable in accordance
with the terms thereof;

 

(n)           the
Receivable is denominated in and provides for payment by the applicable account
debtor in U.S. dollars or Canadian dollars, except for Receivables fully
insured or

 

23

 

backed by a letter of credit denominated in U.S. dollars or
Canadian dollars and in all other respects acceptable to the Agent in its
reasonable discretion;

 

(o)           the
Receivable has not been and is not required to be charged or written off as
uncollectible in accordance with GAAP;

 

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

 

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

 

In addition to the forgoing, the
total amount of Receivables owing to the Credit Parties by an account debtor in
excess of such account debtor’s Concentration Limit of the total amount of Receivables
owing to the Credit Parties by all account debtors shall also constitute “Ineligible
Receivables” for purposes hereof, unless such Receivables exceeding such
account debtor’s Concentration Limit are fully backed or secured by a letter of
credit acceptable to the Agent in its reasonable discretion.  Notwithstanding anything to the contrary
contained in this Agreement or any other Loan Document, no Receivables
purchased or otherwise acquired through any acquisition or other investment
permitted hereunder after the Closing Date shall be deemed to constitute
Eligible Receivables for purposes hereof unless and until the Agent shall have
conducted a field examination (which shall be conducted within a reasonable
time (in the Agent’s judgment) after Borrower’s request at the Borrowers’ cost
and expense) of the applicable books, records and operations for the assets or
Subsidiary so acquired in order to satisfy the Agent that the Receivables so
acquired generally satisfy the above-described standards of eligibility.

 

“Initial Pledged Inter-Company Loan” shall mean that
certain loan advance in the amount of $135,000,000 made by NP International
HoldCo to FinCo, which loan advance to FinCo is evidenced by the Pledged
Inter-Company Note.

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

“Interest Period” shall mean the period commencing on the
date of the applicable LIBOR Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is one (1), two (2) or
three (3) months thereafter, as the Borrower’s Agent may elect in
accordance herewith; provided, however, that (a) if
an Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day, unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (b) no
Interest Period shall end later than the Termination Date, and (c) interest
shall accrue from and including the first day of an Interest Period to, but
excluding, the last day of such Interest Period.

 

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

 

25

 

or finishing of such goods, merchandise and such other
personal property, and all documents of title or other documents representing
any of them.

 

“Investment” shall mean the purchase or other acquisition
of any securities or Indebtedness of, or the making of any loan, advance,
extension of credit or capital contribution to (or the transfer of Property
having the effect of any of the foregoing), or the incurring of any Contingent
Obligation in respect of the Indebtedness of, any Person (in each case other
than accounts receivable arising in the ordinary course of business).

 

“IRS” shall mean the United States Internal Revenue
Service.

 

“Issuing
Bank” shall mean the Agent, in its capacity as the issuer of any
Letter of Credit pursuant to this Agreement. 
The terms “Agent” and “Issuing Bank” may be used interchangeably for
such purpose.

 

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

 

“Joinder Agreement” shall mean any agreement, in Proper
Form, executed by a Subsidiary of a Credit Party from time to time in accordance
with Section 6.10 hereof, pursuant to which such Subsidiary joins
in the execution and delivery of (a) this Agreement or a Guaranty, (b) the
Contribution Agreement, or (c) any other Loan Document.

 

“JPMorgan” shall mean JPMorgan Chase Bank, N.A., together
with its successors and assigns.

 

“Kimberly-Clark” shall mean Kimberly-Clark Corporation, a
Delaware corporation.

 

“LC
Collateral Account” shall have the meaning specified for such
term in Section 2.10(k).

 

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

 

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

 

“Lender or Lenders” shall have the meaning specified in the
preamble of this Agreement.  Unless the
context otherwise requires, the term “Lenders” shall include the Swingline
Lender.

 

“Lender Party” shall mean the Agent, the Canadian
Collateral Agent, any Lender, or any of their respective Affiliates or
branches.

 

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

 

26

 

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

 

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

 

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

 

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

 

“LIBOR Rate” shall mean, with respect to any LIBOR
Borrowing for any Interest Period, an interest rate per annum equal to the rate
appearing on Reuters Screen LIBOR01 Page (or, if no such page exists,
on any successor or substitute page providing rate quotations comparable
to those currently provided on such page of the Reuters Service, as
determined by the Agent from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 a.m., London time, two Business Days before the
commencement of such Interest Period as the composite offered rate for dollar
deposits approximately equal in principal amount to the Agent’s portion of such
LIBOR Borrowing and for a maturity equal to the applicable Interest
Period.  In the event that such rate is
not available at such time for any reason, then the “LIBOR Rate” with respect
to such LIBOR Borrowing for such Interest Period shall be the average interest
rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) at which
dollar deposits approximately equal in principal amount to the Agent’s portion
of such LIBOR Borrowing and for a maturity equal to the applicable Interest
Period are offered to the Agent in the London interbank market at approximately
11:00 a.m., London time, two Business Days before the commencement of such
Interest Period.

 

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

 

27

 

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

 

“Loan Documents” shall mean this Agreement, the Notes, the
Applications, the Security Documents, the Guaranties, the Contribution
Agreement, the Joinder Agreements, the Letters of Credit, all instruments,
certificates and agreements now or hereafter executed and delivered to the
Agent, the Canadian Collateral Agent and/or the Lenders in connection with or
pursuant to any of the foregoing (including without limitation, any fee letter
between the Agent, JPMorgan and/or any of its Affiliates and any Borrower
relating to the transactions contemplated by this Agreement), and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing.

 

“Loans” shall mean the Term Loans, the Revolving Loans and
the Swingline Loans.  Loan shall mean any
one of the Term Loans, Revolving Loans or the Swingline Loans.

 

“Material Adverse Effect” shall mean a material adverse
effect on (a) the business, assets, prospects, operations, financial or
other condition of the Credit Parties and their Subsidiaries taken as a whole, (b) the
ability of the Credit Parties, taken as a whole, to perform their obligations
under the Loan Documents, (c) the validity or enforceability of this
Agreement, any of the Notes or any other Loan Documents or the rights or
remedies of the Agent, the Canadian Collateral Agent or the Lenders hereunder
or thereunder, or (d) the validity or enforceability of the Agent’s Lien
(or the Canadian Collateral Agent’s Lien, as applicable) on any material
portion of the Collateral or the priority of such Lien.

 

“Material Lease” shall mean any lease agreement with
respect to a Material Leasehold Property.

 

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

 

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

 

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

 

28

 

The Monthly Unaudited Financial Statements for the Credit
Parties and their Subsidiaries shall be prepared on a Consolidated and
consolidating basis, the parties recognizing that such consolidating statements
will be prepared in accordance with GAAP only to the extent normal and
customary.

 

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

 

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

 

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

 

“Net Income” shall mean, with respect to any Person for any
period, net income of such Person for the applicable calculation period determined
in accordance with GAAP; provided, that there shall not be
included in such calculation of net income (without duplication) (a) any
extraordinary gains or losses (including in connection with the sale or
write-up of assets), (b) any nonrecurring gains or losses, (c) any
gains or losses from dispositions of property or assets, other than
dispositions of Inventory and Equipment in the ordinary course of business, and
the tax consequences thereof, (d) the net income or loss of any other
Person that is not a Subsidiary of such Person for whom net income is being
calculated (or is accounted for by such Person by the equity method of
accounting), (e) the net income (or loss) of any other Person acquired by,
or merged with, such Person for whom net income is being calculated or any of
its Subsidiaries for any period prior to the date of such acquisition, (f) the
net income of any Subsidiary of such Person for whom net income is being
calculated to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary of such net income is not at the time
permitted by operation of the terms of its charter, certificate of
incorporation or formation or other constituent document or any agreement or
instrument or Legal Requirement applicable to such Subsidiary, all as
determined in accordance with GAAP, (g) any non-cash non-recurring
impairment charges with respect to a writedown of the carrying amount of the
Consolidated assets of the Credit Parties acquired after the Closing Date
(either through direct asset purchase or as part of the acquisition of all or
substantially all of the Stock of another Person) based on the impairment of
such assets, pursuant to the provisions of Section 7.4(f) and
any benefits

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“NP
International HoldCo” shall mean Neenah Paper International
Holding Company, LLC, a Delaware limited liability company and a wholly owned
Subsidiary of the Parent.

 

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

 

30

 

the payment or performance of all other obligations,
liabilities and Indebtedness of the Credit Parties to the Agent, the Canadian
Collateral Agent and the Lenders hereunder, under the Notes, under the Letters
of Credit, under the Applications or under any one or more of the other Loan
Documents, including all fees, costs, expenses and indemnity obligations
hereunder and thereunder, and (b) all obligations and liabilities of the
Credit Parties and/or any of their Subsidiaries now or hereafter owing to
JPMorgan Chase Bank, N.A. or any other Lender Party under any Bank
Product.  The Obligations include
interest (including interest that accrues or that would accrue but for the
filing of a bankruptcy case by a Credit Party or any of its Subsidiaries, whether
or not such interest would be an allowable claim under any applicable
bankruptcy or other similar proceeding) and other obligations accruing or
arising after (a) commencement of any case under any bankruptcy or similar
laws by or against any Credit Party or any of their Subsidiaries (or that would
accrue or arise but for the commencement of any such case) or (b) the
personal liability of the Credit Parties or any of their Subsidiaries for the
Obligations shall be discharged or otherwise cease to exist by operation of law
or for any other reason.

 

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

 

“Offshore
Entities” shall mean FinCo, Neenah Germany, each direct or
indirect subsidiary of Neenah Germany and their respective successors and
assigns.

 

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

 

“Original
Closing Date” shall have the meaning specified in the recitals
of this Agreement.

 

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

 

“Parent” shall have the meaning specified in the preamble
to this Agreement.

 

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

 

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

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation.

 

31

 

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

 

“Permitted Affiliate Transactions” shall mean any of the
following:  (a) transactions between
Credit Parties; (b) transactions between Offshore Entities, (c) customary
directors’ fees, customary directors’ indemnifications and similar arrangements
for officers and directors of the Credit Parties and the Offshore Entities
entered into in the ordinary course of business, together with any payments
made under any such indemnification arrangements; provided, that
any of the foregoing owed to directors and officers of the Offshore Entities
are only payable and paid by the Offshore Entities; (d) customary and
reasonable loans, advances and reimbursements to officers, directors and
employees of the Credit Parties and Offshore Entities for travel,
entertainment, moving and other relocation expenses, in each case made in the
ordinary course of business provided, that any of the foregoing
owed to officers, directors and employees of the Offshore Entities are only
payable and paid by the Offshore Entities; (e) the incurrence of
intercompany Indebtedness permitted pursuant to Sections 7.1(f) and
7.1(n) hereof and Contingent Obligations permitted pursuant to Section 7.1(g) hereof,
(f) employment agreements and arrangements entered into with directors,
officers and employees of the Credit Parties or the Offshore Entitles in the
ordinary course of business; provided, that any obligations under
any of the foregoing owed to directors, officers and employees of the Offshore
Entities are only obligations of the Offshore Entities and are only paid by the
Offshore Entities; and (g) other transactions, contracts or agreements
existing on the Closing Date and which are set forth on Schedule 7.6
attached hereto, together with any renewals and extensions of such existing
transactions, contracts or agreements, so long as such renewals and extensions
are upon terms and conditions substantially identical to the terms and
conditions set forth in such existing transactions, contracts and agreements
(or otherwise no less favorable to the Credit Parties, as applicable), and such
other transactions, contracts or agreements with respect to the Offshore
Entities entered into after the Closing Date, which (i) either (A) contain
terms and conditions substantially similar to those transactions, contracts and
agreements listed on Schedule 7.6 attached hereto or (B) are
transactions, contracts or agreements customarily entered into by public
companies for the provision of administrative services to their related
companies (including, without limitation, legal, accounting, treasury, tax,
human resources, billing and collection, accounts payable, risk management,
compliance and other similar administrative services), and (ii) have been
approved by the Agent in its reasonable discretion.  Where any costs, expenses, fees or other
payments to directors, officers or employees described herein are required to
be made by, or to be obligations solely of, Offshore Entities, such amounts may
be either paid directly by the Offshore Entities, or paid by any Credit Party
and reimbursed in cash by Offshore Entities in the ordinary course of business
which, in any event, shall not be longer than 60 days after such payment
is made.  In the event such costs,
expenses, fees or other payments relate both to the Credit Parties and to one
or more Offshore Entities, the Parent shall be entitled to make a reasonable,
good faith allocation of such amounts as between the affected Credit Parties,
on the one hand, and the affected Offshore Entities on the other.

 

“Permitted Investment Securities” shall mean each of the
following, to the extent the same is pledged as additional Collateral hereunder
and is subject to a first priority perfected Lien in favor of the Agent (or the
Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender
Parties:  (a) readily marketable,
direct obligations of the United States of America or 

 

32

 

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

 

“Permitted Overadvance” shall have the meaning specified in
Section 2.2(h) hereof.

 

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

 

“Plan” shall mean any plan subject to Title IV of ERISA and
maintained by any Credit Party for employees of any Credit Party or of any
member of a “controlled group of corporations”, as such term is defined in the
Code, of which the Borrower, any of its Subsidiaries or any ERISA Affiliate it
may acquire from time to time is a part, or any such plan to which the
Borrower, any of its Subsidiaries or any ERISA Affiliate is required to
contribute on behalf of its employees.

 

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

 

“Pledged
Inter-Company Loan” shall mean, collectively, the Initial
Pledged Inter-Company Loan and subsequent advances under the inter-company
revolving line of credit from NP International HoldCo to FinCo, evidenced by
the Pledged Inter-Company Note, which line of credit shall be used to provide
FinCo with funds to finance, by means of Unpledged Inter-Company Loans, the
activities of NP International and, to the extent permitted under this
Agreement, any non-U.S., non-Canadian subsidiaries of NP International from
time to time.

 

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

 

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

 

“Prime Rate” shall mean the rate of interest per annum
publicly announced from time to time by JPMorgan, or its successor financial
institution, if any, at its principal office in New York City as its prime rate
in effect at such time.  Without notice
to any Credit Party or any other Person, the Prime Rate shall change
automatically from time to time as and in the amount by which said prime rate
shall fluctuate, with each such change to be effective as of the date of each
change in such prime rate.  THE PRIME
RATE IS A REFERENCE RATE AND DOES NOT NECESSARILY REPRESENT THE LOWEST OR BEST
RATE ACTUALLY CHARGED BY JPMORGAN OR SUCH SUCCESSOR FINANCIAL INSTITUTION TO
ANY OF ITS CUSTOMERS.  JPMORGAN OR SUCH
SUCCESSOR FINANCIAL INSTITUTION MAY

 

33

 

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

 

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

 

“Prior
Term Loan Agreement” shall mean that certain Term Loan Agreement
dated March 30, 2007, as amended, among Parent, certain subsidiaries of
Parent and JPMorgan.

 

“Prohibited Transaction” shall mean any non-exempt
transaction set forth in Section 406 of ERISA or Section 4975 of the
Code.

 

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

 

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

 

“Quarterly
Equipment Component Amortization Amount” shall have the meaning
specified for such term on Schedule 1.1D.

 

“Quarterly
Real Estate Component Amortization Amount” shall have the
meaning specified for such term on Schedule 1.1E.

 

“Quarterly Unaudited Financial Statements” shall mean the
financial statements of the Credit Parties and their Subsidiaries, including
all notes thereto, which statements shall include (a) a balance sheet as
of the end of the respective fiscal quarter, as applicable, (b) a
statement of operations for such respective fiscal quarter, as applicable, and
for the fiscal year to date, subject to normal year-end adjustments, all
setting forth in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year and (c) a statement of
cash flows for the fiscal year to date, subject to normal year-end adjustments,
setting forth in comparative form the corresponding figures in the
corresponding period of the preceding fiscal year, all prepared in reasonable
detail and in accordance with GAAP and certified by a Responsible Officer of
Borrower’s Agent as fairly and accurately presenting in all material respects
the financial condition and results of operations of the Credit Parties and
their Subsidiaries, on a Consolidated basis, at the dates and for the periods
indicated therein, subject to normal year-end adjustments.  The Quarterly Unaudited Financial Statements
for the Credit Parties and their Subsidiaries shall be prepared on a
Consolidated and consolidating basis, the parties recognizing that such
consolidating statements will be prepared in accordance with GAAP only to the
extent normal and customary.

 

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

 

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

 

34

 

“Reaffirmation
Agreements” means the Second Amendment to Security Agreement
(Personal Property) and Reaffirmation Agreement entered into by the Credit
Parties (other than Guarantor) and the Agent, the First Amendment to Pledge
Agreement and Reaffirmation Agreement entered by the Credit Parties (other than
Guarantor) and the Agent, the First Amendment to Guaranty and Reaffirmation
Agreement entered into by Guarantor, the First Amendment to Patent Security
Agreement and Reaffirmation Agreement entered into by the Credit Parties (other
than Guarantor) and the Agent, the First Amendment to Trademark Security
Agreement and Reaffirmation Agreement entered into by the Credit Parties (other
than Guarantor) and the Agent, and the First Amendment to Copyright Security
Agreement and Reaffirmation Agreement entered into by the Credit Parties (other
than Guarantor) and the Agent, in each case dated as of the date hereof.

 

“Real Estate
Component” shall have the meaning specified for such term on Schedule
1.1F.

 

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

 

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

 

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

 

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

 

(b)           the
interest rate or rates to accrue under such Refinancing Indebtedness do not
exceed the interest rate or rates then accruing on the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded;

 

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

 

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

 

35

 

“Regulation D” shall mean Regulation D of the Board of
Governors of the Federal Reserve System from time to time in effect and shall
include any successor or other regulation relating to reserve requirements
applicable to member Lenders of the Federal Reserve System.

 

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

 

“Related Obligations” shall have the meaning assigned to
such term in Section 10.22.

 

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

 

“Request for Extension of Credit” shall mean a written
request for extension of credit substantially in the form of Exhibit E
attached hereto.

 

“Required Lenders” shall mean Lenders having greater than
50% of the aggregate amount of the outstanding Term Loans, Revolving Loans,
Letter of Credit Exposure Amount, Swingline Exposure and, prior to the
termination of the Total Revolving Commitment, Unused Commitment; and provided
further, however, if only two (2) Lenders are then parties
to this Agreement, Required Lenders shall mean both of such Lenders.  Notwithstanding anything in this Agreement to
the contrary, no Defaulting Lender shall be taken into account for any purpose
in determining whether the Required Lenders have authorized or taken any action
contemplated in this Agreement or any of the other Loan Documents, subject to Section 10.11
hereof.

 

“Requirements of Environmental Law” shall mean all
requirements imposed by any Environmental Law. 
Requirement of Environmental Law shall mean any one of them.

 

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

 

“Responsible Officer” shall mean, with respect to any
Person, the president, chief financial officer, treasurer, controller, or
general counsel of such Person.

 

“Revolving
Commitment” means, with respect to each Revolving Lender, the
commitment, if any, of such Revolving Lender to make Revolving Loans and to
acquire participations in Letters of Credit, Permitted Overadvances and
Swingline Loans hereunder, expressed as an amount representing the maximum
possible aggregate amount of such Revolving Lender’s Revolving Exposure
hereunder, as such commitment may be reduced or increased from time to time
pursuant to (a) Sections 2.4 and 2.15 and (b) assignments
by or to such Revolving Lender pursuant to Section 10.12.  The initial amount of each Revolving Lender’s
Revolving

 

36

 

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

 

“Revolving
Commitment Increase Notice” shall have the meaning specified for
such term in Section 2.15(a).

 

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

 

“Revolving Credit LIBOR Borrowing” shall mean, as of any
date, that portion of the principal balance of the Revolving Loans bearing
interest at the Adjusted LIBOR Rate as of such date.

 

“Revolving Credit Notes” shall mean the promissory notes,
each substantially in the form of Exhibit A attached hereto, of the
Borrowers evidencing the Revolving Loans, payable to the order of the
respective Revolving Lenders in the amount of said Revolving Lender’s Revolving
Commitment, and all renewals, extensions, modifications, rearrangements and
replacements thereof and substitutions therefor.  Revolving Credit Note shall mean any of such
promissory notes.

 

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

 

“Revolving
Lenders” shall mean, as of any date of determination, Lenders
having a Revolving Commitment.

 

“Revolving Loans” shall mean the Revolving Loans made
pursuant to Section 2.1 hereof, including any Permitted
Overadvances.  Revolving Loan shall mean
one of such Revolving Loans.

 

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

 

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

 

37

 

Agent, for the ratable benefit of the Lender Parties,
covering all Receivables, Inventory and all other tangible and intangible
personal Property of such Credit Parties more particularly described therein,
as the same may thereafter be or have been joined in by a Credit Party pursuant
to a Joinder Agreement, (b) the debentures dated as of the Original
Closing Date, each granted by the Guarantor in favor of the Canadian Collateral
Agent, for the ratable benefit of the Lender Parties, covering the Collateral
referred to therein of the Guarantor, in each case as more particularly described
therein, as the same may thereafter be or have been joined in by a Credit Party
pursuant to a Joinder Agreement, (c) the Pledge Agreement dated as of the
Original Closing Date, between the Credit Parties named therein and the Agent,
for the ratable benefit of the Lender Parties, covering (i) all issued and
outstanding Stock in each of the Borrowers’ Domestic Subsidiaries and, to the
extent set forth therein, Canadian Subsidiaries, and (ii) 65% of all
issued and outstanding Stock in each of the Borrower’s non-Domestic
Subsidiaries (other than Canadian Subsidiaries), (d) the transfer and
assignment of insurance dated as of the Original Closing Date, by Neenah Paper
Company of Canada in favor of the Canadian Collateral Agent, (e) any and
all other security agreements, pledge agreements, collateral assignments
(including without limitation assignments of insurance), assignments of
contract rights or agreements, assignments or pledges of stock or partnership
interests, or other similar documents now or hereafter executed in favor of the
Agent (or the Canadian Collateral Agent, as applicable), for the ratable
benefit of the Lender Parties, as security for the payment or performance of
any and/or all of the Obligations, and (f) any amendment, modification, restatement
or supplement of all or any of the above-described agreements and assignments,
including, without limitation, the Reaffirmation Agreements.

 

“Security Documents” shall mean the Security Agreements,
all related financing statements and any and all other agreements, Intellectual
Property Security Agreements, Mortgages, debentures, deeds of trust, chattel
mortgages, Tri-Party Agreements, guaranties, assignments of income, standby
agreements, subordination agreements, undertakings and other instruments and
financing statements now or hereafter executed and delivered as security for
the payment and performance of the Obligations, as any of them may from time to
time be amended, modified, restated or supplemented.

 

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

 

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

 

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

 

38

 

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

 

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

 

“Special
Cash Collateral Account” shall mean that certain deposit account
identified as such on Schedule 5.29, established or to be
established with JPMorgan Chase Bank, N.A. or one of its Affiliates, into which
the Borrowers deposit certain proceeds received by them from the Disposition of
Property pursuant to Section 2.7(d); provided that such deposit
account is subject to an account control agreement and/or such other Security
Documents required by the Agent, each in form and substance satisfactory to the
Agent, pursuant to which the Agent has (i) been granted a first priority
Lien on and security interest in such account and all cash held from time to
time therein and (ii) sole control over the amounts held from time to time
therein, and which is otherwise maintained as provided in Section 3.3.

 

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

 

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

 

“Stock” shall mean as to a Business Entity, all capital
stock, partnership interests, membership interests or other indicia of equity
rights issued by such Business Entity from time to time.

 

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

 

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

 

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

 

39

 

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

 

“Swingline Loans” shall mean the Swingline Loans made
pursuant to Section 2.11(a) hereof.  Swingline Loan shall mean any one of such
Swingline Loans.

 

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

 

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

 

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

 

“Term
Lenders” means, as of any date of determination, Lenders having
a Term Loan Commitment.

 

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

 

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

 

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

 

“Term
Notes” shall mean the promissory notes, each substantially in
the form of Exhibit C attached hereto, of the Borrowers evidencing
the Term Loans, payable to the order of the respective Term Lenders in the
amount of said Term Lender’s Term Loan Commitment, and all renewals,
extensions, modifications, rearrangements and replacements thereof and
substitutions therefor.  Term Loan Note
shall mean any of such promissory notes.

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

“Trademarks” shall have the meaning specified for such term
in the definition of “Intellectual Property.”

 

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

 

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

 

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

 

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

 

41

 

1.2           Accounting Terms
and Determinations.  Except where
specifically otherwise provided:

 

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

 

(b)           Any accounting term
not otherwise defined shall have the meaning ascribed to it under GAAP.  If any Credit Party is required after the
Closing Date to implement any change(s) in its accounting principles and
practice as a result of any changes in GAAP mandated by the Financial
Accounting Standards Board or successor organization, and if such change(s) result
in any material change in the method of calculation of the Fixed Charge
Coverage Ratio, then for all periods after the date of implementation of such
change(s) until one or more appropriate amendments of this Agreement
addressing such change(s) in GAAP are negotiated, executed and delivered
by the parties hereto in a form acceptable to all such parties, the Fixed
Charge Coverage Ratio shall be calculated hereunder utilizing GAAP as in effect
prior to such change(s).

 

(c)           Unless otherwise
expressly provided, any accounting concept and all financial covenants shall be
determined on a Consolidated basis, and financial measurements shall be
computed without duplication.

 

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

 

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

 

(f)            References in any
Loan Document to Section numbers are references to the Sections of such
Loan Document.

 

(g)           References in any
Loan Document to Exhibits, Schedules, Annexes and Appendices are to the
Exhibits, Schedules, Annexes and Appendices to such Loan Document, and they
shall be deemed incorporated into such Loan Document by reference.

 

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

 

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

 

42

 

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

 

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

 

1.4           Joint and Several
Obligations; Borrowers’ Agent.

 

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

 

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

 

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

 

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

 

43

 

2.2           Loans.

 

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

 

(b)           When requesting a
Revolving Loan hereunder, the Borrowers shall give the Agent notice of a
request for a Loan in accordance with Section 4.1(a) hereof; provided,
however, no notice of a request for a Revolving Loan in accordance with Section 4.1(a) hereof
shall be required to be presented by the Borrowers to the Agent if a check,
wire transfer request or other item issued by any Borrower shall be presented
for payment against any controlled disbursement account maintained with the
Agent in connection with the account or accounts established and maintained by
the Agent for the purposes of deposits and collections of Receivables in
accordance with Section 6.15(a) hereof, and the Agent shall
then cause the Lenders (subject to the settlement delay provisions of Section 2.2(f) hereof)
to make a Revolving Loan for the purpose of crediting said controlled
disbursement account in an amount sufficient to permit such check, wire
transfer request or other item to be honored if (i) such Revolving Loan is
to be made prior to the Termination Date, (ii) the Availability would be
equal to or greater than zero after giving effect to such Revolving Loan, and,
if applicable, the resulting payment of any Obligations to be contemporaneously
paid with the proceeds of such requested Revolving Loan, and (iii) no
Default or Event of Default shall have occurred which is then continuing.  Each such Revolving Loan advanced for the
purpose of crediting any such controlled disbursement account shall be deemed
to be a Revolving Credit Alternate Base Rate Borrowing until a Rate Selection
Notice is otherwise properly presented for such Revolving Credit Alternate Base
Rate Borrowing converting such borrowing to a Revolving Credit LIBOR
Borrowing.  Notwithstanding anything to
the contrary contained in Section 2.11, if any request for a Loan
in accordance with Section 4.1(a) hereof requests Revolving
Loans in the form of Alternate Base Rate Borrowings, the Agent may make a
Swingline Loan available to the Borrowers in an aggregate amount not to exceed
the amount of such requested Revolving Loans, and the aggregate amount of the
corresponding requested Revolving Loans shall be reduced accordingly by the
principal amount of such Swingline Loan. 
Except as otherwise provided in the settlement delay provisions of Section 2.2(f) hereof,
the Agent shall promptly advise the Lenders of any notice of a request for a
Loan (other than a Swingline Loan) given pursuant to Section 4.1(a) or
of any such Revolving Loan advanced for purposes of crediting any such controlled
disbursement account and of each Lender’s portion of a requested borrowing
(based on such Lender’s Commitment Percentage).

 

(c)           Except as otherwise
provided or specified in the settlement delay provisions of Section 2.2(f) below,
each Lender shall make its Revolving Loans available on the proposed dates
thereof by causing its Applicable Lending Office to pay the amount required to
the Agent at the Principal Office in immediately available funds not later than
1:00 p.m., and the Agent shall as soon as practicable, but in no event
later than 5:00 p.m. on such date, credit the amount so received to a
general deposit account designated and maintained by the applicable
Borrower.  If a requested Revolving Loan
shall not occur on the Closing Date or any date specified by the Borrowers as
set forth in the applicable Request for Extension of Credit, as the case may
be, because all of the conditions for such Revolving Loan set forth herein or
in any of

 

44

 

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

 

(d)           The obligations of
the Lenders hereunder are several and not joint; therefore, notwithstanding
anything herein to the contrary:  (i) no
Revolving Lender shall be required to make Revolving Loans at any one time
outstanding in excess of such Lender’s Revolving Commitment and no Term Lender
shall be required to make Term Loans at any time after the Closing Date and in
an amount in excess of such Term Lender’s Term Loan Commitment; (ii) if a
Revolving Lender fails to make a Revolving Loan as and when required hereunder
and the Borrowers subsequently make a repayment on the Revolving Loans, such
repayment shall be shared among the non-defaulting Revolving Lenders in
accordance with the respective Commitment Percentages until each non-defaulting
Revolving Lender has received its Commitment Percentage of all of the
outstanding Revolving Loans, after which the balance of such repayment shall be
applied against such Defaulting Lender’s Commitment Percentage of the
outstanding Revolving Loans; and (iii) the failure of any Revolving Lender
to make any Revolving Loan or any payment in respect of its participation in
Swingline Loans and Letter of Credit Advances shall not in itself relieve any
other Revolving Lender of its obligation to lend hereunder (provided, that
no Lender shall be responsible for the failure of any other Lender to make a
Loan such other Lender is obligated to make hereunder).

 

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

 

(f)            The arrangements
between the Agent and the Lenders with respect to making and advancing the
Revolving Loans and making payments under Letters of Credit shall be handled on
the following basis:  no less than once a
week, the Agent will provide each Lender with a statement showing, for the
period of time since the date of the most recent of such statements previously
provided, the aggregate principal amount of new Revolving Loans made to the
Borrowers, the aggregate amount of new Letter of Credit Advances which have not
been reimbursed, the aggregate face amount of new Letters of Credit issued for
the account of the Borrowers, the aggregate principal amount of new Swingline
Loans made to the Borrowers, the amount of remittances and payments actually
collected and applied by the Agent to reduce the outstanding principal balance
of the Revolving Loans, to reduce the outstanding principal balance of the
Swingline Loans and to reimburse Letter of Credit Advances during such period
and the outstanding principal balances of the Revolving Loans and the Swingline
Loans and the aggregate Letter of Credit Exposure Amount outstanding at the end
of such period.  If a Revolving Lender’s
pro-rata share (based on such Revolving Lender’s Commitment Percentage) of the
Revolving Loans and the unreimbursed Letter of Credit Advances made during such
period exceeds such Revolving Lender’s pro-rata share of remittances and
payments applied to reduce the Revolving Loans and reimburse Letter of Credit
Advances during such period, the difference will be paid and made available in
same day funds by such Revolving Lender to the Agent, and if such Revolving
Lender’s pro-rata share (based on such Revolving Lender’s Commitment
Percentage) of remittances and payments applied to reduce the Revolving Loans

 

45

 

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

 

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

 

(h)           Notwithstanding
anything to the contrary set forth in this Section 2.2 or in any
other provision of this Agreement, the Agent, on its own initiative and in its
sole discretion, but for the ratable benefit of the Lenders, may extend
Revolving Loans or issue Letters of Credit in excess of Availability
(collectively “Permitted Overadvances”)
in an aggregate amount at any one time not exceeding $5,000,000 upon and subject
to the following terms:  (i) no
Permitted Overadvances shall be in excess of (A) the Total Revolving
Commitment, less (B) the aggregate Revolving Loans, Letter of
Credit Exposure Amount and Swingline Exposure at such time (excluding such
Permitted Overadvances) less (C) the aggregate amount of the items
specified in clauses (b)(ii) and (b)(iii) of the definition of “Availability”;
(ii) no Permitted Overadvances shall be outstanding for more than thirty
(30) consecutive days; and (iii) no more than two (2) Permitted
Overadvances can be extended by the Agent during any 180 consecutive day
period.  The extension of any Permitted
Overadvance shall not operate as a waiver of any Default or Event of Default.

 

2.3           Commitment Fees.  In consideration of each Revolving Lender’s
Revolving Commitment, the Borrowers agree to pay to the Agent for the account
of each Revolving Lender a commitment fee (each a “Commitment Fee”) (computed on the basis
of the actual number of days elapsed in a year composed of 360 days, subject
to the terms of Section 10.6 hereof) in an amount equal to the
product of (a) the Applicable Commitment Fee Percentage times (b) such
Revolving Lender’s average Unused Commitment for the applicable calculation
period; provided, however, that such Revolving Lender’s
pro rata share of the Swingline Exposure shall be disregarded for purposes of
calculating such Revolving Lender’s Unused Commitment for Commitment Fee
purposes, except in respect of the Swingline Lender, whose Unused Commitment
for Commitment Fee purposes shall be reduced by the Swingline Exposure.  The Commitment Fee shall be due and payable
in arrears (i) on the last Business Day of each month prior to the
Termination Date, and (ii) on the Termination Date, with each Commitment
Fee to commence to accrue as of the date of this Agreement and to be effective
as to any reduction in the Total Revolving Commitment pursuant to Section 2.4(a) below
as of the date of any such decrease, and each Commitment Fee shall cease to
accrue (except with respect to interest at the Default Rate on any unpaid
portion thereof) on the Termination Date. 
All past due Commitment Fees shall bear interest at the Default Rate and
shall be payable upon demand by the Agent.

 

46

 

2.4           Termination and
Reductions of Revolving Commitments.

 

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

 

(b)           To effect the
payment of any and all Commitment Fees and all other Obligations outstanding
and owing hereunder or under any other Loan Documents, subject to the
provisions of Sections 2.1 and 4.1 hereof, the Agent may,
but shall not be obligated to, cause the Revolving Lenders to make a Revolving
Loan or request that the Swingline Lender make a Swingline Loan if (i) such
Revolving Loan or Swingline Loan, as applicable, is to be made prior to the
Termination Date, (ii) the Availability would be equal to or greater than
zero after giving effect to such Revolving Loan or Swingline Loan, as
applicable, and the resulting payment of Commitment Fees to be
contemporaneously paid with the proceeds of such Loan, and (iii) no
Default or Event of Default shall have occurred which is then continuing.  The inability of the Agent to cause the
payment of any such Commitment Fees or other Obligations in accordance with the
preceding sentence shall not in any way whatsoever affect the Credit Parties’
obligation to otherwise pay such amounts in accordance with the applicable
terms hereof or of any other Loan Documents.

 

2.5           Mandatory and
Voluntary Prepayments.

 

(a)           If the Current
Sum applicable to a Revolving Lender at any time exceeds such Revolving Lender’s
Revolving Commitment, the Agent shall notify the Borrowers’ Agent of such
excess amount (such notice being permitted to be given orally and need not be
in writing) and the Borrowers shall immediately make a prepayment on such
Revolving Lender’s Revolving Credit Note or otherwise reimburse such Revolving
Lender for Letter of Credit Advances or cause one or more Swingline Loans to be
prepaid or one or more Letters of Credit to be canceled and surrendered in an
amount sufficient to reduce such Revolving Lender’s Current Sum to an amount no
greater than such Revolving Lender’s Revolving Commitment.  Any prepayments required by this
subparagraph (a) shall be applied to outstanding Revolving Credit
Alternate Base Rate Borrowings up to the full amount thereof before such
prepayments are applied to outstanding Revolving Credit LIBOR Borrowings
(together with any Consequential Loss resulting from such prepayment).

 

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

 

47

 

notice
being permitted to be given orally and need not be in writing) and the
Borrowers shall immediately make a prepayment on the Revolving Credit Notes or
otherwise reimburse the Agent for Letter of Credit Advances or cause one or
more Swingline Loans to be prepaid or one or more Letters of Credit to be
canceled and surrendered in an amount sufficient to cause the Availability to
be at least equal to zero (except for the existence of a Permitted
Overadvance).  Any prepayments required
by this subparagraph (b) shall be applied to outstanding Revolving
Credit Alternate Base Rate Borrowings up to the full amount thereof before such
prepayments are applied to outstanding Revolving Credit LIBOR Borrowings
(together with any Consequential Loss resulting from such prepayment).  The Borrowers shall make prepayments of the
Term Loans with the proceeds from the sale of Nova Scotia Woodlands, which
proceeds shall be applied in accordance with Section 2.7(d).

 

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

 

(i)            In giving notice of
prepayment as hereinafter provided, the Borrowers shall specify, for the
purpose of paragraphs (ii) and (iii) immediately following, the
manner of application of such prepayment as between Alternate Base Rate
Borrowings and LIBOR Borrowings and as between Swingline Loans, Revolving Loans
and Term Loans; provided, that in no event shall any LIBOR
Borrowing be partially prepaid such that less than $3,000,000 remains
outstanding.

 

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

 

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

 

48

 

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

 

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

 

2.6           Notes;
Payments; Accounts.

 

(a)           Subject to the
provisions of Section 10.12 hereof relating to replacement and
substitution of the Notes, (i) all Revolving Loans made by a Revolving
Lender to the Borrowers shall be evidenced by a single Revolving Credit Note
dated as of the Closing Date, delivered and payable to such Revolving Lender in
a principal amount equal to such Revolving Lender’s Revolving Commitment as of
the Closing Date, (ii) all Term Loans made by a Term Lender to the
Borrowers shall be evidenced by a single Term Note dated as of the Closing
Date, delivered and payable to such Term Lender in a principal amount equal to
such Term Lender’s Term Loan Commitment as of the Closing Date, and (iii) all
Swingline Loans made by the Swingline Lender to the Borrowers shall be
evidenced by a single Swingline Note dated as of the Closing Date, delivered
and payable to the Swingline Lender in a principal amount equal to $15,000,000.

 

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

 

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

 

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

 

49

 

Swingline
Loan, as applicable, and the resulting payment of accrued interest to be
contemporaneously paid with the proceeds of such Loan, and (iii) no
Default or Event of Default shall have occurred which is then continuing.  The inability of the Agent to cause a payment
of any accrued interest owing on the Loans on any Interest Payment Date in
accordance with the preceding sentence shall not in any way whatsoever effect
the Credit Parties’ obligation to otherwise pay such amounts in accordance with
the applicable terms hereof or any other Loan Documents.

 

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

 

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

 

2.7           Application of
Payments and Prepayments.

 

(a)           Except as
otherwise provided in Sections 2.5(a) and 2.5(b) hereof,
prepayments on the Revolving Credit Notes shall be applied to payment of the
aggregate unpaid principal amounts of the Revolving Credit Notes, with the
balance of any such prepayments, if any, being applied to accrued
interest.  Payments of accrued interest
on each Revolving Credit Note in accordance with Section 2.6(c) hereof
shall be applied to the aggregate accrued interest then outstanding under the
Revolving Credit Notes, while payment by the Borrowers of the aggregate
principal amount outstanding under the Revolving Credit Notes on the
Termination Date shall be applied to principal.

 

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

 

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

 

50

 

(d)           All payments
remitted to the Agent and all such payments not relating to principal or
interest of specific Loans, or not constituting payment of specific fees or
other specific Obligations, and all proceeds of Collateral received by the
Agent (or the Canadian Collateral Agent, as applicable), shall be applied,
ratably, subject to the provisions of this Agreement, first, to pay any
fees, indemnities or expense reimbursements then due to the Agent or the
Canadian Collateral Agent from the Borrowers; second, to pay any fees or
expense reimbursements then due to the Lenders from the Borrowers; third,
to pay interest due in respect of all Swingline Loans; fourth, to pay
interest due in respect of all Revolving Loans and Term Loans; fifth, to
pay or prepay principal of the Swingline Loans; sixth, to pay or prepay
principal of the Revolving Loans, the Term Loans and unpaid reimbursement
obligations in respect of Letters of Credit, and thereafter to serve as cash
collateral to be held by the Agent to secure the Letter of Credit Exposure
Amount; seventh, to the payment of any other Obligation due to the
Agent, the Canadian Collateral Agent or any Lender (excluding any amounts
relating to Obligations under any Bank Product); eighth, to the payment
of any Obligations under any Bank Product (excluding any amounts relating to
Obligations under any Bank Product owed to any Non-Reporting Lender Party); and
ninth, to the payment of any Obligations under any Bank Product owed to
any Non-Reporting Lender Party. 
Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrowers, or unless an Event of Default has occurred
and is continuing, neither the Agent nor any Lender shall apply any payments
which it receives to any LIBOR Borrowing, except (i) on the expiration
date of the Interest Period applicable to any such LIBOR Borrowing, or (ii) in
the event, and only to the extent, that there are no outstanding Alternate Base
Rate Borrowings and the Borrowers have consented to such application.  Notwithstanding anything to the contrary
contained in this Agreement, unless an Event of Default has occurred and is
continuing, all proceeds from the sale of Nova Scotia Woodlands shall be
applied first, to pay or prepay the outstanding principal of the Term
Loans and then, to the Special Cash Collateral Account.  Notwithstanding anything to the contrary
contained in this Agreement, unless an Event of Default has occurred and is
continuing, all proceeds from the sale of Neenah Paper FR, LLC’s facility
located in Ripon, California shall be deposited in the Special Cash Collateral
Account; provided  that, if such sale would result in a Borrowing
Base Deficiency, then such proceeds shall be applied, first, to prepay
the outstanding principal of the Revolving Loans in an amount sufficient to
eliminate such Borrowing Base Deficiency, and second, as otherwise
provided in this sentence.

 

(e)           Except for any
settlement delay provided or specified in Section 2.2(f) hereof,
each payment or prepayment received by the Agent hereunder or under any Note
for the account of a Lender shall be paid promptly to such Lender, in
immediately available funds.  If the
Agent fails to send to any Lender the product of such Lender’s Commitment
Percentage, times the aggregate amount of any such payment or prepayment
received by the Agent for the account of all the Lenders by the close of
business on the date such payment was deemed received by the Agent in
accordance with Section 2.7(f) below, the Agent shall pay to such
Lender interest on such Lender’s pro-rata portion of such payment timely
received by the Agent from such date of receipt by the Agent to the date that
such Lender receives its pro-rata portion of such payment, such interest to
accrue at the Federal Funds Effective Rate and to be payable upon written
request from such Lender.

 

(f)            Other than
automatic payments of Obligations with proceeds from Receivables in accordance
with the terms of Section 6.15(b), all sums payable by the
Borrowers 

 

51

 

to
the Agent hereunder or pursuant to the Notes or any of the other Loan Documents
for its own account or the account of the Canadian Collateral Agent or the
Lenders shall be payable in United States dollars in immediately available
funds not later than 1:00 p.m. on the date such payment or prepayment is
due and shall be made without set-off, counterclaim or deduction of any
kind.  Any such payment or prepayment
received and accepted by the Agent after 1:00 p.m. shall be considered for
all purposes (including the payment of interest, to the extent permitted by
law) as having been made on the next succeeding Business Day.  All such payments or prepayments shall be
made at the Principal Office.  If any
payment or prepayment becomes due and payable on a day which is not a Business
Day, then the date for the payment thereof shall be extended to the next
succeeding Business Day and interest shall be payable thereon at the then
applicable rate per annum during such extension.

 

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

 

2.8           Interest Rates
for Loans.

 

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

 

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

 

(i)            The Borrowers’ Agent shall
give the Agent notice by telephone, promptly confirmed by written notice (the “Rate Selection Notice”) substantially
in the

 

52

 

form of Exhibit F hereto.  Each such telephone and written notice shall
specify the amount and type of borrowings which are the subject of the
designation; the amount and type of borrowings into which such borrowings are
to be converted or for which an Interest Option is designated; the proposed
date for the designation or conversion (which, in the case of conversion of
LIBOR Borrowings, shall be the last day of the Interest Period applicable
thereto) and the Interest Period or Periods, if any, selected by the
Borrowers.  Such notice by telephone
shall be irrevocable and shall be given to the Agent no later than the
applicable Rate Selection Date.  If (A) a
new Revolving Loan is to be a Revolving Credit LIBOR Borrowing, (B) an
existing Revolving Credit LIBOR Borrowing is maturing at the time that a new
Revolving Loan is being requested and the Borrowers are electing to have such
existing portion of the outstanding principal balance of the Revolving Loans
going forward bear interest at the same Interest Option and for the same
Interest Period as the new Revolving Loan, or (C) a portion of a Revolving
Credit Alternate Base Rate Borrowing is to be converted so as to bear interest
at the same Interest Option and for the same Interest Period as the new
Revolving Loan, then the Rate Selection Notice shall be included in the Request
for Extension of Credit applicable to the new Revolving Loan, which shall be
given to the Agent no later than the applicable Rate Selection Date.

 

(ii)           No more than eight (8) LIBOR
Borrowings and corresponding Interest Periods shall be outstanding at any one
time.  Each LIBOR Borrowing shall be in a
minimum aggregate principal amount of at least $3,000,000, with any increases
over such minimum amount being in integral aggregate multiples of $1,000,000.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

53

 

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

 

(e)           No Lien under
any Loan Document on any Real Property Asset in Canada of any Credit Party
shall secure any interest payable at the Default Rate, provided  that
this Section 2.8(e) shall not affect the Lien on such Canadian
Real Property Asset with respect to any other Obligation, nor shall this Section 2.8(e) affect
the secured status of interest payable at the Default Rate with respect to any
other Collateral.

 

2.9           Special
Provisions Applicable to LIBOR Borrowings.

 

(a)           If, after the
date of this Agreement, the adoption of any applicable Legal Requirement or any
change in any applicable Legal Requirement or in the interpretation or
administration thereof by any Governmental Authority or compliance by the Agent
or any Lender with any request or directive (whether or not having the force of
law) of any Governmental Authority shall at any time make it unlawful or
impracticable for any Lender to permit the establishment of or to maintain any
LIBOR Borrowing, the commitment of the Lenders to establish or maintain the
Adjusted LIBOR Rate affected by such adoption or change shall forthwith be canceled
and the Borrowers shall forthwith, upon demand by the Agent to the Borrowers’
Agent, (i) convert the Adjusted LIBOR Rate with respect to which such
demand was made to the Alternate Base Rate; (ii) pay all accrued and
unpaid interest to date on the amount so converted; and (iii) pay any
amounts required to compensate the Agent and the Lenders for any additional
cost or expense which the Agent or any Lender may incur as a result of such
adoption of or change in such Legal Requirement or in the interpretation or
administration thereof and any Consequential Loss which the Agent, the Canadian
Collateral Agent or any Lender may incur as a result of such conversion to the
Alternate Base Rate.  If, when the Agent
so notifies the Borrowers’ Agent, the Borrowers have given a Rate Selection
Notice specifying one or more borrowings of the type with respect to which such
demand was made but the selected Interest Period or Interest Periods has not
yet begun, such Rate Selection Notice shall be deemed to be of no force and
effect, as if never made, and the balance of the Loans specified in such Rate
Selection Notice shall bear interest at the Alternate Base Rate until a
different available Interest Option shall be designated in accordance herewith.

 

(b)           If, after the
date of this Agreement, the adoption of any applicable Legal Requirement or any
change in any applicable Legal Requirement or in the interpretation or
administration thereof by any Governmental Authority or compliance by the Agent
or any Lender with any request or directive (whether or not having the force of
law) from any Governmental Authority shall at any time as a result of any
portion of the principal balance of the Loans being maintained on the basis of
the Adjusted LIBOR Rate:

 

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

 

54

 

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

 

(ii)           change the basis of taxation
of payments due from the Borrowers to the Agent or any Lender under any LIBOR
Borrowing (otherwise than by a change in the rate of taxation of the overall
net income of the Agent or such Lender); or

 

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

 

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

 

and the result of any of the
foregoing is to increase the cost to any Lender of agreeing to make or of
making, renewing or maintaining such borrowing on the basis of the Adjusted
LIBOR Rate, or reduce the amount of principal or interest received by any
Lender, then, upon demand by such Lender, the Borrowers shall pay to such
Lender, from time to time as specified by such Lender, additional amounts which
shall compensate such Lender for such increased cost or reduced amount.  Such Lender will promptly notify the
Borrowers’ Agent in writing of any event, upon becoming actually aware of it,
which will entitle any Lender to additional amounts pursuant to this
paragraph.  Such Lender’s determination
of the amount of any such increased cost, increased reserve requirement or
reduced amount shall be conclusive and binding, absent manifest error, provided
that the calculation thereof and reason therefore is certified and is
set forth in reasonable detail in such certification by such Lender.

 

The Borrowers shall have the
right, if any Lender issues any notice referred to in the preceding paragraph,
upon three (3) Business Days’ notice to the Agent, either (A) to repay
in full (but not in part) any borrowing with respect to which such notice was
given, together with any accrued interest thereon, or (B) to convert the
Adjusted LIBOR Rate in effect with respect to such borrowing from such Lender
to the Alternate Base Rate; provided, that any such repayment or
conversion shall be accompanied by payment of (x) the amount required to
compensate the appropriate Lender or Lenders for the increased cost or reduced
amount referred to in the preceding paragraph; (y) all accrued and unpaid
interest to date on the amount so repaid or converted; and (z) any
Consequential Loss which may be incurred as a result of such repayment or
conversion.  Additionally, if any Lender
issues any notice referred to in the preceding paragraph, the Borrowers shall
also have the corresponding rights in Section 10.16(c).

 

55

 

(c)           If for any
reason with respect to any Interest Period the Agent shall have determined
(which determination shall be conclusive and binding upon the Borrowers)
that:  (i) the Agent is unable
through its customary general practices to determine a rate at which the Agent
is offered deposits in United States dollars by prime banks in the London
interbank market, in the appropriate amount for the appropriate period, or by
reason of circumstances affecting the London interbank market generally, the
Agent is not being offered deposits for the applicable Interest Period and in
an amount equal to the amount of the Agent’s pro-rata portion of any LIBOR
Borrowing requested by the Borrowers, or (ii) the Adjusted LIBOR Rate will
not adequately and fairly reflect the cost to any Lender of making and
maintaining any LIBOR Borrowing hereunder for any proposed Interest Period,
then the Agent shall give the Borrowers’ Agent notice thereof explaining in
reasonable detail the circumstances giving rise to such notice, and thereupon, (A) any
Rate Selection Notice previously given by the Borrowers designating an Adjusted
LIBOR Rate which has not commenced as of the date of such notice from the Agent
shall be deemed for all purposes hereof to be of no force and effect, as if never
given, and (B) until the circumstances giving rise to such notice from the
Agent no longer exist, each Rate Selection Notice requesting an Adjusted LIBOR
Rate shall be deemed a request for an Alternate Base Rate Borrowing, and each
outstanding LIBOR Borrowing then in effect shall be converted, without any
notice to or from the Borrowers, upon the termination of the Interest Period
then in effect to an Alternate Base Rate Borrowing.

 

(d)           The Borrowers
hereby agree (without duplication of any other indemnity obligation hereunder)
to indemnify the Agent, the Canadian Collateral Agent and each of the Lenders
against and hold each of them harmless from any Consequential Loss which it may
incur or sustain as a consequence of (i) any prepayment (mandatory or optional)
of any LIBOR Borrowing, (ii) any acceleration of the Loans or exercise of
remedies upon an Event of Default that results in the repayment or conversion
of any LIBOR Borrowing, or any increase in the cost of maintaining any LIBOR
Borrowing, or (iii) any failure by the Borrowers to convert or to borrow
any LIBOR Borrowing on the date specified by the Borrowers.  This indemnity shall survive termination of
the Commitment and this Agreement.  A
certificate as to any additional amounts payable to the Agent, the Canadian
Collateral Agent or any Lender pursuant to this paragraph, detailing the basis
therefor and submitted by the Agent, the Canadian Collateral Agent or such
Lender to the Borrowers’ Agent shall be conclusive and binding upon the
Borrowers, absent manifest error, provided the calculation thereof is set forth
in reasonable detail in such notice.

 

(e)           If the
Borrowers request quotes of the Adjusted LIBOR Rate for different Interest
Periods being considered for election by the Borrowers, the Agent will use
reasonable efforts to provide such quotes to the Borrowers promptly.  However, all such quotes provided shall be
representative only and shall not be binding on the Agent or any Lender, nor
shall they be determinative, directly or indirectly, of any Adjusted LIBOR Rate
or any component of any such rate, nor will the Borrowers’ failure to receive
or the Agent’s failure to provide any requested quote or quotes either (i) excuse
or extend the time for performance of any obligation of the Borrowers or for
the exercise of any right, option or election of the Borrowers or (ii) impose
any duty or liability on the Agent or any Lender.  If the Borrowers request a list of the
Business Days in any calendar month, the Agent will use reasonable efforts to
provide such list promptly.  However, any
such list provided shall be understood to identify only those days which the
Agent believes in good faith at the time such list is prepared will be the
Business Days for 

 

56

 

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

 

(f)            With respect to
any Lender having a LIBOR Lending Office which differs from its Domestic
Lending Office, all Loans advanced by such Lender’s LIBOR Lending Office shall
be deemed to have been made by such Lender and the obligation of the Borrowers
to repay such Loans shall nevertheless be to such Lender and shall be deemed
held by such Lender, to the extent of such portions of the Loan, for the
account of such Lender’s LIBOR Lending Office.

 

(g)           Notwithstanding
any provision of this Agreement to the contrary, each Lender shall be entitled
to fund and maintain its funding of all or any part of the Loans hereunder in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement, all determinations hereunder shall be made as if such Lender
had actually funded and maintained its portion of each LIBOR Borrowing during
each Interest Period for the Loans through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the LIBOR Rate for such Interest Period.

 

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

 

2.10         Letters of
Credit.

 

(a)           Subject to the
terms and conditions contained herein, the Borrowers shall have the right to
utilize a portion of the Revolving Commitment from time to time prior to the
Termination Date to obtain from the Agent one or more Letters of Credit for the
account of the Borrowers in such amounts and in favor of such beneficiaries as
the Borrowers from time to time shall request; provided, that in
no event shall the Agent have any obligation to issue any Letter of Credit if (i) the
face amount of such Letter of Credit, plus the Letter of Credit Exposure
Amount at such time would exceed $10,000,000, (ii) the face amount of such
Letter of Credit would exceed Availability, (iii) such Letter of Credit
would have an expiry date beyond the earlier to occur of (A) five (5) Business
Days prior to the scheduled Termination Date (subject to Section 2.10(j)),
(B) with respect to Standby Letters of Credit, one full year after the
issuance date of such Standby Letter of Credit, or (C) with respect to
Trade Letters of Credit, one hundred eighty (180) days after the issuance date
of such Trade Letter of Credit, (iv) such Letter of Credit is not in a
form and does not contain terms satisfactory to the Agent in its reasonable
credit judgment, (v) the Borrowers have not executed and delivered such
Applications and other instruments and agreements relating to such Letter of
Credit as the Agent shall have reasonably requested, (vi) an Default or
Event of Default has occurred and is continuing, or (vii) such Letter of
Credit is not being issued or has not been issued in connection with
transactions occurring in the ordinary course of business of the Credit Parties
or any of their Subsidiaries.  Each
Letter of Credit may be issued for the account of or used by the Borrowers or
any of their Subsidiaries that are Credit Parties, but the Credit Parties shall
have full liability for each Letter of Credit. 
The Existing Letters of Credit, all of which are identified on Schedule
2.10(a), shall be deemed to have been issued under this Agreement.  The above limitations on the tenor of any Letter
of Credit issued (or in the case of Existing Letters of Credit deemed issued)
hereunder shall not be deemed to be violated by the inclusion in such Letter of
Credit of an “evergreen clause”

 

57

 

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

 

(b)           If requesting
the issuance of any Letter of Credit, the Borrowers’ Agent on behalf of the
Borrowers shall give at least three (3) Business Days’ prior written
notice to the Agent, at its Domestic Lending Office, which written notice shall
be the requisite Application for a Letter of Credit on the Agent’s customary
form.  In accordance with the provisions
of Section 2.2(f) hereof, the Agent shall periodically notify each
Lender that a Letter of Credit has been requested in the amount reflected in
such Application and inform such Lender of the amount of its pro-rata portion
of such proposed Letter of Credit (based upon such Lender’s Commitment
Percentage).

 

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

 

(d)           The Borrowers
promise to repay, to the order of the Agent, the amount of all Letter of Credit
Advances.  To effect repayment of any
such Letter of Credit Advance, the Agent shall automatically satisfy such
Letter of Credit Advance (subject to the terms and conditions of Sections 2.1
and 4.1 hereof) by causing the Revolving Lenders to make a Revolving
Loan or the Swingline Lender to make a Swingline Loan if (i) such Letter
of Credit Advance is (and such Revolving Loan or Swingline Loan, as applicable,
is to be) made prior to the Termination Date, (ii) the Availability would
be equal to or greater than zero after giving effect to such Revolving Loan or
Swingline Loan, as applicable, and the resulting repayment of such Letter of
Credit Advance to be contemporaneously paid with the proceeds of such Loan, and
(iii) no Default or Event of Default shall have occurred which is then
continuing, and any such Revolving Loan or Swingline Loan shall bear interest
pursuant to Section 2.8(a) at the Alternate Base Rate.  If any Letter of Credit Advance cannot be so
satisfied, such Letter of Credit Advance shall be considered for all purposes
as a demand obligation owing by the Borrowers to the Agent, and each such
Letter of Credit Advance shall bear interest from the date thereof at the
Default Rate, without notice of presentment, demand, protest or other
formalities of any kind (said past due interest on such Letter of Credit Advance
being payable on demand).  The
unavailability of a Revolving Loan or Swingline Loan to effect repayment of any
such Letter of Credit Advance in accordance with the second sentence of this Section 2.10(d) shall
not in any way whatsoever affect the Borrowers’ obligation to pay each Letter
of Credit Advance on 

 

58

 

demand
and to pay interest at the Default Rate on the amount of such unreimbursed
Letter of Credit Advance.  Except for any
settlement delay provided in Section 2.2(f), the Agent will pay to
each Revolving Lender such Revolving Lender’s Commitment Percentage of all
amounts received from the Borrowers by the Agent, if any, for application, in
whole or in part, against the Letter of Credit Advances in respect to any
Letter of Credit, but only to the extent such Revolving Lender has made its
full pro-rata payment of each drawing under the Letter of Credit to which such
Letter of Credit Advance relates.  All
rights, powers, benefits and privileges of this Agreement with respect to the
Revolving Loans, all security therefor (including the Collateral) and
guaranties thereof (including the Guaranties) and all restrictions, provisions
for repayment or acceleration and all other covenants, warranties, representations
and agreements of the Borrowers contained in this Agreement with respect to the
Revolving Loans shall apply to such Letter of Credit Advances.

 

(e)           In
consideration of the issuance of each Letter of Credit pursuant to the
provisions of this Section 2.10, the Borrowers agree to pay
(subject to Section 10.6 hereof) to the Agent for the ratable
benefit of the Revolving Lenders a letter of credit fee (computed on the basis
of the actual number of days elapsed in a year composed of 360 days) in an amount
equal to the product of (i) the Applicable Margin in effect for Revolving
Credit LIBOR Borrowings for the applicable period times (ii) the
undrawn amount of the applicable Letter of Credit, with each letter of credit
fee to commence to accrue as of the date of issuance of such Letter of Credit
and to be effective as to any reductions in the undrawn amount of such Letter
of Credit as of the date of any such reduction (whether resulting from payments
thereunder by the Agent, by agreement of the beneficiary thereunder or
automatically by the terms of the Letter of Credit).  Such letter of credit fee shall be due and
payable, in arrears, on the last Business Day of each calendar month and on the
Termination Date.

 

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

 

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

 

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

 

59

 

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

 

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

 

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

 

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

 

In the event that any
restriction or limitation is imposed upon or determined or held to be
applicable to the Agent, any Revolving Lender or any Credit Party by, under or
pursuant to any Legal Requirement now or hereafter in effect or by reason of
any interpretation thereof by any Governmental Authority, which in the
respective sole judgment of the Agent or any Revolving Lender would prevent any
Revolving Lender from legally incurring liability under a Letter of Credit
issued or proposed to be issued hereunder, then the Agent shall give prompt
written notice thereof to the Borrowers’ Agent, whereupon the Agent shall have
no obligation to issue any additional Letters of Credit then or at any time
thereafter.  In addition, if as a result
of any Regulatory Change which imposes, modifies or deems applicable (x) any
tax, reserve, special deposit or similar requirement against any Letters of
Credit issued or participated to by any Revolving Lender; (y) any fee,
expense or assessment against the Letters of Credit issued by the Agent or any
Lender for deposit insurance, or (z) any other charge, expense or
condition which increases the actual cost to the Agent or any Revolving Lender
of issuing or maintaining such Letters of Credit, or reduces any amount
receivable by the Agent or any Revolving Lender hereunder in respect of any
Letter of Credit or any participation therein (which increase in cost, or
reduction in amount receivable, shall be the result of the Agent’s or such
Revolving Lender’s reasonable allocation of the aggregate of such increases or
reductions resulting from such event), then the Borrowers (subject to Section 10.6
hereof) shall pay to the Agent or such Revolving Lender, upon demand and from
time to time, amounts sufficient to compensate such Person for each such
increase from the effective date of such increase to the date of demand
therefor.  Each such demand shall be
accompanied by a certificate setting forth in reasonable detail the calculation
of the amount then being demanded in accordance with the preceding sentence and
each such certificate shall be conclusive absent manifest error.

 

(h)           THE BORROWERS
HEREBY INDEMNIFY AND HOLD HARMLESS EACH LENDER, THE AGENT AND THE CANADIAN
COLLATERAL AGENT FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES,
LIABILITIES,

 

60

 

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

 

(i)            Subject to the
settlement delay procedures of Section 2.2(f), the Agent shall give
telephonic or facsimile notice to the Revolving Lenders of the receipt and
amount of any draft presented under any Letter of Credit and the date on which
payment thereon will be made, and each of the Revolving Lenders shall, by 1:00 p.m.
on the date such payment is to be made under such Letter of Credit, pay in
immediately available funds, an amount equal to the product of (i) such
Revolving Lender’s Commitment Percentage times (ii) the amount of
such payment to be made by the Agent to the beneficiary under such Letter of
Credit.  Any Revolving Lender failing to
timely deliver its requisite portion of any such payment shall deliver the same
to the Agent as soon as possible thereafter, together with interest on such
amount for each day from the due date for such payment to the date of payment
by such Revolving Lender to the Agent of such amount at a rate of interest per
annum equal to the Federal Funds Effective Rate for such period.  Each Revolving Lender hereby absolutely and
unconditionally assumes, as primary obligor and not as a surety, and agrees to
pay and discharge, and to indemnify and hold the Agent harmless from liability
and respect of, such Revolving Lender’s pro-rata share (based on such Revolving
Lender’s Commitment Percentage) of any amounts owing by such Revolving Lender
to the Agent in accordance with the immediately preceding sentence.  Nothing herein shall be deemed to require any
Revolving Lender to pay to the Agent any amount as reimbursement for any
payment made by the Agent to acquire (discount) for its own account prior to
maturity thereof any acceptance created under a Letter of Credit.

 

61

 

(j)            Notwithstanding
the contrary provisions of Section 2.10(a)(iii)(A), Letters of
Credit may be issued with expiry dates later than the fifth Business Day prior
to the scheduled Termination Date upon the terms and conditions set forth in
this Section 2.10(j) (any such Letter of Credit, an “Extended Facility Letter of Credit”).  No Extended Facility Letter of Credit shall
have an expiry date later than one (1) year after the scheduled
Termination Date.  From the date
thirty (30) days prior to the scheduled Termination Date and at all times
thereafter when any Extended Facility Letters of Credit are outstanding, the
Borrower shall maintain cash collateral in a special purpose collateral account
in the name of the Borrower, but subject to the sole dominion and control of
the Agent, in an amount not less than 110% of the aggregate Letter of Credit
Exposure Amount relating to all Extended Facility Letters of Credit then
outstanding.

 

(k)           Cash
Collateralization.  If any Event
of Default shall occur and be continuing, on the Business Day that the Borrowers’
Agent receives notice from the Agent or the Required Lenders (or, if the
maturity of the Loans has been accelerated, Revolving Lenders with Letter of
Credit Exposure Amount representing greater than 50% of the total Letter of
Credit Exposure Amount) demanding the deposit of cash collateral pursuant to
this paragraph, the Borrowers shall deposit in an account with the Agent, in
the name of the Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount
in cash equal to 110% of the Letter of Credit Exposure Amount as of such date plus
accrued and unpaid interest thereon; provided  that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other
notice of any kind, upon the occurrence of any Event of Default with respect to
any Borrower described in clause (o) or (p) of Section 8.1.  Such deposit shall be held by the Agent as
collateral for the payment and performance of the Obligations.  The Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account and the
Borrowers hereby grant the Agent a security interest in the LC Collateral
Account.  Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Agent and at the Borrowers’ risk and expense,
such deposits shall not bear interest. 
Interest or profits, if any, on such investments shall accumulate in
such account.  Moneys in such account
shall be applied by the Agent to reimburse a Revolving Lender for Letter of
Credit Advances for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrowers for the Letter of Credit Exposure Amount at such time or, if the
maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with Letter of Credit Exposure Amount representing greater
than 50% of the total Letter of Credit Exposure Amount), be applied to satisfy
other Obligations.  If the Borrowers are
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrowers within three Business Days after
all such Events of Default have been cured or waived.

 

2.11         Swingline Loans.

 

(a)           Subject to the
terms and conditions hereof, the Swingline Lender may, in its sole discretion,
make loans for the Swingline Lender’s own account (each a “Swingline Loan”) to the extent the same
would otherwise have been available to the Borrowers under the Revolving
Commitment in an aggregate principal amount at any one time outstanding up to,
but not exceeding, $15,000,000; provided, however, that at
no time shall the Swingline Lender make 

 

62

 

any
Swingline Loan to the extent that, after giving effect to such Swingline Loan,
the aggregate amount of each Lender’s Current Sum at such time would exceed the
Total Revolving Commitment; and provided  further, however,
that the Swingline Lender shall not make any Swingline Loan if any Event
of Default exists of which the Swingline Lender has actual knowledge.  Each Swingline Loan shall be a Revolving
Credit Alternate Base Rate Borrowing and shall in any event mature no later
than the Termination Date.  Subject to
the conditions herein and within the limits set forth in the first sentence of
this paragraph, any Swingline Loan prepaid prior to the Termination Date may be
reborrowed as an additional Swingline Loan by the Borrowers pursuant to the
terms of this Agreement; provided that the Swingline Lender shall not be
required to make a Swingline Loan to refinance an outstanding Swingline Loan;
and provided further that such refinance restriction shall not apply with
respect to any “Swingline Loan” under the Existing Credit Agreement outstanding
on the Closing Date.

 

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

 

(c)           The Swingline
Lender may demand at any time that each Revolving Lender pay to the Agent, for
the account of the Swingline Lender, in the manner provided below, such
Revolving Lender’s Commitment Percentage of all or a portion of the outstanding
Swingline Loans, which demand shall be made through the Agent, shall be in
writing and shall specify the outstanding principal amount of Swingline Loans
demanded to be paid.  The Agent shall
forward notice of each such demand to each Revolving Lender on the day such
demand is received by the Agent (except that any such notice or demand received
by the Agent after 2:00 p.m. on any Business Day or any such demand
received on a day that is not a Business Day shall not be required to be
forwarded to the Revolving Lenders by the Agent until the next succeeding
Business Day), together with a statement prepared by the Agent specifying the
amount of each Revolving Lender’s Commitment Percentage of the aggregate
principal amount of the Swingline Loans stated to be outstanding in such notice
or demanded to be paid pursuant to such demand, and, notwithstanding whether or
not the conditions precedent set forth in Sections 4.1 or 4.2
shall have been satisfied (which conditions precedent the Revolving Lenders
hereby irrevocably waive), each Revolving Lender shall, before 11:00 a.m.
on the Business Day next succeeding the date of such Revolving Lender’s receipt
of such notice, make available to the Agent, in immediately available funds,
for the account of the Swingline Lender, the amount specified in such
statement.  Upon such payment by a
Revolving Lender, such Revolving Lender shall, except as provided in Section 2.11(d) below,
be deemed to have made a Revolving Loan to the Borrowers in the amount of such
payment.  The Borrowers agree that all
such Revolving Loans so deemed made shall be deemed to have been requested by
them and direct that all proceeds thereof shall be used to repay the Swingline
Loans to the Swingline Lender, and the Agent shall use such funds received from
the Revolving Lenders to repay the Swingline Loans to the Swingline
Lender.  To the extent that any Revolving
Lender fails to make such payment 

 

63

 

available
to the Agent for the account of the Swingline Lender, the Borrowers shall repay
such Swingline Loan on demand.

 

(d)           Upon the
occurrence of any Event of Default described in Sections 8.1(n) through
8.1(s) each Revolving Lender shall acquire, without recourse or
warranty, an undivided participation in each Swingline Loan otherwise required
to be repaid by such Revolving Lender pursuant to Section 2.11(c) above,
which participation shall be in a principal amount equal to such Revolving
Lender’s Commitment Percentage of such Swingline Loan, by paying to the
Swingline Lender on the date on which such Revolving  Lender  would  otherwise  have  been  required  to  make  a  payment  in  respect  of  such  Swingline  Loan  pursuant  to  Section  2.11(c)  above, in
immediately available funds, an amount equal to such Revolving Lender’s
Commitment Percentage of such Swingline Loan. 
If all or part of such amount is not in fact made available by such
Revolving Lender to the Swingline Lender on such date, the Swingline Lender
shall be entitled to recover any such unpaid amount on demand from such
Revolving Lender together with interest accrued from such date at the Federal
Funds Effective Rate for the first Business Day after such payment was due and
thereafter at the rate of interest then applicable to Alternate Base Rate
Borrowings.

 

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

 

(f)            The Agent, on
behalf of the Swingline Lender, shall request settlement (a “Settlement”) with the Revolving Lenders on at least a weekly
basis or on any date that the Agent elects, by notifying the Revolving Lenders
of such requested Settlement by facsimile, telephone, or e-mail no later than
12:00 noon on the date of such requested Settlement (the “Settlement
Date”).  Each Revolving
Lender (other than the Swingline Lender, in the case of the Swingline Loans)
shall transfer the amount of such Revolving Lender’s Commitment Percentage of
the outstanding principal amount of the applicable Swingline Loan with respect
to which Settlement is requested to the Agent, to such account of the Agent as
the Administrative Agent may designate, not later than 2:00 p.m. on such
Settlement Date.  Settlements may occur
during the existence of a Default and whether or not the applicable conditions
precedent set forth in Section 4.1 have then been satisfied.  Such amounts transferred to the Agent shall
be applied against the amounts of the Swingline Lender’s Swingline Loans and,
together with Swingline Lender’s Commitment Percentage of such Swingline Loan,
shall constitute Revolving Loans of such Revolving Lenders, respectively.  If any such amount is not transferred to the
Agent by any Revolving Lender on such Settlement Date, the Swingline Lender
shall be entitled to recover such amount on demand from such Revolving Lender
together with interest thereon as specified in Section 2.12(b).

 

64

 

2.12         Pro-Rata
Treatment.

 

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

 

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

 

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

 

65

 

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

 

2.13         Sharing of
Payments, Etc.  The Credit
Parties agree that, in addition to (and without limitation of) any right of
set-off, bankers’ lien or counterclaim a Lender may otherwise have, each Lender
shall be entitled, at its option, to offset balances held by it for the account
of any of the Credit Parties at any of its offices against any principal of or
interest on any of such Lender’s Loans to the Borrowers hereunder, such
Revolving Lender’s Commitment Percentage of the Letter of Credit Exposure
Amounts or the Swingline Exposure, or any other Obligation of the Credit
Parties owing to any such Lender under any of the Loan Documents regardless of
whether such offset balances are then due to the Credit Parties, in which case
it shall promptly notify the Borrowers’ Agent and the Agent thereof, provided,
that such Lender’s failure to give such notice shall not affect the
validity thereof.  If a Lender shall
obtain payment (other than the Swingline Lender obtaining payment of all or any
portion of a Swingline Loan) of any principal of or interest on any Loan made
by it under this Agreement, any Letter of Credit Exposure Amount, any Swingline
Exposure or other obligation then due to such Lender under any Loan Document,
through the exercise of any right of set-off (including, without limitation,
any right of set-off or lien granted under Section 10.19 hereof),
banker’s lien, counterclaim or similar right, or otherwise, it shall promptly
purchase from the other Lenders participations in the Loans made by, the Letter
of Credit Exposure Amount or the Swingline Exposure of, or the other
obligations of the Credit Parties hereunder or thereunder of, the other Lenders
in such amounts, and make such other adjustments from time to time as shall be
equitable to the end that all the Lenders shall share the benefit of such
payment (net of any expenses which may be incurred by such Lender in obtaining
or preserving such benefit) pro-rata in accordance with their respective
Commitment Percentages.  To such end all
the Lenders shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.  The Credit
Parties agree, to the fullest extent they may effectively do so under
applicable law, that any Lender so purchasing a participation in the Loans made
by, Letter of Credit Exposure Amount or the Swingline Exposure of, or other
obligations hereunder of, the other Lenders may exercise all rights of set-off,
bankers’ lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of said Loans,
Letter of Credit Exposure Amount, Swingline Exposure or other obligations in
the amount of such participation. 
Nothing contained herein shall require any Lender to exercise any such
right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness
or obligation of the Credit Parties.

 

2.14         Recapture.  If on any Interest Payment Date the Agent
does not receive for the account of one or more Lenders payment in full of
interest computed at the Alternate Base Rate and/or the Adjusted LIBOR Rate, as
applicable (computed without regard to any limitation by the Highest Lawful
Rate), because the Alternate Base Rate and/or the Adjusted LIBOR Rate, as
applicable (so computed), exceeds or has exceeded the Highest Lawful Rate
applicable to such Lenders, the Borrowers shall pay to the Agent for the
account of such Lenders, in addition to interest otherwise required, on each
Interest Payment Date thereafter, the Excess Interest Amount (calculated as of
each such subsequent Interest Payment Date); provided, that in no
event shall the Borrowers be required to pay, for any computation period,
interest at a rate exceeding the Highest Lawful Rate applicable to such Lenders
during such period.  As used herein, the
term “Excess Interest Amount”
shall mean, on any day, the amount by which (a) the amount of all 

 

66

 

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

 

2.15         Increase of
Revolving Commitments.

 

(a)           If no Default
or Event of Default or Material Adverse Effect shall have occurred and be
continuing, the Borrowers may at any time prior to the Termination Date request
one or more increases of the Revolving Commitments by notice to the Agent in
writing of the amount of such proposed increase (each such notice, a “Revolving Commitment Increase Notice”);
provided, however, that, (i) the Revolving Commitment
of any Revolving Lender may not be increased without such Revolving Lender’s
consent, (ii) the aggregate amount of the Revolving Commitments as so
increased shall not exceed $150,000,000, and (iii) the Revolving
Commitments may not be increased without the consent of the Agent (which
consent shall not be unreasonably withheld or delayed).  Any such Revolving Commitment Increase Notice
delivered with respect to any proposed increase in the Revolving Commitments
must offer each Revolving Lender an opportunity to subscribe for its Commitment
Percentage (with respect to the existing Revolving Commitments (prior to such
increase)) of the increased Revolving Commitments.  The Agent shall, within five (5) Business
Days after receipt of a Revolving Commitment Increase Notice, notify each
Lender of such request.  Each Revolving
Lender desiring to increase its Revolving Commitment shall notify the Agent in
writing no later than ten (10) Business Days after receipt of notice from
the Agent.  Any Revolving Lender that
does not notify the Agent within the time period specified above that it will
increase its Revolving Commitment will be deemed to have rejected such
offer.  Any agreement by a Lender to
increase its Revolving Commitment shall be irrevocable.

 

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

 

(c)           Any existing
Revolving Lender that accepts the Borrowers’ offer to increase its Revolving
Commitment shall execute a Revolving Commitment Increase Agreement with the
Borrowers, the Guarantors and the Agent, whereupon such Lender shall be bound
by, and entitled to the benefits of, this Agreement with respect to the full
amount of its Revolving Commitment as so increased.

 

67

 

(d)           Any additional
bank or financial institution which is not an existing Revolving Lender and
which accepts the Borrowers’ offer to participate in the increased Revolving
Commitments shall execute and deliver to the Agent, the Borrowers and the
Guarantors a New Lender Agreement setting forth its Revolving Commitment
(subject to the limitations on the amounts thereof set forth herein), and upon
the effectiveness of such New Lender Agreement such bank or financial
institution (a “New Lender”)
shall become a Revolving Lender for all purposes and to the same extent as if
originally a party hereto and shall be bound by and entitled to the benefits of
this Agreement, and the signature pages hereof shall be deemed to be
amended to add the name of such New Lender.

 

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

 

2.16         Defaulting
Lenders.

 

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

 

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

 

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

 

(ii)           if the reallocation
described in clause (i) above cannot, or can only partially, be
effected, the Borrowers shall within one Business Day following notice by the
Agent (x) first, prepay such Swingline Exposure and (y) second, cash
collateralize such Defaulting Lender’s Letter of Credit Exposure Amount (after
giving effect to any partial reallocation pursuant to clause (i) above)
in accordance with the procedures set forth in Section 2.10(k) for
so long as such Letter of Credit Exposure Amount is outstanding; and

 

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

 

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

 

68

 

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

 

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

 

3.             Collateral.

 

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

 

3.2           Filing and
Recording.  The Credit
Parties shall, at their sole cost and expense, cooperate with the Agent (or the
Canadian Collateral Agent, as applicable) in causing all financing statements,
Intellectual Property Security Agreements and other Security Documents pursuant
to this Agreement to be duly recorded and/or filed or otherwise perfected in
all places necessary or desirable in the Agent’s (or the Canadian Collateral
Agent, as applicable) discretion to perfect the Liens of the Agent (or the
Canadian Collateral Agent, as applicable), and the Credit Parties shall take
such other actions as the Agent (or the Canadian Collateral Agent, as
applicable) may reasonably request, in order to perfect and protect the Liens
of the Agent (or the Canadian Collateral Agent, as applicable), for the ratable
benefit of the Lender Parties, in the Collateral.  The Credit Parties, to the extent permitted
by law, hereby authorize the Agent (and the Canadian Collateral Agent, as
applicable) to file any financing statement in respect of any Lien created
pursuant to the Security Documents which may at any time be required to perfect
such Liens or which, in the reasonable opinion of the Agent (or the Canadian
Collateral Agent, as applicable), may at any time be desirable, although the
same may have been executed only by the Agent (or the Canadian Collateral
Agent, as applicable) or, at the option of the Agent (or the Canadian
Collateral Agent, as applicable), to sign such financing statement on behalf of
the applicable Credit Parties (to the extent that execution by them is
necessary or desirable in the 

 

69

 

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

 

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

 

4.             Conditions.

 

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

 

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

 

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

 

70

 

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

 

or (ii), in the case of
issuance of a Letter of Credit (other than the Existing Letters of Credit), (A) a
completed Application (as may be required by the Agent) signed by a Responsible
Officer or Cash Officer of the Borrowers’ Agent (or any person designated in
writing by a Responsible Officer or Cash Officer of the Borrowers’ Agent) by
12:00 noon three (3) Business Days prior to the proposed date of
issuance of such Letter of Credit; (B) payment of the first letter of
credit fee as and by the time required in Section 2.10 of this
Agreement; and (C) such other Applications, certificates and other
documents as the Agent may reasonably require;

 

along with, in each case,
such financial information as the Agent may require to substantiate compliance
with all financial covenants contained herein by the Borrowers (or, as
applicable, to demonstrate that compliance with any such financial covenant is
not then required) if the Agent believes at such time that any of the financial
covenants contained herein are then applicable and that the Borrowers are not
then in compliance therewith;

 

(b)           all
representations and warranties of the Borrowers and any other Person set forth
in this Agreement and in any other Loan Document shall be true and correct in
all material respects with the same effect as though made on and as of such
date, except for (i) those representations and warranties which relate to
a specified date, which shall be true and correct as of such date and (ii) those
changes in such representations and warranties otherwise permitted by the terms
of this Agreement;

 

(c)           there shall
have occurred no Material Adverse Effect, after giving effect to the requested
Loan(s) or Letter(s) of Credit;

 

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

 

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

 

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

 

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

 

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

 

71

 

obligation
of the Agent to issue the first Letter of Credit is subject to the receipt by
the Agent of each of the following, on or before November 30, 2009 (except
as otherwise specifically provided in any Loan Document, including Schedule
4.3), in Proper Form:

 

(a)           the Notes
executed by the Borrowers;

 

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

 

(c)           a certificate
of corporate resolutions and incumbency executed by the Secretary or an
Assistant Secretary of each Borrower dated as of the date of this Agreement,
authorizing (i) each Borrower’s entering into the transactions
contemplated hereby and (ii) the delivery by each Borrower of the Loan
Documents to be executed and delivered by such Borrower;

 

(d)           a certificate
of corporate resolutions and incumbency executed by the Secretary or an
Assistant Secretary of the Guarantor, dated as of the date of this Agreement,
authorizing the Guarantor to (i) enter into the transactions contemplated
hereby and (ii) deliver the Loan Documents to be executed and delivered by
the Guarantor;

 

(e)           certified
copies of the Organizational Documents of each Credit Party;

 

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

 

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

 

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

 

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

 

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

 

(k)           favorable legal
opinions (i) from Bryan Cave LLP, outside counsel for the Credit Parties, (ii) McInnes
Cooper, special Nova Scotia counsel to the Credit Parties, (iii) Foley &
Lardner LLP, special Michigan and Wisconsin counsel to the Credit Parties, (iv) Bryan
Cave LLP, special California counsel to the Credit Parties, (v) Bryan Cave
LLP, special German counsel to the Credit Parties in connection with the pledge
of certain Stock in Neenah Germany,

 

72

 

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

 

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

 

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

 

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

 

(o)           evidence
satisfactory to the Agent that no Material Adverse Effect shall have occurred
since December 31, 2008;

 

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

 

(q)           the Perfection
Certificate, dated the Closing Date, substantially in the form of Exhibit L
hereto, duly executed by each Credit Party;

 

(r)            (i) a fully
executed (and, where required, notarized) Mortgage or amendment to Mortgage
(each a “Closing Date Mortgage”
and, collectively, the “Closing Date
Mortgages”), in proper form for recording in the applicable
jurisdiction, encumbering each Real Property Asset owned in fee as of the
Closing Date and listed on Schedule 4.2(r)-1 (each such Real Property
Asset, a “Closing Date Mortgaged Property”);
(ii) with respect to each Closing Date Mortgaged Property located in the
United States, such surveys or surveyor or owner certificates as the Agent may
reasonably require; (iii) in the case of each Material Leasehold Property
existing as of the Closing Date copies of all leases between any Credit Party
and any landlord or tenant, and any modifications, supplements or amendments
thereto; (iv) (A) evidence reasonably acceptable to the Agent as to
whether any Closing Date Mortgaged Property that is a Mill Property
owned by the Credit Parties is a Flood Hazard Property, and (B) if there
are any such Flood Hazard Properties, evidence that the applicable Credit Party
has obtained flood hazard insurance as required by law with respect to each
Flood Hazard Property in reasonable amounts approved by the Agent, or evidence
reasonably acceptable to the Agent that such insurance is not available; (v) (A) an
ALTA loan title insurance policy (or the Canadian equivalent or an endorsement
in Proper Form to any existing ALTA loan title insurance policy issued by
the Title Company in favor of the Agent) or unconditional commitment therefor
(a “Closing Date Mortgage Policy”)
issued by the Title Company with respect to each Closing 

 

73

 

Date
Mortgaged Property owned by any Credit Party, in an amount not less than the
appraised fair market value of such Closing Date Mortgaged Property, insuring
fee simple title to the Closing Date Mortgaged Property vested in such Credit
Party and assuring the Agent (or the Canadian Collateral Agent, as applicable)
that the Closing Date Mortgage creates a valid and enforceable first priority
Lien on such Closing Date Mortgaged Property, subject only to any standard or
other exceptions as may be reasonably acceptable to the Agent and which appear
as exceptions on Schedule B to the applicable Closing Date Mortgage
Policy, which Closing Date Mortgage Policy (1) shall include endorsements
(to the extent available) for customary matters reasonably requested by the
Agent (or the Canadian Collateral Agent, as applicable), including, but not
limited to, those endorsements listed on Schedule 4.2(r)-2 and (2) shall
provide for affirmative insurance and such reinsurance as may be reasonable and
customary and as the Agent may reasonably request, all of the foregoing in form
and substance reasonably satisfactory to the Agent; and (B) evidence
satisfactory to the Agent that such Credit Party has (1) delivered to the
Title Company all certificates and affidavits required by the Title Company in
connection with the issuance of the Closing Date Mortgage Policy and (2) paid
to the Title Company or to the appropriate Governmental Authorities all
expenses and premiums of the Title Company in connection with the issuance of
the Closing Date Mortgage Policy and all recording and stamp taxes (including
mortgage recording taxes, fees and other charges and intangible taxes) payable
in connection with recording the Closing Date Mortgage in the appropriate real
estate records; (vi) copies of all recorded documents listed as exceptions
to title or otherwise referred to in the Closing Date Mortgage Policy and any
other such documents as Agent shall reasonably request; (vii) appraisals,
together with reliance letters where applicable, concerning each Closing Date
Mortgaged Property owned by the Credit Parties from one or more independent
real estate appraisers reasonably satisfactory to the Agent, which appraisals
shall set forth the Net Recovery Value Percentage of such Closing Date
Mortgaged Property and be in form, scope and substance reasonably satisfactory
to the Agent and shall satisfy the requirements of any applicable laws and
regulation; and (viii) evidence reasonably satisfactory to the Agent that
there are no material taxes, levies, duties, imposts, deductions, charges
(including water and sewer charges), withholdings, assessments or impositions
of any kind which have been due and payable for more than thirty (30) days with
respect to such Closing Date Mortgaged Property (to the extent the same are not
addressed by endorsements provided under a Closing Date Mortgage Policy),
except those for which extensions have been obtained and except for those which
have been disclosed to the Agent and which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained in accordance with GAAP;

 

(s)           a copy of the
Credit Parties’ hedging policies for protection against fluctuations in the
value of dollars relative to Canadian Dollars, which hedging policies shall be
reasonably satisfactory to the Agent;

 

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

 

(u)           all other Loan
Documents and any other instruments or documents consistent with the terms of
this Agreement and relating to the transactions contemplated hereby

 

74

 

as
the Agent may reasonably request, executed by the applicable Credit Parties or
any other Person required by the Agent;

 

and subject to the further
conditions that, at the time of the Term Loan and the initial Revolving Loan, (i) the
ownership, corporate structure, solvency and capitalization of the Credit
Parties and their Subsidiaries shall be satisfactory to the Lenders in all
respects; (ii) the Agent, the Canadian Collateral Agent and the Lenders
shall have had the opportunity, if they elect, to examine the books of account
and other records and files of the Credit Parties and their Subsidiaries and to
make copies thereof, and to conduct a preclosing audit which shall include,
without limitation, verification of Eligible Receivables, Eligible Inventory,
Eligible Equipment and Eligible Real Estate, verification of satisfactory
status of customer and supplier accounts, payment of payroll taxes and accounts
payable and formulation of an opening Borrowing Base as of the Closing Date
(with the results of such examination and audits to have been satisfactory to
the Agent, the Canadian Collateral Agent and the Lenders in all respects); (iii) all
such actions as the Agent or the Canadian Collateral Agent shall reasonably
require to perfect the Liens created pursuant to the Security Documents shall
have been taken, including without limitation, (A) the delivery to the
Agent (or the Canadian Collateral Agent, as applicable) of all Property with
respect to which possession is necessary or desirable for the purpose of
perfecting such Liens, (B) with respect to Collateral covered by the
Security Agreements, the filing of appropriately completed and duly executed
Uniform Commercial Code, PPSA (Nova Scotia) or other applicable financing
statements, (C) with respect to all Collateral constituting Stock in any
Credit Party or any of their Subsidiaries, delivery to the Agent (or the
Canadian Collateral Agent, as applicable) of original stock certificates and
stock transfer powers with regard to all of the applicable Stock, and (D) with
respect to all Collateral consisting of Intellectual Property, the recording of
appropriate documents in the U.S. Patent and Trademark Office, the U.S. Library
of Congress, the United States Copyright Office, the Canadian Intellectual
Property Office, and any domain name registry, as applicable; (iv) the
Agent (or the Canadian Collateral Agent, as applicable) shall also have
received evidence reasonably satisfactory to it that the Liens created by the
Security Documents constitute first priority Liens (except for any Liens
expressly provided for in Sections 7.2(a), 7.2(c), 7.2(d),
7.2(e) and 7.2(f) below), including without limitation,
satisfactory Uniform Commercial Code, PPSA (Nova Scotia) or other applicable
search reports and satisfactory authorizations to file releases of Liens or
termination statements with respect to any existing prior Liens to be released;
(v) the terms, conditions and amount of all Indebtedness of each Credit
Party shall be acceptable to the Agent; (vi) the Borrowers shall
contemporaneously pay on the Closing Date all fees owed to the Agent, the
Canadian Collateral Agent and the Lenders by the Borrowers under this Agreement
or under any commitment letters or fee letters entered into between the
Borrowers or any of its Affiliates and JPMorgan or any of its Affiliates,
including without limitation, reasonable legal fees and expenses described in Section 10.9
or otherwise for which invoices have been presented; and (vii) all other
legal matters incident to the transactions herein contemplated shall be
reasonably satisfactory to counsel (including Canadian counsel) for the Agent
and the Canadian Collateral Agent and respective counsel for each of the
Lenders.

 

4.3           Post-Closing
Deliveries.  Borrowers
shall deliver or cause to be delivered to the Agent each of the items set forth
on Schedule 4.3, in each case on or before the date specified in such
Schedule for such item or prior to such later date as the Agent may determine
and agree to in writing in its sole discretion. 
Borrowers’ failure to deliver each such item on or before the 

 

75

 

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

 

5.             Representations and Warranties.

 

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

 

5.1           Organization.  Each Credit Party and each of their then
existing Subsidiaries are duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation; has all
power and authority to own its respective Property and assets and to conduct
its respective businesses as presently conducted; and is duly qualified to do
business and in good standing in each and every state or provincial
jurisdiction where its respective business requires such qualification, except
for those jurisdictions in which the failure to qualify and/or be in good
standing does not cause a Material Adverse Effect to occur.

 

5.2           Financial
Statements.

 

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

 

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

 

5.3           Enforceable
Obligations; Authorization.  The Loan Documents are legal, valid and
binding obligations of the Credit Parties to the extent they are party thereto,
enforceable in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors rights generally and by general equitable principles
including remedies of specific performance and injunction.  The 

 

76

 

execution,
delivery and performance of the Loan Documents have all been duly authorized by
all necessary corporate, and if necessary shareholder or member, action; are
within the power and authority of the applicable Credit Parties; do not and
will not contravene or violate any material Legal Requirement or the
Organizational Documents of any Credit Party; do not and will not result in the
breach of, or constitute a default under, any material agreement or instrument
by which any Credit Party or any material portion of its Property is bound or
affected; and do not and will not result in the creation of any Lien upon any
Property of any Credit Party except as expressly contemplated herein or
therein, and do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or non-renewal of any permit,
license, authorization or approval applicable to the operations or any of the
Property of any Credit Party that could reasonably be expected to have a
Material Adverse Effect.  Except as
otherwise set forth on Schedule 5.3, all necessary consents and
approvals of any Governmental Authority and all other requisite material
permits, registrations and consents have been obtained for the delivery and
performance of the Loan Documents.

 

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

 

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

 

5.6           Taxes.  Each Credit Party and each Offshore Entity
has filed all federal, provincial, state, local or foreign income, franchise
and other material tax returns required to have been filed and paid all taxes
shown thereon to be due, except those for which extensions have been obtained
and except for those which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained in
accordance with GAAP.  No federal income
tax returns of any Credit Party or Offshore Entity have been audited by the
Internal Revenue Service, the Canada Revenue Agency, the Netherlands national
tax authority (Belastingdienst) or the German national tax authority
(Bundesfinanzhof), the determination under which could reasonably be expected
to have a Material Adverse Effect.  No
Credit Party or Offshore Entity, as of the Closing Date, requested or been
granted any extension of time to file any federal tax return.  No Credit Party or Offshore Entity has, as of
the Closing Date, requested or been granted any extension of time to file any
state, provincial, local or foreign tax return, other than extensions with
respect to tax liabilities where such Credit Party’s or Offshore Entity’s
failure to pay such tax liabilities would not have a Material Adverse
Effect.  Except for any tax sharing
agreement entered into and delivered to the Agent pursuant to the 

 

77

 

terms
hereof, no Credit Party or Offshore Entity is a party to, or has any material
obligation under, any tax sharing arrangement with any Person.  Each Guarantor is, and has been at all times
since its creation or organization, classified as a disregarded entity for
United States federal tax purposes.

 

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

 

5.8           Subsidiaries
and Offshore Entities.  As
of the Closing Date, no Credit Party has any Subsidiaries or any other
majority, or material minority ownership interests in any other Person other
than as listed on Schedule 5.8 attached hereto.  Except as expressly indicated on Schedule 5.8
attached hereto, as of the Closing Date, each of the Subsidiaries and Offshore
Entities listed on Schedule 5.8 is wholly-owned by the Credit Party
or other Person indicated on such schedule. 
As of the Closing Date, respectively, of Schedule 5.8 set
forth (a) the jurisdiction of incorporation or organization of each
Subsidiary of any Credit Party and each Offshore Entity, and (b) the
percentage of each Credit Party’s, any of its Subsidiaries’ or such other
Person’s (as indicated thereon) ownership of the Stock of each Subsidiary of
any Credit Party and each Offshore Entity.

 

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

 

5.10         Permits,
Licenses, Etc.  (a) Neenah
Paper Company of Canada owns, possesses or has the benefit of all licenses and
permits from Governmental Authorities required in order to conduct its business
or operations in Canada, the failure of which to have would have a material
adverse effect on its ability to conduct such business or operations in Canada
(each, a “Canadian License” and
collectively, the “Canadian Licenses”),
and (b) each Credit Party owns, possesses or has the benefit of all other
material permits, licenses (including Intellectual Property licenses) and
Intellectual Property rights which are required (i) to conduct its
respective business or (ii) for the operation and use of each Real
Property Asset owned in fee and each Material Leasehold Property; provided,
that if Neenah Paper Company of Canada is not operating or has disposed
of (in accordance with the terms of this Agreement) the Property with respect
to which a Canadian License was obtained, it shall not be required to own,
possess or have the benefit of such Canadian License, nor shall it be required
to own, possess or have the benefit of any other permits, licenses and
Intellectual Property rights which would otherwise be required to own or
operate such facility or other Property; provided, further  that
the Credit Parties shall be required 

 

78

 

to
comply in all material respects with all Legal Requirements (including, without
limitation, Environmental Laws) related to the continued ownership (but not the
operation) of any Property located in Canada so long as such Property is owned
by a Credit Party.  Except as set forth
in Schedule 5.10, there are no material permits and licenses or
agreements held by or issued to any Credit Party pertaining to or in connection
with any part of the business or operations in Canada of such Credit Party; provided
that such schedule may be updated by the Credit Parties from time to
time to reflect the changes not otherwise prohibited by the Loan Documents, so
long as any permit, license or agreement added thereto is subject to the Lien
of the Agent (or the Canadian Collateral Agent, as applicable), if such Lien
can be obtained using commercially reasonable efforts, pursuant to the Loan
Documents.

 

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

 

5.12         Title to
Properties; Possession Under Leases.

 

(a)           The Credit
Parties have good and insurable (or, with respect to Real Property Assets owned
in fee and located in Canada, marketable) title to or, in the case of the Nova
Scotia Woodlands Trust Lands (if any), beneficial title to, or a valid
leasehold interest in, all of their respective material Property shown on the
balance sheet referred to in Section 5.2(b) for the Credit
Parties and their Subsidiaries or, if applicable, the most recent Consolidated
balance sheet for the Credit Parties and their Subsidiaries provided under the
terms of Section 6.3(a), 6.3(b) or 6.3(c) and
all material Property acquired since the date of such respective balance
sheets, except for such Property as is no longer used or useful in the conduct
of their respective businesses or as have been disposed of in the ordinary
course of business or otherwise in accordance with this Agreement, and except
for minor defects in title that do not interfere with the ability of any Credit
Party or any of their Subsidiaries to conduct their respective businesses as
now conducted.  All such assets and
Property are free and clear of all Liens other than those permitted by Section 7.2
hereof.

 

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

 

79

 

each
of the Credit Parties, as applicable, enjoy peaceful and undisturbed possession
under all such Material Leases.  Schedule 5.12(b)
attached hereto sets forth each lease in existence as of the date of this
Agreement and the Closing Date of real Property of any Credit Party, and upon
the request of the Agent, the Credit Parties will provide the Agent with
complete and correct copies of all of such leases of real Property then in
effect.  As of the date of this Agreement
and the Closing Date, there are no Material Leasehold Properties other than
those in clause (a) of the definition thereof.

 

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

 

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

 

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

 

5.16         Agreements.  Schedule 5.16 attached hereto is
a complete and correct list, as of the date of this Agreement and the Closing
Date, of (a) other than the Loan Documents, all credit agreements or
indentures for borrowed money and capitalized leases to which any Credit Party
is a party and all Property of the Credit Parties subject to any Lien securing
such Indebtedness or capitalized lease obligation, (b) each letter of
credit and guaranty to which any Credit Party is a party, (c) all other
material instruments in effect as of the date of this Agreement providing for,
evidencing, securing or otherwise relating to any Indebtedness for borrowed
money of any Credit Party (other than the Indebtedness hereunder), and (d) all
obligations of any Credit Party to issuers of appeal bonds issued for account
of any Credit Party, in each case other than the Loan Documents.  The Borrowers shall, upon, request by the
Agent, deliver to the Agent and the Lenders a complete and correct copy of all
such credit agreements, indentures, capitalized leases, letters of credit,
guarantees and other instruments described in Schedule 5.16 or
arising after the date of this Agreement, including any modifications or
supplements thereto, as in effect on the date of this Agreement.

 

5.17         Environmental
Matters.

 

(a)           No material
aspect of the business of any Credit Party or any of their Subsidiaries
requires any Environmental Permit which has not been obtained and which is not
now in full force and effect.

 

(b)           Except as
described in Schedule 5.17(b), each Credit Party and each of their
Subsidiaries is in material compliance with all limitations, restrictions,
conditions, 

 

80

 

standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Requirement of Environmental Law or Environmental Permit reasonably
necessary to the conduct of any material aspect of the business of any Credit
Party or any of their Subsidiaries.

 

(c)           Each Credit
Party and each of their Subsidiaries (i) has obtained and maintained in
effect all Environmental Permits, (ii) along with their respective
Properties (whether leased or owned) has been and is in material compliance
with all applicable Requirements of Environmental Law and Environmental Permits
except as described in Schedule 5.17(c)(ii), (iii) along with
their respective Properties (whether leased or owned) is not subject to any
material (A) Environmental Claims or (B) Environmental Liabilities,
in either case direct or contingent arising from or based upon any act,
omission, event, condition or circumstance occurring or existing on or prior to
the date of this Agreement, except as set forth in any of the environmental
assessments or studies described on Schedule 5.17(c)(iii), or as
disclosed on Schedule 5.17(c)(iii), and (iv) except as
described in Schedule 5.17(c)(iv), has not received individually or
collectively any written notice from any Governmental Authority of any material
violation or alleged material violation of any Requirements of Environmental
Law or Environmental Permit or any written notice of any material Environmental
Claim in connection with their respective Properties.

 

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

 

(e)           Except as
described in Schedule 5.17(e), no Credit Party nor any of their
Subsidiaries has any actual knowledge of the presence or release of any
Hazardous Substance at any of their respective Properties in quantities or
under circumstances that under applicable Requirements of Environmental Law
could require remedial action having a Material Adverse Effect.

 

(f)            Except as
described in Schedule 5.17(f), no Credit Party nor any of their
Subsidiaries has any actual knowledge of any facts or circumstances, including
proposed or anticipated changes in applicable Requirements of Environmental Law
that would materially increase the cost of maintaining compliance or otherwise
result in a Material Adverse Effect.

 

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

 

5.18         No Change in
Credit Criteria or Collection Policies.  There has been no material adverse change in
credit criteria or collection policies concerning Receivables of any Credit
Party since July 31, 2004, which has had or which is likely to have a
Material Adverse Effect.

 

81

 

5.19         Solvency.

 

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

 

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

 

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

 

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

 

82

 

5.20         Status of
Receivables and Other Collateral.  Each Credit Party represents and warrants
that (a) each Credit Party is and shall be the sole owner, free and clear
of all Liens except in favor of the Agent (or the Canadian Collateral Agent, as
applicable) or otherwise permitted under Section 7.2 hereunder, of
and fully authorized to sell, transfer, pledge and/or grant a security interest
in all of the Collateral (other than Excluded Collateral, as defined in the
applicable Security Documents) owned by such Credit Party, and (b) each
Receivable reported by the Credit Parties as an Eligible Receivable meets the
requirements of the definition of Eligible Receivable, each item of Inventory
reported by the Credit Parties as Eligible Inventory meets the requirements of
the definition of Eligible Inventory, each item of Eligible Equipment reported
by the Credit Parties as Eligible Equipment meets the requirements of the
definition of Eligible Equipment, each Real Property Asset reported by the
Credit Parties as Eligible Real Estate meets the requirements of the definition
of Eligible Real Estate.

 

5.21         Transactions
with Related Parties.  Any and all
transactions, contracts, licenses, or other agreements existing on the date of
this Agreement and the Closing Date which have been entered into by and among
any Credit Party and any Affiliate, officer, or director of any Credit Party
(other than Permitted Affiliate Transactions), have been entered into and made
upon terms and conditions not less favorable to the applicable Credit Parties
than those terms which could have been obtained from wholly independent and
unrelated sources.

 

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

 

83

 

consummation
of the transactions contemplated hereby and thereby, will not result in the
loss or impairment of or payment of any additional amounts with respect to, nor
require the consent of any other person in respect of, the Credit Parties’
rights to own, use, or hold for use any of the Intellectual Property as owned,
used, or held for use in the conduct of the business as currently conducted.

 

5.23         [RESERVED]

 

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

 

5.25         Related
Businesses.  As of the
date of this Agreement and the Closing Date, the Credit Parties are engaged in
the businesses of producing and selling paper products.  These operations require financing on a basis
such that the credit supplied can be made available from time to time to
Borrowers, as required for the continued successful operation of Borrowers and
the other Credit Parties taken as a whole. 
Borrowers have requested the Lenders to make credit available hereunder
for the purposes set forth in Section 6.9 and generally for the
purposes of financing the operations of Borrowers and the other Credit
Parties.  Each Borrower and each other
Credit Party expects to derive benefit (and the board of directors of each
Borrower and other Credit Party has determined that such Borrower or other
Credit Party may reasonably be expected to derive benefit), directly or
indirectly, from a portion of the credit extended by Lenders hereunder, both in
its separate capacity and as a member of the group of companies, since the
successful operation and condition of each Borrower and each other Credit Party
is dependent on the continued successful performance of the functions of the
group as a whole.  Each Credit Party
acknowledges that, but for the agreement of each of the other Credit Parties to
execute and deliver this Agreement, the Agent and the Lenders would not have
made available the credit facilities established hereby on the terms set forth
herein.

 

5.26         Material
Leasehold Properties.  No Credit
Party is in default in any material respect under any lease with respect to any
Material Leasehold Property, and to the knowledge of any Credit Party, no other
party thereto is in default under any such lease.

 

5.27         Security
Interests.  Each of the
Security Documents creates in favor of the Agent (or the Canadian Collateral
Agent, as applicable), for the benefit of the Agent (or the Canadian Collateral
Agent, as applicable) and the Lenders, a legal, valid and enforceable security
interest in the Collateral secured thereby. 
Upon the filing of the Uniform Commercial Code financing statements and
the other personal property security financing statements described in Schedule 5.27
and, to the extent governed by United States or Canadian federal law, as
applicable, upon the recording of a patent security agreement in the form of Exhibit M
hereto, a trademark security agreement in the form of Exhibit N
hereto and a copyright security agreement in the form of Exhibit O
hereto (the “Intellectual Property
Security Agreements”), in the United States Patent and Trademark
Office, the United States Copyright Office and the Canadian Intellectual
Property Office, as applicable, such security interests in and Liens on the
Collateral granted thereby that may be perfected by such aforementioned filings
or recordings shall be perfected, first priority security interests (subject,
as to priority, only to Liens permitted under Section 7.2 that, as
a matter of law (including, without limitation, the priority rules of the

 

84

 

Uniform
Commercial Code and the applicable personal property security legislation),
would be prior to the Liens of the Collateral Agent (or the Canadian Collateral
Agent, as applicable), and no further recordings or filings are or will be
required in connection with the creation, perfection or enforcement of such
security interests and Liens, other than (a) the filing of continuation
statements or financing change statements in accordance with applicable law, (b) the
recording of the Intellectual Property Security Agreements in the United States
Patent and Trademark Office, the United States Copyright Office and the
Canadian Intellectual Property Office, as applicable, with respect to
after-acquired U.S. Patent, Trademark and Copyright applications and registrations
and (c) the recordation of appropriate evidence of the security interest
in the appropriate foreign registry with respect to all foreign Intellectual
Property.

 

5.28         [RESERVED]

 

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

 

6.             Affirmative
Covenants.

 

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

 

6.1           Businesses and
Properties.  At all
times:  (a) do or cause to be done
all things reasonably necessary to obtain, preserve, renew and keep in full
force and effect the rights, licenses, permits, franchises, and Intellectual
Property material to the conduct of its businesses; (b) maintain and
operate such businesses in the same general manner in which they are presently
conducted and operated, with such changes as such Credit Party deems prudent or
as otherwise permitted by this Agreement; (c) comply in all material
respects with all material Legal Requirements applicable to such businesses and
the operation thereof, whether now in effect or hereafter enacted (including
without limitation, all material Legal Requirements relating to public and
employee health and safety and all Environmental Laws); and (d) maintain,
preserve and protect all Property material to the conduct of such businesses and
keep such Property in good repair, working order and condition, and from time
to time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto reasonably necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.  Notwithstanding the
foregoing provisions of this Section 6.1, the Credit Parties shall
not be required to comply with the requirements of clauses (a), (b) or
(d) of this Section 6.1 with respect to any Properties
(whether or not Mortgaged Properties) (i) at which operations shall have
been permanently discontinued and (ii) to the extent the Board of
Directors of the Parent shall have determined that the preservation and
maintenance of such Properties and the rights, licenses and permits related to
such Properties, as applicable, are no 

 

85

 

longer
desirable in the conduct of the business of the Credit Parties and their
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Lenders, or that the preservation or maintenance
thereof is not necessary in connection with any transaction permitted under the
Loan Documents. With respect to any Properties at which operations are
permanently discontinued, the Credit Parties will take customary and prudent
steps to secure such Properties from unauthorized Persons and to make or cause
to be made repairs and replacements necessary to prevent the development of
hazardous safety conditions at such Properties.

 

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

 

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

 

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

 

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

 

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

 

(d)           concurrently with the financial statements provided
for in Subsections 6.3(a), 6.3(b) and 6.3(c) hereof,
(i) a Compliance Certificate, signed by a Responsible Officer of the
Borrowers’ Agent setting forth, among other things, in the case of a Compliance
Certificate delivered in connection with Subsections 6.3(a) and
6.3(b), reasonably detailed calculations of the Fixed Charge Coverage
Ratio calculated as of the end of such fiscal year or fiscal quarter, as
applicable; provided, that if the Fixed Charge Coverage Ratio is
not 

 

86

 

being
tested as of such fiscal quarter or fiscal year end date pursuant to Section 7.12,
such calculation of the Fixed Charge Coverage Ratio shall still be delivered,
but may be delivered in a separate certificate, which certificate shall be
delivered as soon as available and in any event within fifteen (15) days after
the delivery of the Compliance Certificate delivered pursuant to this Subsection
6.3(d) for the end of such fiscal year or fiscal quarter end, and provided,
further, that, (A) in no event shall the delivery of a Fixed
Change Coverage Ratio calculation be deemed to imply that Section 7.12
is then being tested, such testing to be determined strictly in accordance with
the express terms of Section 7.12, and (B) failure to provide
a calculation of the Fixed Charge Coverage Ratio at times and for periods when
the Fixed Charge Coverage Ratio is not being tested pursuant to Section 7.12
shall not, in and of itself, constitute a Default or an Event of Default, and (ii) a
written certificate in Proper Form, identifying each Subsidiary which is
otherwise required by the provisions of Section 6.10 hereof to
become a Guarantor at the request of the Agent, but which has not yet done so
as of the date of such certificate, and providing an explanation of the reasons
why each such Subsidiary is not a Guarantor, signed by a Responsible Officer of
the Borrowers’ Agent;

 

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

 

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

 

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

 

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

 

87

 

required
or requested by the Agent with regard to the Credit Parties and their
Subsidiaries, all certified by a Responsible Officer of the Borrowers’ Agent,
and (ii) copies of all monthly accounts statements for each deposit
account covered by a Tri-Party Agreement;

 

(i)            as soon as
available and in any event within fifteen (15) Business Days after the end of
each calendar month, (A) a certificate setting forth the calculation of
the Indenture Cap as of the end of such calendar month (in form and substance
reasonably acceptable to the Agent), and (B) a Borrowing Base Compliance
Certificate;

 

(j)            as soon as
available and in any event within thirty (30) days prior to the commencement of
each fiscal year of the Credit Parties, management-prepared Consolidated and
consolidating financial projections of the Credit Parties and their
Subsidiaries for the immediately following three (3) fiscal years (setting
forth such projections on both an annual basis and on a monthly basis for the
upcoming fiscal year and on an annual basis only for the two (2) fiscal
years thereafter), such projections to be prepared and submitted in such format
and detail as reasonably requested by the Agent; and

 

(k)           such other
information relating to the financial condition, operations and business
affairs of the Credit Parties or any of their Subsidiaries as from time to time
may be reasonably requested by the Agent.

 

Notwithstanding the
delineation of specified time periods above in this Section 6.3 for
the applicable information, the Agent reserves the right to require the applicable
information be furnished to the Agent, the Canadian Collateral Agent and the
Lenders on a more frequent basis, as determined by the Agent in its
discretion.  All collateral reports of
each Credit Party, including each Guarantor, shall be prepared in a manner
compatible with the Borrowers’ reporting procedures.

 

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

 

(a)           Upon reasonable
notice (which may be telephonic notice), at all reasonable times during (so
long as no Default or Event of Default has occurred and is continuing) regular
business hours and as often as the Agent (or the Canadian Collateral Agent, as
applicable) may reasonably request, permit any authorized representative
designated by the Agent (or the Canadian Collateral Agent, as applicable),
including, without limitation any consultant engaged by the Agent (or the
Canadian Collateral Agent, as applicable), together with any authorized
representatives of any Lender desiring to accompany the Agent (or the Canadian
Collateral Agent, as applicable), to visit and inspect the Properties and
records of the Credit Parties and their Subsidiaries and to make copies of, and
extracts from, such records and permit any authorized representative designated
by the Agent (or the Canadian Collateral Agent, as applicable) (together with
any accompanying representatives of any Lender) to discuss the affairs,
finances and condition of the Credit Parties and their Subsidiaries with the
appropriate Financial Officer and such other officers as the Credit Parties
shall deem appropriate and the Credit Parties’ independent public accountants,
as applicable.

 

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

 

88

 

right
to examine (and any authorized representatives of any Lender shall have the
right to accompany the Agent (or the Canadian Collateral Agent, as applicable)
during any such examination), as often as the Agent (or the Canadian Collateral
Agent, as applicable) may request, the existence and condition of the
Receivables, books and records of the Credit Parties and to review their
compliance with the terms and conditions of this Agreement and the other Loan
Documents, subject to governmental confidentiality requirements.  The Agent (or the Canadian Collateral Agent,
as applicable) shall also have the right to verify with any and all customers
of the Credit Parties the existence and condition of the Receivables, as often
as the Agent (or the Canadian Collateral Agent, as applicable) may require,
without prior notice to or consent of any Credit Party.  Without in any way limiting the foregoing,
the Agent (or the Canadian Collateral Agent, as applicable) shall have the
right to (i) conduct field examinations of the Credit Parties’ operations
at the Borrowers’ expense as often as the Agent (or the Canadian Collateral
Agent, as applicable) may request and (ii) to order and obtain an
appraisal of the Inventory, Equipment and Real Property Assets of the Credit
Parties by an appraisal firm satisfactory to the Agent (or the Canadian
Collateral Agent, as applicable) as often as the Agent (or the Canadian
Collateral Agent, as applicable) may request (subject to the proviso at the end
of this clause (b)).  Without in any
way limiting the foregoing, the Credit Parties agree to cooperate and to cause
their Subsidiaries to cooperate in all respects with the Agent (or the Canadian
Collateral Agent, as applicable) and its representatives and consultants in
connection with any and all inspections, examinations and other actions taken
by the Agent or any of its representatives or consultants pursuant to this Section 6.4.  The Credit Parties hereby agree to promptly
pay, upon demand by the Agent (or the Canadian Collateral Agent, as applicable,
or the applicable Lender, if appropriate), any and all reasonable fees and
expenses incurred by the Agent (or the Canadian Collateral Agent, as
applicable) or, during the continuance of any Default or Event of Default, any
Lender, in connection with any inspection, examination or review permitted by
the terms of this Section 6.4 (including without limitation the
fees of third party appraisers, accountants, attorneys and consultants); provided,
however, that so long as no Default or Event of Default is
continuing, the Borrowers shall only be obligated to pay for (x) two (2) field
examinations per each twelve (12)-month period following the Closing Date, (y) two
(2) appraisals of Inventory during each twelve (12)-month period after the
Closing Date, and (z) at Agent’s discretion, up to one (1) appraisal
of Equipment and Real Property Assets during each twelve (12)-month period
after the Closing Date (other than the initial field examinations and
appraisals for any Receivables, Inventory, Equipment and/or Real Property
Assets acquired through an acquisition or other Investment permitted under the
terms of this Agreement, it being agreed that the Borrowers shall be obligated
to pay for each such initial field examination and/or appraisal, as applicable,
conducted with respect to each such acquisition or Investment).  For avoidance of doubt, the Property
inspection rights granted to the Agent and the Lenders in this Section 6.4,
do not include the Property of the Offshore Entities.

 

(c)           At the Agent’s
(or the Canadian Collateral Agent’s, as applicable) request, not more
frequently than once during any consecutive twelve month period if no Default
or Event of Default then exists at the time of such request by the Agent (or
the Canadian Collateral Agent, as applicable), and as frequently as requested
by the Agent (or the Canadian Collateral Agent, as applicable) after the
occurrence of any Default or Event of Default which has not been cured or
waived in writing by the Agent and the Required Lenders, the Credit Parties
shall conduct, at their own expense, a physical count of their Inventory and
promptly supply the Agent (or the Canadian Collateral Agent, as applicable) with
a copy of such counts accompanied by a 

 

89

 

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

 

6.5           Further
Assurances.  Upon
request by the Agent (or the Canadian Collateral Agent, as applicable),
promptly execute and deliver any and all other and further agreements and
instruments and take such further action as may be reasonably requested by the
Agent (or the Canadian Collateral Agent, as applicable) to (a) cure any
defect in the execution and delivery of any Loan Document or more fully to
describe particular aspects of the Credit Parties’ or any of their Subsidiaries’
agreements set forth in the Loan Documents or so intended to be, (b) to
carry out the provisions and purposes of this Agreement and the other Loan
Documents, and (c) grant, preserve, protect and perfect the first priority
Liens created or intended to be created by the Security Documents in the
Collateral.  Upon written request of the
Agent, promptly cause a first priority perfected security interest or pledge to
be granted to the Canadian Collateral Agent, for the ratable benefit of the
Lender Parties, in all of the Stock of Neenah Paper Company of Canada, together
with such related certificates, legal opinions and documents as the Agent may
reasonably require, each in Proper Form. 
Upon written request by the Agent, promptly furnish the Agent with a
then current listing of all assumed names that any Credit Party is then utilizing
in conducting their respective businesses. 
Promptly furnish the Agent with notice of any transfer of Intellectual
Property to another Credit Party and promptly execute and deliver any and all
other and further agreements and instruments as may be reasonably requested by
the Agent in connection therewith.

 

6.6           Books and
Records.  Maintain financial records and
books in accordance with accepted financial practice and GAAP.

 

6.7           Insurance.

 

(a)           Maintain the
insurance required by this Section 6.7 at all times by financially
sound and reputable insurers (or, to the extent consistent with prudent
business practice, a program of self-insurance approved by the Agent, such
approval not to be unreasonably withheld).

 

(b)           Maintain
insurance, to such extent, on such of its Properties and against such
liabilities, casualties, risks and contingencies, including fire and other
risks insured against by extended coverage, employee liability and business
interruption, at least as is customary with companies similarly situated and in
the same or similar businesses, and subject to deductibles that are no greater
than are customary with such companies, provided, however, that
such insurance shall insure the Property of the Credit Parties and each of
their Subsidiaries against all risk of physical damage, including without
limitation, loss by fire, explosion, theft, fraud and such other casualties as
may be reasonably satisfactory to the Agent, but in no event at any time in an
amount less than the replacement value of the Collateral; provided, further,
that from and after the permanent cessation of operations at any of
their facilities (whether or not they are Mortgaged Properties) in accordance
with Section 6.1, the Credit Parties will not be required to
maintain property insurance with respect to the fixed assets comprising such
facility unless such facilities are located on Eligible Real Property used in
the computation of the Borrowing Base or 

 

90

 

such
insurance is required by law, as determined by the Agent (the Credit Parties
agreeing to provide not less than five (5) Business Days’ advance notice
to Administrative Agent prior to the effective date of any cancellation or
non-renewal of such insurance).

 

(c)           Maintain in
full force and effect worker’s compensation coverage and public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with its operations and with the use
of any Properties owned, occupied or controlled by any Credit Party or any of
their Subsidiaries, in such amounts as the Agent shall reasonably deem
necessary.

 

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

 

(e)           All insurance
covering Property subject to a Lien in favor of the Agent (or the Canadian
Collateral Agent, as applicable) for the benefit of the Lenders granted
pursuant to the Security Documents shall provide that, in the case of each
separate loss, the full amount of insurance proceeds shall be payable to the
Agent (or the Canadian Collateral Agent, as applicable), and all liability
insurance maintained by the Credit Parties shall name the Agent and the
Canadian Collateral Agent as additional insured.  All such property and liability insurance
shall further provide for at least thirty (30) days’ (ten (10) days’
with respect to cancellation for non-payment of premium or at the request of
the insured) prior written notice to the Agent (and/or the Canadian Collateral
Agent, as applicable) of the cancellation or substantial modification
thereof.  If any Credit Party fails to
maintain such insurance, the Agent (or the Canadian Collateral Agent, as
applicable) may arrange for such insurance, but at the Borrowers’ expense and
without any responsibility on the Agent’s (or the Canadian Collateral Agent’s)
part for obtaining the insurance, the solvency of the insurance companies, the
adequacy of the coverage, or the collection of claims.  Upon the occurrence and during the
continuance of an Event of Default, the Agent (or the Canadian Collateral
Agent, as applicable) shall have the sole right, in the name of the Lenders,
any Credit Party and its Subsidiaries, to file claims under any insurance
policies, to receive, receipt and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements, receipts,
releases, assignments, reassignments or other documents that may be necessary
to effect the collection, compromise or settlement of any claims under any such
insurance policies.  The Credit Parties
shall deliver certificates evidencing renewal of the insurance required
hereunder and evidence that the premiums have been paid before termination of
any insurance policies required hereunder. 
Upon request, Debtors shall deliver certificates evidencing the
insurance required hereunder and copies of the underlying policies as they are
available.

 

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

 

91

 

Department
of Labor with respect thereto; (c) notify the Agent promptly upon receipt
by any Credit Party or any Subsidiary thereof of any notice of the institution
of any proceedings or other actions which could reasonably be expected to
result in the termination of any Plan by the PBGC and furnish the Agent with
copies of such notice; (d) pay when due, or within any applicable grace
period allowed by the PBGC, all required premium payments to the PBGC; (e) furnish
the Agent with copies of the annual report for each Plan filed with the
Internal Revenue Service not later than ten (10) days after the Agent
requests such report; (f) furnish the Agent with copies of any request for
waiver of the funding standards or extension of the amortization periods
required by Sections 302 and 304 of ERISA or Sections 412 and 431 of
the Code promptly after the request is submitted to the Secretary of the
Treasury, the Department of Labor or the Internal Revenue Service, as the case
may be; and (g) pay when due all installment contributions required under Section 303
of ERISA or Section 430 of the Code or within 10 days of a failure to
make any such required contributions when due furnish the Agent with written
notice of such failure.

 

6.9           Use of Proceeds.  Subject to the terms and conditions contained
herein, use the proceeds of the Loans (a) to finance ongoing working
capital needs of the Credit Parties not otherwise prohibited herein; (b) for
the issuance of Letters of Credit for the account of the Credit Parties in
accordance with and subject to the terms of this Agreement; and (c) for
general corporate purposes of the Credit Parties in the ordinary course of
business and to finance acquisitions permitted under Section 7.4; provided,
that no proceeds of any Loan shall be used (w) for the purpose of
purchasing or carrying directly or indirectly any margin stock as defined in
Regulation U (“Reg U”) of
the Board of Governors of the Federal Reserve System, (x) for the purpose
of reducing or retiring any Indebtedness which was originally incurred to
purchase or carry any such margin stock, (y) for any other purpose which
would cause such Loan to be a “purpose credit”
within the meaning of Reg U and (z) for any purpose which would
constitute a violation of Reg U or of Regulations T or X of the Board
of Governors of the Federal Reserve System or any successor regulation of any
thereof or of any other rule, statute or regulation governing margin stock from
time to time.  Following this transaction,
no more than twenty-five percent (25%) (or such lesser percentage as may be
established from time to time under Reg U or any successor statute) of the
assets, of Borrowers and their Subsidiaries, subject to any restriction on sale
or pledge, will consist of, or be represented by margin stock.

 

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

 

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

 

(b)           a first
priority perfected security interest to be granted to the Agent (or the
Canadian Collateral Agent, as applicable), for the ratable benefit of the
Lender Parties, in all of the Stock of such Subsidiary owned by the Credit
Parties or any of their other Subsidiaries if such newly acquired or created
Subsidiary is a Domestic Subsidiary or is treated, for U.S. federal 

 

92

 

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

 

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

 

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

 

provided, however,
that any such Subsidiary that is an Excluded Foreign Subsidiary shall
not be required to become a Guarantor or grant any Liens hereunder; provided,
further, that until such Subsidiary becomes a Guarantor or a Borrower
pursuant to the terms of this Agreement it shall not become a Credit
Party.  To the extent reasonably
feasible, all of the foregoing requirements shall be affected by the execution
and delivery of a Joinder Agreement.

 

6.11         Notice of
Events.  Notify the Agent within two (2) Business
Days after any Responsible Officer of any Credit Party or any of their
Subsidiaries acquires knowledge of the occurrence of, or if any Credit Party or
any of their Subsidiaries causes or intends to cause, as the case may be, any
of the following:  (a) the
institution of any lawsuit, administrative proceeding or investigation
affecting any Credit Party or any of their Subsidiaries, including without
limitation any examination or audit by the IRS or the Canada Revenue Agency,
the adverse determination under which could reasonably be expected to be
material; (b) any development or change in the business or affairs of any
Credit Party or any of their Subsidiaries which has had or which is likely to
have, in the reasonable judgment of any Responsible Officer of the applicable
Credit Parties, a Material Adverse Effect; (c) any Event of Default or
Default, together with a reasonably detailed statement by a Responsible Officer
on behalf of the Borrowers’ Agent of the 

 

93

 

steps
being taken to cure the effect of such Event of Default or Default; (d) the
occurrence of a default or event of default by any Credit Party or any of their
Subsidiaries under any agreement or series of related agreements to which it is
a party, which default or event of default could reasonably be expected to have
a Material Adverse Effect; (e) any written notice of any material
violation by, or investigation of any Credit Party or any of their Subsidiaries
in connection with any actual or alleged material violation of any Legal
Requirement imposed by the Environmental Protection Agency, the Occupational
Safety Hazard Administration or any other Governmental Authority which has or
is likely to have, in the reasonable judgment of any Responsible Officer of the
applicable Credit Parties, a Material Adverse Effect; and (f) any
significant change in the accuracy of any material representations and
warranties of the Credit Parties or any of their Subsidiaries in this Agreement
or any other Loan Document (including without limitation, the representations
and warranties in Section 5.20(b)).

 

6.12         Environmental
Matters.  Without limiting the
generality of Section 6.1(c) hereof, (a) comply in all
material respects with all material limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Requirement of Environmental Law, or Environmental
Permit; (b) obtain and maintain in effect all Environmental Permits
necessary to the conduct of its business, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c) keep
its Property free of any Environmental Claims or Environmental Liabilities that
could reasonably be expected to have a Material Adverse Effect.  In the event that any Credit Party or any of
their Subsidiaries receives any such written demand or claim from any Person
with respect to any such Environmental Liabilities, the Credit Parties agree to
promptly take action and thereafter diligently pursue the same to completion in
a manner necessary to cause the applicable Environmental Liabilities to be
remediated as soon as reasonably possible in accordance with all applicable
Requirements of Environmental Law.  EACH OF THE CREDIT PARTIES HEREBY INDEMNIFIES AND
AGREES TO HOLD THE AGENT, THE CANADIAN COLLATERAL AGENT AND THE LENDERS
HARMLESS FROM AND AGAINST ANY AND ALL LIABILITY, LOSS, DAMAGE, SUIT, ACTION OR
PROCEEDING ARISING OUT OF THEIR RESPECTIVE BUSINESSES OR THE BUSINESSES OF ANY
OF THE OTHER CREDIT PARTIES OR ANY SUBSIDIARIES OF ANY OF THEM, PERTAINING TO
ANY ENVIRONMENTAL LIABILITIES, INCLUDING WITHOUT LIMITATION, CLAIMS OF ANY
GOVERNMENTAL AUTHORITY OR ANY OTHER PERSON ARISING UNDER ANY REQUIREMENT OF
ENVIRONMENTAL LAW OR UNDER TORT, CONTRACT OR COMMON LAW; PROVIDED, THAT
THE FOREGOING INDEMNITY SHALL NOT APPLY TO THE EXTENT, BUT ONLY TO THE EXTENT,
THE APPLICABLE LIABILITY, LOSS, DAMAGE, SUIT, ACTION OR PROCEEDING IS
DETERMINED BY A FINAL JUDICIAL DECISION TO HAVE BEEN CAUSED BY THE WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION.

 

6.13         End of Fiscal
Year.  Cause each of its fiscal years
and the fiscal years of each of its Subsidiaries to end on December 31st of the applicable year.

 

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

 

94

 

contained in this Agreement and in each of the other Loan Documents at
all times and places and in the manner set forth therein, and except for the
filing of continuation and renewal statements and the making of other filings
by the Agent (or the Canadian Collateral Agent, as applicable) as secured party
or assignee, at all times take all actions necessary to maintain the Liens and
security interests provided for under or pursuant to this Agreement and the
Security Documents as valid perfected first priority Liens on the Collateral
intended to be covered thereby (subject only to other Liens expressly permitted
by Section 7.2 hereof) and supply all information to the Agent (or
the Canadian Collateral Agent, as applicable) necessary for such maintenance.

 

6.15         Collection of Receivables; Application of
Receivables Proceeds.

 

(a)           At all times after (i) Availability is less
than $25,000,000, or (ii) the occurrence of a Default or an Event of
Default (any such time, until the occurrence of a Dominion Termination Event, a
“Dominion Event”), and until such
time when Availability has exceeded $35,000,000 for sixty (60) consecutive days
and no Default or Event of Default is continuing (a “Dominion
Termination Event”), the Borrowers shall cause all payments
received by any Borrowers or any of their Subsidiaries (other than any
Guarantor, except as provided below) on account of Receivables of the Borrowers
(whether in the form of cash, checks, notes, drafts, bills of exchange, money
orders or otherwise) to be promptly deposited in the form received (but with
any endorsements of the applicable Borrower or Subsidiary necessary for deposit
or collection, and if received in funds other than U.S. dollars, with such
arrangements for conversion to U.S. dollars as may be acceptable to the Agent)
into one or more Collection Accounts of the Borrowers designated by the
Agent.  Funds received in a Collection
Account of a Borrower shall be subject to daily wire transfer to an account
designated by the Agent pursuant to arrangements with the applicable depository
that are acceptable to the Agent, and in connection therewith, the Agent (or
the Canadian Collateral Agent, as applicable) and JPMorgan are irrevocably
authorized to cause all collected funds on all Receivables received by the Agent
(or the Canadian Collateral Agent, as applicable) or JPMorgan from whatever
means, whether pursuant to any Tri-Party Agreement or otherwise, to be applied
by the Agent to reduce the outstanding balance of the Revolving Loans.  Upon the occurrence of a Dominion Event, and
from time to time thereafter until a Dominion Termination Event as the Agent
may require, funds held in any other deposit account of any Borrower shall be
remitted to the Agent, except as the Agent may permit to fund outstanding drafts
or transfers or otherwise in its discretion; and until the occurrence of a
Dominion Termination Event, funds contained in any account of any Borrower
shall be subject to withdrawal by the Agent only, as hereinafter provided,
except as otherwise expressly authorized by the Agent.  Upon the occurrence of a Dominion Event, the
Borrowers shall, at any time and from time to time upon request of the Agent,
liquidate any Permitted Investment Securities held by them and remit the
proceeds to the Agent.  Prior to the
occurrence of a Default or Event of Default, all remittances and payments that
are deposited with the Agent in accordance with this Section 6.15(a) will
be applied by the Agent on the same day received (or on the next Business Day
in the case of remittances and payments received after 11:00 a.m.) to
reduce the outstanding balance of the Revolving Loans, subject to final
collection in cash of the item deposited. 
After the occurrence of a Default or Event of Default, all remittances
and payments that are deposited with the Agent in accordance with this Section 6.15(a) will
be applied by the Agent in accordance with Section 2.7.  Upon the occurrence of a Dominion Event, and
until the occurrence of a Dominion Termination Event, each Guarantor shall be
subject to cash management arrangements (including with respect to 

 

95

 

payments received on account of Receivables, short term investments and
intercompany transfers of funds) pursuant to which funds in each such Guarantor’s
accounts may be applied to reduce the outstanding balance of the Revolving
Loans acceptable to the Agent and the Canadian Collateral Agent, whether or not
demand has been made under the relevant Guaranty.  Upon the occurrence of a Dominion Event, if
any Credit Party, or any other Person acting for or in concert with the Credit
Parties, receives any monies, checks, notes, drafts or other payments relating
to or as proceeds of Receivables or other Collateral except as contemplated by
this Section 6.15(a), the Credit Parties shall, or shall cause such
Person to, receive and hold such items in trust for, and as the sole and
exclusive property of, the Agent and the Canadian Collateral Agent (for the
benefit of the Lender Parties) and, immediately upon receipt thereof, remit the
same (or cause the same to be remitted) in hand to or as directed by the Agent.

 

(b)           Until the occurrence of a Dominion Event, the Credit
Parties shall be required, and hereby agree, to promptly deposit Receivable
payments when received into any Controlled Account maintained by the Credit
Parties pursuant to the terms hereof and designated to the Agent as a
Collection Account.  The Agent shall not
deliver any “sole control” activation notices under any Tri-Party Agreement until
the occurrence of a Dominion Event.  Upon
the occurrence of a Dominion Event, all amounts in each Controlled Account
shall be subject to the provisions of Section 6.15(a), and none of
such Controlled Accounts shall be utilized for disbursement purposes, except as
otherwise consented to by the Agent (or the Canadian Collateral Agent, as
applicable).

 

6.16         Receivables and Other Collateral Matters.  The Credit Parties shall maintain books and
records pertaining to the respective Collateral owned by each of them in
detail, form and scope as the Agent shall reasonably require, and concurrently
with the delivery by any Credit Party to the Agent (or the Canadian Collateral
Agent, as applicable) of any accounts receivable aging or any sales report
summary hereunder, the Credit Parties will disclose to the Agent (or the
Canadian Collateral Agent, as applicable) which Receivables, if any, arise out
of contracts with the United States or Canada or any department, agency or
instrumentality thereof, and will, upon request from the Agent (or the Canadian
Collateral Agent, as applicable), use commercially reasonable efforts to
execute or cause to be executed any instruments and take any steps required by
the Agent (or the Canadian Collateral Agent, as applicable) in order that all
monies due or to become due under any such contract shall be assigned to the
Agent (or the Canadian Collateral Agent, as applicable) and notice thereof
given under the Federal Assignment of Claims Act or any equivalent Canadian
statute.  The Credit Parties will,
promptly after any Responsible Officer of any of them learns thereof, report to
the Agent any material loss or destruction of, or substantial damage to, any
portion or component of the Collateral with fair market value in excess of
$500,000, and any other matters materially affecting the value, enforceability
or collectability of any of the Collateral with fair market value in excess of
$500,000.  If any amount payable under or
in connection with any Receivable is evidenced by a promissory note or other
instrument, as such terms are defined in the Uniform Commercial Code (or, where
applicable, or the PPSA (Nova Scotia)), such promissory note or instrument
shall be promptly pledged, endorsed, assigned and delivered to the Agent (or
the Canadian Collateral Agent, as applicable) as additional Collateral.  The Credit Parties shall not redate, nor
allow any of their Subsidiaries to redate, any invoice or sale, or without
written notice to the Agent, make or allow to be made sales on extended dating
beyond that customary in the industry. Finally, neither any 

 

96

 

Credit Party, nor any of their Subsidiaries, shall be entitled to
pledge the Agent’s or any Lender’s credit on any purchases or for any purpose
whatsoever.

 

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

 

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

 

6.19         Canadian Pension Plans; Canadian Benefit Plans.

 

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

 

(b)           All employer and employee payments, contributions
and premiums required to be remitted, paid to or in respect of each Canadian
Pension Plan or Canadian Benefit Plan shall be remitted or paid by the Credit
Parties in a timely fashion in accordance with the terms thereof, any funding
agreements and all applicable laws.

 

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

 

97

 

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

 

6.20         Conforming Leasehold Interests; Matters Relating to
Additional Real Property Collateral.

 

(a)           If any Credit Party acquires any Material Leasehold
Property after the Closing Date, the Credit Party shall use commercially
reasonable efforts to cause the landlord with respect to such Material
Leasehold Property to execute and deliver to the Agent waivers or
subordinations of any and all landlord rights (whether statutory or
contractual) held by such landlord with respect to any Collateral located on
such Material Leasehold Property.

 

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

 

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

 

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

 

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

 

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

 

(E)           Matters Relating to Flood
Hazard Properties.  (1) Evidence
as to whether any Additional Mortgaged Property that is located in the United
States or is a Mill Property is a Flood Hazard Property and (2) if any
such 

 

98

 

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

 

(F)           Title Insurance.  (1) If required by the Agent, ALTA mortgagee
title insurance policies (or the Canadian equivalent, as applicable) or
unconditional commitments therefor (the “Additional
Mortgage Policies”) issued by the Title Company with respect to
the Additional Mortgaged Property, in an amount not less than the fair market
value of the Additional Mortgaged Property, or such lesser amount as may be
reasonably satisfactory to the Agent, insuring fee simple title or leasehold
title, as applicable, to each such Additional Mortgaged Property vested in such
Credit Party and assuring the Agent that such Additional Mortgage creates a
valid and enforceable first priority Lien on such Additional Mortgaged
Property, subject only to any standard or other exceptions as may be reasonably
acceptable to the Agent and which appear as exceptions on Schedule B to
the applicable Additional Mortgage Policy, which Additional Mortgage Policy (a) shall
include endorsements (to the extent available) for customary matters reasonably
requested by the Agent, including, but not limited to, those endorsements
listed on Schedule 4.2(r) and (b) shall provide for
affirmative insurance and such reinsurance as may be reasonable and customary
and as the Agent may reasonably request, all of the foregoing in form and
substance reasonably satisfactory to the Agent; and (2) evidence
reasonably satisfactory to the Agent that such Credit Party has (a) delivered
to the Title Company all certificates and affidavits required by the Title
Company in connection with the issuance of the Additional Mortgage Policy and (b) paid
to the Title Company or to the appropriate Governmental Authorities all
expenses and premiums of the Title Company in connection with the issuance of
the Additional Mortgage Policy and all recording and stamp taxes (including
mortgage recording taxes, fees and other charges and intangible taxes) payable
in connection with recording the Additional Mortgage in the appropriate real
estate records;

 

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

 

(H)          Opinions of Counsel.  (1) A favorable opinion of counsel
(which counsel shall be reasonably satisfactory to the Agent), as to the due
authorization, execution and delivery by such Credit Party of such Additional
Mortgage and such other matters as the Agent may reasonably request, and (2) an
opinion of counsel (which counsel shall be reasonably satisfactory to the
Agent) in the state or province in which such Additional Mortgaged Property is
located with respect to the enforceability of the form of Additional Mortgages
to be recorded in such state or province and such other reasonable and
customary matters (including without limitation any matters governed by the
laws of such 

 

99

 

state regarding personal
property security interests in respect of any Collateral) as the Agent may
reasonably request, in each case in form and substance reasonably satisfactory
to the Agent;

 

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

 

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

 

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

 

7.             Negative Covenants.

 

The
Credit Parties covenant and agree with the Agent and the Lenders that prior to
the termination of this Agreement, the Credit Parties will not do any of the
following:

 

7.1           Indebtedness.  Create, incur, suffer or permit to exist, or
assume or guarantee, directly or indirectly, or become or remain liable with
respect to any Indebtedness, whether direct, indirect, absolute, contingent, or
otherwise, except the following:

 

(a)           Indebtedness to the Lenders and the Agent pursuant
hereto;

 

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

 

(c)           Purchase money Indebtedness (including the amount of
any Capital Lease Obligations required to be capitalized and included as a
liability on the consolidated balance sheet of the Credit Parties and their
Subsidiaries incurred to finance Capital Expenditures) 

 

100

 

including under conditional sales agreements and other title retention
arrangements but excluding purchase money Indebtedness incurred in respect of
Inventory; provided  that the aggregate amount of such purchase
money Indebtedness incurred during any fiscal year of the Credit Parties shall
not exceed $5,000,000;

 

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

 

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

 

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

 

(g)           Contingent Obligations of a Credit Party with
respect to (i) Indebtedness of another Credit Party that is permitted
hereunder or (ii) Indebtedness of an Offshore Entity that is permitted
under  Section 7.20;

 

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

 

(i)            Customary and prudent Hedging Obligations entered
into in the ordinary course of business with the Agent, any Lender or any of
their respective Affiliates for the sole purpose of protecting the Credit
Parties and their Subsidiaries against fluctuations in interest rates, currency
exchange rates, commodity (including pulp) prices and similar risks, so long as
such Hedging Obligations are not speculative in nature and are incurred in the
normal course of business and consistent with industry practices, and, with
respect to Hedging Obligations constituting Bank Products;

 

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

 

(k)           Indebtedness incurred in connection with the
financing of environmental remediation or Capital Expenditures made to acquire,
develop, construct, install, equip or replace existing Equipment, in each case
only to the extent (i) such Equipment is primarily intended to establish,
maintain or improve the compliance by such Credit Party with applicable
Environmental Law (including, as is necessary to maintain certain licenses or
permits held by the Credit Parties and required in the conduct of their
businesses), (ii) such Indebtedness does not exceed $30,000,000 in the
aggregate at any time outstanding, (iii) such Indebtedness (A) is
loaned by or guaranteed by a Governmental Authority or government-sponsored
entity and is 

 

101

 

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

 

(l)            unsecured letters of credit issued by any third
party for the account of any Credit Party, provided  that at no
time shall the sum of the Letter of Credit Exposure Amount plus the
outstanding face amount of all letters of credit issued pursuant to this Section 7.1(l) plus
the drawn and unreimbursed amount of such letters of credit exceed $20,000,000;

 

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

 

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

 

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

 

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

 

102

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

103

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

104

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)           The guarantees by the Credit Parties of any
obligations of any other Credit Party that are not prohibited by this Agreement
or of any Indebtedness of any other Credit Party if such Indebtedness so
guaranteed is permitted under the terms of Section 7.1 above; and

 

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

 

7.4           Mergers, Consolidations and Dispositions and
Acquisitions of Assets.  In
any single transaction or series of related transactions, directly or
indirectly:

 

105

 

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

 

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

 

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

 

(d)           Sell, assign, pledge, transfer or otherwise dispose
of, or in any way part with control of, any Stock of any of its Subsidiaries or
of any Offshore Entity or any Indebtedness or obligations of any character of
any of its Subsidiaries or of any Offshore Entity, or permit any such
Subsidiary or Offshore Entity to do so with respect to any Stock of any other
subsidiary or any Indebtedness or obligations of any character of any Credit
Party, any of their Subsidiaries or any Offshore Entity, or permit any of their
Subsidiaries or any of the Offshore Entities to dissolve or liquidate, or to
issue any additional Stock other than to the Credit Parties or, solely with
respect to Neenah Germany’s subsidiaries, to Neenah Germany or one of its
directly or indirectly wholly owned subsidiaries;

 

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

 

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

 

provided, however
that notwithstanding the foregoing, any of the following described
actions may be undertaken, so long as no Default or Event of Default then
exists or would exist immediately after giving effect to the applicable event:

 

(1)           any Subsidiary of any Credit
Party may merge or consolidate with any Credit Party or any other Subsidiary of
any Credit Party, provided, that if (i) one or more of the
entities so merging or consolidating was a Borrower, and if the surviving
entity is not yet a Borrower, such surviving entity must be a wholly-owned
Domestic Subsidiary and such surviving entity shall simultaneously with such
merger, execute and deliver to the Agent a Joinder Agreement with respect to
this Agreement, together with all requested Security Documents, as required at
such time by the Agent, appropriately completed in Proper Form, and (ii) one
or more of the entities so merging or consolidating was a Guarantor (and so
long as none of the entities was a Borrower, in which event clause (i) shall
apply), and if the surviving entity is not yet a Guarantor, such surviving
entity must be a wholly-owned Canadian Subsidiary and such surviving entity
shall simultaneously with such merger, execute and deliver to the Agent a
Guaranty or a Joinder 

 

106

 

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

 

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

 

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

 

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

 

107

 

(in each case for reasonably
equivalent value) Neenah Paper FR, LLC’s facility located in Ripon,
California;  (vii) sell, exchange,
lease, transfer or otherwise dispose of (in each case for reasonably equivalent
value) Nova Scotia Woodlands so long as the net cash proceeds (i.e., gross
proceeds net of reasonable and customary out-of-pocket transaction costs and
expenses incurred by the Credit Parties in connection with such transaction)
received in readily available funds by the Credit Parties upon the consummation
of such disposition are not less than $65,000,000; provided, that
the net cash proceeds received in connection therewith at any time are contemporaneously
applied in accordance with Section 2.7(c); (viii) sell,
exchange, lease, transfer or otherwise dispose of (in each case for reasonably
equivalent value) real Property having a fair market value not to exceed the sum
of (1) $2,000,000 for all such transactions in the aggregate in any
calendar year; plus (2) the excess (if any) of $2,000,000 over the
amount of dispositions pursuant to this clause (A) (viii) consummated
in the immediately preceding calendar year; and (ix) sell or otherwise dispose
of, for fair and adequate consideration any other equipment and fixtures having
a fair market value not to exceed $1,000,000 in the aggregate during the period
from the Closing Date through the Termination Date; provided  that,
upon the occurrence and during the continuation of a Dominion Event, all net
proceeds of any and all of the foregoing shall be paid to the Agent for
application in accordance with Section 2.7; and (B) any of the
Offshore Entities may (i) sell, exchange or otherwise dispose of marketable
investments in which their cash is invested in the ordinary course of business;
(ii) terminate, surrender or sublease a lease of real Property in the
ordinary course of business; (iii) sell or otherwise dispose of equipment
and fixtures that are obsolete, worn out or no longer needed in the business of
the Offshore Entities; (iv) in the case of Neenah Germany and its
subsidiaries, assign their accounts receivable, or any portion thereof, to
secure a line of credit in the maximum principal amount of €15,000,000; and (v) sell
or otherwise dispose of, for fair and adequate consideration, any other
equipment and fixtures having a fair market value not to exceed €1,500,000 in
the aggregate during the period from the Closing Date through the Termination
Date;

 

(5)           (i)  to the extent any
Collateral is sold or otherwise permanently disposed of as permitted by this Section 7.4,
such Collateral shall be sold or otherwise disposed of free and clear of the
Liens of the Security Documents and the Agent (or the Canadian Collateral
Agent, as applicable) shall take such actions, including executing and filing
appropriate releases, as are appropriate in connection therewith, and no
approval of any of Lenders shall be required therefor, and (ii) to the
extent any Collateral is leased as permitted by this Section 7.4,
the Parent or the applicable Credit Party may request that the Agent (or the
Canadian Collateral Agent, as applicable) enter into a subordination,
non-disturbance and attornment agreement in form and substance acceptable to 

 

108

 

the related lessee and to
the Agent or the Canadian Collateral Agent, as applicable (and no approval of
any of the Lenders shall be required therefor) and the Agent or the Canadian
Collateral Agent may require the delivery of Security Documents, including
without limitation, a collateral assignment of lease, in form and substance
reasonably acceptable to it; and

 

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

 

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

 

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

 

109

 

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

 

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

 

(b)           Permitted Investment Securities;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.8           ERISA Compliance.

 

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

 

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

 

110

 

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

 

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

 

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

 

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

 

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

 

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

 

7.11         Redemption, Dividends, Stock Issuance, Distributions
and Payments.  At any
time:

 

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

 

(b)           Declare or pay, directly or indirectly,  any dividend, except (i) dividends paid
to a Credit Party which is a direct parent of the Credit Party paying a
dividend, (ii) non-cash dividends paid to the holders of any Stock of the
Parent in the form of additional Stock of the Parent, and (iii) Cash
Dividends to the holders of any Stock of the Parent, so long as (A) no
Default or Event of Default exists on the date that the applicable Cash
Dividend is declared or paid, or would result from the payment thereof, (B) the
aggregate amount of such Cash Dividends paid during any twelve (12)-month
period does not exceed $10,000,000 in the aggregate, (C) such Cash
Dividend is legally declared and payable, (D) the Borrowers shall have pro
forma Availability of at least $25,000,000 on the date of such payment and, on
an average basis, for the sixty (60)-day period before the payment of such
dividends, in each case after giving effect to such payment, and (E) Borrower’s
Agent shall have (x) given the Agent at least five (5) Business Days
prior written notice specifying the amount and date of such proposed Cash
Dividend and, (y) if required by the Agent, submitted a certificate of a
Responsible Officer setting forth reasonably detailed calculations
demonstrating compliance with the required Availability test described above
and certifying that the other conditions set forth in this clause (b) have
been satisfied;

 

111

 

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

 

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

 

(e)           Redeem (whether as a result of mandatory or optional
redemption obligations or rights), purchase, defease or retire for value, or
make any principal payment on, any Subordinated Indebtedness, prior to the Termination
Date (other than any non-cash conversion to equity and any principal payments
on Indebtedness permitted under Section 7.1(f)); provided, that
each principal payment made with respect to an Unpledged Inter-Company Loan
must substantially coincide with a principal payment in the same amount under a
Pledged Inter-Company Loan, such that, after the initial advance on the
Unpledged Inter-Company Loan, the outstanding balance of the Pledged
Inter-Company Loans and the Unpledged Inter-Company Loans remain equal at all
times (after giving effect to any such substantially contemporaneous principal
payment).

 

7.12         Fixed Charge Coverage Ratio.

 

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

 

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

 

7.14         Sale and Lease-Back Transactions.  (a) Enter into any arrangement, directly
or indirectly, with any Person whereby any Credit Party shall sell or transfer
any Property, real or personal, which is used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
Property or other Property which such Credit Party intends to use for
substantially the same purpose or purposes as the Property being sold or
transferred, except for the sale of Property, the aggregate value of which does
not exceed $5,000,000 during the term of this Agreement, so long as (i) no
Default or Event of Default then exists or would exist immediately after giving
effect to such sale, and (ii) upon the occurrence and during the
continuation of a Dominion Event, the net proceeds of such sale are used to
prepay Revolving Loans pursuant to Section 2.5, or (b) cause
any Offshore Entity to enter into any arrangement, directly or indirectly, with
any Person whereby any Offshore Entity shall sell or transfer any Property,
real or personal, which is used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such Property or other
Property which such Offshore Entity intends to use for substantially the same
purpose or purposes as the Property being sold or transferred, except for the
sale of Property, the aggregate value of which does not, 

 

112

 

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

 

7.15         Change of Name or Place of Business.  Permit any Credit Party to change its
address, name, identity, type of organization, corporate structure (e.g. by
merger, consolidation, change in corporate form or otherwise), jurisdiction of
organization, location of its chief executive office or principal place of
business or the place it keeps its material books and records, unless the
Borrowers’ Agent has (a) notified the Agent and the Canadian Collateral
Agent of such change in writing at least ten (10) Business Days before the
effective date of such change, (b) taken such action, reasonably
satisfactory to the Agent (or the Canadian Collateral Agent, as applicable), to
have caused the Liens against all Collateral in favor of the Agent (or the Canadian
Collateral Agent, as applicable) for the ratable benefit of the Lender Parties
to be at all times fully perfected and in full force and effect and (c) delivered
such certificates of Governmental Authorities as the Agent (or the Canadian
Collateral Agent, as applicable) may require substantiating such change.

 

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

 

7.17         Tax Classification.  Elect, without the prior consent of the
Agent, a different classification for United States federal tax purposes than
the classification that such Credit Party, or such Subsidiary, as the case may
be, had when such Person became a party to this Agreement or any other Loan
Document.

 

7.18         Deposit Accounts.  (a) Establish any additional deposit
accounts for any purpose (i) which are not listed on Schedule 5.29
(as updated from time to time pursuant to the terms hereof) and (ii) unless
such additional deposit accounts are Controlled Accounts; (b) allow any of
Parent’s foreign exchange accounts identified in Schedule 5.29, each
with Bank of America, N.A., to remain open or to be reopened, or to hold any
funds of any Credit Party, unless such foreign exchange accounts are covered by
a Tri-Party Agreement containing arrangements satisfactory to the Agent with
respect to such accounts, or (c) allow (i) the aggregate balance of
one or more accounts heretofore or hereafter established in the ordinary course
of business as part of the administration of employee benefits or other
corporate-related service matters and not subject to a Tri-Party Agreement to
exceed $100,000 or (ii) allow any account referred to as a “Disbursement/Pass-Through Account”
on Schedule 5.29 (as in effect on the Closing Date) to have a
positive balance of funds of any Credit Party (except as specifically provided
in such Schedule as in effect on the Closing Date) unless such account is subject
to a Tri-Party Agreement.

 

113

 

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

 

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

 

8.             Events of Default and
Remedies.

 

8.1           Events of Default.  If any of the following events shall occur
and be continuing, then the Agent (or the Canadian Collateral Agent, as
applicable) may (and, if directed by the Required Lenders, shall), by written
notice (or facsimile notice) to the Borrowers’ Agent, take any or all of the following
actions at the same or different times:  (i) accelerate
the Termination Date and declare the Loans, all Letter of Credit Advances, the
Commitment Fees and all other Obligations then outstanding to be, and thereupon
the Loans, said Letter of Credit Advances, the Commitment Fees and all other
Obligations shall forthwith become, immediately due and payable, without
further notice of any kind, notice of intention to accelerate, presentment and
demand or protest, or other notice of any kind all of which are hereby
expressly waived by each Credit Party; (ii) terminate all or any portion
of the Commitments and any obligation to issue any additional Letters of
Credit; (iii) demand that the Credit Parties provide the Agent, for the
ratable benefit of the Lender Parties, and the Credit Parties jointly and
severally agree upon such demand to, provide cash collateral in an amount equal
to 110% of the aggregate Letter of Credit Exposure Amount then outstanding,
pursuant to Section 2.10(k); and (iv) exercise any and all
other rights pursuant to the Loan Documents or available under applicable law:

 

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

 

(b)           Any Credit Party or any Offshore Entity (i) shall
fail to pay when due, or within any applicable period of grace, any other
Indebtedness (excluding Indebtedness outstanding hereunder) in excess of
$5,000,000 in principal amount unless such payment is being contested in good
faith (by appropriate proceedings) and adequate reserves have been provided
therefor, or (ii) shall default (beyond any applicable grace and curative
periods) in any other manner with respect to any other Indebtedness (excluding
Indebtedness outstanding hereunder) in excess of $5,000,000 in principal amount
if the effect of any such default or event of default shall be to accelerate or
to permit the holder of any such other Indebtedness, at its option, to
accelerate the maturity of such Indebtedness prior to the stated maturity
thereof; or

 

114

 

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

 

(d)           Except as provided in Section 8.1(e) or
8.1(f) below, Default shall occur in the punctual and complete
performance or observance of any covenant, condition or agreement to be
observed or performed on the part of any Credit Party or any of their
Subsidiaries pursuant to the terms of any provision of this Agreement or any
other Loan Document, and such Default remains uncured fifteen (15) Business
Days after the earlier to occur of (i) the Agent giving written notice of
such Default to the Borrowers’ Agent or (ii) any Responsible Officer of
any Credit Party or any of their Subsidiaries acquired actual knowledge of the
existence of such Default; or

 

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

 

(f)            Default shall occur in the punctual and complete
performance or observance of any covenant, condition or agreement to be
observed or performed on the part of any Credit Party or any of their
Subsidiaries pursuant to the terms of Section 6.2, Sections 6.3(f) through
6.3(i), Section 6.9, Sections 7.1 through Section 7.20
hereof; or

 

(g)           Final judgment or judgments (or any decree or
decrees for the payment of any fine or any penalty) for the payment of an
uninsured money award in excess of $2,000,000 in the aggregate shall be
rendered against any Credit Party or any Offshore Entity and the same shall
remain undischarged and unpaid for a period of thirty (30) days during which
execution shall not be effectively stayed or bonded; or

 

(h)           Any Credit Party or any of their Subsidiaries shall
have concealed, removed, or permitted to be concealed or removed, any part of
its Property, with intent to hinder, delay or defraud its creditors or any of
them, or made or suffered a transfer of any of its Property which is or could
reasonably be expected to be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or

 

(i)            Any of the following shall occur where such
occurrence could reasonably be expected to result in any material
liability:  (i) a Reportable Event
shall have occurred with respect to a Plan; (ii) the filing by any Credit
Party, any ERISA Affiliate, or an administrator of any Plan of a notice of
intent to terminate such Plan under the provisions of Section 4041 of
ERISA; (iii) the receipt of notice by any Credit Party, any ERISA
Affiliate or an administrator of a Plan that the PBGC has instituted
proceedings to terminate (or appoint a trustee to administer) such a Plan; (iv) any
other event or condition exists which might, in the opinion of the Agent,
constitute grounds under the provisions of Section 4042 of ERISA for the
termination of or the appointment of a trustee to administer any Plan by the
PBGC; (v) a Plan shall fail to maintain a minimum funding standard
required by Section 412 of the Code for any plan year or a waiver of 

 

115

 

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

 

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

 

(k)           Any Credit Party or any of its Subsidiaries which is
a party to any Tri-Party Agreement fails to perform and observe, and/or cause
to be performed and observed, all material covenants, provisions and conditions
to be performed, discharged and observed by such Credit Party or Subsidiary
under the terms of any Tri-Party Agreement; or

 

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

 

(m)          A Change of Control shall occur.

 

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

 

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

 

116

 

(o)           An involuntary proceeding shall be commenced against
any Credit Party or any of their Subsidiaries or any Offshore Entity seeking
liquidation, reorganization, or other relief with respect to it or its debts
under any bankruptcy, insolvency, or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian, or
other similar official for it or a substantial part of its property, and such
involuntary proceeding shall remain undismissed and unstayed for a period of
60 days; or

 

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

 

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

 

(r)            Any Credit Party or any of their Subsidiaries shall
suffer any writ of attachment or execution or any similar process to be issued
or levied against it or any substantial part of its Property which is not
released, stayed, bonded or vacated within thirty (30) days after its issue or
levy; or

 

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

 

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

 

9.             The Agent; the
Canadian Collateral Agent.

 

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

 

117

 

references to the Canadian Collateral Agent, mutatis mutandis, and (b) include
reference to its (and the Canadian Collateral Agent’s) Affiliates and its own
(and the Canadian Collateral Agent’s) and its (and the Canadian Collateral
Agent’s) Affiliates’ officers, directors, employees’ and agents (including any
sub-agents)) (i) shall not have duties or responsibilities except those
expressly set forth in this Agreement, the Letters of Credit and the other Loan
Documents, and shall not by reason of this Agreement or any other Loan Document
be a trustee for any Lender; (ii) shall not be responsible to any Lender
for any recitals, statements, representations or warranties contained in this
Agreement, the Letters of Credit or any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by
any of them under, this Agreement, the Letters of Credit or any other Loan
Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Letters of Credit or any
other Loan Document or any other certificate or document referred to or
provided for herein or therein or any property covered thereby or for any
failure by any Party or any other Person (other than the Agent) to perform any
of its obligations hereunder or thereunder; (iii) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or under
the Letters of Credit or any other Loan Document except to the extent requested
by the Required Lenders, provided  that the Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Documents or applicable
law, and (iv) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under the Letters of Credit or any other Loan
Document or any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, INCLUDING PURSUANT TO ITS
OWN NEGLIGENCE, except to the extent it is determined by a final judicial
decision that such act or omission constituted its own gross negligence or
willful misconduct.  The Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by them with
reasonable care.  Without in any way
limiting any of the foregoing, each Lender acknowledges that the Agent shall
not have any greater responsibility in the operation of the Letters of Credit
than is specified in the Uniform Customs and Practice for Documentary Credits
(1993 Revision, International Chamber of Commerce Publication No. 500 or
any successor publication).  In any
foreclosure proceeding concerning any collateral for the Notes, each holder of
a Note if bidding for its own account or for its own account and the accounts
of other Lenders is prohibited from including in the amount of its bid an
amount to be applied as a credit against its Note or the Notes of the other
Lenders, instead such holder must bid in cash only.  However, in any such foreclosure proceeding,
the Agent may (but shall not be obligated to) submit a bid for all Lenders
(including itself) in the form of a credit against the Notes of all of the
Lenders, and the Agent or its designee may (but shall not be obligated to),
with the consent of the Required Lenders, accept title to such collateral for
and on behalf of all Lenders.  The Agent
may perform any and all its duties and exercise its rights and powers by or
through any one or more sub-agents appointed by the Agent in its reasonable
credit judgment.

 

9.2           Reliance.  The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (which may be counsel
for the Credit Parties), independent accountants and other experts selected by
the Agent.  As to any matters not
expressly provided for by this Agreement, the Letters of Credit or any other
Loan Document, the 

 

118

 

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

 

9.3           Defaults.  The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default unless it has
received notice from a Lender or the Borrowers’ Agent specifying such Default
or Event of Default and stating that such notice is a “Notice of Default.”  In the event that the Agent receives such a
notice of the occurrence of a Default or Event of Default, the Agent shall give
prompt notice thereof to the Lenders (and shall give each Lender prompt notice
of each such non-payment).  The Agent
shall (subject to Section 9.7 hereof) take such action with respect
to such Default or Event of Default as shall be directed by the Required
Lenders and within its rights under the Loan Documents and at law or in equity,
provided  that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, permitted or within its rights
under any of the Loan Documents or under applicable law with respect to such
Default or Event of Default.

 

9.4           Rights as a Lender.  With respect to its Commitment, the Loans and
any Letter of Credit Exposure Amount, the Agent in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term “Lender” or “Lenders” shall, unless the context
otherwise indicates, include the Agent in its individual capacity.  The Agent may (without having to account
therefor to any Lender) accept deposits from, lend money to and generally
engage in any kind of banking, trust, letter of credit, agency or other
business with any Credit Party (and any of their Affiliates) as if it were not
acting as the Agent, and the Agent may accept fees and other consideration from
any Credit Party (in addition to the fees heretofore agreed to between the
applicable Credit Parties and the Agent) for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.

 

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

 

119

 

or thereof or of any such other documents, INCLUDING THE NEGLIGENCE OF
SUCH INDEMNIFIED PERSON, but excluding any act or omission to the extent the
same is determined by a final judicial decision to have been caused by or
resulted from the gross negligence or willful misconduct of such indemnified
person.  The obligations of the Lenders
under this Section 9.5 shall survive the termination of this
Agreement and the repayment of the Indebtedness arising in connection with this
Agreement.

 

9.6           Non-Reliance on Agent and Other Lenders.  Each Lender agrees that it has received
current financial information with respect to the Credit Parties and the other
Parties and that it has  independently
and without reliance on the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis of
the Credit Parties and the other Parties and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions
in taking or not taking action under this Agreement or any of the other Loan
Documents.  The Agent shall not be
required to keep itself informed as to the performance or observance by any
Party of this Agreement, the Letters of Credit or any of the other Loan
Documents or any other document referred to or provided for herein or therein
or to inspect the properties or books of the Credit Parties or any Party.  Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent, under the Letters of Credit or the other Loan Documents, the Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the affairs, financial condition or business of
the Credit Parties or any other Party (or any of their Affiliates) which may
come into the possession of the Agent.

 

9.7           Failure to Act.  Except for action expressly required of the
Agent hereunder, under the Letters of Credit and under the other Loan
Documents, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 9.5 hereof against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.

 

9.8           Resignation or Removal of Agent.  Subject to the appointment and acceptance of
a successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Lenders and the Borrowers’ Agent, and the Agent may be
removed at any time with or without cause by the Required Lenders.  Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Agent reasonably
acceptable to the Borrowers.  If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent’s giving
of notice of resignation or the Required Lenders’ removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent reasonably acceptable to the Borrowers; provided, however,
that if an Event of Default has occurred which has not been waived or
cured to the satisfaction of the Agent and the Required Lenders, the Borrowers’
approval of a successor Agent shall not be required.  Any successor Agent shall be a Lender which
has an office in the United States with a combined capital and surplus of at
least $2,000,000,000, and any successor Canadian Collateral Agent shall be an
Affiliate of such a Lender.  Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, 

 

120

 

such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
hereunder.  Such successor Agent shall
promptly specify by notice to the Borrowers’ Agent and the Lenders its office
for the purpose of any notices and payments hereunder.  After any retiring Agent’s resignation or
removal hereunder as Agent, the provisions of this Section 9 shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as the Agent.

 

9.9           Syndication Agent; Joint Lead Arrangers; Joint
Bookrunners.  Any
syndication agent, joint lead arranger or joint bookrunner appointed in
connection with the Loan Documents or the transactions contemplated thereby, in
its capacity as such, shall have no rights, powers, duties or responsibilities,
and no rights, powers, duties or responsibilities shall be read into this
Agreement or any other Loan Document or otherwise exist on behalf of or against
any such syndication agent, joint lead arranger or joint bookrunner, in its
capacity as such (in each case without prejudice to the rights, powers, duties
or responsibilities of any such Person in its capacity as a Lender, Agent,
Canadian Collateral Agent, or otherwise as a Party to any Loan Document, other
than in its capacity as syndication agent, joint lead arranger or joint
bookrunner).  If any such syndication
agent, joint lead arranger or joint bookrunner resigns from such capacity, no
successor syndication agent, joint lead arranger or joint bookrunner, as applicable,
shall be appointed.

 

10.           Miscellaneous.

 

10.1         No Waiver.  No waiver of any Default or Event of Default
shall be deemed to be a waiver of any other Default or Event of Default.  No failure to exercise and no delay on the
part of the Agent, the Canadian Collateral Agent or any Lender in exercising
any right or power under any Loan Document or at law or in equity shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or the abandonment or discontinuance of steps to enforce any such
right or power, preclude any further or other exercise thereof or the exercise
of any other right or power.  No course
of dealing between the Credit Parties and the Agent or any Lender shall operate
as a waiver of any right or power of the Agent or any Lender.  No notice to or demand on any Credit Party or
any other Person shall entitle the Credit Parties or any other Person to any
other or further notice or demand in similar or other circumstances.

 

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

 

121

 

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

 

10.3         Governing Law.  UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN
DOCUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.

 

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

 

10.5         Counterparts.  This Agreement may be executed in several
identical counterparts, and by the parties hereto on separate counterparts, and
each counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.

 

10.6         Limitation of Interest.  The Credit Parties and the Lenders intend to
strictly comply with all applicable laws, including applicable usury laws, if
any.  Accordingly, the provisions of this
Section 10.6 shall govern and control over every other provision of
this Agreement or any other Loan Document which conflicts or is inconsistent
with this Section, even if such provision declares that it controls.  As used in this Section, the term “interest” includes the aggregate of all
charges, fees, benefits or other compensation which constitute interest under
applicable law, provided, that, to the maximum extent permitted
by applicable law, (a) any non-principal payment shall be characterized as
an expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in equal or in unequal parts during the full term of the
Loans and the Commitments so that interest for the entire term does not exceed
the Highest Lawful Rate.  In no event
shall the Borrowers or any other Person be obligated to pay, or the Agent or
any Lender have any right or privilege to reserve, receive or retain, (y) any
interest in excess of the maximum amount of nonusurious interest permitted
under the laws of the United States or of any state, if any, which are
applicable to the Agent or such Lender, respectively, or (z) total
interest in excess of the amount which the Agent or such Lender could lawfully
have contracted for, reserved, received, retained or charged had the interest
been calculated for the full term of the Loans at the Highest Lawful Rate, if
any, applicable to the Agent or such Lender. 
None of the terms and provisions contained in this Agreement or in any
other Loan Document which directly or indirectly relate to interest shall ever
be construed without reference to this Section 10.6, or be
construed to create a contract to pay any Lender for the use, forbearance or
detention of money at an interest rate in excess of the Highest Lawful Rate
applicable to such Lender.  If the term
of 

 

122

 

any Loans or the Notes is shortened by reason of acceleration of
maturity as a result of any Default or Event of Default or by any other cause,
or by reason of any required or permitted prepayment, and if for that (or any
other) reason the Agent or any Lender at any time is owed or receives (and/or
has received) interest in excess of interest calculated at the Highest Lawful
Rate applicable to the Agent or such Lender, then and in any such event all of
any such excess interest owed to or received by the Agent or such Lender shall
be canceled automatically as of the date of such acceleration, prepayment or
other event which produces the excess, and, if such excess interest has been
paid to the Agent or such Lender, it shall be credited pro  tanto
against the then-outstanding principal balance of the Borrowers’ obligations to
the Agent or such Lender, effective as of the date or dates when the event
occurs which causes it to be excess interest, until such excess is exhausted or
all of such principal has been fully paid and satisfied, whichever occurs
first, and any remaining balance of such excess shall be promptly refunded to
its payor.

 

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

 

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

 

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

 

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

 

123

 

Loan or a Letter of Credit) by any Lender hereunder, (b) breach by
any Credit Party of this Agreement or any other Loan Document, (c) violation
by any Credit Party or any of their Subsidiaries of any law, rule, regulation
or order including any Requirements of Environmental Law, (d) Liens or
security interests granted on any Property pursuant to or under the Loan
Documents, to the extent resulting from any Hazardous Substance located in, on
or under any such Property, (e) ownership by the Lenders, the Agent or the
Canadian Collateral Agent of any Property following foreclosure under the Loan
Documents, to the extent such losses, liabilities, claims, costs or damages
arise out of or result from any Hazardous Substance, located in, on or under
such Property prior to or at the time of such foreclosure, including losses,
liabilities, claims, costs or damages which are imposed upon Persons under laws
relating to or regulating Hazardous Substances, solely by virtue of ownership, (f) any
Lender, the Agent or the Canadian Collateral Agent being deemed an operator of
any such Property by a court or other regulatory or administrative agency or
tribunal or other third party, to the extent such losses, liabilities, claims,
costs or damages arise out of or result from any Hazardous Substance,
petroleum, petroleum product or petroleum waste located in on or under such
Property at or prior to any foreclosure thereon under the Loan Document, or (g) investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to any of the foregoing, and the Borrowers agree to
reimburse the Agent, the Canadian Collateral Agent and each Lender, and each
Affiliate thereof and their respective directors, officers, employees,
partners, counsel and agents, upon demand for any out-of-pocket expenses
(including reasonable legal fees) and costs incurred in connection with any
such investigation or proceeding, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIM
OR DAMAGE RESULTS FROM THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON; but
excluding any such losses, liabilities, claims, costs, damages or expenses
incurred by a Person or any Affiliate thereof or their respective directors,
officers, employees, partners, counsel or agents to the extent the same is
determined by a final judicial decision to have been caused by or resulted from
the gross negligence or willful misconduct of such Person, Affiliate, director,
officer, employee, partner, counsel or agent. 
No party hereto, nor any other Person indemnified hereunder, shall be
liable for any damages arising from the use by others of information or other
materials obtained through electronic, telecommunications or other information
transmission systems or for any special, indirect, consequential or punitive
damages in connection with the Loan Documents or the transaction contemplated
thereby.

 

10.11       Amendments, Waivers, Etc.  No amendment, modification or waiver of any
provision of this Agreement, the Notes or any other Loan Document, nor any consent
to any departure by the Credit Parties or any of their Subsidiaries, nor by the
Agent, the Canadian Collateral Agent or any Lenders therefrom, shall in any
event be effective unless the same shall be agreed or consented to in writing
by the Required Lenders and the Borrowers, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, that no such amendment, waiver or
consent shall, unless consented to in writing by each affected Lender
(excluding a Defaulting Lender except with respect to clause (a)), do any of
the following:  (a) increase the
Total Commitment or any Commitment of any such Lender  or subject the Agent, the Canadian Collateral
Agent or any such Lender to any additional obligations; (b) reduce the
principal of, or interest on, any Loan, any Letter of Credit Exposure Amount or
any fee hereunder (provided, that any waiver of Default Rate
interest shall

 

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not be considered a reduction of interest); (c) waive or postpone
any scheduled date fixed for any payment of principal of, or interest on, any
Loan, any Letter of Credit Exposure Amount or any fee or other sum to be paid
hereunder; (d) change the percentage of any of the Commitments or of the
aggregate unpaid principal amount of any of the Loans, any Letter of Credit
Exposure Amount, or the number of Lenders which shall be required for the
Lenders or any of them to take any action under this Agreement; (e) increase
any of the applicable Borrowing Base advance rates or sublimits; (f) change
any provision contained in Sections 2.2(d), 2.2(e), 2.7,
2.11, 10.9(b) or 10.10 hereof or this Section 10.11
or Section 10.16 hereof; (g) release the Borrowers from liability
for any of the Obligations; (h) release any Guarantor from any Guaranty; (i) other
than as expressly permitted by this Agreement, release any Collateral for any
of the Obligations if the value of such Collateral (excluding the value of all
other Collateral released pursuant to  Section 7.4(f)(4) or 10.21(f) hereof)
exceeds $2,000,000 in the aggregate, as reasonably determined by the Agent; (j) change
any of the definitions of “Obligations”
or “Required Lenders” contained
herein; or (k) change any of the definitions of “Eligible Equipment,” “Eligible Inventory,” “Eligible Real Estate,” “Eligible Receivables,” “Ineligible Receivables,” or “Ineligible Inventory” contained herein, if
the effect of any such change would be to materially increase the Borrowing
Base, and provided  further  that nothing in this Section 10.11
shall affect, limit or restrict the Agent’s right to establish, fix, reduce,
increase or otherwise revise any standards of eligibility for any items
included within the Borrowing Base or any Reserves, from time to time in
accordance with other provisions of this Agreement and subject to the
limitations set forth herein.  Anything
in this Section 10.11 to the contrary notwithstanding, no
amendment, waiver or consent shall be made with respect to Section 9
without the written consent of the Agent and the Canadian Collateral Agent, and
no amendment, waiver or consent shall amend, modify or otherwise affect the
rights or duties of the Swingline Lender hereunder without the prior written
consent of the Swingline Lender. 
Notwithstanding any contrary provision hereof, if any Lender (a) fails
to consent to any of the above-described items requiring the unanimous consent
of the Lenders when such consent has been agreed to by the Agent and the
Required Lenders, (b) is a Defaulting Lender hereunder, or (c) requests
compensation under Section 2.9(d) and/or Section 10.16,
the Agent or the Borrowers shall be entitled to cause such non-consenting
Lender to be replaced hereunder by an Eligible Assignee in compliance with all
relevant provisions of Section 10.12 hereof without payment of any
prepayment or termination fee. In such event, such non-consenting Lender agrees
to abide by the relevant provisions of Section 10.12 hereof in
connection with the replacement of such non-consenting Lender by the Eligible
Assignee secured by the Agent or the Borrowers. 
Notwithstanding the foregoing right of the Borrowers to replace a Lender
that requests compensation under Section 2.9(d) and/or Section 10.16,
the Borrowers shall continue to be obligated to pay such Lender all amounts
owing under Section 2.9(d) and/or Section 10.16
for the period such Lender remains a Lender hereunder.  Notwithstanding the foregoing right of the
Borrowers to replace any such non-consenting Lender, neither the Agent nor any
Lender shall have any obligation to the Borrowers to find or locate any
substitute lender or lenders to replace any such non-consenting Lender.

 

10.12       Successors and Assigns.

 

(a)           This Agreement shall be binding upon and inure to
the benefit of the Credit Parties, the Agent, the Canadian Collateral Agent and
the Lenders and their respective successors and permitted assigns, provided
that the undertaking of the Lenders hereunder to 

 

125

 

make Loans to the Borrowers and to issue Letters of Credit for the
account of the Borrowers shall not inure to the benefit of any successor of the
Borrowers, other than a successor expressly permitted by the terms of this
Agreement. The Borrowers may not assign or transfer any of their rights or
obligations hereunder without the prior written consent of all of the Lenders
(and any attempted assignment or transfer by the Borrowers without such consent
shall be null and void), and no Lender may assign or otherwise transfer its
rights or obligations hereunder except in accordance with this Section 10.12.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than (i) the
parties hereto, their respective successors and assigns permitted hereby, (ii) any
participant of a Lender (to the extent provided in subparagraph (b) below),
and (iii) to the extent expressly set forth herein, the Affiliates of the
Agent and each of the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

(b)           Each Lender may sell participations to any Person in
all or part of any Loan, or all or part of its Notes, the Letter of Credit
Exposure Amount, the Swingline Exposure or Commitments, to another bank or
other entity, in which event, without limiting the foregoing, the provisions of
Sections 10.10 and Section 10.16 shall inure to the
benefit of each purchaser of a participation and the pro-rata treatment of
payments, as described in Section 2.12, shall be determined as if
such Lender had not sold such participation. 
In the event any Lender shall sell any participation:  (i) the Borrowers, the Agent, the
Canadian Collateral Agent and the other Lenders shall continue to deal solely
and directly with such selling Lender in connection with such selling Lender’s
rights and obligations under the Loan Documents (including the Note(s) held
by such selling Lender), (ii) such Lender shall retain the sole right and
responsibility to enforce the obligations of the Borrowers relating to the
Loans, Letter of Credit Exposure Amount and Swingline Exposure, including the
right to approve any amendment, modification or waiver of any provision of this
Agreement other than (and then only if expressly permitted by the applicable
participation agreement) amendments, modifications or waivers with respect to (1) any
reduction of fees payable hereunder to the Lender, (2) any reduction of
the amount of principal or the rate of interest payable on, or the dates fixed
for the scheduled repayment of principal of, the Loans and other sums to be
paid to the Lenders hereunder, and (3) any postponement of any date for
the payment of any amount payable in respect of the Loans of such Lender, and (iii) the
Borrowers agree, to the fullest extent they may effectively do so under
applicable law, that any participant of a Lender may exercise all rights of
set-off, bankers’ lien, counterclaim or similar rights with respect to such
participation as fully as if such participant were a direct holder of Loans if
such Lender has previously given notice of such participation to the Borrowers.

 

(c)           Each Lender may assign to one or more Lenders or
Eligible Assignees all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitment and the same
portion of the related Loans at the time owing to it, the related Note or Notes
held by it and its Letter of Credit Exposure Amount); provided, however,
that, (i) the Agent and the Borrowers must give their respective
prior written consent, which consent will not be unreasonably withheld,
conditioned or delayed (except that the Borrowers’ consent to any such
assignment shall not be required if (A) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund or (B) an Event of Default has
occurred which has not been waived or cured to the satisfaction of the Agent
and the Required Lenders), (ii) the aggregate amount of the applicable
Commitment, Loans, Letter of Credit Exposure Amount and 

 

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Swingline Exposure (without duplication) of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance (as defined below) with respect to such assignment is delivered to
the Agent) shall in no event be less than $5,000,000 (except for certain
exceptions approved by the Borrowers and the Agent) and shall be in an amount
that is an integral multiple of $1,000,000 (unless all of the assigning Lender’s
applicable Commitment, Loans, Letter of Credit Exposure Amount and Swingline
Exposure is being assigned); (iii) the aggregate amount of the applicable
Commitment and/or Loans of the assigning Lender immediately after each partial
assignment must be at least $5,000,000 (except for certain exceptions approved
by the Borrowers and the Agent) and shall be in an amount which is an integral
multiple of $1,000,000; provided, however, that upon the
occurrence and during the continuance of any Event of Default, any Lender shall
be entitled to assign to one or more Lenders or Eligible Assignees all of such
assigning Lender’s Commitment, Loans, Letter of Credit Exposure Amount and
Swingline Exposure in accordance with the other terms of this Section 10.12;
and (iv) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance and recording in its records, and to the
Borrowers’ Agent, for its acceptance on behalf of the Borrowers if the
Borrowers’ approval of such assignment is otherwise required under the terms of
this Section 10.12, an Assignment and Acceptance in substantially
the form of Exhibit P annexed hereto, or in such other form as may
be approved by the Agent (each an “Assignment
and Acceptance”) with blanks appropriately completed, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $3,500 (for which the Borrowers shall have no
liability).  Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five (5) Business
Days after the execution thereof, unless a shorter period of time may be agreed
to by the Agent in its sole and absolute discretion, (A) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (B) the Lender thereunder shall, to the extent provided in
such assignment, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).

 

(d)           By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows:  (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Lender assignor
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
any Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any other instrument
or document furnished pursuant thereto; (ii) such assignor Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Credit Parties or any of their Subsidiaries or the
performance or observance by the Credit Parties of any of their obligations
under any of the Loan Documents; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
copies of the financial statements of the Credit Parties previously delivered
in accordance herewith and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it will keep
confidential all information with 

 

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respect to the Credit Parties furnished to it by the Credit Parties,
such assignor Lender, the Agent or the Canadian Collateral Agent (other than
information generally available to the public or otherwise available to the
Agent on a non-confidential basis or otherwise permitted pursuant to the terms
of this Agreement); (v) such assignee will, independently and without
reliance upon the Agent, the Canadian Collateral Agent, such assignor Lender or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance
with their terms all obligations that by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

(e)           The Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at its office a copy of each Assignment and
Acceptance delivered to it and a register containing the names and addresses of
the Lenders and the Commitments of, and principal amount of the Loans owing to,
and the Letter of Credit Exposure Amount and Swingline Exposure of, each Lender
from time to time (the “Register”).  The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrowers, the Agent, the Canadian
Collateral Agent and the Lenders shall treat each person the name of which is
recorded therein as a Lender hereunder for all purposes of the Loan Documents.  Such records shall be available for
inspection by the Borrowers, the Canadian Collateral Agent or any Lender at any
reasonable time and from time to the upon reasonable prior notice.

 

(f)            Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and the assignee thereunder together with the
Note(s) subject to such assignment, the written consent to such assignment
and the fee payable in respect thereto, the Agent shall, if such Assignment and
Acceptance has been completed with blanks appropriately filled, (i) accept
such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the
Borrowers and the Lenders. 
Contemporaneously with the receipt by the Borrowers of such Assignment
and Acceptance and the surrendered Note(s), the Borrowers, at their own
expense, shall execute and deliver to the Agent in exchange for the surrendered
Note(s), a new Note or Notes payable to the order of such assignee in an amount
equal to the applicable Commitment, Loans, Letter of Credit Exposure Amount and
Swingline Exposure (without duplication) assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained
Commitments, Loans, Letter of Credit Exposure Amount and/or Swingline Exposure
hereunder, a new Note or Notes to the order of the assigning Lender in an
amount equal to the applicable Commitment, Loans, Letter of Credit Exposure
Amount and/or Swingline Exposure retained by it hereunder.  Such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note(s), shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of the surrendered Note(s).  Such surrendered Note shall be marked
canceled and returned to the Borrowers’ Agent.

 

(g)           Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section 10.12,
disclose to the assignee or participant or proposed assignee or participant,
any information relating to the Credit Parties 

 

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and/or any Subsidiary of the Credit Parties furnished to such Lender by
or on behalf of the Credit Parties or such applicable Subsidiary, so long as
such assignee or participant or proposed assignee or participant confirms that
it will keep confidential all information with respect to the Credit Parties
furnished to it by the Credit Parties, such assignor Lender, the Agent or the
Canadian Collateral Agent (other than information generally available to the
public or otherwise available to the Agent on a non-confidential basis or
otherwise permitted pursuant to the terms of this Agreement).

 

(h)           Notwithstanding anything herein to the contrary, any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation, any pledge or assignment to secure obligations
to a Federal Reserve Bank, and this Section shall not apply to any such
pledge or assignment of a security interest; provided  that no
such pledge or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.

 

10.13       Entire Agreement.  This Agreement and the other Loan Documents
embody the entire agreement and understanding among the Credit Parties, the
Agent, the Canadian Collateral Agent and the Lenders relating to the subject
matter hereof and supersede all prior proposals, agreements and understandings
relating to the subject matter hereof. 
Any conflict between the provisions of this Agreement and the provisions
of any other Loan Documents shall be governed by the provisions of this
Agreement.  The Credit Parties certify
that they are relying on no representation, warranty, covenant or agreement
except for those set forth in this Agreement and the other Loan Documents of
even date herewith.

 

10.14       Severability.  If any provision of any Loan Documents shall
be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions shall not
be affected or impaired thereby.

 

10.15       Disclosures.  Every reference in the Loan Documents to
disclosures of the Borrower or other Credit Parties to the Agent and the
Lenders in writing, to the extent that such references refer to disclosures at
or prior to the execution of this Agreement, shall be deemed strictly to refer
only to written disclosures delivered to the Agent and the Lenders in an
orderly manner prior to or concurrently with the execution hereof.

 

10.16       Capital Adequacy.  Without duplication of the provisions of Section 2.9:

 

(a)           If after the date of this Agreement, any Lender
shall have determined that the adoption or effectiveness (regardless of whether
previously announced) after the date of this Agreement of any applicable Legal
Requirement or treaty regarding capital adequacy, or any change therein after
the date of this Agreement, or any change in the interpretation or
administration thereof by any Governmental Authority or comparable agency
charged with the interpretation or administration thereof after the date of this
Agreement, or compliance by any Lender with any request or directive regarding
capital adequacy made or adopted after the date of this Agreement (whether or
not having the force of law) of any such Governmental Authority, has or would
have the effect of increasing the cost of, or reducing the rate of return on
the capital of such Lender (or any holding company of which such Lender is a
part) as a consequence of its 

 

129

 

obligations hereunder or under any Letter of Credit or its Note to a
level below that which such Lender or holding company could have achieved but
for such adoption, change or compliance by an amount deemed by such Lender to
be material, then from time to time, upon demand by such Lender (with a copy to
the Agent) in the form of a certificate stating the cause of such demand and
reasonably detailed calculations therefor, the Borrowers (subject to Section 10.6
hereof) agree to pay to such Lender such additional amount or amounts as will
compensate such Lender or holding company for such reduction.

 

(b)           The certificate of any Lender setting forth such
amount or amounts as shall be necessary to compensate such Lender or its
holding company as specified in Section 10.16(a) above (and
setting forth the calculation thereof in reasonable detail) shall be conclusive
and binding, absent manifest error.  The
Borrowers shall pay such Lender the amount shown as due on any such certificate
within five (5) Business Days after such Lender delivers such certificate.  In preparing such certificate, such Lender
may employ such assumptions and allocations of costs and expenses as it shall
in good faith deem reasonable and may use any reasonable averaging and
attribution method.

 

(c)           If any Lender requests compensation from the
Borrowers under this Section 10.16 or under Sections 2.9(b) or
10.17, then at any time within 120 days after receipt by the
Borrowers’ Agent of the certificate from such Lender regarding the
circumstances and calculation of the applicable compensation so requested, the
Borrowers shall have the right to seek and obtain one or more substitute
lenders approved by the Agent (which approval shall not be unreasonably
withheld so long as each such substitute lender is an Eligible Assignee) to replace
such Lender hereunder in compliance with all relevant provisions of Section 10.12
hereof.  In such event, the Agent or the
Borrowers shall be entitled to cause such Lender so requesting compensation to
be replaced hereunder by an Eligible Assignee in compliance with all relevant
provisions of Section 10.12 hereof without payment of any
prepayment or termination fee, and, any such Lender so requesting compensation
agrees to abide by the relevant provisions of Section 10.12 hereof
in connection with the replacement of such non-consenting Lender by the
Eligible Assignee secured by the Agent or the Borrowers.  Contemporaneously with the replacement of
such Lender hereunder with one or more such substitute lenders, the Borrowers
shall cause such substitute lender(s) to pay in full, as the purchase
price for such assignment, the Obligations owed to such replaced Lender,
including all accrued, unpaid interest thereon and any Consequential Loss owing
by the Borrowers to such replaced Lender as a result of such payment.  Notwithstanding the foregoing terms and
provisions of this Section 10.16, (i) the Borrowers shall
remain obligated to make timely payment of the additional compensation set
forth in the certificate presented to the Borrowers by such replaced Lender under
the terms of Section 10.16(b) above for the periods prior to
the applicable replacement date, and (ii) neither the Agent nor any Lender
shall have any obligation to the Borrowers to find or locate any substitute
lender or lenders to replace any Lender requesting compensation from the
Borrowers under this Section 10.16.

 

(d)           Failure or delay on the part of any Lender Party to
demand compensation pursuant to this Section 10.16 or under Sections 2.9(b) or
10.17 shall not constitute a waiver of such Lender Party’s right to
demand such compensation; provided  that the Borrower shall not be
required to compensate any Lender Party pursuant to any such section for any
increased costs or reductions incurred more than one hundred eighty
(180) days prior to the date that such Lender 

 

130

 

Party (or the Agent on behalf of such Lender Party) notifies the
Borrower of the circumstance giving rise to such increased costs or reductions
and of such Lender Party’s intention to claim compensation therefor; provided
further  that, if the circumstance giving rise to such increased
costs or reductions arises with retroactive effect, then the one hundred eighty
(180)-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

10.17       Taxes.

 

(a)           As used in this Section 10.17, the
following terms shall have the following meanings:

 

(i)            “Indemnifiable Tax” means any Tax, but
excluding, in any case, any Tax that (A) would not be imposed in respect
of a payment to a Lender or a holder of any of the Notes under this Agreement,
under the Notes held by such holder, under any Letter of Credit or under any of
the other Loan Documents except for a present or former connection between the
jurisdiction of the Governmental Authority imposing such Tax and such holder
(or a shareholder or other Person with an interest in such holder), including a
connection arising from such holder’s (or shareholder of such holder or such
other Person) being or having been a citizen or resident of such jurisdiction,
or being or having been organized, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such Lender or holder having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement, the Notes
held by such holder, any Letter of Credit or any other Loan Documents, or (B) is
an income or franchise tax imposed on net income, net profits or gross receipts
by any Governmental Authority of a jurisdiction with respect to which any
Lender, a holder of any of the Notes, an issuer of any Letter of Credit or a
recipient of any payment under this Agreement or any of the other Loan
Documents has a present or former connection, including a connection arising
from such holder’s, issuer’s or recipient’s, as the case may be (or a
shareholder or other Person with an interest in such holder, issuer or
recipient, as the case may be), being or having been a citizen or resident of
such jurisdiction, or being or having been organized, present or engaged in a
trade or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such Lender, holder, issuer, or recipient, as
the case may be, having executed, delivered, performed its obligations or
received a payment under, or enforced, this Agreement, the Notes held by such
holder, any Letter of Credit or any other Loan Documents.

 

(ii)           “Other Tax” means any present or future
recording, stamp, documentary, excise, transfer, sales, property or similar
tax, levy, impost, duty, charge, assessment or fee arising from any payment
made under this Agreement, any Note, any Letter of Credit or any other Loan
Document or from the execution, delivery or enforcement of any Loan Document.

 

(iii)          “Tax” means any present or future tax,
levy, impost, duty, charge, assessment or fee of any nature (including interest
thereon and penalties and additions thereto) that is imposed by any
Governmental Authority in respect of a payment to a 

 

131

 

holder of any of the Notes
under this Agreement, under the Notes or under any of the other Loan Documents.

 

(b)           If any Credit Party is required by any applicable
Legal Requirement to make any deduction or withholding for or on account of any
Tax from any payment to be made by it under this Agreement, under the Notes,
under any Letter of Credit or under any other Loan Documents, then the Credit
Party shall (A) promptly notify the applicable Lender, the holder of Notes
or other relevant Persons hereunder that is entitled to such payment of such
requirement to so deduct or withhold such Tax, (B) pay to the relevant
Governmental Authorities the full amount required to be so deducted or
withheld, (C) promptly forward to such Lender, holder or other relevant
Person an official receipt (or certified copies thereof), or other
documentation reasonably acceptable to such holder or other relevant Person,
evidencing such payment to such Governmental Authorities and (D) if such
Tax is an Indemnifiable Tax, pay to such Lender, holder or other relevant
Person, in addition to whatever net amount of such payment is paid to such
holder or other relevant Person, such additional amount as is necessary to
ensure that the total amount actually received by such holder or other relevant
Person (free and clear of Indemnifiable Tax imposed on or with respect to such
additional amount) will equal the full amount of the payment such holder or
other relevant Person would have received had no such deduction or withholding
been required.

 

(c)           In addition, the relevant Credit Party or Credit
Parties shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(d)           Without duplication of the Credit Parties’
obligations on account of Indemnifiable Taxes and Other Taxes pursuant to Sections 10.17(b) and
10.17(c), the Credit Parties shall indemnify the Agent and each Lender,
within ten (10) Business Days after written demand therefor, for the full
amount of any Indemnifiable Taxes or Other Taxes paid by the Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Credit Parties under this Agreement, any Note, any
Letter of Credit or any other Loan Document (including Indemnifiable Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 10.17) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnifiable Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. 
A certificate as to the amount of such payment or liability, describing
the requested amounts in reasonable detail, delivered to the Credit Parties by
a Lender, or by the Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

 

(e)           Each Lender or holder of a Note shall, upon request
by the Credit Parties, take requested measures to mitigate the amount of
Indemnifiable Tax required to be deducted or withheld from any payment made by
the Credit Parties under this Agreement, under the Notes or under any other
Loan Documents if such measures can, in the sole and absolute opinion of such
Lender or holder, be taken without such Person suffering any economic, legal,
regulatory or other disadvantage (provided, however, that
no such Person shall be required to designate a funding office that is not
located in the United States of America).

 

(f)            Any Foreign Lender that is entitled to an exemption
from or reduction of the deduction, withholding or payment of an Indemnifiable
Tax or Other Tax under the law of 

 

132

 

the United States or the jurisdictions in which the Credit Parties are
located (or any political subdivision thereof), or any treaty to which any such
jurisdiction is a party, with respect to payments under this Agreement, under
any Note, under any Letter of Credit or under any other Loan Document shall
deliver to the Credit Parties and the Agent, at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Credit Parties as will permit
such payments to be made without deduction or withholding or at a reduced rate.  Without limiting the generality of the
foregoing, in the event that the relevant Credit Party is resident for tax
purposes in the United States, any Foreign Lender shall deliver to the Credit
Party and the Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the request
of the Credit Parties or the Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:

 

(i)            duly completed copies of IRS
Form W-8BEN claiming eligibility for benefits of an income tax treaty to
which the United States is a party,

 

(ii)           duly completed copies of IRS
Form W-8ECI,

 

(iii)          in the case of a Foreign
Lender claiming the benefits of the exemption for portfolio interest under
section 881(c) of the Code, (x) a certificate to the effect that
such Foreign Lender is not (A) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Credit
Party within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation”
described in section 881(c)(3)(C) of the Code and (y) duly
completed copies of IRS Form W-8BEN, or

 

(iv)          any other form prescribed by
applicable law as a basis for claiming exemption from U.S. federal income tax
withholding duly completed together with such supplementary documentation as
may be prescribed by applicable law,

 

in
all cases properly completed and duly executed by such Foreign Lender claiming
complete exemption from withholding of U.S. federal income tax on all payments
by the Credit Parties under this Agreement, under any Note, under any Letter of
Credit or under any other Loan Document. 
The Credit Parties shall not be required to pay additional amounts to
any Foreign Lender pursuant to this Section 10.17 to the extent
that the obligation to pay such additional amounts would not have arisen but
for the failure of such Foreign Lender to comply with this clause (f) (unless
such failure is due to a change in treaty, law or regulation, or any
interpretation or administration thereof by any Governmental Authority,
occurring after the date on which a form, certificate or other document
originally was required to be provided).

 

(g)           Each Lender and each Note holder agrees that if, in
its good faith opinion, it has subsequently recovered or received a permanent
net tax benefit with respect to any amounts of Taxes (i) previously paid
by it and as to which it has been indemnified by or on behalf of the Borrowers
or (ii) previously deducted by the Credit Parties (including, without
limitation, any Indemnifiable Taxes deducted from any additional amounts paid
under clause (b) above), the relevant Lender or Note holder, as the
case may be, shall reimburse the Credit Parties 

 

133

 

to the extent of the amount of any such recovery or permanent net tax
benefit (but only to the extent of any indemnity payments made, or additional
amounts paid, by or on behalf of the Credit Parties under this Section 10.17
with respect to the Taxes giving rise to such recovery or tax benefit); provided,
however, that the Credit Parties, upon the request of the Lender
or Note holder, as the case may be, agree to repay to such Lender or Note
holder, as the case may be, the amount paid over to the Credit Parties
(together with penalties, interest or other charges), in the event such Lender
or Note holder is required to repay such amount to the relevant Governmental Authority.

 

10.18       Waiver of Claim.  Each Borrower hereby waives and releases the
Agent, the Canadian Collateral Agent and all Lenders from any and all claims or
causes of action which the Borrowers or any of them may own, hold or claim in
respect of any of the Agent, the Canadian Collateral Agent or any Lenders as of
the date of this Agreement.

 

10.19       Right of Setoff.  The Lender Parties each are hereby authorized
at any time and from time to time during the existence of an Event of Default
or a Dominion Event, without notice to any Credit Party (any such notice being
expressly waived by the Credit Parties by their execution of the applicable
Loan Documents), to setoff and apply any and all deposits (general or special,
time or demand, provisional or final, whether or not such setoff results in any
loss of interest or other penalty, and including without limitation all
certificates of deposit) at any time held, and any other funds or property at
any time held, and other Indebtedness at any time owing by the Agent, the
Canadian Collateral Agent or such other Lender Party to or for the credit or
the account of any such Credit Party against any and all of the Obligations
irrespective of whether or not Agent, the Canadian Collateral Agent or such
other Lender Party shall have made any demand under this Agreement, the Notes
or any other Loan Document.  Each Credit
Party (by their execution of the applicable Loan Documents) also hereby grants
to Agent, the Canadian Collateral Agent and each of the other Lender Parties a security
interest in and hereby transfers, assigns, sets over, and conveys to the Agent,
the Canadian Collateral Agent and to each of the other Lender Parties, as
security for payment of all Obligations, all such deposits, funds or property
of such Credit Party or Indebtedness of the Agent, the Canadian Collateral
Agent or any other Lender Party to any such Credit Party.  Should the right of the Agent, the Canadian
Collateral Agent or any other Lender Party to realize funds in any manner set
forth hereinabove be challenged and any application of such funds be reversed,
whether by court order or otherwise, the Lenders shall make restitution or
refund to the applicable Credit Parties pro rata in accordance with their
respective Commitment Percentages.  Each
Lender agrees to promptly notify the Borrowers’ Agent and the Agent after any
such setoff and application by it or any of its Affiliates, provided  that
the failure to give such notice will not affect the validity of such setoff and
application.  The rights of the Agent,
the Canadian Collateral Agent and the other Lender Parties under this Section are
in addition to other rights and remedies (including without limitation other
rights of setoff) which the Agent, the Canadian Collateral Agent or the other
Lender Parties may have.  This Section is
subject to the terms and provisions of Section 2.12 hereof.

 

10.20       Waiver of Right to Jury Trial.  EXCEPT AS PROHIBITED BY APPLICABLE LAW, EACH
PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE

 

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NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS EVIDENCED
THEREBY.

 

10.21       Additional Provisions Regarding Collection of
Receivables and other Collateral.

 

(a)           Each Credit Party (by its execution of the
applicable Loan Documents) hereby designates and constitutes the Agent or the
Agent’s designee (or the Canadian Collateral Agent or its designee, as
applicable) as each Credit Party’s attorney-in-fact with power to endorse each
such Credit Party’s name upon any notes, acceptances, checks, drafts, money
orders or other evidence of payment of any Receivables or any other Collateral
that may come into its possession; to sign or endorse such Credit Party’s name
on any invoice, bill of lading or other title or ownership documents relating
to any Receivables or Inventory, drafts against any customers of any Credit
Party, assignments and verifications of Receivables and, upon the occurrence
and during the continuance of any Event of Default, notices to customers of any
Credit Party; to send verifications of Receivables; and to notify the U.S.
Postal Service authorities to change the address for delivery of mail addressed
to any Credit Party to such address as the Agent (or the Canadian Collateral
Agent, as applicable) may designate at any time after the occurrence of any
Event of Default which is continuing. 
All acts of said attorney or designee are hereby ratified and approved
by each Credit Party (by its execution of the applicable Loan Documents), and
said attorneys or designee shall not be liable for any acts of omission or
commission, for any error of judgment or for any mistake of fact or law, provided
that the Agent or its designee (or the Canadian Collateral Agent or its
designee, as applicable) shall not be relieved of liability to the extent it is
determined by a final judicial decision that its act, error or mistake
constituted gross negligence or willful misconduct.  The power of attorney granted under this
subparagraph is coupled with an interest and is irrevocable until all of the
Obligations are paid in full and this Agreement and the Commitments are
terminated.

 

(b)           The Agent (or the Canadian Collateral Agent, as
applicable), without notice to or consent of any Credit Party, at any time
after the occurrence and during the continuation of an Event of Default:  (i) may sue upon or otherwise collect,
extend the time of payment of, or compromise or settle for cash, credit or
otherwise upon any terms, any of the Receivables or any instruments or
insurance applicable thereto and/or release any account debtor thereon; (ii) is
authorized and empowered to accept or direct shipments of Inventory and accept
the return of the goods represented by any of the Receivables; and (iii) shall
have the right to receive, endorse, assign and/or deliver in its name or the
name of any Credit Party any and all checks, drafts and other instruments for
the payment of money relating to the Receivables, and each Credit Party (by its
execution of the applicable Loan Documents) hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed.

 

(c)           Nothing herein contained shall be construed to
constitute any Credit Party as agent of the Agent or the Canadian Collateral
Agent for any purpose whatsoever, and neither the Agent nor the Canadian
Collateral Agent shall be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever the same may
be located and regardless of the cause thereof (except to the extent it is
determined by a final judicial decision that the Agent’s or a Lender’s act or
omission constituted gross negligence of willful conduct).  The Agent, the Canadian Collateral Agent and
the Lenders shall not, under any circumstances or in any event whatsoever, have
any liability for any error or omission or delay of 

 

135

 

any kind occurring in the settlement, collection or payment of any of
the Receivables or any instrument received in payment thereof or for any damage
resulting therefrom (except to the extent it is determined by a final judicial
decision that the Agent’s or such Lender’s error, omission or delay constituted
gross negligence or willful misconduct). 
The Agent, the Canadian Collateral Agent and the Lenders do not, by
anything herein or in any assignment or otherwise, assume any of any Credit
Party’s obligations under any contract or agreement assigned to the Agent, the
Canadian Collateral Agent or the Lender, and the Agent, the Canadian Collateral
Agent and the Lenders shall not be responsible in any way for the performance
by any Credit Party of any of the terms and conditions thereof.

 

(d)           Upon the occurrence and during the continuation of
any Event of Default:  (i) if any of
the Receivables includes a charge for any tax payable to any governmental tax
authority, the Agent (or the Canadian Collateral Agent, as applicable) is
hereby authorized (but in no event obligated) in its discretion to pay the
amount thereof to the proper taxing authority for the account of any Credit Party
and to charge any Credit Party’s account therefor; and (ii) the Borrowers
shall notify the Agent (or the Canadian Collateral Agent, as applicable) if any
Receivables include any tax due to any such taxing authority and, in the
absence of such notice, the Agent (or the Canadian Collateral Agent, as
applicable) shall have the right to retain the full proceeds of such
Receivables and shall not be liable for any taxes that may be due from any
Credit Party by reason of the sale and delivery creating such Receivables.

 

(e)           Upon the occurrence and continuation of any Event of
Default, the Agent (or the Canadian Collateral Agent, as applicable) may at any
time and from time to time employ and maintain in the premises of any Credit
Party a custodian selected by the Agent (or the Canadian Collateral Agent, as
applicable) who shall have full authority to do all acts necessary to protect
the Agent’s, the Canadian Collateral Agent’s and the Lenders’ interests and to
report to the Agent (or the Canadian Collateral Agent, as applicable)
thereon.  Each Credit Party (by its
execution of the applicable Loan Documents) hereby agrees to cooperate with any
such custodian and to do so whatever the Agent (or the Canadian Collateral
Agent, as applicable) may reasonably request to preserve the Collateral.  All costs and expenses incurred by the Agent
(or the Canadian Collateral Agent, as applicable) by reason of the employment
of the custodian shall be added to the Obligations and may be charged to any
Credit Party’s account.

 

(f)            The Lenders hereby irrevocably authorize the Agent
(or the Canadian Collateral Agent, as applicable), at its option and in its
discretion, to release any Lien granted to or held by the Agent (or the
Canadian Collateral Agent, as applicable) upon any Collateral (i) upon
termination of the Total Commitment and payment in full in cash and
satisfaction (or cash collateralization pursuant to the terms of the Loan
Documents) of all Loans, any Letter of Credit Exposure Amount, and all other
Obligations which have matured and which the Agent (or the Canadian Collateral
Agent, as applicable) has been notified in writing are then due and payable; or
(ii) constituting property being sold or disposed of in the ordinary
course of any Credit Party’s business and in compliance with the terms of this
Agreement and the other Loan Documents (with respect to which the Agent (or the
Canadian Collateral Agent, as applicable) may rely conclusively on any
certificate of any Credit Party, without further inquiry); or (iii) constituting
property in which the Credit Parties owned no interest at the time the Lien was
granted or at any time thereafter; or (iv) if approved, authorized or
ratified in writing by the Lenders.  Upon
request by the Agent (or the Canadian Collateral Agent, as applicable) at any
time, the Lenders 

 

136

 

will confirm in writing the Agent’s (or the Canadian Collateral Agent’s,
as applicable) authority to release particular types or items of Collateral
pursuant to this Section 10.21(f).

 

(g)           Without in any manner limiting the Agent’s (or the
Canadian Collateral Agent’s, as applicable) authority to act without any
specific or further authorization or consent by the Lenders (as set forth in Section 10.21(f)),
each Lender agrees to confirm in writing, upon request by the Agent (or the
Canadian Collateral Agent, as applicable), the authority to release Collateral
conferred upon the Agent (or the Canadian Collateral Agent, as applicable)
under Section 10.21(f).  Upon
receipt by the Agent (or the Canadian Collateral Agent, as applicable) of
confirmation from the Lenders of its authority to release any particular item
or types of Collateral, and upon prior written request by any Credit Party, the
Agent (or the Canadian Collateral Agent, as applicable) shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Agent (or the
Canadian Collateral Agent, as applicable) for the benefit of the Lenders upon
such Collateral; provided, however, that (i) the
Agent (or the Canadian Collateral Agent, as applicable) shall not be required
to execute any such document on terms which, in the Agent’s (or the Canadian
Collateral Agent’s, as applicable) opinion, would expose the Agent (or the
Canadian Collateral Agent, as applicable) to liability or create any
obligations or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Lien upon (or obligations of
any Credit Party in respect of) all interests in the Collateral retained by any
Credit Party.

 

(h)           So long as Neenah Paper Company of Canada owns the
Nova Scotia Woodlands or other Timberland Properties located in Canada which
are pledged as Collateral from time to time hereunder, the Canadian Collateral
Agent may from time to time appoint a sub-agent pursuant to Section 9.1
(the “Designated Timber Agent”)
for the purpose of facilitating sales, exchanges or other dispositions of
Timberland Properties permitted by Section 7.4(f)(4)(vi) and
not otherwise prohibited hereby.  Any
such Designated Timber Agent shall have the authority to act on behalf of (and
subject to the control of), the Canadian Collateral Agent pursuant to the terms
and conditions of Sections 10.21(f) and 10.21(g) to
release any Lien granted to or held by the Canadian Collateral Agent upon any
Collateral sold, exchanged, or otherwise disposed of pursuant to Section 7.4(f)(4)(vi).  Subject to the terms and conditions of Sections 10.21(f) and
10.21(g) and the other applicable terms and conditions of the Loan
Documents, the Agent, the Canadian Collateral Agent, and any Designated Timber
Agent shall act promptly upon any request from the Borrowers’ Agent
(accompanied by a certificate referred to in Section 10.21(f)(ii) and
such information and documentation as may be reasonably necessary to effect
such release) to execute such documents as may be reasonably necessary to
release any Lien granted to or held by the Agent (or the Canadian Collateral
Agent, as applicable) upon any such Collateral pursuant to any such sale,
exchange, or disposition.

 

10.22       Bank Product Obligations.

 

(a)           The term “Obligations,”
as defined and used in this Agreement, includes all Obligations under all Bank
Products of any Credit Party or any of their Subsidiaries (collectively, “Related Obligations”) to the Agent,
JPMorgan, the Canadian Collateral Agent, or any other Lender Party (each an “Obligee” and, collectively, the “Obligees”).  Accordingly, the 

 

137

 

benefit of the Loan Documents and of the provisions of this Agreement
relating to the Collateral shall extend to and be available in respect of the
Related Obligations solely on the condition and understanding, as among the
Agent and all Obligees, that (i) the Related Obligations shall be entitled
to the benefit of the Loan Documents and the Collateral to the extent expressly
set forth in this Agreement and the other Loan Documents and to such extent the
Agent (or the Canadian Collateral Agent, as applicable) shall hold, and have
the right and power to act with respect to, any Guaranty and the Collateral on
behalf of and as agent for the Obligees, but the Agent and the Canadian
Collateral Agent are otherwise acting solely as agent for the Lenders and shall
have no fiduciary duty, duty of loyalty, duty of care, duty of disclosure or
other obligation whatsoever to any Obligee, (ii) all matters, acts and
omissions relating in any manner to the Guaranty, the Collateral, or the
omission, creation, perfection, priority, abandonment or release of any Lien,
shall be governed solely by the provisions of this Agreement and the other Loan
Documents and no separate Lien, right, power or remedy shall arise or exist in
favor of any Obligee under any separate instrument or agreement or in respect
of any Related Obligation, (iii) each Obligee shall be bound by all
actions taken or omitted, in accordance with the provisions of this Agreement
and the other Loan Documents, by the Agent, the Canadian Collateral Agent and
the Required Lenders, each of whom shall be entitled to act at its sole
discretion and exclusively in its own interest given its own Commitments and its
own interest in the Loans, Letter of Credit Obligations and other Obligations
to it arising under this Agreement or the other Loan Documents, without any
duty or liability to any other Obligee or as to any Related Obligation and
without regard to whether any Related Obligation remains outstanding or is
deprived of the benefit of the Collateral or becomes unsecured or is otherwise
affected or put in jeopardy thereby, (iv) no Obligee (except the Agents,
the Canadian Collateral Agent and the Lenders, to the extent set forth in this
Agreement) shall have any right to be notified of, or to direct, require or be
heard with respect to, any action taken or omitted in respect of the Collateral
or under this Agreement or the Loan Documents and (v) no Obligee shall exercise
any right of setoff, banker’s lien or similar right except to the extent such
right is exercised in compliance with Section 2.13.

 

(b)           The Borrowers hereby irrevocably and unconditionally
guarantee to each of the Obligees the full and prompt payment and performance
of any and all Related Obligations to each Obligee.  Such guaranty shall be an absolute,
continuing, irrevocable, and unconditional guaranty of payment and performance,
and not a guaranty of collection, and the Borrowers shall remain liable on its
obligations hereunder until the payment and performance in full of the Related
Obligations.  No set-off, counterclaim,
recoupment, reduction, or diminution of any obligation, or any defense of any
kind or nature which any Credit Party or any of their Subsidiaries may have
against any Obligee or any other party shall be available to, or shall be
asserted by, any Credit Party against any Obligee or any subsequent holder of
the Related Obligations or any part thereof or against payment of the Related
Obligations or any part thereof.

 

(c)           If any Credit Party becomes liable for any
obligations or indebtedness owing by any Subsidiary of any Credit Party to any
Obligee by endorsement or otherwise, other than under this Section 10.22,
such liability shall not be in any manner impaired or affected hereby, and the
rights of each Obligee shall be cumulative of any and all other rights that any
Obligee may ever have against the Borrower.

 

(d)           In the event of default by any Subsidiary of any
Credit Party in payment or performance of any of the Related Obligations, or
any part thereof, when any part of the Related 

 

138

 

Obligations becomes due, whether by its terms, by acceleration, upon
demand or otherwise, the Borrowers shall promptly pay the amount due thereon to
the applicable Obligee without notice or demand in dollars and it shall not be
necessary for any Obligee, in order to enforce such payment by the Borrowers,
first to institute suit or exhaust its remedies against any Subsidiary of any
Credit Party or any others liable on such Related Obligations, or to enforce
any rights against any collateral which shall ever have been given to secure
such Related Obligations.  Notwithstanding
anything to the contrary contained in this Section 10.22, the
Credit Parties hereby irrevocably subordinate to the prior and defeasible
payment in full of the Related Obligations, any and all rights the Borrowers
may now or hereafter have under any agreement or at law or in equity (including,
without limitation, any law subrogating the Borrowers to the rights of any of
the Obligees) to assert any claim against or seek contribution, indemnification
or any other form of reimbursement from any Subsidiary of any Credit Party or
any other party liable for payment of any or all of the Related Obligations for
any payment made by any Borrower under or in connection with this Section 10.22
or otherwise.

 

(e)           The Borrowers hereby agree that their obligations
under this Section 10.22 shall not be released, discharged,
diminished, impaired, reduced, or affected for any reason or by the occurrence
of any event, including, without limitation, one or more of the following
events, whether or not with notice to or the consent of any Borrower:  (i) the taking or accepting of
collateral as security for any or all of the Related Obligations or the
release, surrender, exchange, or subordination of any collateral now or
hereafter securing any or all of the Related Obligations; (ii) any partial
release of the liability of any Borrower hereunder or any other Credit Party
under the Loan Documents, or the full or partial release of any other guarantor
from liability for any or all of the Related Obligations; (iii) any
disability of any Credit Party or any of their Subsidiaries, or the
dissolution, insolvency, or bankruptcy of any Credit Party, any of their
Subsidiaries, any guarantor or any other party at any time liable for the
payment of any or all of the Related Obligations; (iv) any renewal,
extension, modification, waiver, amendment, or rearrangement of any or all of
the Related Obligations or any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Related Obligations; (v) any
adjustment, indulgence, forbearance, waiver, or compromise that may be granted
or given by any Obligee to any Credit Party, any of their Subsidiaries, or any
other party ever liable for any or all of the Related Obligations; (vi) any
neglect, delay, omission, failure, or refusal of any Obligee to take or
prosecute any action for the collection of any of the Related Obligations or to
foreclose or take or prosecute any action in connection with any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or
all of the Related Obligations; (vii) the unenforceability or invalidity
of any or all of the Related Obligations or of any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Related Obligations; (viii) any payment by any Credit Party, any
Subsidiary of any Credit Party or any other party to any Obligee is held to
constitute a preference under applicable bankruptcy or insolvency law or if for
any other reason any Obligee is required to refund any payment or pay the amount
thereof to someone else; (ix) the settlement or compromise of any of the
Related Obligations; (x) the non-perfection of any security interest or
lien securing any or all of the Related Obligations; (xi) any impairment of any
collateral securing any or all of the Related Obligations; (xii) the failure of
any Obligee to sell any collateral securing any or all of the Related
Obligations in a commercially reasonable manner or as otherwise required by
law; (xiii) any change in the corporate existence, structure, or ownership of
any Credit Party or any of their Subsidiaries; or 

 

139

 

(xiv) any other circumstance which might otherwise constitute a defense
available to, or discharge of, any Credit Party or any of their Subsidiaries.

 

(f)            The Borrowers hereby waive promptness, diligence,
notice of any default under the Related Obligations, demand of payment, notice
of acceptance of this Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by any Subsidiary of any Credit Party of
additional obligations or indebtedness, and all other notices and demands with
respect to the Related Obligations and this Agreement.

 

10.23       Construction.  The Borrowers, each other Credit Party, the
Agent, the Canadian Collateral Agent and each Bank acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by the parties hereto.

 

10.24       Joint and Several Obligations.  Notwithstanding anything to the contrary
contained herein or in any other Loan Documents (but giving effect to Section 1.4(a)),
the Borrowers acknowledge that they and the Guarantors are jointly and
severally responsible for their respective agreements, covenants,
representations, warranties and obligations contained and set forth in this
Agreement or in any other Loan Document to which the applicable Party is a
party.

 

10.25       USA Patriot Act.  Each Lender hereby notifies the Credit
Parties that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is
required to obtain, verify and record information that identifies the Credit
Parties, which information includes the name and address of the Credit Parties
and other information that will allow such Lender to identify the Credit
Parties in accordance with the Act.

 

10.26       Judgment.  The specification under the Loan Documents of
Dollars and payment in New York City is of the essence.  The Credit Parties’ obligations hereunder and
under the other Loan Documents to make payments in Dollars (the “Obligation Currency”) shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation Currency,
except to the extent that such tender or recovery results in the effective
receipt by the Lender Parties of the full amount of the Obligation Currency
expressed to be payable to the Lender Parties under this Agreement or the other
Loan Documents.  If, for the purpose of
obtaining or enforcing judgment in any court, it is necessary to convert into
or from any currency other than the Obligation Currency (such other currency
being hereinafter referred to as the “Judgment
Currency”) an amount due in the Obligation Currency, the rate of
exchange used shall be that at which the Lender Parties could, in accordance
with normal banking procedures, purchase Dollars with the Judgment Currency on
the Business Day preceding that on which final judgment is given.  The obligation of the Credit Parties in
respect of any such sum due from it to the Lender Parties hereunder shall,
notwithstanding any judgment in such Judgment Currency, be discharged only to
the extent that, on the Business Day immediately following the date on which
the Lender Parties receive any sum adjudged to be so due in the Judgment
Currency, the Lender Parties may, in accordance with normal banking procedures,
purchase Dollars with the Judgment Currency. 
If the Dollars so purchased are less than the sum originally due to the
Lender Parties in Dollars, the Credit 

 

140

 

Parties agree, as a separate obligation and notwithstanding any such
judgment, to indemnify the Lender Parties against such loss, and if the Dollars
so purchased exceed the sum originally due to the Lender Parties in Dollars,
the Lender Parties agree to remit to the Credit Parties such excess.

 

10.27       Jurisdiction; Service of Process.  Each Credit Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. 
Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Agreement or any
other Loan Document shall affect any right that any Lender Party may otherwise
have to bring any action or proceeding relating to this Agreement or any other
Loan Document against any Credit Party or its properties in the courts of any
jurisdiction.  Each Credit Party hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in this
Section.  Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.  Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 10.2.  Nothing in
this Agreement or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.

 

10.28       Confidentiality.  Each of the Agent, the Issuing Bank and the
Lenders agrees to maintain the confidentiality of the Information (as defined below),
except that information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority, (c) to the extent
requested by any rating agency or market data collector (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such information and instructed to keep it
confidential), (d) to the extent required by law or by any subpoena or
similar legal process, (e) to any other party to this Agreement, (f) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (g) subject to an agreement
containing provisions substantially the same as those of this Section, to (i) any
assignee of, or any prospective assignee of, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Credit
Parties and their obligations, (h) with the consent of the Borrowers or (i) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source
other than the Borrowers.  For the
purposes of this Section, “Information” means all information received from the
Credit Parties relating to any 

 

141

 

of the Credit Parties, the Offshore Entities, their respective
subsidiaries or their respective businesses, other than any such information
that is available to the Agent, the Issuing Bank or any Lender on a non-confidential
basis prior to disclosure by the Borrowers; provided  that, in the
case of information received from the Borrowers after the date hereof, such
information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

EACH
LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THIS SECTION 10.28
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE CREDIT PARTIES AND 
THEIR RELATED PARTIES AND AFFILIATES, OR THEIR RESPECTIVE SECURITIES,
AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF
MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL
NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALL
INFORMATION, INCLUDING REQUESTS FOR WAIVERS, CONSENTS AND AMENDMENTS, FURNISHED
BY THE CREDIT PARTIES, THE AGENT OR THEIR RESPECTIVE RELATED PARTIES AND
AFFILIATES, PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL
BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION ABOUT THE CREDIT PARTIES AND THEIR RELATED PARTIES AND AFFILIATES
OR THEIR RESPECTIVE SECURITIES. 
ACCORDINGLY, EACH LENDER REPRESENTS TO THE CREDIT PARTIES AND THE AGENT
THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO
MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

10.29       No Fiduciary Duty/Conflicts.  The Lender Parties may have economic
interests that conflict with those of Borrowers, their stockholders and/or
their Affiliates.  Borrowers agree that
nothing in the Loan Documents or otherwise will be deemed to create an
advisory, fiduciary or agency relationship or fiduciary or other implied duty
between any Lender Party, on the one hand, and Borrowers, their stockholders or
their affiliates, on the other.  The
Credit Parties acknowledge and agree that (i) the transactions
contemplated by the Loan Documents (including the exercise of rights and
remedies hereunder and thereunder) are arm’s-length commercial transactions
between the Lenders Parties, on the one hand, and Borrowers, on the other, and (ii) in
connection therewith and with the process leading thereto, (x) no Lender
Party has assumed an advisory or fiduciary responsibility in favor of any
Borrower, its stockholders or its Affiliates with respect to the transactions
contemplated hereby (or the exercise of rights or remedies with respect
thereto) or the process leading thereto (irrespective of whether any Lender
Party has advised, is currently advising or will advise any Borrower, its
stockholders or its Affiliates on other matters) or any other obligation to
Borrowers except the obligations expressly set forth in 

 

142

 

the Loan Documents and (y) each Lender Party is acting solely as
principal and not as the agent or fiduciary of any Borrower, its management,
stockholders, creditors or any other Person. 
Each Borrower acknowledges and agrees that each Borrower has consulted
its own legal and financial advisors to the extent it deemed appropriate and
that it is responsible for making its own independent judgment with respect to
such transactions and the process leading thereto.  Borrower agrees that it will not claim that
any Lender Party has rendered advisory services of any nature or respect, or
owes a fiduciary or similar duty to such Borrower, in connection with such
transaction or the process leading thereto.

 

(Signature Pages Follow)

 

143

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first set forth
above.

 

	
   

  	
  NEENAH PAPER, INC.,

  
	
   

  	
  as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr. Vice President, CFO and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
  3460 Preston Ridge Road, Suite 600

  
	
   

  	
  Alpharetta, Georgia 30005

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Facsimile: 678-518-3283

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
  Bryan Cave LLP

  
	
   

  	
  One Atlantic Center — Fourteenth Floor

  
	
   

  	
  1201 West Peachtree Street, NW

  
	
   

  	
  Atlanta, Georgia 30309-3488

  
	
   

  	
  Attention: Robert C. Lewinson

  
	
   

  	
  Facsimile: 404-420-0623

  
	
   

  	
   

  
	
   

  	
  NEENAH PAPER MICHIGAN, INC.,

  
	
   

  	
  as a Borrower

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr. Vice President, CFO and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  NPCC HOLDING COMPANY, LLC

  
	
   

  	
  as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Neenah Paper, Inc., as its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr.
  Vice President, CFO and Treasurer

  

 

Signature
Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  NEENAH PAPER INTERNATIONAL HOLDING COMPANY, LLC, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Neenah Paper, Inc., as its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr. Vice President, CFO and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEENAH PAPER INTERNATIONAL, LLC, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Neenah Paper International Holding Company, LLC, as its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Neenah Paper, Inc., as its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr. Vice President, CFO and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEENAH PAPER FVC, INC, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr. Vice President, CFO and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEENAH PAPER FR, LLC, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr. Vice President, CFO and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEENAH PAPER COMPANY OF CANADA, as a Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BONNIE C. LIND

  
	
   

  	
  Name:

  	
  Bonnie C. Lind

  
	
   

  	
  Title:

  	
  Sr. Vice President, CFO and Treasurer

  

 

Signature
Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as a Lender, as Agent and as Swingline Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JEFF A. TOMPKINS

  
	
   

  	
  Name:

  	
  Jeff A. Tompkins

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
  2200 Ross Avenue, 9th Floor TX 2921

  
	
   

  	
  Dallas, Texas 75201

  
	
   

  	
  Attention: Jeff A. Tompkins

  
	
   

  	
  Facsimile: 214-965-2594

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
  Vinson & Elkins LLP

  
	
   

  	
  2001 Ross Avenue, Suite 3700

  
	
   

  	
  Dallas, Texas 75201

  
	
   

  	
  Attention: Erec R. Winandy

  
	
   

  	
  Facsimile: 214-999-7756

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  TORONTO BRANCH,

  
	
   

  	
  as Canadian Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAN C. HOWAT

  
	
   

  	
  Name:

  	
  Dan C. Howat

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
  c/o JPMorgan Chase Bank, N.A., as Agent

  
	
   

  	
  2200 Ross Avenue, 9th Floor TX 2921

  
	
   

  	
  Dallas, Texas 75201

  
	
   

  	
  Attention: Jeff A. Tompkins

  
	
   

  	
  Facsimile: 214-965-2594

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
  Vinson & Elkins, L.L.P.

  
	
   

  	
  2001 Ross Avenue, Suite 3700

  
	
   

  	
  Dallas, Texas 75201

  
	
   

  	
  Attention: Erec R. Winandy

  
	
   

  	
  Facsimile: 214-999-7756

  

 

Signature
Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DENNIS LOSIN

  
	
   

  	
  Name:

  	
  Dennis Losin

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  Bank of America, N.A.

  
	
   

  	
   

  	
  300 Galleria Parkway, Suite 800

  
	
   

  	
   

  	
  Atlanta, GA 30339

  
	
   

  	
  Attention:

  	
  Senior Portfolio Manager

  
	
   

  	
  Facsimile:

  	
  404-607-3277

  

 

Signature
Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  UBS AG, Stamford Branch,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARY E. EVANS

  
	
   

  	
  Name:

  	
  Mary E. Evans

  
	
   

  	
  Title:

  	
  Associate Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ IRJA R. OTSA

  
	
   

  	
  Name:

  	
  Irja R. Otsa

  
	
   

  	
  Title:

  	
  Associate Director

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  677 Washington Blvd.

  
	
   

  	
   

  	
  Stamford, CT 06901

  
	
   

  	
  Attention:

  	
  Daniel Goldenberg

  
	
   

  	
  Facsimile:

  	
  203-719-3888

  

 

Signature
Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  GOLDMAN SACHS LENDING PARTNERS LLC, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ DENIS P. COLEMAN III

  
	
   

  	
  Name:

  	
   

  	
  Denis P. Coleman III

  
	
   

  	
  Title:

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  6032 Connection Drive

  
	
   

  	
   

  	
  Dallas, TX 75062

  
	
   

  	
  Attention:

  	
  Ray Garcia

  
	
   

  	
  Facsimile:

  	
  212-357-4597

  

 

Signature
Page to Amended and Restated Credit Agreement

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