Document:

Exhibit 10.7

 

Execution
Copy

 

 

 

[Published CUSIP Number:
        ]

 

CREDIT AGREEMENT

 

Dated as of June 12,
2008

 

among

 

KAPSTONE KRAFT PAPER CORPORATION,

as the Borrower,

 

KAPSTONE PAPER AND PACKAGING CORPORATION,

as the Parent,

 

THE SUBSIDIARIES OF THE BORROWER
IDENTIFIED HEREIN,

as Guarantors,

 

BANK OF AMERICA, N.A.,

as Administrative Agent,
Swing Line Lender and L/C Issuer,

 

and

 

THE OTHER LENDERS PARTY
HERETO

 

Arranged By:

 

BANC OF AMERICA SECURITIES
LLC,

as Sole Lead Arranger and Sole  Book Manager

 

 

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS
  AND ACCOUNTING TERMS

  	
   

  	
  1

  
	
  1.01

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.02

  	
  Other
  Interpretive Provisions

  	
   

  	
  32

  
	
  1.03

  	
  Accounting
  Terms

  	
   

  	
  32

  
	
  1.04

  	
  Rounding

  	
   

  	
  33

  
	
  1.05

  	
  Times
  of Day

  	
   

  	
  33

  
	
  1.06

  	
  Letter
  of Credit Amounts

  	
   

  	
  33

  
	
  ARTICLE II

  	
  THE
  COMMITMENTS AND CREDIT EXTENSIONS

  	
   

  	
  33

  
	
  2.01

  	
  Term
  Loans and Revolving Credit Loans

  	
   

  	
  34

  
	
  2.02

  	
  Borrowings,
  Conversions and Continuations of Loans

  	
   

  	
  35

  
	
  2.03

  	
  Letters
  of Credit

  	
   

  	
  37

  
	
  2.04

  	
  Swing
  Line Loans

  	
   

  	
  47

  
	
  2.05

  	
  Prepayments

  	
   

  	
  50

  
	
  2.06

  	
  Termination
  or Reduction of Commitments

  	
   

  	
  54

  
	
  2.07

  	
  Repayment
  of Loans

  	
   

  	
  55

  
	
  2.08

  	
  Interest

  	
   

  	
  58

  
	
  2.09

  	
  Fees

  	
   

  	
  58

  
	
  2.10

  	
  Computation
  of Interest and Fees; Retroactive Adjustments of Applicable Rate

  	
   

  	
  59

  
	
  2.11

  	
  Evidence
  of Debt

  	
   

  	
  60

  
	
  2.12

  	
  Payments
  Generally; Administrative Agent’s Clawback

  	
   

  	
  61

  
	
  2.13

  	
  Sharing
  of Payments by Lenders

  	
   

  	
  63

  
	
  ARTICLE III

  	
  TAXES,
  YIELD PROTECTION AND ILLEGALITY

  	
   

  	
  64

  
	
  3.01

  	
  Taxes

  	
   

  	
  64

  
	
  3.02

  	
  Illegality

  	
   

  	
  68

  
	
  3.03

  	
  Inability
  to Determine Rates

  	
   

  	
  68

  
	
  3.04

  	
  Increased
  Costs; Reserves on Eurodollar Rate Loans

  	
   

  	
  68

  
	
  3.05

  	
  Compensation
  for Losses

  	
   

  	
  70

  
	
  3.06

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
   

  	
  71

  
	
  3.07

  	
  Survival

  	
   

  	
  71

  
	
  ARTICLE IV

  	
  CONDITIONS
  PRECEDENT TO CREDIT EXTENSIONS

  	
   

  	
  71

  
	
  4.01

  	
  Conditions
  to Closing Date

  	
   

  	
  71

  
	
  4.02

  	
  Conditions
  to Commitment Effective Date

  	
   

  	
  72

  
	
  4.03

  	
  Conditions
  to all Credit Extensions

  	
   

  	
  79

  
	
  ARTICLE V

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  80

  
	
  5.01

  	
  Organization

  	
   

  	
  80

  
	
  5.02

  	
  Authorization;
  No Conflict

  	
   

  	
  80

  
	
  5.03

  	
  Validity
  and Binding Nature

  	
   

  	
  81

  
	
  5.04

  	
  Financial
  Condition

  	
   

  	
  81

  
	
  5.05

  	
  No
  Material Adverse Change

  	
   

  	
  81

  
	
  5.06

  	
  Litigation
  and Contingent Liabilities

  	
   

  	
  81

  
	
  5.07

  	
  Ownership
  of Properties; Liens

  	
   

  	
  81

  
	
  5.08

  	
  Equity
  Ownership; Subsidiaries

  	
   

  	
  81

  
	
  5.09

  	
  Pension
  Plans

  	
   

  	
  82

  

 

 

	
  5.10

  	
  Investment
  Company Act

  	
   

  	
  82

  
	
  5.11

  	
  Regulation
  U

  	
   

  	
  83

  
	
  5.12

  	
  Taxes

  	
   

  	
  83

  
	
  5.13

  	
  Solvency,
  etc.

  	
   

  	
  83

  
	
  5.14

  	
  Environmental
  Matters

  	
   

  	
  83

  
	
  5.15

  	
  Insurance

  	
   

  	
  84

  
	
  5.16

  	
  Real
  Property

  	
   

  	
  84

  
	
  5.17

  	
  Information

  	
   

  	
  84

  
	
  5.18

  	
  Intellectual
  Property

  	
   

  	
  84

  
	
  5.19

  	
  Burdensome
  Obligations

  	
   

  	
  84

  
	
  5.20

  	
  Labor
  Matters

  	
   

  	
  85

  
	
  5.21

  	
  No
  Default

  	
   

  	
  85

  
	
  5.22

  	
  Related
  Agreements, etc.

  	
   

  	
  85

  
	
  5.23

  	
  Casualty,
  Etc.

  	
   

  	
  86

  
	
  5.24

  	
  Collateral
  Documents

  	
   

  	
  86

  
	
  5.25

  	
  Material
  Contracts

  	
   

  	
  86

  
	
  ARTICLE VI

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  	
  86

  
	
  6.01

  	
  Reports,
  Certificates and Other Information

  	
   

  	
  86

  
	
  6.02

  	
  Certificates;
  Other Information

  	
   

  	
  87

  
	
  6.03

  	
  Books,
  Records and Inspections

  	
   

  	
  90

  
	
  6.04

  	
  Maintenance
  of Property; Insurance

  	
   

  	
  91

  
	
  6.05

  	
  Compliance
  with Laws; Payment of Taxes and Liabilities

  	
   

  	
  92

  
	
  6.06

  	
  Maintenance
  of Existence, etc.

  	
   

  	
  92

  
	
  6.07

  	
  Use of
  Proceeds

  	
   

  	
  92

  
	
  6.08

  	
  Employee
  Benefit Plans

  	
   

  	
  92

  
	
  6.09

  	
  Environmental
  Matters

  	
   

  	
  93

  
	
  6.10

  	
  Further
  Assurances

  	
   

  	
  93

  
	
  6.11

  	
  Deposit
  Accounts

  	
   

  	
  94

  
	
  6.12

  	
  Compliance
  with Terms of Leaseholds

  	
   

  	
  94

  
	
  6.13

  	
  Material
  Contracts

  	
   

  	
  94

  
	
  6.14

  	
  Kraft
  Acquisition Documents

  	
   

  	
  94

  
	
  6.15

  	
  Amendments
  to Private Placement Notes or Private Placement Note Purchase Agreement

  	
   

  	
  95

  
	
  ARTICLE VII

  	
  NEGATIVE
  COVENANTS

  	
   

  	
  95

  
	
  7.01

  	
  Debt

  	
   

  	
  95

  
	
  7.02

  	
  Liens

  	
   

  	
  97

  
	
  7.03

  	
  Operating
  Leases

  	
   

  	
  98

  
	
  7.04

  	
  Restricted
  Payments

  	
   

  	
  99

  
	
  7.05

  	
  Mergers,
  Consolidations, Acquisitions, Sales

  	
   

  	
  99

  
	
  7.06

  	
  Modification
  of Organization Documents

  	
   

  	
  100

  
	
  7.07

  	
  Transactions
  with Affiliates

  	
   

  	
  100

  
	
  7.08

  	
  Unconditional
  Purchase Obligations

  	
   

  	
  100

  
	
  7.09

  	
  Inconsistent
  Agreements

  	
   

  	
  100

  
	
  7.10

  	
  Business
  Activities; Issuance of Equity

  	
   

  	
  101

  
	
  7.11

  	
  Investments

  	
   

  	
  101

  
	
  7.12

  	
  Restriction
  of Amendments to Certain Documents

  	
   

  	
  102

  

 

 

	
  7.13

  	
  Accounting
  Changes; Fiscal Year

  	
   

  	
  102

  
	
  7.14

  	
  Financial
  Covenants

  	
   

  	
  102

  
	
  7.15

  	
  Prepayments,
  Etc. of Debt

  	
   

  	
  102

  
	
  7.16

  	
  Amendment,
  Etc. of Debt

  	
   

  	
  102

  
	
  7.17

  	
  Use of
  Proceeds

  	
   

  	
  103

  
	
  7.18

  	
  Holding
  Company

  	
   

  	
  103

  
	
  ARTICLE VIII

  	
  EVENTS
  OF DEFAULT AND REMEDIES

  	
   

  	
  103

  
	
  8.01

  	
  Events
  of Default

  	
   

  	
  103

  
	
  8.02

  	
  Remedies
  Upon Event of Default

  	
   

  	
  106

  
	
  ARTICLE IX

  	
  ADMINISTRATIVE
  AGENT

  	
   

  	
  107

  
	
  9.01

  	
  Appointment
  and Authority

  	
   

  	
  107

  
	
  9.02

  	
  Rights
  as a Lender

  	
   

  	
  108

  
	
  9.03

  	
  Exculpatory
  Provisions

  	
   

  	
  108

  
	
  9.04

  	
  Reliance
  by Administrative Agent

  	
   

  	
  109

  
	
  9.05

  	
  Delegation
  of Duties

  	
   

  	
  109

  
	
  9.06

  	
  Resignation
  of Administrative Agent

  	
   

  	
  110

  
	
  9.07

  	
  Non-Reliance
  on Administrative Agent and Other Lenders

  	
   

  	
  111

  
	
  9.08

  	
  No
  Other Duties, Etc.

  	
   

  	
  111

  
	
  9.09

  	
  Administrative
  Agent May File Proofs of Claim

  	
   

  	
  111

  
	
  9.10

  	
  Collateral
  and Guaranty Matters

  	
   

  	
  112

  
	
  9.11

  	
  Secured
  Cash Management Agreements and Secured Hedge Agreements

  	
   

  	
  112

  
	
  9.12

  	
  Lenders’
  Enforcement Rights

  	
   

  	
  113

  
	
  ARTICLE X

  	
  GUARANTY

  	
   

  	
  113

  
	
  10.01

  	
  The
  Guaranty

  	
   

  	
  113

  
	
  10.02

  	
  Obligations
  Unconditional

  	
   

  	
  114

  
	
  10.03

  	
  Reinstatement

  	
   

  	
  115

  
	
  10.04

  	
  Certain
  Additional Waivers

  	
   

  	
  115

  
	
  10.05

  	
  Remedies

  	
   

  	
  115

  
	
  10.06

  	
  Rights
  of Contribution

  	
   

  	
  115

  
	
  10.07

  	
  Guarantee
  of Payment; Continuing Guarantee

  	
   

  	
  116

  
	
  ARTICLE XI

  	
  MISCELLANENOUS

  	
   

  	
  116

  
	
  11.01

  	
  Amendments,
  Etc.

  	
   

  	
  116

  
	
  11.02

  	
  Notices;
  Effectiveness; Electronic Communications

  	
   

  	
  119

  
	
  11.03

  	
  No
  Waiver; Cumulative Remedies

  	
   

  	
  121

  
	
  11.04

  	
  Expenses;
  Indemnity; Damage Waiver

  	
   

  	
  121

  
	
  11.05

  	
  Payments
  Set Aside

  	
   

  	
  123

  
	
  11.06

  	
  Successors
  and Assigns

  	
   

  	
  124

  
	
  11.07

  	
  Treatment
  of Certain Information; Confidentiality

  	
   

  	
  128

  
	
  11.08

  	
  Right
  of Setoff

  	
   

  	
  129

  
	
  11.09

  	
  Interest
  Rate Limitation

  	
   

  	
  130

  
	
  11.10

  	
  Counterparts;
  Integration; Effectiveness

  	
   

  	
  130

  
	
  11.11

  	
  Survival
  of Representations and Warranties

  	
   

  	
  130

  
	
  11.12

  	
  Severability

  	
   

  	
  130

  
	
  11.13

  	
  Replacement
  of Lenders

  	
   

  	
  131

  
	
  11.14

  	
  Governing
  Law; Jurisdiction; Etc.

  	
   

  	
  131

  
	
  11.15

  	
  Waiver
  of Jury Trial

  	
   

  	
  132

  

 

 

	
  11.16

  	
  No
  Advisory or Fiduciary Responsibility

  	
   

  	
  133

  
	
  11.17

  	
  Electronic
  Execution of Assignments and Certain Other Documents

  	
   

  	
  133

  
	
  11.18

  	
  USA
  PATRIOT Act Notice

  	
   

  	
  134

  
	
  11.19

  	
  Intercreditor
  Agreement

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
   

  	
  135

  

 

 

SCHEDULES

 

	
  1.01

  	
  Existing
  Letters of Credit

  
	
  2.01

  	
  Commitments
  and Applicable Percentages

  
	
  4.02(a)

  	
  Excluded
  Estoppel and Consent Agreements

  
	
  4.02(b)

  	
  Material
  Adverse Effect

  
	
  5.02

  	
  Consents;
  No Conflict

  
	
  5.05

  	
  Changes
  in Business

  
	
  5.06

  	
  Litigation
  and Contingent Liabilities

  
	
  5.07

  	
  Ownership
  of Properties; Liens

  
	
  5.08

  	
  Ownership
  of Loan Parties and Subsidiaries

  
	
  5.12

  	
  Taxes

  
	
  5.16

  	
  Real
  Property

  
	
  5.20

  	
  Labor
  Matters

  
	
  5.23

  	
  Casualty,
  Etc.

  
	
  5.25

  	
  Material
  Contracts

  
	
  7.01

  	
  Existing
  Debt

  
	
  7.01(g)

  	
  Debt
  To Be Repaid

  
	
  7.02

  	
  Existing
  Liens

  
	
  7.08

  	
  Unconditional Purchase Obligations

  
	
  7.11

  	
  Investments

  
	
  7.18

  	
  Holding
  Company Contracts

  
	
  11.02

  	
  Administrative
  Agent’s Office, Certain Addresses for Notices

  

 

EXHIBITS

 

Form of

 

	
  A

  	
  Committed
  Loan Notice

  
	
  B

  	
  Swing
  Line Loan Notice

  
	
  C-1

  	
  Term
  A Note

  
	
  C-2

  	
  Term
  B Note

  
	
  C-3

  	
  Revolving
  Credit Note

  
	
  D

  	
  Compliance
  Certificate

  
	
  E-1

  	
  Assignment
  and Assumption

  
	
  E-2

  	
  Administrative
  Questionnaire

  
	
  F

  	
  Security
  Agreement

  
	
  G

  	
  Mortgage

  
	
  H

  	
  Secured Lender Party Designation Notice

  

 

 

CREDIT AGREEMENT

 

This
CREDIT AGREEMENT is entered into as of June 12, 2008 among KAPSTONE KRAFT
PAPER CORPORATION, a Delaware corporation (the “Borrower”), KAPSTONE
PAPER AND PACKAGING CORPORATION, a Delaware corporation (the “Parent”),
certain subsidiaries of the Borrower identified on the signature pages hereto
as guarantors and such other subsidiaries of the Borrower as may from time to
time become party hereto (together with the Parent, the “Guarantors”),
the lenders from time to time party hereto (the “Lenders”) and BANK OF
AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

PRELIMINARY STATEMENTS:

 

The
Borrower has requested that the Lenders provide term loan facilities and a
revolving credit facility, and the Lenders have indicated their willingness to
lend and the L/C Issuer has indicated its willingness to issue letters of
credit, in each case, on the terms and subject to the conditions set forth
herein.

 

In
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

1.01                           Defined Terms.

 

As
used in this Agreement, the following terms shall have the meanings set forth
below:

 

“Account
Debtor” has the meaning set forth in the Security Agreement.

 

“Account
or Accounts” has the meaning set forth in the UCC.

 

“Acquisition”
means any transaction or series of related transactions for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of all or substantially all of
any business or division of a Person, (b) the acquisition of in excess of
50% of the Capital Securities of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is already a
Subsidiary).

 

“Adjusted
Working Capital” means the remainder of: (a) (i) the consolidated
current assets of the Borrower and its Subsidiaries minus (ii) the
amount of cash and cash equivalents included in such consolidated current
assets; minus (b) (i) consolidated current liabilities of the
Borrower and its Subsidiaries minus (ii) the amount of short-term
Debt (including current maturities of long-term Debt) of the Borrower and its
Subsidiaries included in such consolidated current liabilities.

 

 

“Administrative
Agent” means Bank of America in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.

 

“Administrative
Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 11.02, or such other
address or account as the Administrative Agent may from time to time notify to
the Borrower and the Lenders.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in
substantially the form of Exhibit E-2 or any other form approved by the
Administrative Agent.

 

“Affiliate”
means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

 

“Aggregate
Commitments” means the Commitments of all the Lenders.

 

“Agreement”
means this Credit Agreement.

 

“Applicable
Percentage” means with respect to any Lender at any time (a) with
respect to such Lender’s portion of the outstanding Term A Loan at any time,
the percentage (carried out to the ninth decimal place) of the outstanding
principal amount of the Term A Loan held by such Lender at such time, (b) with
respect to such Lender’s portion of the outstanding Term B Loan at any time,
the percentage (carried out to the ninth decimal place) of the outstanding
principal amount of the Term B Loan held by such Lender at such time and (c) with
respect to the Revolving Credit Facility, the percentage (carried out to the
ninth decimal place) of the Revolving Credit Facility represented by such
Lender’s Revolving Credit Commitment at such time.  If the commitment of each Lender to make
Revolving Credit Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02, or if the
Revolving Credit Commitments have expired, then the Applicable Percentage of
each Lender in respect of the Revolving Credit Facility shall be determined
based on the Applicable Percentage of such Lender in respect of the Revolving
Credit Facility most recently in effect, giving effect to any subsequent
assignments.  The initial Applicable
Percentage of each Lender in respect of each Facility is set forth opposite the
name of such Lender on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable Rate”
means (a) in respect of the Term A Loan and the Revolving Credit Facility
the applicable percentage per annum set forth below determined by reference to
the Total Leverage Ratio as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 6.02(a):

 

2

 

Applicable Rate

 

	
  Pricing

  Level

  	
   

  	
  Total Leverage

  Ratio

  	
   

  	
  Eurodollar

  Rate Loans

  	
   

  	
  Letter of

  Credit Fee

  	
   

  	
  Base Rate

  Loans

  	
   

  	
  Unused

  Fee

  	
   

  
	
  I

  	
   

  	
  > 3.00x but < 4.00x

  	
   

  	
  3.00

  	
  %

  	
  3.00

  	
  %

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  
	
  II

  	
   

  	
  > 2.50x but <
  3.00x

  	
   

  	
  2.625

  	
  %

  	
  2.625

  	
  %

  	
  1.125

  	
  %

  	
  0.50

  	
  %

  
	
  III

  	
   

  	
  > 2.00x but <
  2.50x

  	
   

  	
  2.25

  	
  %

  	
  2.25

  	
  %

  	
  0.75

  	
  %

  	
  0.50

  	
  %

  
	
  IV

  	
   

  	
  > 1.50x but <
  2.00x

  	
   

  	
  1.875

  	
  %

  	
  1.875

  	
  %

  	
  0.375

  	
  %

  	
  0.50

  	
  %

  
	
  V

  	
   

  	
  < 1.50x

  	
   

  	
  1.50

  	
  %

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  	
  0.375

  	
  %

  

 

and (b) in respect of the Term B Loan, 2.00%
per annum for Base Rate Loans and 3.50% per annum for Eurodollar Rate Loans.

 

Any
increase or decrease in the Applicable Rate resulting from a change in the
Total Leverage Ratio shall become effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered pursuant
to Section 6.02(a); provided, however, that (a) if a
Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level I shall apply as of the first Business Day after
the date on which such Compliance Certificate was required to have been
delivered and (b) the Applicable Rate in effect on the Commitment
Effective Date and for the first six (6) months after the Commitment
Effective Date shall be determined based upon Pricing Level I.

 

Notwithstanding
anything to the contrary contained in this definition, the determination of the
Applicable Rate for any period shall be subject to the provisions of Section 2.10(b).

 

“Applicable
Revolving Credit Percentage” means with respect to any Lender at any time,
such Lender’s Applicable Percentage in respect of the Revolving Credit Facility
at such time.

 

“Approved
Fund” means any Fund 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.

 

“Arranger”
means Banc of America Securities LLC, in its capacity as sole lead arranger and
sole book manager.

 

“Asset Disposition”
means the sale, lease, assignment or other transfer for value (each, a “Disposition”)
by any Loan Party to any Person (other than a Loan Party) of any asset or right
of such Loan Party (including, the loss, destruction or damage of any portion
thereof or any actual or threatened (in writing to any Loan Party)
condemnation, confiscation, requisition, seizure or taking thereof) other than (a) the
sale or lease of inventory in the ordinary course of business and (b) other
Dispositions in any Fiscal Year the Net Proceeds of which do not in the
aggregate exceed $5,000,000.

 

“Assignee
Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

 

3

 

“Assignment and
Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 11.06(b)), and accepted by the Administrative
Agent, in substantially the form of Exhibit E or any other form
approved by the Administrative Agent.

 

“Audited Financial
Statements” means the audited consolidated balance sheet of (a) the
Parent and its Subsidiaries for the Fiscal Years ended December 31, 2005, December 31,
2006 and December 31, 2007 and (b) the Target for the Fiscal Years
ended December 31, 2005, December 31, 2006 and December 31,
2007, in each case along with the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such Fiscal Years,
including the notes thereto.

 

“Availability
Period” means, in respect of the Revolving Credit Facility, the
period from and including the Commitment Effective Date to the earliest of (a) the
Maturity Date, (b) the date of termination of the Revolving Credit
Commitments pursuant to Section 2.06, and (c) the date of
termination of the commitment of each Lender to make Revolving Credit Loans and
of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

“Bank of America” means Bank of America, N.A.
and its successors.

 

“Base Rate”
means for any day a fluctuating rate per annum equal to the higher of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.”  The “prime rate” is
a rate set by Bank of America based upon various factors including Bank of
America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. 
Any change in such rate announced by Bank of America shall take effect
at the opening of business on the day specified in the public announcement of
such change.

 

“Base Rate Loan”
means a Loan that bears interest based on the Base Rate.

 

“BONY
Documents” means (a) Acknowledgment
of Assignment of Indebtedness and Related Liens dated contemporaneously with
the Commitment Effective Date, executed by The Bank of New York and addressed
to the Seller, Cogen South L.L.C. and Oak Acquisition, LLC, (b) Assignment of Mortgage and Assignment of
Rents and Assignment and Security Agreement dated contemporaneously with the
Commitment Effective Date, executed by The Bank of New York for the benefit of
Oak Acquisition, LLC, (c) the Resignation of Agent/Appointment of New Agent
letter dated contemporaneously with the Commitment Effective Date, executed by
The Bank of New York and addressed to the Seller, Cogen South L.L.C. and Oak
Acquisition, LLC, and (d) the Letter Agreement relating to the assignment
of Collateral from the Bank of New York to Oak Acquisition, LLC.

 

“Borrower”
has the meaning specified in the introductory paragraph hereto.

 

“Borrower
Materials” has the meaning specified in Section 6.02.

 

4

 

 

“Borrowing”
means a borrowing consisting of simultaneous Loans of the same Type and, in the
case of Eurodollar Rate Loans, having the same Interest Period made by each of
the Lenders pursuant to Section 2.01.

 

“Business”
has the meaning given such term in the Mead Purchase Agreement.

 

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Administrative Agent’s Office is located and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.

 

“Capital Expenditures” means all
expenditures which, in accordance with GAAP, would be required to be
capitalized and shown on the consolidated balance sheet of the Borrower,
including expenditures in respect of Capital Leases, but excluding any such
expenditures for which the Borrower has been reimbursed by the Seller pursuant
to the Kraft Acquisition Documents and expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed (a) from
insurance proceeds (or other similar recoveries) paid on account of the loss of
or damage to the assets being replaced or restored or (b) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.

 

“Capital
Lease” means, with respect to any Person, any lease of (or other agreement conveying
the right to use) any real or personal property by such Person that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of such Person.

 

“Capital Securities”
means, with respect to any Person, all shares, interests, participations or
other equivalents (however designated, whether voting or non-voting) of such
Person’s capital, whether now outstanding or issued or acquired after the
Closing Date, including common shares, preferred shares, membership interests
in a limited liability company, limited or general partnership interests in a
partnership, interests in a trust, interests in other unincorporated
organizations, warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person or warrants, rights or options for the
purchase or acquisition from such Person of such shares (or such other
interests) or any other equivalent of such ownership interest.

 

“Cash Collateralize”
has the meaning specified in Section 2.03(g).

 

“Cash Equivalent
Investment” means, at any time, (a) any evidence of Debt, maturing not
more than one year after such time, issued or guaranteed by the United States
Government or any agency thereof, (b) commercial paper, maturing not more
than one year from the date of issue, or corporate demand notes, in each case
(unless issued by a Lender or its holding company) rated at least A-l by
S&P or P-l by Moody’s, (c) any certificate of deposit, time deposit or
banker’s acceptance, maturing not more than one year after such time, or any
overnight Federal Funds transaction that is issued or sold by any Lender or its
holding company (or by a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital 

 

5

 

and surplus and undivided
profits of not less than $500,000,000), (d) any repurchase agreement
entered into with any Lender (or commercial banking institution of the nature
referred to in clause (c) ) which (i) is secured by a fully
perfected security interest in any obligation of the type described in any of clauses
(a) through (c) above and (ii) has a market value at
the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such Lender (or other commercial banking institution)
thereunder and (e) money market accounts or mutual funds which invest
exclusively in assets satisfying the foregoing requirements, and (f) other
short term liquid investments approved in writing by the Administrative Agent.

 

“Cash
Management Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
credit card processing, purchase card, ACH transactions, electronic funds
transfer and other cash management arrangements.

 

“Cash
Management
Bank” means any Person that, at the time it enters into a Cash
Management Agreement, is a Lender or an Affiliate of a Lender (even if such
Person thereafter ceases to be a Lender or such Person’s Affiliate ceases to be
a Lender) and has delivered a Secured Lender Party Designation Notice to the
Administrative Agent on or before the date on which such determination is being
made.

 

“CFC”
means a Person that is a controlled foreign corporation under Section 957
of the Code.

 

“Change
in Law” means the occurrence, after the date of this Agreement, of any of
the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of law) by any
Governmental Authority.

 

“Change of Control”
means the occurrence of any of the following events: (a) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, except that a person or group shall be deemed to have “beneficial
ownership” of all Capital Securities that such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time (such right, an “option right”)), directly or indirectly, of
more than 35% of the Capital Securities of the Parent entitled to vote for
members of the board of directors or equivalent governing body of the Parent on
a fully diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right); provided
that the acquisition by any one or more Exempt Persons (as defined below)
(acting singly or in concert) of the “beneficial ownership” of 35% or more of
the Capital Securities of the Parent entitled to vote for members of the board
of directors or equivalent governing body of the Parent on a fully diluted
basis (and taking into account all such securities that such person or group
has the right to acquire pursuant to any option right) shall not be a Change of
Control; (b) a majority of the members of the Board 

 

6

 

of
Directors of Parent shall cease to be Continuing Members (as defined below); (c) Parent
shall cease to own and control 100% of each class of the outstanding Capital
Securities of the Borrower; (d) the Borrower shall cease to, directly or
indirectly, own and control 100% of each class of the outstanding Capital
Securities of each Subsidiary; or (e) all of Roger W. Stone (or a
replacement reasonably satisfactory to the Required Lenders), Matthew Kaplan
(or a replacement reasonably satisfactory to the Required Lenders) and Timothy
Keneally (or a replacement reasonably satisfactory to the Required Lenders)
shall cease at any time to be employed full time by the Parent  in a position at least equivalent to their current
respective positions; provided, however, such an event under this
clause (e) shall not constitute a Change of Control for up to 135 days if
the Parent is diligently working to replace such Person(s) with a
reasonably qualified candidate (or candidates) to perform the same or similar
duties as such Person(s).  For purposes
of the foregoing, (x) “Continuing Member” means a member of the
Board of Directors of Parent who either (i) was a member of Parent’s Board
of Directors on the day before the Closing Date and has been such continuously
thereafter or (ii) became a member of such Board of Directors after the
day before the Closing Date and whose election or nomination for election by
the stockholders of Parent was approved by a vote of the majority of the
Continuing Members then members of Parent’s Board of Directors and (y) “Exempt
Person” means each member of the class consisting of:  (i) Roger Stone, (ii) Matthew Kaplan
and (iii) so long as voting control is retained by such Person, any
spouse, lineal descendant, parent or sibling of such Person, or any trust or
similar estate planning entity controlled by such Person or whose beneficiaries
or owners are solely comprised of such Person’s spouse, lineal descendant,
parent or sibling.

 

“Closing Date”
means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 11.01.

 

“Code”
means the Internal Revenue Code of 1986.

 

“Cogen
Junior Notes” means the subordinated promissory note from Cogen JV to the
Borrower dated October 22, 2001 in the original principal amount of
$9,500,000 and the subordinated promissory note from Cogen JV to the Borrower
dated December 31, 2004 in the original principal amount of $57,500,000.

 

“Cogen
JV” means Cogen South LLC, a Delaware limited liability company.

 

“Cogen
Loan Agreement” shall mean that certain Amended and Restated Construction
and Term Loan Agreement of Cogen JV dated as of December 15, 1996, as
amended or assigned, and all documents executed in connection therewith.

 

“Cogen
Notes” means the Cogen Senior Notes and the Cogen Junior Notes.

 

“Cogen
Senior Notes” means all indebtedness outstanding under the Cogen Loan
Agreement, including those certain Replacement Promissory Notes dated as of December 31,
1998 executed by Cogen JV in favor of the Borrower in the principal amounts of
$50,000,000 and $8,039,721.92, respectively.

 

7

 

“Collateral”
means all of the “Collateral” and “Mortgaged Property” referred
to in the Collateral Documents and all of the other property that is or is
intended under the terms of the Collateral Documents to be subject to Liens in
favor of the Collateral Agent for the benefit of the Secured Parties.

 

“Collateral Agent”
has the meaning specified in the Security Agreement.

 

“Collateral
Documents” means, collectively, the Security Agreement; any Deposit
Account Control Agreement; the Mortgages; each other mortgage, collateral
assignment, security agreement, pledge agreement or other similar agreement
delivered to the Administrative Agent pursuant to Section 6.10; and
each other agreement, instrument or document that creates or purports to create
a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.

 

“Commitment”
means, as to each Lender, the Revolving Credit Commitment of such Lender and/or
the Term Loan Commitment of such Lender.

 

“Commitment
Effective Date” means the first date all the conditions precedent in
Section 4.02 are satisfied or waived in accordance with Section 11.01.

 

“Committed Loan
Notice” means a notice of (a) a Borrowing of (i) Revolving
Credit Loans or (ii) the Term A Loan or (iii) the Term B Loan, (b) a
conversion of Loans from one Type to the other, or (c) a continuation of
Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in
writing, shall be substantially in the form of Exhibit A.

 

“Compliance
Certificate” means a certificate substantially in the form of Exhibit D.

 

“Consolidated Net
Income” means, with respect to the Parent and its Subsidiaries for
any period, the net income (or loss) of the Parent and its Subsidiaries for
such period, excluding any gains from Asset Dispositions, any
extraordinary gains and any gains from discontinued operations.

 

“Contingent Liability” means, with respect to any Person, each
obligation and liability of such Person and all such obligations and
liabilities of such Person incurred pursuant to any agreement, undertaking or
arrangement by which such Person: (a) guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect agreement,
contingent or otherwise, to provide funds for payment, to supply funds to, or
otherwise to invest in, a debtor, or otherwise to assure a creditor against
loss) the indebtedness, dividend, obligation or other liability of any other
Person in any manner (other than by endorsement of instruments in the course of
collection), including any indebtedness, dividend or other obligation which may
be issued or incurred at some future time; (b) guarantees the payment of
dividends or other distributions upon the Capital Securities of any other
Person; (c) undertakes or agrees (whether contingently or otherwise): (i) to
purchase, repurchase, or otherwise acquire any indebtedness, obligation or
liability of any other Person or any property or assets constituting security
therefor, (ii) to advance or provide funds for the payment or discharge of
any indebtedness, obligation or liability of any other Person (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise),
or to maintain solvency, assets, level of income, working capital or 

 

8

 

other financial condition of any other Person, or (iii) to
make payment to any other Person other than for value received; (d) agrees
to lease property or to purchase securities, property or services from such
other Person with the purpose or intent of assuring the owner of such
indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (e) induces
the issuance of any letter of credit for the benefit of such other Person; or (f) undertakes
or agrees otherwise to assure a creditor against loss. The amount of any
Contingent Liability which is in the form of a guaranty of Debt shall (subject
to the limitation set forth below and any other limitation set forth herein) be
deemed to be the outstanding principal amount (or maximum permitted principal
amount, if larger) of the indebtedness, obligation or other liability
guaranteed or supported thereby.  The
amount of any Contingent Liability which is not in the form of a guaranty of
Debt shall be equal to the reasonably anticipated maximum amount of such
Contingent Liability as determined by such Person in good faith.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

“Controlled
Group” means each Loan Party, each of its Domestic Subsidiaries and all
other members of a controlled group of corporations, all members of a
controlled group of trades or businesses (whether or not incorporated) under
common control and all members of an affiliated service group which, together
with any Loan Party or any of its Subsidiaries, are treated as a single
employer under Section 414 of the Code or Section 4001 of ERISA.

 

“Credit Extension”
means each of the following:  (a) a
Borrowing and (b) an L/C Credit Extension.

 

“Cumulative
Available Excess Cash Flow” means, as of any date of determination, the sum
of Available Excess Cash Flow (as defined below) for each of the Fiscal Years
ended prior to such date of determination for which audited financial
statements of the Parent and its Subsidiaries have been delivered to the
Administrative Agent in accordance with Section 6.01(a) of
this Credit Agreement (commencing with the 2008 Fiscal Year). “Available Excess
Cash Flow” means (a) with respect to the 2008 Fiscal Year, 50% of Excess
Cash Flow for the period commencing the Commitment Effective Date through the
end of such Fiscal Year, (b) with respect to the 2009 Fiscal Year, 50% of
Excess Cash Flow for such Fiscal Year and (c) with respect to the 2010
Fiscal Year and each Fiscal Year thereafter, (i) if as of such date of
determination the Total Leverage Ratio is greater than or equal to 2.0:1.0, 50%
of Excess Cash Flow for such Fiscal Year and (ii) if as of such date of
determination the Total Leverage Ratio is less than 2.0:1.0, 100% of Excess
Cash Flow for such Fiscal Year.

 

“Debt” of any Person
means, without duplication, (a) all indebtedness of such Person for
borrowed money, whether or not evidenced by bonds, debentures, notes or similar
instruments, (b) all obligations of such Person as lessee under Capital
Leases which have been or should be recorded as liabilities on a balance sheet
of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business but including the Earn-Out 

 

9

 

Obligations), (d) all
indebtedness secured by a Lien on the property of such Person, whether or not
such indebtedness shall have been assumed by such Person; provided that
if such Person has not assumed or otherwise become liable for such
indebtedness, such indebtedness shall be measured at the fair market value of
such property securing such indebtedness at the time of determination, (e) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn), bankers’ acceptances and similar
obligations issued for the account of such Person (including the Letters of
Credit), (f) all Hedging Obligations of such Person, (g) all Contingent
Liabilities of such Person, (h) all Debt of any partnership of which such
Person is a general partner, (i) the principal portion of all obligations
of such Person under Synthetic Lease Obligations and other Off-Balance Sheet
Liabilities (excluding Operating Leases to the extent they would otherwise be
included) and (j) any Capital Securities or other equity instrument,
whether or not mandatorily redeemable, that under GAAP is characterized as
debt, whether pursuant to financial accounting standards board issuance No. 150
or otherwise.

 

“Debt to be Repaid”
means Debt listed on Schedule 7.01(g) .

 

“Debtor Relief Laws”
means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

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

 

“Default Rate”
means (a) when used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate plus (iii) 2% per annum; provided, however,
that with respect to a Eurodollar Rate Loan, the Default Rate shall be an
interest rate equal to the interest rate (including any Applicable Rate)
otherwise applicable to such Loan plus 2% per annum and (b) when
used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate
plus 2% per annum.

 

“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Term
Loans, Revolving Credit Loans, participations in L/C Obligations or
participations in Swing Line Loans required to be funded by it hereunder within
one Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within one Business Day of
the date when due, unless the subject of a good faith dispute, or (c) has
been deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding.

 

“Deposit Account Control
Agreement” shall mean an agreement, among a Loan Party, a depository
institution, and the Collateral Agent, which agreement is in a form acceptable
to the Collateral Agent and which provides the Collateral Agent with “control”
(as such term is used in Article 9 of the Uniform Commercial Code) over
the deposit account(s) described therein, as the same may be amended,
modified, extended, restated, replaced, or supplemented from time to time.

 

10

 

“Discretionary
L/C Issuer” has the meaning specified in Section 2.03(b)(v).

 

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

 

“Domestic
Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

 

Earn-Out Obligations means the
Borrower’s payment obligations under Sections 1.11 and 1.12 of the
International Paper Purchase Agreement.

 

“EBITDA”
means, for any period, Consolidated Net Income for such period plus, to
the extent deducted in determining such Consolidated Net Income for such period
(without duplication), (a) Interest Expense, (b) income tax expense, (c) depreciation
and amortization, (d) extraordinary losses (or less gains), net of related
tax effects, (e) other non-cash charges or losses (or less gains or
income) for which no cash outlay (or cash receipt) is foreseeable, (f) “cold
mill” maintenance outage costs in an aggregate amount of up to $7,500,000 for
the term of this Agreement (it being understood that such add-back shall only
be permitted in connection with one such outage during the term of this
Agreement) but only to the extent that (i) the aggregate amount of such
costs for such period exceeds the actual expense allocable to such outage
during such period and (ii) any such resulting add-back is applied to
reduce EBITDA in the future periods to which such expenses actually relate on a
Dollar for Dollar basis and (g) expenses and fees incurred to consummate
the transactions contemplated by the Loan Documents in an aggregate amount for
all periods not exceeding $13,500,000. For purposes of calculating the Total
Leverage Ratio and the Fixed Charge Coverage Ratio, (i) EBITDA shall be
deemed to be:  $38,877,600  for
the Fiscal Quarter ending September 30, 2007,  $39,298,700  for the Fiscal Quarter ending December 31, 2007 and  $33,475,400  for the Fiscal
Quarter ending March 31, 2008 and (ii) EBITDA for the period from April 1,
2008 to the Closing Date shall be determined in a manner consistent with clause
(i) above.

 

“Eligible Assignee”
means any Person that meets the requirements to be an assignee under Section 11.06(b)(iii),
(v) and (vi) (subject to such consents, if any, as may
be required under Section 11.06(b)(iii)).

 

“Environmental Claims”
means all claims, however asserted, by any governmental, regulatory or judicial
authority or other Person alleging potential liability or responsibility for
violation of any Environmental Law, or for release or injury to the
environment.

 

“Environmental Laws”
means all present or future federal, state or local laws, statutes, common law
duties, rules, regulations, ordinances and codes, together with all
administrative or judicial orders, consent agreements, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authority, in each case relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.

 

11

 

“Environmental
Liability” means any liability, contingent or otherwise (including
any liability for damages, costs of environmental remediation, fines, penalties
or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Substances, (c) exposure
to any Hazardous Substances, (d) the release or threatened release of any
Hazardous Substances into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

“Eurodollar Rate”
means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate
per annum equal to the London Interbank Offered Rate (“LIBOR”), as
published by Reuters (or other commercially available source providing
quotations of LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period (or three business days prior to the
commencement of such Interest Period if banks in London, England were not open
and dealing in offshore Dollars on such second preceding business day), for
Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period. 
If such rate is not available at such time for any reason, then the “Eurodollar
Rate” for such Interest Period shall be the rate per annum determined by the
Administrative Agent to be the rate at which deposits in Dollars for delivery
on the first day of such Interest Period in same day funds in the approximate
amount of the Eurodollar Rate Loan being made, continued or converted by Bank
of America and with a term equivalent to such Interest Period would be offered
by Bank of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period (or
three business days prior to the commencement of such Interest Period if banks
in London, England were not open and dealing in offshore Dollars on such second
preceding business day).

 

“Eurodollar Rate
Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

 

“Event of Default”
has the meaning specified in Section 8.01.

 

“Excess Cash Flow” means, for any
period, (a) EBITDA for such period, minus (b) scheduled
repayments of principal of the Term Loans made during such period, minus
(c) voluntary prepayments of the Term Loans pursuant to Section 2.05(a) during
such period, minus (d) cash payments made in such period with
respect to Capital Expenditures (to the extent such cash payments are
unfinanced), minus (e) all income taxes paid in cash by the Loan
Parties during such period, minus (f) cash Interest Expense of the
Loan Parties during such period, minus (g) any cash losses (and plus
any cash gains) from extraordinary items to the extent excluded from the
calculation of EBITDA, minus (h) any increase in Adjusted Working
Capital for such period.

 

12

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) taxes imposed on or measured by
its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable Lending Office is located, (b) any branch profits taxes
imposed by the United States or any similar tax imposed by any other
jurisdiction in which the Borrower is located, (c) any backup withholding
tax that is required by the Code to be withheld from amounts payable to a
Lender that has failed to comply with clause (A) of Section 3.01(e)(ii),
and (d) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 10.13), any United
States withholding tax that (i) is required to be imposed on amounts
payable to such Foreign Lender pursuant to the Laws in force at the time such
Foreign Lender becomes a party hereto (or designates a new Lending Office) or (ii) is
attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with clause (B) of Section 3.01(e)(ii),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new Lending Office (or assignment),
to receive additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 3.01(a)(ii) or (iii).

 

“Existing Credit Agreement”
means that certain Credit Agreement dated as of January 2, 2007 among the
Borrower, the Administrative Agent and a syndicate of lenders, as in effect on
the date hereof and as amended or otherwise modified.

 

“Existing
Letters of Credit” means each of the letters of credit described by
date of issuance, amount, purpose and the date of expiry on Schedule 1.01
hereto.

 

“Expiration
Date” has the meaning specified in Section 4.02.

 

“Extraordinary
Receipt” means any cash received by or paid to or for the account of
any Person not in the ordinary course of business, including tax refunds,
pension plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for
lost earnings), condemnation awards (and payments in lieu thereof), indemnity
payments and any purchase price adjustments.

 

“Facility”
means each of the Term A Loan, the Term B Loan and the Revolving
Credit Facility, as the context may require; and “Facilities” means all
three.

 

“Federal Funds Rate”
means, for any day, the 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 on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
(rounded upward, if necessary, to a whole 

 

13

 

multiple
of 1/100 of 1%) charged to Bank of America on such day on such transactions as
determined by the Administrative Agent.

 

“Fee Letter”
means the letter agreement, dated April 4, 2008, among the Borrower, the
Administrative Agent and the Arranger.

 

“FILOT Lease” means, collectively, (i) the lease
agreement to be entered into on or before the Commitment Effective Date between
Charleston County, South Carolina and KapStone Charleston Kraft LLC and (ii) the
lease agreement to be entered into on or before the Commitment Effective Date
between Charleston County, South Carolina and Cogen South LLC.

 

“Fiscal Quarter”
means a fiscal quarter of a Fiscal Year.

 

“Fiscal Year” means
the fiscal year of the Parent and its Subsidiaries, which period shall be the
12-month period ending on December 31 of each year. References to a Fiscal
Year with a number corresponding to any calendar year (e.g., “Fiscal Year
2008”) refer to the Fiscal Year ending on December 31 of such calendar
year.

 

“Fixed
Charge Coverage Ratio” means, as of the last day of any Fiscal Quarter, for
the period of four consecutive Fiscal Quarters ending in such date, the ratio
of (a) the total for such period of (i) EBITDA minus (ii) the
sum of income taxes paid in cash by the Loan Parties minus (iii) cash
dividends paid during such period minus (iv) all unfinanced Capital
Expenditures to (b) the sum for such period of (i) cash
Interest Expense plus (ii) required payments of principal of Funded
Debt (including the Term Loans but excluding the Revolving Credit Loans and the
Intercompany Subordinated Debt); provided, with respect to each of
clauses (a)(ii), (a)(iii), (a)(iv), (b)(i) and (b)(ii) above, for any
Fiscal Quarter ending during the first three full Fiscal Quarters following the
Commitment Effective Date, the relevant amount shall be determined not by
taking the actual amount for such four consecutive Fiscal Quarter period but
instead by dividing (x) the actual amount of such item from the Commitment
Effective Date to such Fiscal Quarter end by (y) the number of days from
(and including) the Commitment Effective Date to (and including) such Fiscal
Quarter end and multiplying the quotient by 365.

 

“Foreign Lender”
means any Lender that is organized under the Laws of a jurisdiction other than
that in which the Borrower is resident for tax purposes (including such a
Lender when acting in the capacity of the L/C Issuer).  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

 

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

 

“FRB”
means the Board of Governors of the Federal Reserve System of the United
States.

 

“Fund”
means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its activities.

 

14

 

 

“Funded Debt”
means, as to any Person, all Debt for borrowed money of such Person that
matures more than one year from the date of its creation (or is renewable or
extendible, at the option of such Person, to a date more than one year from
such date).

 

“GAAP”
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governmental
Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

 

“Guaranty”
means the Guaranty made by the Guarantors under Article X in favor
of the Secured Lender Parties, together with each joinder agreement delivered
pursuant to Section 6.10.

 

“Guarantors”
has the meaning specified in the introductory paragraph hereto.

 

“Hazardous
Substances” means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, radon gas, mold, oil and pesticides; (b) any
chemicals, materials, pollutant or substances defined as or included in the
definition of “hazardous substances”, “hazardous waste”, “hazardous materials”,
“extremely hazardous substances”, “restricted hazardous waste”, “toxic
substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the exposure to, or release of which is
prohibited, limited or regulated by any Governmental Authority or for which any
duty or standard of care is imposed pursuant to, any Environmental Law.

 

“Hedge Bank”
means any Person that, at the time it enters into a Secured Hedge Agreement, is
a Lender or an Affiliate of a Lender (even if such Person thereafter ceases to
be a Lender or such Person’s Affiliate ceases to be a Lender) and has delivered
a Secured Lender Party Designation Notice to the Administrative Agent on or
before the date on which such determination is being made.

 

“Hedging Obligation”
means, with respect to any Person, any liability of such Person under any Swap
Contract.

 

“Indemnified Taxes”  means Taxes other than Excluded
Taxes.

 

“Indemnitee”
has the meaning specified in Section 11.04(b).

 

15

 

“Information”
has the meaning specified in Section 11.07.

 

“Intercompany
Subordinated Debt” means unsecured Debt of the Borrower to Parent in
respect of the loan made by Parent to the Borrower pursuant to the Intercompany
Subordinated Note.

 

“Intercompany Subordinated
Note” means that certain Subordinated Promissory Note dated as of the
Closing Date by the Borrower in favor of Parent.

 

“Intercompany
Subordination Agreement” means that certain Subordination and Intercreditor
Agreement dated as of the date hereof by and among Parent, Borrower and
Administrative Agent, as amended, restated or otherwise modified from time to
time pursuant to the terms thereof.

 

“Intercreditor Agreement”
means that certain intercreditor agreement by and among (i) the Collateral
Agent, (ii) the Administrative Agent on behalf of the Secured Lender
Parties, (iii) the Private
Placement Noteholders and (iv) the Loan Parties, as amended,
modified, supplemented or restated from time to time.

 

“Interest Expense”
means for any period the consolidated interest expense of the Parent and its
Subsidiaries for such period (including all imputed interest on Capital
Leases).

 

“Interest Payment
Date” means, (a) as to any Eurodollar Rate Loan, the last day
of each Interest Period applicable to such Loan and the Maturity Date of the
Facility under which such Loan was made; provided, however, that
if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any
Base Rate Loan or Swing Line Loan, the last day of each calendar quarter and
the Maturity Date of the Facility under which such Loan was made (with Swing
Line Loans being deemed made under the Revolving Credit Facility for purposes
of this definition).  If any payment to
be made by the Borrower shall come due on a day other than a Business Day, such
payment shall be made on the next following Business Day in accordance with Section 2.12(a).

 

“Interest Period”
means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar
Rate Loan and ending on the date one, two, three or six months thereafter, as
selected by the Borrower in its Committed Loan Notice; provided that:

 

(a)                                  any Interest Period that
would otherwise end on a day that is not a Business Day shall be extended to
the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day;

 

(b)                                 any Interest Period that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar 

 

16

 

month
at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and

 

(c)                                  no Interest Period shall
extend beyond the Maturity Date of the Facility under which such Loan was made.

 

“Interim
Financial Statements” means the unaudited consolidated balance sheet of the
Parent and its Subsidiaries for each Fiscal Quarter ending prior to the
Commitment Effective Date beginning with the Fiscal Quarter ended March 31,
2008, and the related consolidated statements of income or operations and cash
flows of the Parent and its Subsidiaries for such Fiscal Quarter periods,
including the notes thereto.

 

“International Paper
Purchase Agreement” means that certain Purchase Agreement dated as of June 23,
2006 among the Parent, the Borrower and International Paper Company, as amended
from time to time.

 

“Inventory” is
defined in the Security Agreement.

 

“Investment”
means, with respect to any Person, any investment in another Person, whether by
acquisition of any Debt or Capital Security, by making any loan or advance, by
becoming obligated with respect to a Contingent Liability in respect of
obligations of such other Person (other than travel and similar advances to
employees in the ordinary course of business) or by making an Acquisition.

 

“IRS”
means the United States Internal Revenue Service.

 

“ISP”
means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice, Inc. (or such later version thereof as may be in effect at the
time of issuance).

 

“Issuer
Documents” means with respect to any Letter of Credit, the Letter of Credit
Application, and any other document, agreement and instrument entered into by
the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the L/C
Issuer and relating to such Letter of Credit.

 

“Kraft
Acquisition” shall mean the acquisition by the Borrower of the Target
pursuant to the Kraft Acquisition Documents.

 

“Kraft
Acquisition Documents” has the meaning set forth in Section 4.02(xi)(A).

 

“Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and 

 

17

 

permits
of, and agreements with, any Governmental Authority, in each case whether or
not having the force of law.

 

“L/C Advance”
means, with respect to each Lender, such Lender’s funding of its participation
in any L/C Borrowing in accordance with its Applicable Revolving Credit
Percentage.

 

“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a
Borrowing of Revolving Credit Loans.

 

“L/C Credit
Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

 

“L/C Issuer”
means (a) with respect to any Letters of Credit (other than the Existing
Letters of Credit), Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder, (b) with
respect to each Existing Letter of Credit, the Lender identified on Schedule
1.01 as the issuer of such Existing Letter of Credit and (c) any
Discretionary L/C Issuer.

 

“L/C Obligations”
means, as at any date of determination, the aggregate amount available to be
drawn under all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.  For purposes of computing the amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

 

“L/C Side Letter”
means the letter
agreement, dated as of the Closing Date, among the Borrower and the
Administrative Agent.

 

“Lender”
has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes the Swing Line Lender.

 

“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such
in such Lender’s Administrative Questionnaire, or such other office or offices
as a Lender may from time to time notify the Borrower and the Administrative
Agent.

 

“Letter of Credit”
means any standby letter of
credit issued hereunder and shall
include the Existing Letters of Credit.

 

“Letter of Credit
Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

 

18

 

“Letter of Credit
Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect for the Revolving Credit Facility (or, if such day
is not a Business Day, the next preceding Business Day).

 

“Letter
of Credit Fee” has the meaning specified in Section 2.03(i).

 

“Letter of Credit
Sublimit” means an amount equal to $20,000,000.  The Letter of
Credit Sublimit is part of, and not in addition to, the Revolving Credit
Facility.

 

“Lien”
means, with respect to any Person, any interest granted by such Person in any
real or personal property, asset or other right owned or being purchased or
acquired by such Person (including an interest in respect of a Capital Lease)
which secures payment or performance of any obligation and shall include any
mortgage, lien, encumbrance, title retention lien, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by
judicial process or otherwise.

 

“Loan”
means an extension of credit by a Lender to the Borrower under Article II
in the form of a Term A Loan, a Term B Loan, a Revolving Credit Loan or a Swing
Line Loan.

 

“Loan Documents”
means, collectively, (a) this Agreement, (b) the Fee Letter and (c) to
the extent executed and delivered, (i) the Notes, (ii) the Collateral
Documents, (iii) the
Intercreditor Agreement, (iv) each Issuer Document, (v) each
Secured Hedge Agreement, (vi) the L/C Side Letter, (vii) each Secured
Cash Management Agreement and (viii) the Intercompany Subordination
Agreement; provided that for purposes of the definition of “Material
Adverse Effect” and Articles IV through IX, “Loan Documents”
shall not include Secured Hedge Agreements or Secured Cash Management
Agreements.

 

“Loan Parties”
means, collectively the Borrower, the Parent and each other Guarantor.

 

“Margin Stock” means
any “margin stock” as defined in Regulation U.

 

“Material Adverse Effect”  means (a) a material adverse change in, or a material
adverse effect upon, the financial condition, operations, assets, business or
properties of the Loan Parties taken as a whole, (b) a material impairment
of the ability of any Loan Party to perform any of the Obligations under any
Loan Document or (c) a material adverse effect upon any substantial
portion of the collateral under the Collateral Documents or upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document.

 

“Material
Contract” means, with respect to any Person, (a) each contract or
other agreement, written or oral, to which such Person is a party involving
aggregate consideration payable to or by such Person of $10,000,000 or more and
(b) any other contract, agreement, permit or license, written or oral, to
which such Person is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could reasonably be
expected to have a Material Adverse Effect.

 

19

 

“Maturity Date”
means the earlier of (a) (i) with respect to the Revolving Credit
Facility and the Term A Loan, June 12, 2013 and (ii) with respect to
the Term B Loan, June 12, 2015 and (b) the date which is ninety (90)
days prior to the date on which any of the Earn-Out Obligations will become (or
are reasonably expected to become) due and owing under the International Paper
Purchase Agreement (the “Springing Maturity Date”); provided that
the Springing Maturity Date shall not apply (and only the Maturity Date
referenced in clause (a) above shall apply) if (A) the Total
Leverage Ratio as of the end of the Fiscal Quarter most recently preceding
the Springing Maturity Date for which a Compliance Certificate has
been received is less than 2.0 to 1.0, calculated for purposes
hereof on a pro forma basis after giving effect to the amount of
Indebtedness, as estimated by the Borrower in its reasonable good faith
judgment, which has been incurred or is to be incurred by any Loan
Party or Subsidiary thereof to enable the Borrower to satisfy the Earn-Out
Obligations, (B) no Default or Event of Default shall exist on the
Springing Maturity Date and (C) the chief financial officer of the
Borrower shall have delivered to the Administrative Agent, at least five (5) Business
Days prior to the Springing Maturity Date (but no more than seven (7) Business
Days prior thereto), a certificate in a form acceptable to the Administrative
Agent certifying (x) to the date of the Springing Maturity Date, (y) to the
satisfaction of the requirement in clause (A) above, and including or
attaching calculations for such Total Leverage Ratio on a pro
forma basis, and (z) that no Default or Event of Default then exists.

 

“Mead
Purchase Agreement” has the meaning set forth in Section 4.02(xi)(A).

 

“Moody’s”
means Moody’s Investors Service, Inc. and any successor thereto.

 

“Mortgage”
has the meaning specified in Section 4.02(a)(iv).

 

“Mortgage Policy”
has the meaning specified in Section 4.02(a)(iv)(B).

 

“Multiemployer
Pension Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of
ERISA, to which any Loan Party or any other member of the Controlled Group may
have any liability.

 

“Net Cash Proceeds”
means:

 

(a)                                  with respect to any Asset
Disposition, the aggregate cash proceeds (including cash proceeds received
pursuant to policies of insurance or by way of deferred payment of principal
pursuant to a note, installment receivable or otherwise, but only as and when
received) received by any Loan Party pursuant to such Asset Disposition net of (i) the
direct costs relating to such sale, transfer or other disposition (including
sales commissions and legal, accounting and investment banking fees), (ii) taxes
paid or reasonably estimated by the Borrower to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements) and (iii) amounts required to be applied to the repayment
of any Debt secured by a Lien on the asset subject to such Asset Disposition
(other than the Senior Debt);

 

20

 

(b)                                 with respect to any issuance
or exercise of Capital Securities (including, without limitation, the
Warrants), the aggregate cash proceeds received by any Loan Party pursuant to
such issuance or exercise, net of the direct costs relating to such issuance or
exercise (including sales and underwriters’ commissions); and

 

(c)                                  with respect to any issuance
of Debt, the aggregate cash proceeds received by any Loan Party pursuant to
such issuance, net of the direct costs of such issuance (including up-front,
underwriters’ and placement fees).

 

“Note”
means a Term A Note, a Term B Note or a Revolving Credit Note, as the context
may require.

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or otherwise with
respect to any Loan or Letter of Credit, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due,
now existing or hereafter arising and including interest and fees that accrue
after the commencement by or against any Loan Party or any Affiliate thereof of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding.

 

“OFAC” has the
meaning specified in Section 6.05.

 

“Off-Balance Sheet
Liabilities” means, with respect to any Person as of any date of
determination thereof, without duplication and to the extent not included as a
liability on the consolidated balance sheet of such Person and its Subsidiaries
in accordance with GAAP: (a) with respect to any asset securitization or
similar transaction (including any accounts receivable purchase facility) (i) the
unrecovered investment of purchasers or transferees of assets so transferred
and (ii) any other payment, recourse, repurchase, hold harmless, indemnity
or similar obligation of such Person or any of its Subsidiaries in respect of
assets transferred or payments made in respect thereof, other than limited
recourse provisions that are customary for transactions of such type and that
neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the
obligors of the assets so transferred nor (y) impair the characterization
of the transaction as a true sale under applicable Laws (including Debtor
Relief Laws); or (b) the monetary obligations under any financing lease
(excluding any operating lease) or so-called “synthetic,” tax retention or
off-balance sheet lease transaction which, upon the application of any Debtor
Relief Law to such Person or any of its Subsidiaries, would be characterized as
indebtedness; or (c) the monetary obligations under any sale and leaseback
transaction which does not create a liability on the consolidated balance sheet
of such Person and its Subsidiaries; or (d) any other monetary obligation
arising with respect to any other transaction which (i) upon the
application of any Debtor Relief Law to such Person or any of its Subsidiaries,
would be characterized as indebtedness or (ii) is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the consolidated balance sheet of such Person and its Subsidiaries
(for purposes of this clause (d), any transaction structured to provide tax
deductibility as interest 

 

21

 

expense of any dividend,
coupon or other periodic payment will be deemed to be the functional equivalent
of  a borrowing).

 

“Operating Lease”
means any lease of (or other agreement conveying the right to use) any real or
personal property by any Loan Party, as lessee, other than any Capital Lease
and obligations in respect of the FILOT Lease.

 

“Organization
Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect thereto
filed in connection with its formation or organization with the applicable
Governmental Authority in the jurisdiction of its formation or organization
and, if applicable, any certificate or articles of formation or organization of
such entity.

 

“Other Taxes”
means all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.

 

“Outstanding Amount”
means (a) with respect to the Term Loans, Revolving Credit Loans and Swing
Line Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any borrowings and prepayments or repayments of the Term
Loans, Revolving Credit Loans and Swing Line Loans, as the case may be,
occurring on such date; and (b) with respect to any L/C Obligations on any
date, the amount of such L/C Obligations on such date after giving effect to
any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements by the Borrower of Unreimbursed Amounts.

 

“Parent”
has the meaning specified in the introductory paragraph hereto.

 

“Participant”
has the meaning specified in Section 11.06(d).

 

“PBGC”
means the Pension Benefit Guaranty Corporation and any entity succeeding to any
or all of its functions under ERISA.

 

“Pension Plan”
means a “pension plan”, as such term is defined in Section 3(2) of
ERISA, which is subject to Title IV of ERISA or the minimum funding standards
of ERISA (other than a Multiemployer Pension Plan), and as to which any Loan
Party or any of its Domestic Subsidiaries or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any
time during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.

 

22

 

“Permitted Acquisition”
means any Proposed Acquisition which is either (a) approved in writing by
the Required Lenders or (b) which satisfies each of the following
conditions:

 

(i)                                     Other than Debt permitted
under Section 7.01, none of the Loan Parties shall incur or assume any
Debt or other liabilities in connection with such Proposed Acquisition except
for ordinary course trade payables and accrued expenses. No earn-out or similar
payment obligations shall be incurred in connection with such Proposed
Acquisition unless approved in writing by the Administrative Agent;

 

(ii)                                  Before and after giving
effect to such Proposed Acquisition, no Unmatured Default or Event of Default
shall have occurred and be continuing;

 

(iii)                               The aggregate amount payable
in connection with, and other consideration for (in each case, including all
transaction costs and all Debt, liabilities and Contingent Liabilities incurred
or assumed in connection therewith or otherwise reflected in a consolidated
balance sheet of the Borrower and such acquired Person) such Proposed
Acquisition and all other Permitted Acquisitions under clause (b) of this
definition shall not exceed $60,000,000;

 

(iv)                              After giving effect to such
Proposed Acquisition, the Borrower shall be in compliance on a pro forma basis
with the financial covenants set forth in Section 7.14, recomputed
for the most recent Fiscal Quarter for which financial statements have been
delivered;

 

(v)                                 Upon consummation of such
Proposed Acquisition, the Collateral Agent, on behalf of the Secured Parties,
shall have a perfected first priority Lien upon all assets acquired in
connection therewith, subject only to Permitted Liens;

 

(vi)                              Not less than twenty (20)
Business Days prior to consummating such Proposed Acquisition, the Borrower
shall deliver to the Administrative Agent an acquisition summary with respect
to such Proposed Acquisition, such summary to include (A) a reasonably
detailed description of the business to be acquired (including financial
information) and operating results (including financial statements in form and
substance reasonably satisfactory to the Administrative Agent), (B) the
terms and conditions, including economic terms, of the Proposed Acquisition,
and (C) pro forma financial projections for the Loan Parties for the four
Fiscal Quarters following the date of such Proposed Acquisition, together with
a calculation of the Borrower’s compliance on a Pro Forma Basis with the
financial covenants set forth in Section 7.14 for such period, in
each case in form and substance reasonably satisfactory to the Administrative
Agent;

 

(vii)                           The Administrative Agent
shall have been furnished with copies of the Borrower’s business, legal and
environmental due diligence with respect to the proposed business and assets to
be acquired, with results reasonably satisfactory to the Administrative Agent;
and

 

23

 

(viii)                        Prior to consummating such
Proposed Acquisition, the Borrower shall provide the Administrative Agent with
all acquisition documents relating thereto and such other information
(including officer’s certificates and opinions of counsel) as the Administrative
Agent shall reasonably request in order to confirm that the conditions set
forth herein have been satisfied.

 

“Permitted
Lien” means a Lien expressly permitted hereunder pursuant to Section 7.02.

 

“Permitted Parent Dividends” means the dividend the Borrower is
permitted to pay to the Parent in an aggregate amount not to exceed (a) (i) from
the Closing Date through the Fiscal Year ending December 31, 2009, 50% of
Cumulative Available Excess Cash Flow and (ii) thereafter, 100% of
Cumulative Available Excess Cash Flow plus (b) an aggregate amount of up
to $500,000 in connection with the redemption of the Warrants pursuant to the
terms thereof and in connection with the obligations of the Parent pursuant to
the Underwriting Agreement, if applicable.

 

“Person”
means any natural person, corporation, partnership, trust, limited liability
company, association, Governmental Authority or unit, or any other entity,
whether acting in an individual, fiduciary or other capacity.

 

“Platform”
has the meaning specified in Section 6.02.

 

“Pledged Debt”
has the meaning specified in Section 1(b) of the Security
Agreement.

 

“Pledged Equity”
has the meaning specified in Section 1(b) of the Security
Agreement.

 

“Private Placement
Noteholders” means the holders from time to time of the Private Placement
Notes.

 

“Private Placement
Note Purchase Agreement” means that certain Note Purchase Agreement among
the Borrower,  the other Loan Parties and the Private Placement Noteholders
dated on or about the Commitment Effective Date (as may be amended, supplemented
or restated from time to time in accordance with the Intercreditor Agreement).

 

“Private Placement
Notes” means the Senior Notes due 2015 issued pursuant to the terms of the
Private Placement Note Purchase Agreement in the aggregate initial principal
amount of $40,000,000.

 

“Pro Forma Basis”
means, with respect to any determination for any period and any Pro Forma
Transaction, that such determination shall be made by giving pro forma effect
to each such Pro Forma Transaction, as if each such Pro Forma Transaction had
been consummated on the first day of such period.

 

“Pro Forma Transaction”
means any transaction consummated as part of any Permitted Acquisition,
together with each other transaction relating thereto and consummated in
connection therewith, including any incurrence or repayment of Debt.

 

24

 

 

“Proposed Acquisition”
means (a) any proposed acquisition that is consensual and approved by the
board of directors of such Proposed Acquisition Target, of all or substantially
all of the assets or Capital Securities of any Proposed Acquisition Target by the
Borrower or any Subsidiary of the Borrower or (b) any proposed merger of
any Proposed Acquisition Target with or into the Borrower or any Subsidiary of
the Borrower (and, in the case of a merger with the Borrower, with the Borrower
being the surviving corporation).

 

“Proposed Acquisition
Target” means any Person or any brand, line of business, division, branch,
operating division or other unit operation of any Person.

 

“Public
Lender” has the meaning specified in Section 6.02.

 

“Ratable
Portion” shall mean, as of any date of determination, an amount equal to
the product of (a) the Net Cash Proceeds being applied to the payment or
prepayment of Senior Debt pursuant to any of Sections 2.06(b)(i) through
(vi) of this Agreement multiplied by (b) a fraction, the
numerator of which is (x) with respect to an offer to prepay the Private
Placement Notes, the then aggregate outstanding principal amount of the Private
Placement Notes and/or (y) with respect to a prepayment of the Loans, the
then aggregate outstanding principal amount of the Loans and the denominator of
which is the then aggregate outstanding principal amount of all Senior Debt.

 

“Reduction Amount”
has the meaning set forth in Section 2.05(b)(ix).

 

“Regulation D” means
Regulation D of the FRB.

 

“Regulation U” means
Regulation U of the FRB.

 

“Register”
has the meaning specified in Section 11.06(c).

 

“Related Agreements”
means the Kraft Acquisition Documents and all agreements and instruments
entered into or delivered in connection therewith, including without limitation
all supply agreements and transitional services agreements with Seller.

 

“Related
Parties” means, with respect to any Person, such Person’s Affiliates and
the partners, directors, officers, employees, agents, trustees and advisors of
such Person and of such Person’s Affiliates.

 

“Related Transactions”
means the transactions contemplated by the Related Agreements.

 

“Reportable Event”
means a reportable event as defined in Section 4043 of ERISA and the
regulations issued thereunder as to which the PBGC has not waived the
notification requirement of Section 4043(a), or the failure of a Pension
Plan to meet the minimum funding standards of Section 412 of the Code
(without regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of
ERISA) or under Section 302 of ERISA.

 

25

 

“Request for Credit
Extension” means (a) with respect to a Borrowing, conversion or
continuation of Loans, a Committed Loan Notice, (b) with respect to an L/C
Credit Extension, a Letter of Credit Application, and (c) with respect to
a Swing Line Loan, a Swing Line Loan Notice.

 

“Required Lenders”
means, as of any date of determination, Lenders holding more than 50% of the
sum of the (a) Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations and
Swing Line Loans being deemed “held” by such Lender for purposes of this
definition) and (b) aggregate unused Revolving Credit Commitments; provided
that the unused Revolving Credit Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded
for purposes of making a determination of Required Lenders.

 

“Required
Revolving Lenders” means, as of any date of determination, Lenders holding
more than 50% of the sum of the (a) Total Revolving Credit Outstandings
(with the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by
such Lender for purposes of this definition) and (b) aggregate unused
Revolving Credit Commitments; provided that the unused Revolving Credit
Commitment of, and the portion of the Total Revolving Credit Outstandings held
or deemed held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Revolving Lenders.

 

“Required
Term A Loan Lenders” means, as of any date of determination, Lenders
holding more than 50%  of the Term
A Loan on such date; provided that the portion of the Term A Loan held
by any Defaulting Lender shall be excluded for purposes of making a
determination of Required Term A Loan Lenders.

 

“Required
Term B Loan Lenders” means, as of any date of determination, Lenders
holding more than 50%  of the Term
B Loan on such date; provided that the portion of the Term B Loan held
by any Defaulting Lender shall be excluded for purposes of making a
determination of Required Term B Loan Lenders.

 

“Responsible
Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of a Loan Party
and any other officer of the applicable Loan Party so designated by any of the
foregoing officers in a notice to the Administrative Agent.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

 

“Revolving Credit
Commitment” means, as to each Lender, its obligation to (a) make
Revolving Credit Loans to the Borrower pursuant to Section 2.01(b),
(b) purchase participations in L/C Obligations, and (c) purchase
participations in Swing Line Loans, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.01 under the caption “Revolving Credit Commitment” or
opposite such caption in the Assignment and Assumption pursuant to which such
Lender becomes a party 

 

26

 

hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.

 

“Revolving Credit
Facility” means, at any time, the aggregate amount of the Lenders’
Revolving Credit Commitments at such time. 
The initial amount of the Revolving Credit Facility in effect on the
Closing Date is ONE HUNDRED MILLION DOLLARS ($100,000,000).

 

“Revolving Credit
Loan” has the meaning specified in Section 2.01(b).

 

“Revolving Credit
Note” means a promissory note made by the Borrower in favor of a
Lender evidencing Revolving Credit Loans or Swing Line Loans, as the case may
be, made by such Lender, substantially in the form of Exhibit C-3.

 

“S&P”
means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

 

“SCANA
Side Letters” means those certain letter agreements dated as of April 3,
2008 and April 4, 2008, among MeadWestvaco Corporation, MeadWestvaco South
Carolina LLC, SCANA Corporation, South Carolina Electric and Gas Company, Cogen
South L.L.C., the Parent and Oak Acquisition LLC.

 

“SEC”
means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 

“Secured Cash Management Agreement”
means any Cash Management Agreement that is entered into by and between any
Loan Party and any Cash Management Bank.

 

“Secured Hedge Agreement” means
any Swap Contract permitted under Article VI or VII that is
entered into by and between any Loan Party and any Hedge Bank.

 

“Secured Lender
Parties” means, collectively, the Administrative Agent, the Lenders,
the L/C Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or
sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05,
and the other Persons the Obligations owing to which are or are purported to be
secured by the Collateral under the terms of the Collateral Documents (other
than the Private Placement Noteholders).

 

“Secured
Lender Party Designation Notice” means in connection with any Secured Cash
Management Agreement or any Secured Hedge Agreement, a notice of secured party
designation delivered by the Cash Management Bank or Hedge Bank, as applicable,
to the Administrative Agent substantially in the form of Exhibit H.

 

“Secured Party”
has the meaning specified in the Security Agreement.

 

“Security Agreement”
has the meaning specified in Section 4.02(a)(iii).

 

27

 

“Seller”
means a collective reference to MeadWestvaco Corporation and MeadWestvaco South
Carolina LLC.

 

“Senior
Debt” means a collective reference to (a) the obligations of the Loan
Parties under the Private Placement Note Purchase Agreement and the Private
Placement Notes and (b) the Obligations hereunder.

 

“Solvent”
and “Solvency”
mean, with respect to any Person on any date of determination, that on such
date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay such debts and liabilities as they mature, (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital, and (e) such Person is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. 
The amount of contingent liabilities at any time shall be computed as
the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

 

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities
or other interests having ordinary voting power for the election of directors
or other governing body (other than securities or interests having such power
only by reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower.

 

“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master Agreement.

 

28

 

“Swing Line
Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.

 

“Swing Line Lender”
means Bank of America in its capacity as provider of Swing Line Loans, or any
successor swing line lender hereunder.

 

“Swing Line Loan”
has the meaning specified in Section 2.04(a).

 

“Swing Line Loan
Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b),
which, if in writing, shall be substantially in the form of Exhibit B.

 

“Swing Line
Sublimit” means an amount equal to the lesser of (a) $10,000,000 and (b) the Revolving
Credit Facility.  The Swing Line Sublimit
is part of, and not in addition to, the Revolving Credit Facility.

 

“Synthetic
Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do
not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).  In no event shall any Operating Lease or any
FILOT Lease be construed as a Synthetic Lease Obligation.

 

“Target”
means all or substantially all of the assets purchased from the Seller which
constitute the “Purchased Assets” as such term us defined in the Mead Purchase
Agreement.

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

 

“Teachers”
means Teachers Insurance and Annuity Association of America.

 

“Term A Loan”
has the meaning specified in Section 2.01(a)(i).

 

“Term A Loan
Commitment” means, as to each Lender, its obligation to make its
portion of the Term A Loan to the Borrower on the Commitment Effective Date
pursuant to Section 2.01(a)(i), in the principal amount set forth
opposite such Lender’s name on Schedule 2.01. The aggregate principal
amount of the Term A Loan Commitments of all of the Lenders as in effect on the
Closing Date is THREE HUNDRED NINETY MILLION DOLLARS ($390,000,000).

 

“Term A
Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Term A Loans made by such Lender, substantially in the form of Exhibit C-1.

 

“Term B Loan”
means the Term B-1 Loan and/or the Term B-2 Loan, as applicable.

 

“Term B-1 Loan”
has the meaning specified in Section 2.01(a)(ii).

 

29

 

“Term B-2 Loan”
has the meaning specified in Section 2.01(a)(iii).

 

“Term B Loan
Commitment” means the Term B-1 Loan Commitment and/or the Term B-2
Loan Commitment, as applicable.

 

“Term B-1 Loan
Commitment” means, as to each Lender, its obligation to make its
portion of the Term B-1 Loan to the Borrower on the Commitment Effective Date
pursuant to Section 2.01(a)(ii), in the principal amount set forth
opposite such Lender’s name on Schedule 2.01. The aggregate principal
amount of the Term B-1 Loan Commitments of all of the Lenders as in effect on
the Closing Date is TWENTY FIVE MILLION DOLLARS ($25,000,000).

 

“Term B-2 Loan
Commitment” means, as to each Lender, its obligation to make its
portion of the Term B-2 Loan to the Borrower on the Commitment Effective Date
pursuant to Section 2.01(a)(iii), in the principal amount set forth
opposite such Lender’s name on Schedule 2.01. The aggregate principal
amount of the Term B-2 Loan Commitments of all of the Lenders as in effect on
the Closing Date is FORTY MILLION DOLLARS ($40,000,000), provided,
however, that such Term B-2 Loan Commitments may be reduced on or prior to the
Commitment Effective Date in accordance with Section 2.01(a)(iii).

 

“Term B
Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Term B Loans made by such Lender, substantially in the form of Exhibit C-2.

 

“Term Loan”
means the Term A Loan and/or the Term B Loan, as applicable.

 

“Term Loan
Commitment” means the Term A Loan Commitment and/or the Term B Loan
Commitment, as applicable.

 

“Termination Event”
means, with respect to a Pension Plan that is subject to Title IV of ERISA, (a) a
Reportable Event, (b) the withdrawal of Borrower or any other member of
the Controlled Group from such Pension Plan during a plan year in which
Borrower or any other member of the Controlled Group was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA, (c) the termination of such
Pension Plan, the filing of a notice of intent to terminate the Pension Plan or
the treatment of an amendment of such Pension Plan as a termination under Section 4041
of ERISA, (d) the institution by the PBGC of proceedings to terminate such
Pension Plan or (e) any event or condition that might constitute grounds
under Section 4042 of ERISA for the termination of, or appointment of a
trustee to administer, such Pension Plan.

 

“Ticking Fee”
has the meaning specified in Section 2.09(b).

 

“Total Debt” means
all Debt of the Parent  and its
Subsidiaries, determined on a consolidated basis, excluding (a) contingent
obligations in respect of Contingent Liabilities (except to the extent
constituting Contingent Liabilities in respect of Debt of a Person other than
any Loan Party or in respect of Letters of Credit), (b) Hedging
Obligations, (c) Debt of the Parent  to
Subsidiaries and Debt of Subsidiaries to the Parent or to other Subsidiaries
and (d) the Earn-Out Obligations.

 

30

 

“Total Leverage
Ratio” means, as of the last day of any Fiscal Quarter, the ratio of
(a) Total Debt as of such day to (b) EBITDA for the period of four
consecutive Fiscal Quarters ending on such day.

 

“Total
Revolving Credit Outstandings” means the aggregate Outstanding Amount of
all Revolving Credit Loans, Swing Line Loans and L/C Obligations.

 

“Total Outstandings”
means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

 

“Total Plan Liability”
means, at any time, the present value of all vested and unvested accrued
benefits under all Pension Plans, determined as of the then most recent
valuation date for each Pension Plan, using PBGC actuarial assumptions for
single employer plan terminations.

 

“Type”
means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“UCC”
means the Uniform Commercial Code as in effect in the State of Illinois; provided
that, if perfection or the effect of perfection or non-perfection or the
priority of any security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of
Illinois, “UCC” means the Uniform Commercial Code as in effect from time
to time in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or non-perfection or
priority.

 

“Underwriting
Agreement” means the Underwriting Agreement dated on or about August 15,
2005 between Stone Arcade Acquisition Corporation, Morgan Joseph & Co., Inc.,
as Representative, and the other Underwriters identified therein, as in effect
on the Closing Date.

 

“Unfunded
Liability” means the amount (if any) by which the present value of all
vested and unvested accrued benefits under all Pension Plans exceeds the fair
market value of all assets allocable to those benefits, all determined as of
the then most recent valuation date for each Pension Plan, using PBGC actuarial
assumptions for single employer plan terminations.

 

“United States”
and “U.S.”
mean the United States of America.

 

“Unreimbursed
Amount” has the meaning specified in Section 2.03(c)(i).

 

“Unused
Fee” has the meaning specified in Section 2.09(a).

 

“Warrants” means those certain warrants to
purchase 40,000,000 shares of common stock of the Parent at an exercise price
of $5.00 per share dated on or about August 15, 2005.

 

“Wholly-Owned Subsidiary”
means, as to any Person, a Subsidiary all of the Capital Securities of which
(except directors’ qualifying Capital Securities) are at the time directly or
indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such
Person.

 

31

 

1.02                           Other Interpretive
Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

 

(a)                                  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references
in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and
Preliminary Statements, Exhibits and Schedules to, the Loan Document in which
such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

 

(b)                                 In the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including;” the words “to” and “until”
each mean “to but excluding;” and the word “through” means “to
and including.”

 

(c)                                  Section headings herein
and in the other Loan Documents are included for convenience of reference only
and shall not affect the interpretation of this Agreement or any other Loan
Document.

 

1.03                           Accounting
Terms.

 

(a)                                  Generally.  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.

 

32

 

(b)                                 Changes in GAAP or
Accounting Practices.  If at any
time any change in GAAP or in accounting practices as permitted under Section 7.13
hereof would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either the Borrower or the Required Lenders
shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP or accounting practices
(subject to the approval of the Required Lenders); provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP or past accounting practices prior to such change therein
and (ii) the Borrower shall provide to the Administrative Agent and the
Lenders financial statements and other documents required under this Agreement
or as reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect
to such change in GAAP or accounting practices, as appropriate.

 

(c)                                  Consolidation of Variable
Interest Entities.  All
references herein to consolidated financial statements of the Parent and its
Subsidiaries or to the determination of any amount for the Parent and its
Subsidiaries on a consolidated basis or any similar reference shall, in each
case, be deemed to include each variable interest entity that the Parent is
required to consolidate pursuant to FASB Interpretation No. 46 —
Consolidation of Variable Interest Entities: an interpretation of ARB No. 51
(January 2003) as if such variable interest entity were a Subsidiary as
defined herein.

 

1.04                           Rounding.  Any
financial ratios required to be maintained by the Parent or the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than
the number of places by which such ratio is expressed herein and rounding the
result up or down to the nearest number (with a rounding-up if there is no
nearest number).

 

1.05                           Times of Day.  Unless otherwise specified, all references
herein to times of day shall be references to Central time (daylight or
standard, as applicable).

 

1.06                           Letter of Credit Amounts.  Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the stated amount of
such Letter of Credit in effect at such time; provided, however,
that with respect to any Letter of Credit that, by its terms or the terms of
any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the maximum stated amount of such Letter of Credit after
giving effect to all such increases, whether or not such maximum stated amount
is in effect at such time.

 

33

 

 

ARTICLE II

 

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01                           Term Loans
and Revolving Credit Loans.

 

(a)                                  The Term Loans.

 

(i)                                     Term A Loan.  Subject to the terms and conditions set forth
herein, each Lender severally agrees to make its portion of a term loan (the “Term
A Loan”) to the Borrower on the Commitment Effective Date in an amount not
to exceed such Lender’s Term A Loan Commitment. 
Amounts borrowed under this Section 2.01(a)(i) and
repaid or prepaid may not be reborrowed. 
The Term A Loan may be a Base Rate Loan or Eurodollar Rate Loan, as
further provided herein; provided, however, all Borrowings made
on the Commitment Effective Date shall be made as Base Rate Loans unless the
Administrative Agent shall have received an appropriate funding indemnity letter
executed by the Borrower and reasonably acceptable to the Administrative Agent
at least three (3) Business Days prior to the Commitment Effective Date.

 

(ii)                                  Term B-1 Loan.  Subject to the terms and conditions set forth
herein, each Lender severally agrees to make its portion of a term loan (the “Term
B-1 Loan”) to the Borrower on the Commitment Effective Date in an amount
not to exceed such Lender’s Term B-1 Loan Commitment.  Amounts borrowed under this Section 2.01(a)(ii) and
repaid or prepaid may not be reborrowed. 
The Term B-1 Loan may be a Base Rate Loan or Eurodollar Rate Loan, as
further provided herein; provided, however, all Borrowings made
on the Commitment Effective Date shall be made as Base Rate Loans unless the
Administrative Agent shall have received an appropriate funding indemnity
letter executed by the Borrower and reasonably acceptable to the Administrative
Agent at least three (3) Business Days prior to the Commitment Effective
Date.

 

(iii)                               Term B-2 Loan.  Subject to the last sentence of this clause (iii) and
the other terms and conditions set forth herein, each Lender severally agrees
to make its portion of a term loan (the “Term B-2 Loan”) to the Borrower
on the Commitment Effective Date in an amount not to exceed such Lender’s Term B-2
Loan Commitment.  Amounts borrowed under
this Section 2.01(a)(iii) and repaid or prepaid may not be
reborrowed.  The Term B-2 Loan may be a
Base Rate Loan or Eurodollar Rate Loan, as further provided herein; provided,
however, all Borrowings made on the Commitment Effective Date shall be
made as Base Rate Loans unless the Administrative Agent shall have received an
appropriate funding indemnity letter executed by the Borrower and reasonably
acceptable to the Administrative Agent at least three (3) Business Days
prior to the Commitment Effective Date. 
It is understood and agreed that in accordance with Section 2.06(b)(ii)(B),
the aggregate Term B-2 Loan Commitment shall be permanently reduced on a Dollar
for Dollar basis in an amount equal to the aggregate principal amount of the
Private Placement Notes issued pursuant to the Private Placement Note Purchase
Agreement on or prior to the Commitment Effective Date.

 

(b)                                 The Revolving Credit Loans.  Subject to the terms and conditions set forth
herein, each Lender severally agrees to make loans (each such loan, a “Revolving Credit

 

34

 

Loan”) to the
Borrower from time to time, on any Business Day during the Availability Period,
in an aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Revolving Credit Commitment; provided, however, that
after giving effect to any Revolving Credit Borrowing, (i) the Total
Revolving Credit Outstandings shall not exceed the Revolving Credit Facility,
and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of
any Lender, plus such Lender’s Applicable Revolving Credit Percentage of
the Outstanding Amount of all L/C Obligations, plus such Lender’s
Applicable Revolving Credit Percentage of the Outstanding Amount of all Swing
Line Loans shall not exceed such Lender’s Revolving Credit Commitment.  Within the limits of each Lender’s Revolving
Credit Commitment, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.01(b), prepay under Section 2.05,
and reborrow under this Section 2.01(b).  Revolving Credit Loans may be Base Rate Loans
or Eurodollar Rate Loans, as further provided herein; provided, however,
all Borrowings made on the Commitment Effective Date shall be made as Base Rate
Loans unless the Administrative Agent shall have received an appropriate
funding indemnity letter executed by the Borrower and reasonably acceptable to
the Administrative Agent at least three (3) Business Days prior to the
Commitment Effective Date.

 

2.02                           Borrowings,
Conversions and Continuations of Loans.

 

(a)                                  Each Borrowing, each
conversion of Loans from one Type to the other, and each continuation of
Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to
the Administrative Agent, which may be given by telephone.  Each such notice must be received by the
Administrative Agent not later than 10:00 a.m. (i) three Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of, Eurodollar Rate Loans or of any conversion of Eurodollar Rate
Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing
of Base Rate Loans.  Each telephonic
notice by the Borrower pursuant to this Section 2.02(a) must
be confirmed promptly by delivery to the Administrative Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of the Borrower.  Each Borrowing
of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal
amount of $2,000,000 or a whole multiple of $500,000 in excess thereof.  Except as provided in Sections 2.03(c) and
2.04(c), each Borrowing of or conversion to Base Rate Loans shall be in
a principal amount of $1,000,000 or a whole multiple of $100,000 in excess
thereof.  Each Committed Loan Notice
(whether telephonic or written) shall specify (i) whether the Borrower is
requesting a Borrowing, a conversion of Loans from one Type to the other, or a
continuation of Eurodollar Rate Loans, (ii) the requested date of the
Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Loans to be borrowed,
converted or continued, (iv) the Type of Loans to be borrowed or to which
existing Loans are to be converted, and (v) if applicable, the duration of
the Interest Period with respect thereto. 
If the Borrower fails to specify a Type of a Loan in a Committed Loan
Notice or if the Borrower fails to give a timely notice requesting a conversion
or continuation, then the applicable Loans shall be made as, or converted to,
Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be
effective 

 

35

 

as
of the last day of the Interest Period then in effect with respect to the
applicable Eurodollar Rate Loans.  If the
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans in such Committed Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one
month.  Notwithstanding anything to the
contrary herein, a Swing Line Loan may not be converted to a Eurodollar Rate
Loan.

 

(b)                                 Following receipt of a
Committed Loan Notice, the Administrative Agent shall promptly notify each
Lender of the amount of its Applicable Percentage under the applicable Facility
of the applicable Loans, and if no timely notice of a conversion or
continuation is provided by the Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion to Base Rate Loans
described in Section 2.02(a). 
In the case of a Borrowing, each Lender shall make the amount of its
Loan available to the Administrative Agent in immediately available funds at
the Administrative Agent’s Office not later than 12:00 noon on the Business Day
specified in the applicable Committed Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.03 (and, if such Borrowing is the
initial Credit Extension, Section 4.01 and 4.02), the
Administrative Agent shall make all funds so received available to the Borrower
in like funds as received by the Administrative Agent either by (i) crediting
the account of the Borrower on the books of Bank of America with the amount of
such funds or (ii) wire transfer of such funds, in each case in accordance
with instructions provided to (and reasonably acceptable to) the Administrative
Agent by the Borrower; provided, however, that if, on the date a
Committed Loan Notice with respect to a Revolving Credit Borrowing is given by
the Borrower, there are L/C Borrowings outstanding, then the proceeds of such
Revolving Credit Borrowing, first, shall be applied to the payment in
full of any such L/C Borrowings, and second, shall be made available to
the Borrower as provided above.

 

(c)                                  Except as otherwise provided
herein, a Eurodollar Rate Loan may be continued or converted only on the last
day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Loans
may be requested as, converted to or continued as Eurodollar Rate Loans without
the consent of the Required Lenders.

 

(d)                                 The Administrative Agent
shall promptly notify the Borrower and the Lenders of the interest rate
applicable to any Interest Period for Eurodollar Rate Loans upon determination
of such interest rate.  At any time that
Base Rate Loans are outstanding, the Administrative Agent shall notify the
Borrower and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

 

(e)                                  After giving effect to all
Borrowings, all conversions of Loans from one Type to the other, and all
continuations of Loans as the same Type, there shall not be more than twelve
Interest Periods in effect in the aggregate with respect to all Revolving Loans
and Term Loans.

 

36

 

2.03                           Letters of
Credit.

 

(a)                                  The Letter of Credit
Commitment.

 

(i) Subject to the terms and conditions set
forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements
of the Lenders set forth in this Section 2.03, (1) from time
to time on any Business Day during the period from the Commitment Effective
Date until the Letter of Credit Expiration Date, to issue Letters of Credit for
the account of the Borrower or its Subsidiaries, and to amend or extend Letters
of Credit previously issued by it, in accordance with Section 2.03(b),
and (2) to honor drawings under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of the Borrower or its Subsidiaries and any drawings thereunder; provided
that after giving effect to any L/C Credit Extension with respect to any Letter
of Credit, (x) the Total Revolving Credit Outstandings shall not exceed
the Revolving Credit Facility, (y) the aggregate Outstanding Amount of the
Revolving Credit Loans of any Lender, plus such Lender’s Applicable
Revolving Credit Percentage of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Applicable Revolving Credit Percentage of the Outstanding Amount
of all Swing Line Loans shall not exceed such Lender’s Revolving Credit
Commitment, and (z) the Outstanding Amount of the L/C Obligations shall
not exceed the Letter of Credit Sublimit. 
Each request by the Borrower for the issuance or amendment of a Letter
of Credit shall be deemed to be a representation by the Borrower that the L/C
Credit Extension so requested complies with the conditions set forth in the
proviso to the preceding sentence. 
Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.  All Existing Letters of Credit shall be
deemed to have been issued pursuant hereto, and from and after the Commitment
Effective Date shall be subject to and
governed by the terms and conditions hereof.

 

(ii)                                  The L/C Issuer
shall not issue any Letter of Credit if:

 

(A)                              subject to Section 2.03(b)(iii), the expiry date of such
requested Letter of Credit would occur more than twelve  months
after the date of issuance or last
extension, unless the Required Revolving Lenders have approved such
expiry date; or

 

(B)                                the expiry date
of such requested Letter of Credit would occur after the Letter of Credit
Expiration Date, unless all the Lenders that have Revolving Credit Commitments
have approved such expiry date.

 

37

 

(iii)                               The L/C Issuer
shall not be under any obligation to issue any Letter of Credit if:

 

(A)                              any order,
judgment or decree of any Governmental Authority or arbitrator shall by its
terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of
Credit, or any Law applicable to the L/C Issuer or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the L/C Issuer with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the L/C Issuer
in good faith deems material to it;

 

(B)                                the issuance of
such Letter of Credit would violate one or more policies of the L/C Issuer
applicable to letters of credit generally;

 

(C)                                except as
otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of
Credit is in an initial stated amount less than $100,000;

 

(D)                               such Letter of
Credit is to be denominated in a currency other than Dollars; or

 

(E)                                 a default of
any Lender’s obligations to fund under Section 2.03(c) exists
or any Lender is at such time a Defaulting Lender hereunder, unless the L/C
Issuer has entered into satisfactory arrangements with the Borrower or such
Lender to eliminate the L/C Issuer’s risk with respect to such Lender.

 

(iv)                              The L/C Issuer
shall not amend any Letter of Credit if the L/C Issuer would not be permitted
at such time to issue such Letter of Credit in its amended form under the terms
hereof.

 

(v)                                 The L/C Issuer
shall be under no obligation to amend any Letter of Credit if (A) the L/C
Issuer would have no obligation at such time to issue such Letter of Credit in
its amended form under the terms hereof, or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(vi)                              The L/C Issuer
shall act on behalf of the Lenders with respect to any Letters of Credit issued
by it and the documents associated therewith, and the L/C Issuer shall have all
of the benefits and immunities (A) provided to the

 

38

 

Administrative Agent in Article IX with respect to any acts
taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and Issuer Documents
pertaining to such Letters of Credit as fully as if the term “Administrative
Agent” as used in Article IX included the L/C Issuer with respect
to such acts or omissions, and (B) as additionally provided herein with
respect to the L/C Issuer.

 

(b)                                 Procedures for
Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.

 

(i)                                     Each Letter of
Credit shall be issued or amended, as the case may be, upon the request of the
Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent)
in the form of a Letter of Credit Application, appropriately completed and
signed by a Responsible Officer of the Borrower.  Such Letter of Credit Application must be
received by the L/C Issuer and the Administrative Agent not later than 10:00 a.m.
at least two Business Days (or such later date and time as the Administrative
Agent and the L/C Issuer may agree in a particular instance in their sole
discretion) prior to the proposed issuance date or date of amendment, as the
case may be.  In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the L/C
Issuer:  (A) the proposed issuance
date of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address
of the beneficiary thereof; (E) the documents to be presented by such
beneficiary in case of any drawing thereunder; (F) the full text of any
certificate to be presented by such beneficiary in case of any drawing
thereunder; (G) the purpose and nature of the requested Letter of Credit;
and (H) such other matters as the L/C Issuer may require.  In the case of a request for an amendment of
any outstanding Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the L/C Issuer (1) the Letter
of Credit to be amended; (2) the proposed date of amendment thereof (which
shall be a Business Day); (3) the nature of the proposed amendment; and (4) such
other matters as the L/C Issuer may require. 
Additionally, the Borrower shall furnish to the L/C Issuer and the
Administrative Agent such other documents and information pertaining to such
requested Letter of Credit issuance or amendment, including any Issuer
Documents, as the L/C Issuer or the Administrative Agent may reasonably
require.

 

(ii)                                  Promptly after
receipt of any Letter of Credit Application, the L/C Issuer will confirm with
the Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of such Letter of Credit Application from the
Borrower and, if not, the L/C Issuer will provide the Administrative Agent with
a copy thereof.  Unless the L/C Issuer
has received written notice from any Lender, the Administrative Agent or any
Loan Party, at least one Business Day prior to the requested date of issuance
or amendment of the applicable Letter of Credit, that one or more applicable
conditions contained 

 

39

 

in Article IV shall not then be satisfied, then, subject to
the terms and conditions hereof, the L/C Issuer shall, on the requested date,
issue a Letter of Credit for the account of the Borrower (or the applicable Subsidiary) or enter into the
applicable amendment, as the case may be, in each case in accordance with the
L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter
of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s
Applicable Revolving Credit Percentage times the amount of such Letter
of Credit.

 

(iii)                               If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must
permit the L/C Issuer to prevent any such extension at least once in each
twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Non-Extension
Notice Date”) in each such twelve-month
period to be agreed upon at the time such Letter of Credit is issued.  Unless otherwise directed by the L/C Issuer,
the Borrower shall not be required to make a specific request to the L/C Issuer
for any such extension.  Once an
Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to
have authorized (but may not require) the L/C Issuer to permit the extension of
such Letter of Credit at any time to an expiry date not later than the Letter
of Credit Expiration Date; provided, however, that the L/C Issuer
shall not permit any such extension if (A) the L/C Issuer has determined
that it would not be permitted, or would have no obligation at such time to
issue such Letter of Credit in its revised form (as extended) under the terms hereof
(by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is seven Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the
Required Revolving Lenders have elected not to permit such extension or (2) from
the Administrative Agent, any Lender or the Borrower that one or more of the
applicable conditions specified in Section 4.02 is not then
satisfied, and in each such case directing the L/C Issuer not to permit such
extension.

 

(iv)                              Promptly after
its delivery of any Letter of Credit or any amendment to a Letter of Credit to
an advising bank with respect thereto or to the beneficiary thereof, the L/C
Issuer will also deliver to the Borrower and the Administrative Agent a true
and complete copy of such Letter of Credit or amendment.

 

(v)                                 Any Lender with
a Revolving Credit Commitment (in such capacity, a “Discretionary L/C Issuer”)
may from time to time, at the written request of the Borrower (with a copy to
the Administrative Agent) and with the 

 

40

 

consent
of the Administrative Agent (such consent not to be unreasonably withheld or
delayed), and in such Lender’s sole discretion, agree to issue one or more
Letters of Credit for the account of the Borrower or its Subsidiaries on the
same terms and conditions in all respects as are applicable to the Letters of
Credit issued by the L/C Issuer hereunder by executing and delivering to the
Administrative Agent a written agreement to such effect, among (and in form and
substance satisfactory to) the Borrower, the Administrative Agent and such
Discretionary L/C Issuer.  With respect
to each of the Letters of Credit issued (or to be issued) thereby, each of the
Discretionary L/C Issuers shall have all of the same rights and obligations
under and in respect of this Agreement and the other Loan Documents, and shall
be entitled to all of the same benefits (including, without limitation, the
rights, obligations and benefits set forth in Sections 2.03, 9.07 and 11.01),
as are afforded to the L/C Issuer hereunder and thereunder.  The Administrative Agent shall promptly notify
each of the Lenders with a Revolving Credit Commitment of the appointment of
any Discretionary L/C Issuer.  Each
Discretionary L/C Issuer shall provide to the Administrative Agent, on a
monthly basis, a report that details the activity with respect to each Letter
of Credit issued by such Discretionary L/C Issuer (including an indication of
the maximum amount then in effect with respect to each such Letter of Credit).

 

(c)                                  Drawings and
Reimbursements; Funding of Participations.

 

(i) Upon receipt from the beneficiary of
any Letter of Credit of any notice of a drawing under such Letter of Credit,
the L/C Issuer shall notify the Borrower and the Administrative Agent
thereof.  Not later than 10:00 a.m.
on the date of any payment by the L/C Issuer under a Letter of Credit (each
such date, an “Honor
Date”), the Borrower shall reimburse the L/C Issuer through the
Administrative Agent in an amount equal to the amount of such drawing.  If the Borrower fails to so reimburse the L/C
Issuer by such time, the Administrative Agent shall promptly notify each Lender
of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the
amount of such Lender’s Applicable Revolving Credit Percentage thereof.  In such event, the Borrower shall be deemed
to have requested a Revolving Credit Borrowing of Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the unutilized
portion of the Revolving Credit Commitments and the conditions set forth in Section 4.02
(other than the delivery of a Committed Loan Notice).  Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.03(c)(i) may
be given by telephone if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.

 

(ii)                                  Each Lender
(including any Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make
funds available to the Administrative Agent for the account of the L/C Issuer
at the Administrative

 

41

 

Agent’s Office in an amount equal to its Applicable Revolving Credit
Percentage of the Unreimbursed Amount not later than 12:00 noon on the Business
Day specified in such notice by the Administrative Agent, whereupon, subject to
the provisions of Section 2.03(c)(iii), each Lender that so makes
funds available shall be deemed to have made a Base Rate Loan to the Borrower
in such amount.  The Administrative Agent
shall remit the funds so received to the L/C Issuer.

 

(iii)                               With respect to
any Unreimbursed Amount that is not fully refinanced by a Revolving Credit
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02
cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate.  In such event, each Lender’s
payment to the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.03(c)(ii) shall be deemed payment in respect of
its participation in such L/C Borrowing and shall constitute an L/C Advance
from such Lender in satisfaction of its participation obligation under this Section 2.03.

 

(iv)                              Until each
Lender funds its Revolving Credit Loan or L/C Advance pursuant to this Section 2.03(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Applicable Revolving Credit Percentage of
such amount shall be solely for the account of the L/C Issuer.

 

(v)                                 Each Lender’s
obligation to make Revolving Credit Loans or L/C Advances to reimburse the L/C
Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, the Borrower
or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.03(c) is
subject to the conditions set forth in Section 4.02 (other than
delivery by the Borrower of a Committed Loan Notice ).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Borrower to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer under any Letter of
Credit, together with interest as provided herein.

 

(vi)                              If any Lender
fails to make available to the Administrative Agent for the account of the L/C
Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
the L/C Issuer shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which 

 

42

 

such payment is immediately available to the L/C Issuer at a rate per
annum equal to the greater of the Federal Funds Rate and a rate determined by
the L/C Issuer in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by the L/C Issuer in connection with the foregoing.  If such Lender pays such amount (with
interest and fees as aforesaid), the amount so paid shall constitute such
Lender’s Revolving Loan included in the relevant Borrowing or L/C Advance in
respect of the relevant L/C Borrowing, as the case may be.  A certificate of the L/C Issuer submitted to
any Lender (through the Administrative Agent) with respect to any amounts owing
under this Section 2.03(c)(vi) shall be conclusive absent
manifest error.

 

(d)                                 Repayment of
Participations.

 

(i) At any time after the L/C Issuer has
made a payment under any Letter of Credit and has received from any Lender such
Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c),
if the Administrative Agent receives for the account of the L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrower or otherwise, including proceeds of Cash
Collateral applied thereto by the Administrative Agent), the Administrative
Agent will distribute to such Lender its Applicable Revolving Credit Percentage
thereof (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender’s L/C Advance was outstanding) in
the same funds as those received by the Administrative Agent.

 

(ii)                                  If any payment received
by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is
required to be returned under any of the circumstances described in Section 11.05
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Lender shall pay to the Administrative Agent for the account
of the L/C Issuer its Applicable Revolving Credit Percentage thereof on demand
of the Administrative Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per annum
equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

(e)                                  Obligations
Absolute.  The
obligation of the Borrower to reimburse the L/C Issuer for each drawing under
each Letter of Credit and to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances, including the following:

 

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

 

43

 

 

(ii)                                  the existence
of any claim, counterclaim, setoff, defense or other right that any Loan Party
or any Subsidiary may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

(iii)                               any draft,
demand, certificate or other document presented under such 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; or any loss or
delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;

 

(iv)                              any payment by
the L/C Issuer under such Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the L/C Issuer under such Letter of Credit to
any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any Debtor Relief
Law; or

 

(v)                                 any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Loan Party or any Subsidiary.

 

The
Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will promptly notify the L/C Issuer. 
The Borrower shall be conclusively deemed to have waived any such claim
against the L/C Issuer and its correspondents unless such notice is given as
aforesaid.

 

(f)                                    Role of L/C Issuer.  Each Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of the L/C Issuer, the Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any
action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Revolving Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or enforceability
of any document or instrument related to any Letter of Credit or Issuer
Document.  The

 

44

 

Borrower
hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrower’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuer, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuer shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding,
the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to the Borrower, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the Borrower
which the Borrower proves were caused by the L/C Issuer’s willful misconduct or
gross negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a
Letter of Credit.  In furtherance and not
in limitation of the foregoing, the L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

 

(g)                                 Cash Collateral.  Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request
under any Letter of Credit and such drawing has resulted in an L/C Borrowing,
or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation
for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations.  Sections 2.05 and 8.02(c) set
forth certain additional requirements to deliver Cash Collateral
hereunder.  For purposes of this Section 2.03,
Section 2.05 and Section 8.02(c), “Cash Collateralize”
means to pledge and deposit with or deliver to the Administrative Agent, for
the benefit of the L/C Issuer and the Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to the Administrative Agent and the L/C Issuer
(which documents are hereby consented to by the Lenders).  Derivatives of such term have corresponding meanings.  The Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
Collateral shall be maintained in blocked, non-interest bearing deposit
accounts at Bank of America.  If at any
time the Administrative Agent determines that any funds held as Cash Collateral
are subject to any right or claim of any Person other than the Administrative
Agent or that the total amount of such funds is less than the aggregate
Outstanding Amount of all L/C Obligations, the Borrower will, forthwith upon
demand by the Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited as Cash Collateral, an amount equal to the excess
of (x) such aggregate Outstanding Amount over (y) the total amount of
funds, if any, then held as Cash Collateral that the Administrative Agent
determines to be free and clear of any such right and claim.  Upon the drawing of any 

 

45

 

Letter
of Credit for which funds are on deposit as Cash Collateral, such funds shall
be applied, to the extent permitted under applicable Laws, to reimburse the L/C
Issuer.

 

(h)                                 Applicability of ISP.  Unless otherwise expressly agreed by the L/C
Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to
an Existing Letter of Credit), the rules of the ISP shall apply to
each Letter of Credit.

 

(i)                                     Letter of Credit Fees.  The Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Applicable
Revolving Credit Percentage a Letter of Credit fee (the “Letter of Credit
Fee”) for each Letter of Credit equal to the Applicable Rate times
the daily amount available to be drawn under such Letter of Credit.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due
and payable on the first Business Day after the end of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter
on demand and (ii) computed on a quarterly basis in arrears.  If there is any change in the Applicable Rate
during any quarter, the daily amount available to be drawn under each standby Letter of Credit shall be
computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, upon the request of the Required Revolving Lenders, while any
Event of Default exists, all Letter of Credit Fees shall accrue at the Default
Rate.

 

(j)                                     Fronting Fee and Documentary
and Processing Charges Payable to L/C Issuer.  The Borrower shall pay directly to the L/C
Issuer for its own account a fronting fee with respect to each Letter of
Credit, at the rate per annum specified in the L/C Side Letter, computed on the
daily amount available to be drawn under such Letter of Credit on a quarterly
basis in arrears.  Such fronting fee
shall be due and payable on the tenth Business Day after the end of each March,
June, September and December in respect of the most recently-ended
quarterly period (or portion thereof, in the case of the first payment),
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on
demand.  For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, the Borrower shall pay directly
to the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect.  Such customary fees and standard costs and
charges are due and payable on demand and are nonrefundable.

 

(k)                                  Conflict with Issuer
Documents.  In the
event of any conflict between the terms hereof and the terms of any Issuer
Document, the terms hereof shall control.

 

46

 

(l)                                     Letters of Credit Issued for Subsidiaries.  Notwithstanding that a Letter of Credit
issued or outstanding hereunder is in support of any obligations of, or is for
the account of, a Subsidiary, the Borrower shall be obligated to reimburse the
L/C Issuer hereunder for any and all drawings under such Letter of Credit.  The Borrower hereby acknowledges that the
issuance of Letters of Credit for the account of Subsidiaries inures to the
benefit of the Borrower, and that the Borrower’s business derives substantial
benefits from the businesses of such Subsidiaries.

 

2.04                           Swing Line
Loans.

 

(a)                                  The Swing Line.  Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Lenders set forth in this Section 2.04, to make loans (each
such loan, a “Swing Line Loan”) to the Borrower from time to time on any
Business Day during the Availability Period in an aggregate amount not to
exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Applicable Revolving Credit Percentage of the Outstanding Amount of Revolving
Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may
exceed the amount of such Lender’s Revolving Credit Commitment; provided,
however, that after giving effect to any Swing Line Loan, (i) the
Total Revolving Credit Outstandings shall not exceed the Revolving Credit Facility
at such time, and (ii) the aggregate Outstanding Amount of the Revolving
Credit Loans of any Lender at such time, plus such Lender’s Applicable
Revolving Credit Percentage of the Outstanding Amount of all L/C Obligations at
such time, plus such Lender’s Applicable Revolving Credit Percentage of
the Outstanding Amount of all Swing Line Loans at such time shall not exceed
such Lender’s Revolving Credit Commitment, and provided  further
that the Borrower shall not use the proceeds of any Swing Line Loan to
refinance any outstanding Swing Line Loan. 
Within the foregoing limits, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.04,
prepay under Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall bear interest only
at a rate based on the Base Rate. 
Immediately upon the making of a Swing Line Loan, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Swing Line Lender a risk participation in such Swing Line Loan in an amount
equal to the product of such Lender’s Applicable Revolving Credit Percentage times
the amount of such Swing Line Loan.

 

(b)                                 Borrowing Procedures.  Each Swing Line Borrowing shall be made upon
the Borrower’s irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone.  Each such notice must be received by the
Swing Line Lender and the Administrative Agent not later than 12:00 noon on the
requested borrowing date, and shall specify (i) the amount to be borrowed,
which shall be a minimum of $100,000,
and (ii) the requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be confirmed
promptly by delivery to the Swing Line Lender and the Administrative Agent of a
written Swing Line Loan Notice, appropriately completed and signed by a
Responsible Officer of the Borrower. 
Promptly after receipt by the Swing Line Lender of any telephonic Swing
Line Loan Notice, the 

 

47

 

Swing
Line Lender will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has also received such Swing Line Loan
Notice and, if not, the Swing Line Lender will notify the Administrative Agent
(by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received
notice (by telephone or in writing) from the Administrative Agent (including at
the request of any Lender) prior to 1:00 p.m. on the date of the proposed
Swing Line Borrowing (A) directing the Swing Line Lender not to make such
Swing Line Loan as a result of the limitations set forth in the first proviso
to the first sentence of Section 2.04(a), or (B) that one or
more of the applicable conditions specified in Article IV is not
then satisfied, then, subject to the terms and conditions hereof, the Swing
Line Lender will, not later than 2:00 p.m. on the borrowing date specified
in such Swing Line Loan Notice, make the amount of its Swing Line Loan
available to the Borrower.

 

(c)                                  Refinancing of Swing Line
Loans.

 

(i) The Swing Line Lender at any time in its
sole and absolute discretion may request, on behalf of the Borrower (which
hereby irrevocably authorizes the Swing Line Lender to so request on its
behalf), that each Lender make a Base Rate Loan in an amount equal to such
Lender’s Applicable Revolving Credit Percentage of the amount of Swing Line
Loans then outstanding.  Such request
shall be made in writing (which written request shall be deemed to be a Committed
Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the Revolving
Credit Facility and the conditions set forth in Section 4.02.  The Swing Line Lender shall furnish the
Borrower with a copy of the applicable Committed Loan Notice promptly after
delivering such notice to the Administrative Agent.  Each Lender shall make an amount equal to its
Applicable Revolving Credit Percentage of the amount specified in such
Committed Loan Notice available to the Administrative Agent in immediately
available funds for the account of the Swing Line Lender at the Administrative
Agent’s Office not later than 12:00 noon on the day specified in such Committed
Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Lender
that so makes funds available shall be deemed to have made a Base Rate Loan to
the Borrower in such amount.  The Administrative
Agent shall remit the funds so received to the Swing Line Lender.

 

(ii)                                  If for any
reason any Swing Line Loan cannot be refinanced by such a Revolving Credit  Borrowing in accordance with Section 2.04(c)(i),
the request for Base Rate Loans submitted by the Swing Line Lender as set forth
herein shall be deemed to be a request by the Swing Line Lender that each of
the Lenders fund its risk participation in the relevant Swing Line Loan and
each Lender’s payment to the Administrative Agent for the account of the Swing
Line Lender pursuant to Section 2.04(c)(i) shall be deemed
payment in respect of such participation.

 

48

 

(iii)                               If any Lender
fails to make available to the Administrative Agent for the account of the
Swing Line Lender any amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.04(c) by the time
specified in Section 2.04(c)(i), the Swing Line Lender shall be
entitled to recover from such Lender (acting through the Administrative Agent),
on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the Swing Line Lender at a rate per annum equal to the greater of the
Federal Funds Rate and a rate determined by the Swing Line Lender in accordance
with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the Swing
Line Lender in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the amount so paid shall constitute such Lender’s Committed Loan included in
the relevant Committed Borrowing or funded participation in the relevant Swing
Line Loan, as the case may be.  A
certificate of the Swing Line Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (iii) shall
be conclusive absent manifest error.

 

(iv)                              Each Lender’s
obligation to make Revolving Credit Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.04(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Borrower or any
other Person for any reason whatsoever, (B) the occurrence or continuance
of a Default, or (C) any other occurrence, event or condition, whether or
not similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.04(c) is
subject to the conditions set forth in Section 4.02.  No such funding of risk participations shall
relieve or otherwise impair the obligation of the Borrower to repay Swing Line
Loans, together with interest as provided herein.

 

(d)                                 Repayment of Participations.

 

(i) At any time after any Lender has purchased
and funded a risk participation in a Swing Line Loan, if the Swing Line Lender
receives any payment on account of such Swing Line Loan, the Swing Line Lender
will distribute to such Lender its Applicable Revolving Credit Percentage
thereof in the same funds as those received by the Swing Line Lender.

 

(ii)                                  If any payment
received by the Swing Line Lender in respect of principal or interest on any
Swing Line Loan is required to be returned by the Swing Line Lender under any
of the circumstances described in Section 11.05 (including pursuant
to any settlement entered into by the Swing Line Lender in its discretion),
each Lender shall pay to the Swing Line Lender its Applicable Revolving Credit
Percentage thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned, 

 

49

 

at
a rate per annum equal to the Federal Funds Rate.  The Administrative Agent will make such
demand upon the request of the Swing Line Lender.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

(e)                                  Interest for Account of
Swing Line Lender.  The Swing
Line Lender shall be responsible for invoicing the Borrower for interest on the
Swing Line Loans.  Until each Lender
funds its Base Rate Loan or risk participation pursuant to this Section 2.04
to refinance such Lender’s Applicable Revolving Credit Percentage of any Swing
Line Loan, interest in respect of such Applicable Revolving Credit Percentage
shall be solely for the account of the Swing Line Lender.

 

(f)                                    Payments Directly to Swing
Line Lender.  The
Borrower shall make all payments of principal and interest in respect of the
Swing Line Loans directly to the Swing Line Lender.

 

2.05                           Prepayments.

 

(a)                                  Optional.

 

(i)                                     Subject to the
last sentence of this Section 2.05(a)(i), the Borrower may, upon
notice to the Administrative Agent, at any time or from time to time
voluntarily prepay the Term Loans and Revolving Credit Loans in whole or in
part without premium or penalty; provided that (A) such notice must
be received by the Administrative Agent not later than 10:00 a.m. (1) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans and (2) on
the date of prepayment of Base Rate Loans; (B) any prepayment of
Eurodollar Rate Loans shall be in a principal amount of $2,000,000 or a whole
multiple of $500,000 in excess thereof; and (C) any prepayment of Base
Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$100,000 in excess thereof or, in each case, if less, the entire principal
amount thereof then outstanding.  Each
such notice shall specify the date and amount of such prepayment and the Type(s) of
Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the
Interest Period(s) of such Loans. 
The Administrative Agent will promptly notify each Lender of its receipt
of each such notice, and of the amount of such Lender’s ratable portion of such
prepayment (based on such Lender’s Applicable Percentage in respect of the
relevant Facility).  If such notice is
given by the Borrower, the Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein.  Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest on the amount prepaid,
together with any additional amounts required pursuant to Section 3.05.  Each prepayment of the outstanding Term Loans
pursuant to this Section 2.05(a) shall be applied (x) ratably
to the Term A Loan and the Term B Loan and (y) to the principal repayment
installments thereof on a pro-rata basis, and each such prepayment shall be
paid to the Lenders in 

 

50

 

accordance
with their respective Applicable Percentages in respect of each of the relevant
Facilities.

 

(ii)                                  The Borrower
may, upon notice to the Swing Line Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay Swing Line Loans
in whole or in part without premium or penalty; provided that (A) such
notice must be received by the Swing Line Lender and the Administrative Agent
not later than 12:00 noon on the date of the prepayment, and (B) any such
prepayment shall be in a minimum principal amount of $100,000.  Each such notice shall specify the date and
amount of such prepayment.  If such
notice is given by the Borrower, the Borrower shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the
date specified therein.

 

(b)                                 Mandatory.

 

(i)                                     Within ninety  (90) days after the end of each Fiscal Year commencing with
the Fiscal Year ending December 31, 2008, the Borrower shall prepay an
aggregate principal amount of Senior Debt equal to 50% of Excess Cash Flow for
such Fiscal Year; provided,  however with respect to Fiscal Year
2008, Excess Cash Flow shall be computed for the period commencing with the
Commitment Effective Date through the last day of such Fiscal Year; and further
provided, however, if the Total Leverage Ratio
as of the last day of such Fiscal Year is less than 2.0 to 1.0, then the
Borrower shall not be required to make a prepayment pursuant to this Section 2.05(b)(i) for such Fiscal Year.

 

(ii)                                  If any Loan
Party or any of its Subsidiaries disposes of any property in connection with an
Asset Disposition which results in the realization by such Person of Net Cash
Proceeds, the Borrower shall prepay an aggregate principal amount of Senior
Debt equal to 100% of such Net Cash Proceeds immediately upon receipt thereof
by such Person (such prepayments to be applied as set forth in clauses (vii) and
(ix) below); provided,
however, that, with
respect to any Net Cash Proceeds realized under an Asset Disposition described
in this Section 2.05(b)(ii),
at the election of the Borrower (as notified by the Borrower to the
Administrative Agent on or prior to the date of such Asset Disposition), and so
long as no Default shall have occurred and be continuing, such Loan Party or
such Subsidiary may reinvest all or any portion of such Net Cash Proceeds in
operating assets performing
the same or a similar function or otherwise used in the business of such Loan
Party or such Subsidiary so long as within 180 days after the receipt
of such Net Cash Proceeds, such purchase shall have been consummated (as
certified by the Borrower in writing to the Administrative Agent); and provided  further, however, that any Net Cash
Proceeds not so reinvested (or subject to a definitive agreement to be
reinvested) shall be immediately applied to the prepayment of the Loans as set
forth in this Section 2.05(b)(ii) immediately
upon the earlier of the occurrence of a Default or the expiration of such 180
day period.

 

51

 

(iii)                               Upon the sale
or issuance by any Loan Party or
any of its Subsidiaries of any of its Capital Securities (other than any sales
or issuances of Capital Securities to another Loan Party or in connection with
a Permitted Acquisition) or the exercise by any Person of any convertible
Capital Securities issued by a Loan Party (other than the Warrants), the
Borrower shall prepay an aggregate principal amount of Senior Debt equal to
100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof
by such Loan Party or such
Subsidiary (such prepayments to be applied as set forth in clauses (vii) and
(ix) below).

 

(iv)                              Upon the
incurrence or issuance by any Loan
Party or any of its Subsidiaries of any Debt (other than Debt permitted
under Sections 7.01  (a) — (i) and (k)),
the Borrower shall prepay an aggregate principal amount of Senior Debt equal to
100% of all Net Cash Proceeds received therefrom immediately upon receipt
thereof by such Loan Party or
such Subsidiary (such prepayments to be applied as set forth in clauses (vii) and
(ix) below).

 

(v)                                 Immediately
upon the receipt by any Loan Party or any Subsidiary of Net Cash Proceeds from
the exercise of any Warrants, the Borrower shall prepay an aggregate principal
amount of Senior Debt equal to (A) 100% of such Net Cash Proceeds if the
Total Leverage Ratio as of the end of the immediately preceding Fiscal Quarter
for which a Compliance Certificate has been received is equal to or greater
than 2.50:1.0, (B) 75% of such Net Cash Proceeds if the Total Leverage
Ratio as of the end of the immediately preceding Fiscal Quarter for which a
Compliance Certificate has been received is less than 2.50:1.0 but equal to or
greater than 2.0:1.0 and (C) 50% of such Net Cash Proceeds if the Total
Leverage Ratio as of the end of the immediately preceding Fiscal Quarter for
which a Compliance Certificate has been received is less than 2.0:1.0 but equal
to or greater than 1.50:1.0; provided,
however, that if the Total
Leverage Ratio as of the end of the immediately preceding Fiscal Quarter for
which a Compliance Certificate has been received is less than 1.50:1.0, then
the Borrower shall not be required to make a prepayment pursuant to this Section 2.05(b)(v).

 

(vi)                              Upon any
Extraordinary Receipt received by or paid to or for the account of any Loan
Party or any of its Subsidiaries, and not otherwise included in clauses (ii),
(iii), (iv) or (v) of this Section 2.05(b), the Borrower
shall prepay an aggregate principal amount of Senior Debt equal to 100% of all
Net Cash Proceeds received therefrom immediately upon receipt thereof by such
Loan Party or such Subsidiary (such prepayments to be applied as set forth in
clauses (vii) and (ix) below); provided, however,
that with respect to any proceeds of insurance, condemnation awards (or
payments in lieu thereof) or indemnity payments, at the election of the
Borrower (as notified by the Borrower to the Administrative Agent on or prior
to the date of receipt of such insurance proceeds, condemnation awards or
indemnity payments), and so long as no Default shall have occurred and be
continuing, such Loan Party or such Subsidiary may apply 

 

52

 

within
180 days after the receipt of
such cash proceeds to replace or repair the equipment, fixed assets or real
property in respect of which such cash proceeds were received; and provided, further, however, that any cash proceeds
not so applied shall be immediately applied to the prepayment of the Loans as
set forth in this Section 2.05(b)(v).

 

(vii)                           Each prepayment
of Senior Debt pursuant to the foregoing provisions of this Section 2.05(b) shall
be applied to the outstanding Loans; provided, however, the Borrower
shall offer to prepay a Ratable Portion of the Private Placement Notes with any
such prepayment amount pursuant to the terms of the Private Placement Note
Purchase Agreement and, to the extent accepted by the Private Placement
Noteholders, prepay the applicable Private Placement Notes so long as at least
a Ratable Portion of the outstanding Loans is prepaid contemporaneously
with such prepayment of Private Placement Notes; in each case accompanied by a certificate of a
Responsible Officer of the Borrower demonstrating the calculation of such
prepayment amount and applied, first, to the Term A Loan and the
Term B Loan (ratably to the remaining principal amortization payments)  and, second, to the Revolving Credit Facility in the manner set
forth in clause (ix) of this Section 2.05(b).

 

(viii)                        If for any
reason the Total Revolving Credit Outstandings at any time exceed the Revolving
Credit Facility at such time, the Borrower shall immediately prepay Revolving
Credit Loans, Swing Line Loans and L/C Borrowings and/or Cash Collateralize the
L/C Obligations (other than the L/C Borrowings) in an aggregate amount equal to
such excess.

 

(ix)                                Prepayments of
the Revolving Credit Facility made pursuant to this Section 2.05(b),
first, shall be applied ratably to the L/C Borrowings and the Swing Line
Loans, second, shall be applied ratably to the outstanding Revolving
Credit Loans, and, third, shall be used to Cash Collateralize the
remaining L/C Obligations; and, in the case of prepayments of the Revolving
Credit Facility required pursuant to clause (i), (ii), (iii), (iv) or (v) of
this Section 2.05(b), the amount remaining, if any, after the
prepayment in full of all L/C Borrowings, Swing Line Loans and Revolving Credit
Loans outstanding at such time and the Cash Collateralization of the remaining
L/C Obligations in full (the sum of such prepayment amounts, cash
collateralization amounts and remaining amount being, collectively, the “Reduction Amount”)
may be retained by the Borrower for use in the ordinary course of its business,
and the Revolving Credit Facility shall be automatically and permanently reduced
by the Reduction Amount as set forth in Section 2.06(b)(iv).  Upon the drawing of any Letter of Credit that
has been Cash Collateralized, the funds held as Cash Collateral shall be
applied (without any further action by or notice to or from the Borrower or any
other Loan Party) to reimburse the L/C Issuer or the Lenders, as applicable.

 

53

 

2.06                           Termination
or Reduction of Commitments.

 

(a)                                  Optional.  The Borrower may, upon notice to the
Administrative Agent, terminate the Revolving Credit Facility, the Letter of
Credit Sublimit or the Swing Line Sublimit, or from time to time permanently
reduce the Revolving Credit Facility, the Letter of Credit Sublimit or the
Swing Line Sublimit; provided that (i) any such notice shall be
received by the Administrative Agent not later than 10:00 a.m. five
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof and (iii) the Borrower shall not
terminate or reduce (A) the Revolving Credit Facility if, after giving
effect thereto and to any concurrent prepayments hereunder, the Total Revolving
Credit Outstandings would exceed the Revolving Credit Facility, (B) the
Letter of Credit Sublimit if, after giving effect thereto, the Outstanding
Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed
the Letter of Credit Sublimit, or (C) the Swing Line Sublimit if, after
giving effect thereto and to any concurrent prepayments hereunder, the
Outstanding Amount of Swing Line Loans would exceed the Letter of Credit
Sublimit.

 

(b)                                 Mandatory.

 

(i) The
aggregate Term A Loan Commitments shall be automatically and permanently
reduced to zero  on
the date of the Borrowing of the Term A Loan.

 

(ii)                                  (A)                              The aggregate Term B-1 Loan Commitments shall be automatically and
permanently reduced to zero  on the date of the Borrowing of the Term B-1
Loan.

 

(B)                                The aggregate
Term B-2 Loan Commitments shall be automatically and permanently reduced (x) to
zero on the earlier of (i) the date of funding of the Private Placement
Notes pursuant to the Private Placement Note Purchase Agreement; provided
that, such Private Placement Notes are funded in an amount equal to $40,000,000
and (ii) the date of the Borrowing of the Term B-2 Loan and (y) to
the extent the Private Placement Notes are funded in an amount less than
$40,000,000, the aggregate Term B-2 Loan Commitments shall be automatically and
permanently reduced in an amount equal to the aggregate principal amount of the
Private Placement Notes.

 

(iii)                               The Revolving
Credit Facility shall be automatically and permanently reduced on each date on
which the prepayment of Revolving Credit Loans outstanding thereunder is
required to be made pursuant to Section 2.05(b)(i), (ii), (iii),
(iv) or (v) by an amount equal to the applicable
Reduction Amount.

 

(iv)                              If after giving
effect to any reduction or termination of Revolving Credit Commitments under
this Section 2.06, the Letter of Credit Sublimit or the Swing Line
Sublimit exceeds the Revolving Credit Facility at such time, the Letter of
Credit Sublimit or the Swing Line Sublimit, as the case may be, shall be
automatically reduced by the amount of such excess.

 

54

 

 

(c)           Application of Commitment
Reductions; Payment of Fees.  The Administrative Agent will promptly notify
the Lenders of any termination or reduction of the Letter of Credit Sublimit,
Swing Line Sublimit or the Revolving Credit Commitment under this Section 2.06.  Upon any reduction of the Revolving Credit
Commitments, the Revolving Credit Commitment of each Lender shall be reduced by
such Lender’s Applicable Revolving Credit Percentage of such reduction
amount.  All fees in respect of the
Revolving Credit Facility accrued until the effective date of any termination
of the Revolving Credit Facility shall be paid on the effective date of such
termination.

 

2.07         Repayment
of Loans.

 

(a)           Term A Loan.  The Borrower shall repay the outstanding
principal amount of the Term A Loan on the following dates in the respective
amounts set forth opposite such dates (which amounts shall be reduced as a
result of the application of prepayments hereunder ratably to the remaining
principal amortization payments):

 

	
  Payment Dates

  	
   

  	
  Principal Amortization

  Payment

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  7,312,500

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  7,312,500

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  7,312,500

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  7,312,500

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  9,750,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  9,750,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  9,750,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  9,750,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  March 31, 2013

  	
   

  	
  $

  	
  12,187,500

  	
   

  
	
  Maturity Date

  	
   

  	
  $

  	
  187,687,500

  	
   

  

 

provided, however,
that the final principal repayment installment of the Term A Loan shall be
repaid on the Maturity Date and in any event shall be in an amount equal to the
aggregate principal amount of the Term A Loan outstanding on such date.

 

(b)           Term B-1 Loan.  The Borrower shall repay the outstanding
principal amount of the Term B-1 Loan on the following dates in the respective
amounts set forth 

 

55

 

opposite such dates (which
amounts shall be reduced as a result of the application of prepayments
hereunder ratably to the remaining principal amortization payments):

 

	
  Payment Dates

  	
   

  	
  Principal Amortization

  Payment

  	
   

  
	
  September 30,
  2008

  	
   

  	
  $

  	
  468,750

  	
   

  
	
  December 31,
  2008

  	
   

  	
  $

  	
  468,750

  	
   

  
	
  March 31,
  2009

  	
   

  	
  $

  	
  468,750

  	
   

  
	
  June 30,
  2009

  	
   

  	
  $

  	
  468,750

  	
   

  
	
  September 30,
  2009

  	
   

  	
  $

  	
  625,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  $

  	
  625,000

  	
   

  
	
  March 31,
  2010

  	
   

  	
  $

  	
  625,000

  	
   

  
	
  June 30,
  2010

  	
   

  	
  $

  	
  625,000

  	
   

  
	
  September 30,
  2010

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  December 31,
  2010

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  March 31,
  2011

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  June 30,
  2011

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  September 30,
  2011

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  December 31,
  2011

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  March 31,
  2012

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  June 30,
  2012

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  September 30,
  2012

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  December 31,
  2012

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  March 31,
  2013

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  June 30,
  2013

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  September 30,
  2013

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  December 31,
  2013

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  March 31,
  2014

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  June 30,
  2014

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  September 30,
  2014

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  December 31,
  2014

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  March 31,
  2015

  	
   

  	
  $

  	
  781,250

  	
   

  
	
  Maturity
  Date

  	
   

  	
  $

  	
  5,781,250

  	
   

  

 

provided, however,
that the final principal repayment installment of the Term B-1 Loan shall be
repaid on the Maturity Date and in any event shall be in an amount equal to the
aggregate principal amount of the Term B-1 Loan outstanding on such date.

 

(c)           Term B-2 Loan.  The Borrower shall repay the outstanding
principal amount of the Term B-2 Loan on the following dates in the respective
percentages set forth opposite such dates (which amounts shall be reduced as a
result of the application of prepayments hereunder ratably to the remaining
principal amortization payments):

 

56

 

	
  Payment Dates

  	
   

  	
  Principal Amortization

  Payment

  	
   

  
	
  September 30,
  2008

  	
   

  	
  1.875000000

  	
  %

  
	
  December 31,
  2008

  	
   

  	
  1.875000000

  	
  %

  
	
  March 31,
  2009

  	
   

  	
  1.875000000

  	
  %

  
	
  June 30,
  2009

  	
   

  	
  1.875000000

  	
  %

  
	
  September 30,
  2009

  	
   

  	
  2.500000000

  	
  %

  
	
  December 31,
  2009

  	
   

  	
  2.500000000

  	
  %

  
	
  March 31,
  2010

  	
   

  	
  2.500000000

  	
  %

  
	
  June 30,
  2010

  	
   

  	
  2.500000000

  	
  %

  
	
  September 30,
  2010

  	
   

  	
  3.125000000

  	
  %

  
	
  December 31,
  2010

  	
   

  	
  3.125000000

  	
  %

  
	
  March 31,
  2011

  	
   

  	
  3.125000000

  	
  %

  
	
  June 30,
  2011

  	
   

  	
  3.125000000

  	
  %

  
	
  September 30,
  2011

  	
   

  	
  3.125000000

  	
  %

  
	
  December 31,
  2011

  	
   

  	
  3.125000000

  	
  %

  
	
  March 31,
  2012

  	
   

  	
  3.125000000

  	
  %

  
	
  June 30,
  2012

  	
   

  	
  3.125000000

  	
  %

  
	
  September 30,
  2012

  	
   

  	
  3.125000000

  	
  %

  
	
  December 31,
  2012

  	
   

  	
  3.125000000

  	
  %

  
	
  March 31,
  2013

  	
   

  	
  3.125000000

  	
  %

  
	
  June 30,
  2013

  	
   

  	
  3.125000000

  	
  %

  
	
  September 30,
  2013

  	
   

  	
  3.125000000

  	
  %

  
	
  December 31,
  2013

  	
   

  	
  3.125000000

  	
  %

  
	
  March 31,
  2014

  	
   

  	
  3.125000000

  	
  %

  
	
  June 30,
  2014

  	
   

  	
  3.125000000

  	
  %

  
	
  September 30,
  2014

  	
   

  	
  3.125000000

  	
  %

  
	
  December 31,
  2014

  	
   

  	
  3.125000000

  	
  %

  
	
  March 31,
  2015

  	
   

  	
  3.125000000

  	
  %

  
	
  Maturity
  Date

  	
   

  	
  23.125000000

  	
  %

  

 

provided, however,
that the final principal repayment installment of the Term B-2 Loan shall be
repaid on the Maturity Date and in any event shall be in an amount equal to the
aggregate principal amount of the Term B-2 Loan outstanding on such date.

 

(d)           Revolving Credit Loans.  The Borrower shall repay to the Lenders on
the Maturity Date the aggregate principal amount of all Revolving Credit Loans
outstanding on such date.

 

(e)           Swing Line Loans.  The Borrower shall repay each Swing Line Loan
on the earlier to occur of (i) the date on which the Swing Line Lender demands
repayment of such Swing Line Loan and (ii) the Maturity Date.

 

57

 

2.08         Interest.

 

(a)           Subject to the provisions of Section 2.08(b),
(i) each Eurodollar Rate Loan under a Facility shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurodollar Rate for such Interest Period plus the
Applicable Rate for such Facility; and (ii) each Base Rate Loan under a
Facility shall bear interest on the outstanding principal amount thereof from
the applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate for such Facility; and (iii) each Swing Line Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to (A) the Base Rate plus
the Applicable Rate for the Revolving Credit Facility or (B) if
applicable, such other rate as agreed to by the Borrower and the Swing Line
Lender.

 

(b)           (i)            If any amount of principal
of any Loan is not paid when due (without regard to any applicable grace
periods), whether at stated maturity, by acceleration or otherwise, such amount
shall thereafter bear interest at a fluctuating interest rate per annum at all
times equal to the Default Rate to the fullest extent permitted by applicable
Laws.

 

(ii)           If any amount
(other than principal of any Loan) payable by the Borrower under any Loan
Document is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, then upon the request
of the Required Lenders such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

 

(iii)          Upon the
request of the Required Lenders, while any other Event of Default exists, the
Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable
Laws.  Notwithstanding the foregoing,
upon the occurrence of an Event of Default under Sections 8.01(a) or
8.01(d), such increase shall occur automatically.

 

(iv)          Accrued and unpaid interest
on past due amounts (including interest on past due interest) shall be due and
payable upon demand.

 

(c)           Interest on each Loan shall be due and payable in
arrears on each Interest Payment Date applicable thereto and at such other
times as may be specified herein. 
Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

2.09         Fees.  In addition
to certain fees described in Sections 2.03(i) and (j):

 

(a)           Unused Fee.  The Borrower shall pay to the Administrative
Agent for the account of each Lender with a Revolving Credit Commitment  in accordance with its pro  rata share thereof
(i.e., according to such Lender’s Applicable Revolving Credit Percentage) an
unused commitment fee (the “Unused Fee”) for the period commencing 

 

58

 

on
the Commitment Effective Date in an amount equal the product of (i) the
Applicable Rate times (ii) the actual daily amount by which the
Revolving Credit Facility exceeds the sum of (x) the Outstanding Amount of
Revolving Loans plus (y) the Outstanding Amount of L/C
Obligations.  The Unused Fee shall accrue
at all times during the Availability Period with respect to the Revolving
Credit Commitments, including at any time after the Commitment Effective Date
during which one or more of the applicable conditions in Article IV
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each calendar quarter, commencing with the first such date to
occur after the Commitment Effective Date, and on the Maturity Date.  The Unused Fee shall be calculated quarterly
in arrears, and if there is any change in the Applicable Percentage during any
quarter, the actual daily amount shall be computed and multiplied by the
Applicable Percentage separately for each period during such quarter that such
Applicable Percentage was in effect.  For
purposes hereof, (i) L/C Obligations shall be counted toward and
considered as usage of the Revolving Credit Facility and (ii) Swing Line
Loans shall not be counted toward or be considered as usage of the Revolving
Credit Facility.

 

(b)           Ticking Fee.  The Borrower shall pay to the Administrative
Agent for the account of each Lender with respect to such Lender’s Commitments,
a ticking fee equal to 0.50% per annum times the total principal amount
of its aggregate Commitments (the “Ticking Fee”).  The Ticking Fee shall accrue at all times
from the Closing Date until the earliest of (i) the Commitment Effective
Date, (ii) the Expiration Date and (iii) the termination of the
Commitments hereunder, and shall be due and payable in arrears on such date.

 

(c)           Other Fees.

 

(i)             The Borrower shall pay to
the Arranger and the Administrative Agent for their own respective accounts
fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

 

(ii)            The Borrower shall pay to the
Lenders such fees as shall have been separately agreed upon in writing in the
amounts and at the times so specified. 
Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

 

2.10         Computation
of Interest and Fees; Retroactive Adjustments of Applicable Rate.

 

(a)           All computations of interest
for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime
rate” shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed.  All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the
day on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the Loan or such portion is paid, provided
that any Loan that is repaid on the same 

 

59

 

day
on which it is made shall, subject to Section 2.12(a), bear
interest for one day.  Each determination
by the Administrative Agent of an interest rate or fee hereunder shall be
conclusive and binding for all purposes, absent manifest error.

 

(b)           If, as a result of any
restatement of or other adjustment to the financial statements of the Parent or
for any other reason, the Borrower, Parent or the Lenders determine that (i) the
Total Leverage Ratio as calculated by the Parent as of any applicable date was
inaccurate and (ii) a proper calculation of the Total Leverage Ratio would
have resulted in higher pricing for such period, the Borrower shall immediately
and retroactively be obligated to pay to the Administrative Agent for the account
of the applicable Lenders or the L/C Issuer, as the case may be, promptly on
demand by the Administrative Agent (or, after the occurrence of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Bankruptcy Code of the United States, automatically and without further action
by the Administrative Agent, any Lender or the L/C Issuer), an amount equal to
the excess of the amount of interest and fees that should have been paid for
such period over the amount of interest and fees actually paid for such
period.  This paragraph shall not limit
the rights of the Administrative Agent, any Lender or the L/C Issuer, as the
case may be, under Section 2.03(c)(iii),
2.03(i) or 2.08(b) or
under Article VIII.  The Borrower’s obligations under this
paragraph shall survive the termination of the Aggregate Commitments and the
repayment of all other Obligations hereunder.

 

2.11         Evidence of Debt.

 

(a)           The Credit Extensions made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrower and
the interest and payments thereon.  Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Obligations. 
In the event of any conflict between the accounts and records maintained
by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent
shall control in the absence of manifest error. 
Upon the request of any Lender made through the Administrative Agent,
the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Note, which shall evidence such Lender’s Loans in
addition to such accounts or records. 
Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

 

(b)           In addition to the accounts and records referred to
in Section 2.11(a), each Lender and the Administrative Agent shall
maintain in accordance with its usual practice accounts or records evidencing
the purchases and sales by such Lender of participations in Letters of Credit
and Swing Line Loans.  In the event of any
conflict between the accounts and records maintained by the Administrative
Agent and the accounts and 

 

60

 

records
of any Lender in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error.

 

2.12         Payments
Generally; Administrative Agent’s Clawback.

 

(a)           General.  All payments to be made by the Borrower shall
be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 1:00 p.m. on the
date specified herein.  The
Administrative Agent will promptly distribute to each Lender its Applicable
Percentage in respect of the relevant Facility (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office.  All payments
received by the Administrative Agent after 1:00 p.m. shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue.  If any payment
to be made by the Borrower shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of
time shall be reflected on computing interest or fees, as the case may be.

 

(b)           (i)            Funding by Lenders;
Presumption by Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing of
Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans,
prior to 11:00 a.m. on the date of such Borrowing) that such Lender will
not make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.02 (or,
in the case of a Borrowing of Base Rate Loans, that such Lender has made such
share available in accordance with and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Borrowing available
to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at (A) in
the case of a payment to be made by such Lender, the greater of the Federal
Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation, plus any administrative,
processing or similar fees customarily charged by the Administrative Agent in
connection with the foregoing, and (B) in the case of a payment to be made
by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay
such interest to the Administrative Agent for the same or an overlapping
period, the Administrative Agent shall promptly remit to the Borrower the
amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the
applicable Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Loan included in such Borrowing.  Any payment by the 

 

61

 

Borrower
shall be without prejudice to any claim the Borrower may have against a Lender
that shall have failed to make such payment to the Administrative Agent.

 

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

 

A notice of the Administrative Agent to any
Lender or the Borrower with respect to any amount owing under this subsection (b) shall
be conclusive, absent manifest error.

 

(c)           Failure to Satisfy
Conditions Precedent.  If any
Lender makes available to the Administrative Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to the Borrower by the Administrative
Agent because the conditions to the applicable Credit Extension set forth in Article IV
are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

 

(d)           Obligations of Lenders
Several.  The obligations of the Lenders
hereunder to make the Term Loans and Revolving Credit Loans, to fund
participations in Letters of Credit and Swing Line Loans and to make payments
pursuant to Section 11.04(c) are several and not joint.  The failure of any Lender to make any Loan,
to fund any such participation or to make any payment under Section 11.04(c) on
any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan, to
purchase its participation or to make its payment under Section 11.04(c).

 

(e)           Funding Source.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.

 

62

 

(f)            Insufficient Funds.  If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, L/C Borrowings, interest and fees then due hereunder, such funds
shall be applied (i) first, toward payment of interest and fees
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of interest and fees then due to such parties, and (ii) second,
toward payment of principal and L/C Borrowings then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of principal
and L/C Borrowings then due to such parties.

 

2.13         Sharing of Payments by Lenders.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations
in respect of any the Facilities due and payable to such Lender hereunder and
under the other Loan Documents at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Lender at such time to (ii) the aggregate amount of the
Obligations in respect of the Facilities due and payable to all Lenders
hereunder and under the other Loan Documents at such time) of payments on
account of the Obligations in respect of the Facilities due and payable to all
Lenders hereunder and under the other Loan Documents at such time obtained by
all the Lenders at such time or (b) Obligations in respect of any of the
Facilities owing (but not due and payable) to such Lender hereunder and under
the other Loan Documents at such time in excess of its ratable share (according
to the proportion of (i) the amount of such Obligations owing (but not due
and payable) to such Lender at such time to (ii) the aggregate amount of
the Obligations in respect of the Facilities owing (but not due and payable) to
all Lenders hereunder and under the other Loan Parties at such time) of payment
on account of the Obligations in respect of the Facilities owing (but not due
and payable) to all Lenders hereunder and under the other Loan Documents at
such time obtained by all of the Lenders at such time then the Lender receiving
such greater proportion shall (a) notify the Administrative Agent of such
fact, and (b) purchase (for cash at face value) participations in the
Loans and subparticipations in L/C Obligations and Swing Line Loans of the
other Lenders, or make such other adjustments as shall be equitable, so that
the benefit of all such payments shall be shared by the Lenders ratably in accordance
with the aggregate amount of Obligations in respect of the Facilities then due
and payable to the Lenders or owing (but not due and payable) to the Lenders,
as the case may be, provided that:

 

(i)            if any such participations
or subparticipations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and

 

(ii)           the provisions of this Section shall
not be construed to apply to (A) any payment made by the Borrower pursuant
to and in accordance with the express terms of this Agreement or (B) any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Loans or subparticipations in L/C Obligations or
Swing Line Loans to any assignee or participant.

 

63

 

Each Loan Party consents to the foregoing
and agrees, to the extent it may effectively do so under applicable law, that
any Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against such Loan Party
rights of setoff and counterclaim with respect to such participation as fully
as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

 

ARTICLE III

 

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01         Taxes.

 

(a)           Payments Free of Taxes; Obligation to Withhold;
Payments on Account of Taxes.

 

(i)             Any and all payments by or
on account of any obligation of the Borrower hereunder or under any other Loan
Document shall to the extent permitted by applicable Laws be made free and
clear of and without reduction or withholding for any Taxes.  If, however, applicable Laws require the
Borrower or the Administrative Agent to withhold or deduct any Tax, such Tax
shall be withheld or deducted in accordance with such Laws as determined by the
Borrower or the Administrative Agent, as the case may be, upon the basis of the
information and documentation to be delivered pursuant to subsection (e) below.

 

(ii)            If the Borrower or the
Administrative Agent shall be required by the Code to withhold or deduct any
Taxes, including both United States Federal backup withholding and withholding
taxes, from any payment, then (A) the Administrative Agent shall withhold
or make such deductions as are determined by the Administrative Agent to be
required based upon the information and documentation it has received pursuant
to subsection (e) below, (B) the Administrative Agent shall timely
pay the full amount withheld or deducted to the relevant Governmental Authority
in accordance with the Code, and (C) to the extent that the withholding or
deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable
by the Borrower shall be increased as necessary so that after any required
withholding or the making of all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to
the sum it would have received had no such withholding or deduction been made.

 

(b)           Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection
(a) above, the Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable Laws.

 

64

 

(c)            Tax Indemnifications.

 

(i)            Without limiting the
provisions of subsection (a) or (b) above, the Borrower shall, and
does hereby, indemnify the Administrative Agent, each Lender and the L/C
Issuer, and shall make payment in respect thereof within 10 days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) withheld or deducted by the
Borrower or the Administrative Agent or paid by the Administrative Agent, such
Lender or the L/C Issuer, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  The Borrower shall also, and does hereby,
indemnify the Administrative Agent, and shall make payment in respect thereof
within 10 days after demand therefor, for any amount which a Lender or the L/C
Issuer for any reason fails to pay indefeasibly to the Administrative Agent as
required by clause (ii) of this subsection.  A certificate as to the amount of any such
payment or liability delivered to the Borrower by a Lender or the L/C Issuer
(with a copy to the Administrative Agent), or by the Administrative Agent on
its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive
absent manifest error.

 

(ii)           Without limiting the
provisions of subsection (a) or (b) above, each Lender and the L/C
Issuer shall, and does hereby, indemnify the Borrower and the Administrative
Agent, and shall make payment in respect thereof within 10 days after demand
therefor, against any and all Taxes and any and all related losses, claims,
liabilities, penalties, interest and expenses (including the fees, charges and
disbursements of any counsel for the Borrower or the Administrative Agent)
incurred by or asserted against the Borrower or the Administrative Agent by any
Governmental Authority as a result of the failure by such Lender or the L/C
Issuer, as the case may be, to deliver, or as a result of the inaccuracy,
inadequacy or deficiency of, any documentation required to be delivered by such
Lender or the L/C Issuer, as the case may be, to the Borrower or the
Administrative Agent pursuant to subsection (e).  Each Lender and the L/C Issuer hereby
authorizes the Administrative Agent to set off and apply any and all amounts at
any time owing to such Lender or the L/C Issuer, as the case may be, under this
Agreement or any other Loan Document against any amount due to the
Administrative Agent under this clause (ii). 
The agreements in this clause (ii) shall survive the resignation
and/or replacement of the Administrative Agent, any assignment of rights by, or
the replacement of, a Lender or the L/C Issuer, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all other
Obligations.

 

(d)           Evidence of Payments.  Upon request by the Borrower or the Administrative
Agent, as the case may be, after any payment of Taxes by the Borrower or the
Administrative Agent to a Governmental Authority as provided in this Section 3.01,
the Borrower shall deliver to the Administrative Agent or the Administrative
Agent shall deliver to the Borrower, as the case may be, the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of any return 

 

65

 

required
by Law to report such payment or other evidence of such payment reasonably
satisfactory to the Borrower or the Administrative Agent, as the case may be.

 

(e)            Status of Lenders; Tax
Documentation.

 

(i)            Each Lender shall deliver to
the Borrower and to the Administrative Agent, at the time or times prescribed
by applicable Laws or when reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable Laws or by the taxing authorities of any jurisdiction
and such other reasonably requested information as will permit the Borrower or
the Administrative Agent, as the case may be, to determine (A) whether or
not payments made hereunder or under any other Loan Document are subject to
Taxes, (B) if applicable, the required rate of withholding or deduction,
and (C) such Lender’s entitlement to any available exemption from, or
reduction of, applicable Taxes in respect of all payments to be made to such
Lender by the Borrower pursuant to this Agreement or otherwise to establish
such Lender’s status for withholding tax purposes in the applicable
jurisdiction.

 

(ii)           Without limiting the
generality of the foregoing, if the Borrower is resident for tax purposes in
the United States,

 

(A)          any Lender that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the Borrower and the Administrative Agent executed originals of IRS Form W-9
or such other documentation or information prescribed by applicable Laws or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent, as the case may be, to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements; and

 

(B)           each Foreign Lender that is
entitled under the Code or any applicable treaty to an exemption from or
reduction of withholding tax with respect to payments hereunder or under any
other Loan Document shall deliver to the Borrower and the Administrative 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 Borrower or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:

 

(I)            executed originals of IRS Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is
a party,

 

(II)           executed originals of IRS Form W-8ECI,

 

66

 

(III)         executed originals of IRS Form W-8IMY and all
required supporting documentation,

 

(IV)         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 Borrower 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) executed originals of IRS Form W-8BEN,
or

 

(V)           executed originals of any other form prescribed by
applicable Laws as a basis for claiming exemption from or a reduction in United
States Federal withholding tax together with such supplementary documentation
as may be prescribed by applicable Laws to permit the Borrower or the
Administrative Agent to determine the withholding or deduction required to be
made.

 

(iii)          Each Lender shall promptly (A) notify
the Borrower and the Administrative Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction, and (B) take
such steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
Laws of any jurisdiction that the Borrower or the Administrative Agent make any
withholding or deduction for taxes from amounts payable to such Lender.

 

(f)            Treatment of Certain Refunds.  Unless required by applicable Laws, at no
time shall the Administrative Agent have any obligation to file for or
otherwise pursue on behalf of a Lender or the L/C Issuer, or have any
obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld
or deducted from funds paid for the account of such Lender or the L/C Issuer,
as the case may be.  If the
Administrative Agent, any Lender or the L/C Issuer determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses incurred by the Administrative Agent, such
Lender or the L/C Issuer, as the case may be, and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of the
Administrative Agent, such Lender or the L/C Issuer, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent, 

 

67

 

such
Lender or the L/C Issuer in the event the Administrative Agent, such Lender or
the L/C Issuer is required to repay such refund to such Governmental
Authority.  This subsection shall not be
construed to require the Administrative Agent, any Lender or the L/C Issuer to
make available its tax returns (or any other information relating to its taxes
that it deems confidential) to the Borrower or any other Person.

 

3.02         Illegality.  If any
Lender determines that any Law has made it unlawful, or that any Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine
or charge interest rates based upon the Eurodollar Rate, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to the Borrower through the
Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist.  Upon receipt of such notice, the
Borrower shall, upon demand from such Lender (with a copy to the Administrative
Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such
Lender to Base Rate Loans, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate
Loans to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Rate Loans. 
Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted.

 

3.03         Inability to Determine Rates.  If the Required Lenders determine that for
any reason in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not
being offered to banks in the London interbank eurodollar market for the
applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate
and reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, the Administrative Agent will promptly so notify
the Borrower and each Lender. 
Thereafter, the obligation of the Lenders to make or maintain Eurodollar
Rate Loans shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Borrowing of Base Rate Loans in the amount
specified therein.

 

3.04         Increased
Costs; Reserves on Eurodollar Rate Loans.

 

(a)            Increased Costs Generally.  If any Change in Law shall:

 

(i)            impose, modify or deem
applicable any reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets of, deposits with or for the account of, or
credit extended or participated in by, any 

 

68

 

Lender
(except any reserve requirement contemplated by Section 3.04(e)) or the L/C Issuer;

 

(ii)           subject any Lender or the
L/C Issuer to any tax of any kind whatsoever with respect to this Agreement,
any Letter of Credit, any participation in a Letter of Credit or any Eurodollar
Rate Loan made by it, or change the basis of taxation of payments to such
Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or
Other Taxes covered by Section 3.01 and the imposition of, or any
change in the rate of, any Excluded Tax payable by such Lender or the L/C
Issuer); or

 

(iii)          impose on any Lender or the
L/C Issuer or the London interbank market any other condition, cost or expense
affecting this Agreement or Eurodollar Rate Loans made by such Lender or any
Letter of Credit or participation therein;

 

and
the result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
the L/C Issuer of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or the L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or the L/C Issuer, the Borrower will
pay to such Lender or the L/C Issuer, as the case may be, such additional
amount or amounts as will compensate such Lender or the L/C Issuer, as the case
may be, for such additional costs incurred or reduction suffered.

 

(b)            Capital Requirements.  If any Lender or the L/C Issuer determines
that any Change in Law affecting such Lender or the L/C Issuer or any Lending
Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if
any, regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or the L/C Issuer’s capital or on the
capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the L/C Issuer, to a level below that which such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer
or such Lender’s or the L/C Issuer’s holding company for any such reduction
suffered.

 

(c)            Certificates for
Reimbursement.  A
certificate of a Lender or the L/C Issuer setting forth the amount or amounts
necessary to compensate such Lender or the L/C Issuer or its holding company,
as the case may be, as specified in subsection (a) or (b) of this Section and
delivered to the Borrower shall be conclusive absent manifest 

 

69

 

error.  The Borrower shall pay such Lender or the L/C
Issuer, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of such Lender’s or the L/C
Issuer’s right to demand such compensation, provided that the Borrower
shall not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender or
the L/C Issuer, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
L/C Issuer’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the
period of retroactive effect thereof).

 

(e)           Reserves
on Eurodollar Rate Loans.  The
Borrower shall pay to each Lender, as long as such Lender shall be required to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Loan by such Lender (as determined by such Lender in good faith, which
determination shall be conclusive), which shall be due and payable on each date
on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’
prior notice (with a copy to the Administrative Agent) of such additional
interest from such Lender.  If a Lender
fails to give notice 10 days prior to the relevant Interest Payment Date, such
additional interest shall be due and payable 10 days from receipt of such
notice.

 

3.05         Compensation for Losses.  Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a)           any continuation, conversion, payment or prepayment
of any Loan other than a Base Rate Loan on a day other than the last day of the
Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise);

 

(b)           any failure by the Borrower (for a reason other than
the failure of such Lender to make a Loan) to prepay, borrow, continue or
convert any Loan other than a Base Rate Loan on the date or in the amount
notified by the Borrower; or

 

(c)           any assignment of a Eurodollar Rate Loan on a day
other than the last day of the Interest Period therefor as a result of a
request by the Borrower pursuant to Section 11.13;

 

including
any loss of anticipated profits and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate 

 

70

 

the
deposits from which such funds were obtained. 
The Borrower shall also pay any customary administrative fees charged by
such Lender in connection with the foregoing.

 

For
purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a
matching deposit or other borrowing in the London interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.

 

3.06         Mitigation
Obligations; Replacement of Lenders.

 

(a)           Designation of a Different
Lending Office.  If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay
any additional amount to any Lender, the L/C Issuer or any Governmental
Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, then such
Lender or the L/C Issuer shall, as applicable, use reasonable efforts to
designate a different Lending Office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender or the L/C Issuer,
such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or 3.04, as the case may
be, in the future, or eliminate the need for the notice pursuant to Section 3.02,
as applicable, and (ii) in each case, would not subject such Lender or the
L/C Issuer, as the case may be, to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case
may be.  The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender or the L/C Issuer
in connection with any such designation or assignment.

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 3.01,
the Borrower may replace such Lender in accordance with Section 11.13.

 

3.07         Survival.  All of the Borrower’s obligations under this Article III
shall survive termination of the Aggregate Commitments, repayment of all other
Obligations hereunder and resignation of the Administrative Agent.

 

ARTICLE IV

 

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01         Conditions to Closing Date.  The occurrence of the Closing Date is subject
to satisfaction of the following conditions precedent:

 

(a)           The Administrative Agent’s receipt of the following,
each of which shall be originals or telecopies (followed promptly by originals)
unless otherwise specified,

 

71

 

each
properly executed by a Responsible Officer of the signing Loan Party, each
dated the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and
substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)            Credit Agreement.  Executed counterparts of this Agreement
(including exhibits and schedules (which schedules shall reflect the business
of the Loan Parties as of the Closing Date)), sufficient in number for
distribution to the Administrative Agent and the Borrower; and

 

(ii)           Corporate
Documents.

 

(A)          Such
certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may require evidencing the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party or is to be a party; and

 

(B)           Such documents and certifications as the
Administrative Agent may reasonably require to evidence that each Loan Party is
duly organized or formed, and is validly existing, in good standing and qualified
to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

(iii)          Other.  Such other customary documents, agreements,
certificates or opinions as the Administrative Agent, the L/C Issuer, the Swing
Line Lender or any Lender reasonably may require.

 

Without
limiting the generality of the provisions of the last paragraph of Section 9.03,
for purposes of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection
thereto.

 

4.02         Conditions to Commitment Effective Date.

 

Each of the occurrence of
the Commitment Effective Date and the obligation of the L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent on or before August 29,
2008 (the “Expiration Date”):

 

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(a)            The Administrative Agent’s
receipt of the following, each of which shall be originals or telecopies
(followed promptly by originals) unless otherwise specified, each properly
executed by a Responsible Officer of the signing Loan Party, each dated the
Commitment Effective Date (or, in the case of certificates of governmental
officials, a recent date before the Commitment Effective Date) and each in form
and substance satisfactory to the Administrative Agent:

 

(i)             Credit
Agreement Schedules.  The final
schedules to this Agreement, updated to reflect the consummation of the Mead
Purchase Agreement and the business of the Loan Parties as of the Commitment
Effective Date, in form and substance satisfactory to the Administrative Agent.

 

(ii)            Notes.  One or more Notes, as applicable, executed by
the Borrower in favor of each Lender requesting Notes.

 

(iii)          Personal Property Collateral
Documents.  A pledge and security agreement, in substantially the form of Exhibit F
(together with each other pledge and security
agreement delivered pursuant to Section 6.10, in each case as
amended, the “Security
Agreement”), duly executed by each Loan Party, together with:

 

(A)          certificates
representing the Pledged Equity referred to therein accompanied
by undated stock powers executed in blank and instruments evidencing
the Pledged Debt indorsed in blank,

 

(B)           proper
Financing Statements in form appropriate for filing under the Uniform
Commercial Code of all jurisdictions that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created under the Security
Agreement, covering the Collateral described in the Security Agreement,

 

(C)           completed
requests for information, dated on or before the date of the initial Credit
Extension, listing  all effective
financing statements filed in the jurisdictions referred to in clause (B) above
that name any Loan Party or the Target as debtor, together with copies of such
other financing statements,

 

(D)          evidence of the
completion of all other actions, recordings and filings of or with respect to
the Security Agreement that the Administrative Agent may deem necessary or
desirable in order to perfect the Liens created thereby,

 

(E)           the
Deposit Account Control Agreements and the Securities Account Control
Agreements, in each case as defined in the Security Agreement and duly executed
by the appropriate parties, and

 

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(F)           evidence that
all other action that the Administrative Agent may deem necessary or desirable
in order to perfect the Liens created under the Security Agreement has been
taken (including receipt of duly executed payoff letters, UCC-3 termination
statements and landlords’ and bailees’ waiver and consent agreements).

 

(iv)          Real Property Collateral
Documents.  Deeds of
trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages and
leasehold deeds of trust, in substantially the form of Exhibit G
(with such changes as may be satisfactory to the Administrative Agent and its
counsel to account for local law matters) and covering the properties listed on Schedule 5.16 (together with the
Assignments of Leases and Rents referred to therein and each other mortgage
delivered pursuant to Section 6.10, in each case as amended, the “Mortgages”), duly
executed by the appropriate Loan Party, together with:

 

(A)          evidence that
counterparts of the Mortgages have been duly executed, acknowledged and
delivered and are in form suitable for filing or recording in all filing or
recording offices that the Administrative Agent may deem necessary or desirable
in order to create a valid first and subsisting Lien on the property described
therein in favor of the Collateral Agent for the benefit of the Secured Parties
and that all filing, documentary, stamp, intangible and recording taxes and
fees have been paid,

 

(B)          fully paid American Land Title Association Lender’s
Extended Coverage title insurance policies or binder therefore (the “Mortgage Policies”), with
endorsements and in amounts acceptable to the Administrative Agent, issued,
coinsured and reinsured by title insurers acceptable to the Administrative
Agent, insuring the Mortgages to be valid first and subsisting Liens on the
property described therein, free and clear of all defects (including, but not
limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting
only those encumbrances specifically permitted under each respective Mortgage
and other Liens permitted under the Loan Documents, and providing for such
other affirmative insurance (including endorsements for future advances under
the Loan Documents, for mechanics’ and materialmen’s Liens and for zoning of
the applicable property) and such coinsurance and direct access reinsurance as
the Administrative Agent may deem necessary or desirable,

 

(C)          Express Map form surveys, for which all necessary
fees (where applicable) have been paid, and dated no more than 30 days before
the day of the initial Credit Extension, and which shall be in form sufficient
to delete any standard “survey exception” which would otherwise be contained in
the related Mortgage Policy, certified to the Administrative Agent and the
issuer of the Mortgage Policies in a manner satisfactory to the Administrative
Agent by a land surveyor duly registered and licensed in the States in which
the property described in such surveys

 

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is located and acceptable to the
Administrative Agent, showing all buildings and other improvements, any
off-site improvements, the location of any easements, parking spaces, rights of
way, building set-back lines and other dimensional regulations and the absence
of encroachments, either by such improvements or on to such property, and other
defects, other than encroachments and other defects acceptable to the
Administrative Agent,

 

(D)          engineering,
soils and other reports (including environmental audits and corresponding
reliance letters) as to the properties described in the Mortgages, from
professional firms acceptable to the Administrative Agent,

 

(E)           except as set
forth on Schedule 4.02(a), estoppel and consent agreements executed by
each of the lessors of the leased real properties listed on Schedule 5.16,
along with (1) a memorandum of lease in recordable form with respect to
such leasehold interest, executed and acknowledged by the owner of the affected
real property, as lessor, or (2) evidence that the applicable lease with
respect to such leasehold interest or a memorandum thereof has been recorded in
all places necessary or desirable, in the Administrative Agent’s reasonable
judgment, to give constructive notice to third-party purchasers of such
leasehold interest, or (3) if such leasehold interest was acquired or
subleased from the holder of a recorded leasehold interest, the applicable
assignment or sublease document, executed and acknowledged by such holder, in
each case in form sufficient to give such constructive notice upon recordation
and otherwise in form satisfactory to the Administrative Agent,

 

(F)           evidence of the
insurance required by the terms of the Mortgages, and

 

(G)          evidence that all other action that the
Administrative Agent may deem necessary or desirable in order to create valid
first and subsisting Liens on the property described in the Mortgages has been
taken.

 

(v)           Corporate Documents.

 

(A)          Such additional
certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may require evidencing the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party or is to be a party; and

 

75

 

(B)           Such additional
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and is validly
existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.

 

(vi)          Legal Opinions.

 

(A)          a favorable
opinion of Sonnenschein Nath &
Rosenthal LLP, counsel to the Loan Parties, addressed to the
Administrative Agent and each Lender, as to such matters concerning the Loan
Parties and the Loan Documents as the Administrative Agent may reasonably
request;

 

(B)           a favorable
opinion of Ellis Lawhorne & Sims, P.A., local counsel to the Loan
Parties in South Carolina, addressed to the Administrative Agent and each
Lender, as to such matters concerning the Loan Parties and the Loan Documents
as the Administrative Agent may reasonably request; and

 

(C)           a
favorable opinion of Seller’s counsel, delivered in connection with the Kraft
Acquisition which opinion is either (A) addressed to the Administrative
Agent and the Lenders or (B) accompanied by a reliance letter from such
counsel addressed to the Administrative Agent and the Lenders that expressly
states that the Administrative Agent and the Lenders may rely on such opinion.

 

(vii)         Governmental and Third Party
Approvals.  Certificate
signed by a Responsible Officer of the Borrower certifying that all
governmental and third party approvals necessary in connection with the Kraft
Acquisition, the financing contemplated hereby and the continuing operations of
the Loan Parties have been obtained and are in full force and effect, and all
applicable waiting periods have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the Kraft Acquisition or the financing
thereof contemplated hereunder, except for such governmental and third party
approvals the failure to obtain could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(viii)        Closing Officer’s
Certificate.  A
certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in Sections 4.02(a) and (b) have
been satisfied  and (B) that
except as disclosed on Schedule 4.02(b) there has been no event or
circumstance since December 31, 2007 that has had or could be reasonably
expected to have, either individually or

 

76

 

in the aggregate, a Material Adverse Effect (as such term is defined in
the Mead Purchase Agreement).

 

(ix)          Financial
Information.

 

(A)          The Audited Financial
Statements and the Interim Financial Statements;

 

(B)           projected income statements,
balance sheets and cash flow statements prepared by the Borrower on a Pro Forma
Basis and giving effect to the Kraft Acquisition, the Loans contemplated hereby
and the use of proceeds therefrom, on a quarterly basis for the Fiscal Year
ending December 31, 2008 and on an annual basis for each Fiscal Year
thereafter;

 

(C)           a pro forma consolidated
balance sheet of the Parent and its Subsidiaries as of the date of the most
recent consolidated balance sheet delivered pursuant to clause (xiii) above,
adjusted to give effect to the consummation of the Kraft Acquisition and the
Loans contemplated hereby as if such transactions had occurred on such date,
and which is consistent in all material respects with the sources and uses of
cash for the Kraft Acquisition previously described to the Administrative Agent
and the forecasts previously provided to the Administrative Agent; and

 

(D)          an officer’s certificate
prepared by the chief financial officer of the Borrower as to the financial
condition, solvency and related matters of the Borrower and its Subsidiaries,
after giving effect to the Kraft Acquisition, the Loans to be made on the
Commitment Effective Date and the other transactions contemplated by the Loan
Documents, in form and substance reasonably satisfactory to the Administrative
Agent.

 

(x)           Insurance.  Evidence that all insurance required to be
maintained pursuant to the Loan Documents has been obtained and is in effect,
together with the certificates of insurance, naming the Administrative Agent,
on behalf of the Lenders, as an additional insured or loss payee, as the case
may be, under all insurance policies maintained with respect to the assets and
properties of the Loan Parties that constitutes Collateral.

 

(xi)          Kraft
Acquisition.

 

(A)          Evidence that the Kraft
Acquisition shall have been or shall concurrently be consummated in accordance
with applicable law and on the terms and conditions set forth in that certain
Asset Purchase Agreement dated as of April 4, 2008 among the Sellers, the
Parent and Oak Acquisition LLC (the “Mead Purchase Agreement”) submitted
to the Administrative Agent, and no provision of the Mead Purchase Agreement or
the other documentation relating to the Kraft Acquisition (collectively,

 

77

 

the “Kraft Acquisition Documents”) shall have been waived,
amended, supplemented or otherwise modified in any material respect without the
approval of the Administrative Agent.

 

(B)           A copy, certified by a
Responsible Officer of the Borrower as true and complete, of each Acquisition
Document as originally executed and delivered, together with all exhibits and
schedules thereto, and evidence that the sum of (A) the aggregate purchase
price of the Kraft Acquisition, (B) the amount required to refinance the
Existing Credit Agreement and (C) related fees and expenses shall not
exceed $551  million.

 

(C)           A copy, certified by a
Responsible Officer of the Borrower as true and complete, of (i) the
assignment agreement relating to the assignment of the Cogen Notes from
Teachers to the Seller (the “Note Assignment”), (ii) the
acknowledgement signed by Teachers relating to the Note Assignment, (iii) the
BONY documents and (iv) the SCANA Side Letters, each on terms and
conditions satisfactory to the Administrative Agent.

 

(xii)         Capitalization.  The pro forma capitalization and structure of
the Loan Parties (excluding any change in ownership of the Parent involving a
non-material shareholder) after giving effect to the Kraft Acquisition as
disclosed in the Mead Purchase Agreement shall not have been modified in any
material respect without the approval of the Administrative Agent.

 

(xiii)        Debt.  Evidence that the Loan Parties shall have no
Debt other than the Debt incurred pursuant to the Facilities and other Debt
permitted pursuant to Section 7.01.

 

(xiv)        Existing
Credit Agreement.  Evidence that the Existing Credit Agreement
has been, or concurrently with the Commitment Effective Date is being, terminated and all Liens securing obligations under the
Existing Credit Agreement have been, or concurrently with the Commitment
Effective Date are being, released.

 

(xv)         Intercompany Subordinated Note.  A copy, certified by a Responsible Officer of
the Borrower as true and complete, of the Intercompany Subordinated Note.

 

(xvi)        Intercreditor Agreement.  To the extent the Private Placement Notes are
to be funded pursuant to the Private Placement Note Purchase Agreement on the
Commitment Effective Date, executed counterparts of the Intercreditor
Agreement, sufficient in number for distribution to the Administrative Agent, the
Borrower and the Private Placement Noteholders.

 

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(xvii)      Private
Placement Notes.  To the
extent the Private Placement Notes are to be funded pursuant to the Private
Placement Note Purchase Agreement on the Commitment Effective Date, executed counterparts of the Private Placement
Note Purchase Agreement and Private Placement Notes, and evidence that the
Borrower has received, or will receive simultaneously on the Commitment
Effective Date, proceeds of the Private Placement Notes in a principal amount
of not less than $40,000,000.

 

(xviii)     Other.  Such other customary documents, agreements,
certificates or opinions as the Administrative Agent, the L/C Issuer, the Swing
Line Lender or any Lender reasonably may require.

 

(b)            Fees and Expenses.

 

(i)            (A) All fees and
expenses required to be paid to the Administrative Agent and the Arranger on or
before the Commitment Effective Date shall have been paid and (B) all fees
and expenses required to be paid to the Lenders on or before the Commitment
Effective Date shall have been paid.

 

(ii)           Unless waived
by the Administrative Agent, the Borrower shall have paid all fees, charges and
disbursements of counsel to the Administrative Agent (directly to such counsel
if requested by the Administrative Agent) to the extent invoiced prior to or on
the Commitment Effective Date, plus such additional amounts of such fees,
charges and disbursements as shall constitute its reasonable estimate of such
fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter
preclude a final settling of accounts between the Borrower and the
Administrative Agent).

 

4.03         Conditions to all Credit Extensions.  The obligation of each Lender to honor any
Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type, or a continuation of Eurodollar
Rate Loans) is subject to the following conditions precedent:

 

(a)            The
representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are
contained in any document furnished at any time under or in connection herewith
or therewith, shall be true and correct in all material respects (except to the
extent already qualified by materiality pursuant to the terms thereof) on and
as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects (except to the
extent already qualified by materiality pursuant to the terms thereof) as of
such earlier date, and except that for purposes of this Section 4.03,
the representations and warranties contained in Sections 5.05(a) shall
be deemed to refer to the most recent statements furnished pursuant to Sections
6.01(a) and (b), respectively.

 

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(b)           No
Default or Event of Default shall exist, or would result from such proposed
Credit Extension or from the application of the proceeds thereof.

 

(c)           The
Administrative Agent and, if applicable, the L/C Issuer or the Swing Line
Lender shall have received a Request for Credit Extension in accordance with
the requirements hereof.

 

Each
Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of Eurodollar
Rate Loans) submitted by the Borrower shall be deemed to be a representation
and warranty that the conditions specified in Sections 4.02(a) and (b) have
been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative
Agent and the Lenders to enter into this Agreement and to induce the Lenders to
make Loans and issue and participate in Letters of Credit hereunder, each Loan
Party represents and warrants to the Administrative Agent and the Lenders that,
both before and after giving effect to the Related Transactions:

 

5.01         Organization.  Each Loan Party and its Subsidiaries is
validly existing and in good standing under the laws of its jurisdiction of
organization; and each Loan Party and its Subsidiaries is duly qualified to do
business in each jurisdiction where, because of the nature of its activities or
properties, such qualification is required, except for such jurisdictions where
the failure to so qualify would not have a Material Adverse Effect.

 

5.02         Authorization; No Conflict.  Each Loan Party is duly authorized to execute
and deliver each Loan Document to which it is a party, the Borrower is duly
authorized to borrow monies hereunder and each Loan Party is duly authorized to
perform its Obligations under each Loan Document to which it is a party. Except
as set forth on Schedule 5.02, the execution, delivery and performance
by each Loan Party of each Loan Document to which it is a party, and the
borrowings by the Borrower hereunder, do not and will not (a) require any
consent or approval of any governmental agency or authority (other than any
consent or approval which has been obtained and is in full force and effect), (b) conflict
with (i) any provision of Law, (ii) the charter, by-laws or other
organizational documents of any Loan Party or (iii) assuming, solely with
respect to the Existing Credit Agreement, the satisfaction of the condition to
the Commitment Effective Date contained in Section 4.02(a)(xiv),
any agreement, indenture, instrument or other document material to the business
of any Loan Party, or any judgment, order or decree, which is binding upon any
Loan Party or any of their respective properties or (c) require, or result
in, the creation or imposition of any Lien on any asset of any Loan Party
(other than Liens in favor of the Collateral Agent created pursuant to the
Collateral Documents).

 

80

 

5.03         Validity and Binding Nature.  Each of this Agreement and each other Loan
Document to which any Loan Party is a party is the legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, subject to bankruptcy, insolvency and similar laws affecting the
enforceability of creditors’ rights generally and to general principles of
equity.

 

5.04         Financial Condition.  The Audited Financial Statements and the
Interim Financial Statements, copies of each of which have been delivered to
each Lender, were prepared in accordance with GAAP (subject, in the case of
such Interim Financial Statements, to the absence of footnotes and to normal
year-end adjustments) and present fairly in all material respects the
consolidated financial condition of the Business as at such dates and the
results of its operations for the periods then ended.

 

5.05         No Material Adverse Change.  Since December 31, 2007, there has been
no material adverse change in the Business or, after giving effect to the
Related Transactions, in the financial condition, operations, assets, business
or properties of the Loan Parties and their Subsidiaries taken as a whole
except as set forth on Schedule 5.05.

 

5.06         Litigation and Contingent Liabilities.  No litigation (including derivative actions),
arbitration proceeding or governmental investigation or proceeding is pending
or, to the Borrower’s knowledge, threatened against any Loan Party or its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect, except as set forth in Schedule 5.06.  Other than any liability incident to such
litigation or proceedings, no Loan Party nor any of its Subsidiaries has any
material contingent liabilities not listed on Schedule 5.06 or permitted
by Section 7.01.

 

5.07         Ownership of Properties; Liens.  Except as disclosed on Schedule 5.07,
each Loan Party and its Subsidiaries owns good and, in the case of real
property, marketable title to all of its properties and assets, real and
personal, tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and clear of all
Liens, charges and claims (including infringement claims with respect to
patents, trademarks, service marks, copyrights and the like) except as
permitted by Section 7.02.

 

5.08         Equity Ownership; Subsidiaries.  All issued
and outstanding Capital Securities of the Borrower and its Subsidiaries are
duly authorized and validly issued, fully paid, non-assessable, and free and
clear of all Liens other than those in favor of the Collateral Agent, and such
securities were issued in compliance with all applicable state and federal laws
concerning the issuance of securities, except where the failure to so comply
would not have a Material Adverse Effect. 
Schedule 5.08 sets forth the authorized Capital Securities of
each Loan Party (other than the Parent) as of the Closing Date (or, if the
Commitment Effective Date has occurred or is occurring simultaneously, the
Commitment Effective Date). All of the issued and outstanding Capital
Securities of the Borrower are owned by Parent, and all of the issued and outstanding
Capital Securities of each Wholly-Owned Subsidiary are, directly or indirectly,
owned by the Borrower.  Except as set
forth on Schedule 5.08, other than the Warrants and the Underwriting
Agreement, there are no pre-emptive or other outstanding rights, options,
warrants,

 

81

 

conversion rights or
other similar agreements or understandings for the purchase or acquisition of
any Capital Securities of any Loan Party or its Subsidiaries.

 

5.09         Pension Plans.

 

(a)           The Unfunded Liability of all Pension Plans does not
in the aggregate exceed the greater of (i) twenty percent of the Total
Plan Liability for all such Pension Plans and (ii) $5,000,000.  Each Pension Plan complies in all material
respects with all applicable requirements of law and regulations. No
contribution failure under Section 412 of the Code, Section 302 of
ERISA or the terms of any Pension Plan has occurred with respect to any Pension
Plan, sufficient to give rise to a Lien under Section 302(f) of
ERISA, or otherwise to have a Material Adverse Effect.  There are no pending or, to the knowledge of
Borrower, threatened, claims, actions, investigations or lawsuits against any
Pension Plan, any fiduciary of any Pension Plan, or Borrower or other any
member of the Controlled Group with respect to a Pension Plan or a
Multiemployer Pension Plan which could reasonably be expected to have a
Material Adverse Effect.  Neither the
Borrower nor any other member of the Controlled Group has engaged in any prohibited
transaction (as defined in Section 4975 of the Code or Section 406 of
ERISA) in connection with any Pension Plan or Multiemployer Pension Plan which
could reasonably be expected to have a Material Adverse Effect. Within the past
five years, neither the Borrower nor any other member of the Controlled Group
has engaged in a transaction which resulted in a Pension Plan with an Unfunded
Liability being transferred out of the Controlled Group, which could reasonably
be expected to have a Material Adverse Effect. 
No Termination Event has occurred or is reasonably expected to occur
with respect to any Pension Plan, which could reasonably be expected to have a
Material Adverse Effect.

 

(b)           All contributions (if any) have been made to any
Multiemployer Pension Plan that are required to be made by the Borrower or any
other member of the Controlled Group under the terms of the plan or of any
collective bargaining agreement or by applicable law; neither the Borrower nor
any other member of the Controlled Group has withdrawn or partially withdrawn
from any Multiemployer Pension Plan, incurred any material withdrawal liability
with respect to any such plan or received notice of any material claim or
demand for withdrawal liability or partial withdrawal liability from any such
plan, and no condition has occurred which, if continued, could result in a
withdrawal or partial withdrawal from any such plan; and neither the Borrower
nor any other member of the Controlled Group has received any notice that any
Multiemployer Pension Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of any
excise tax, that any such plan is or has been funded at a rate less than that
required under Section 412 of the Code, that any such plan is or may be
terminated, or that any such plan is or may become insolvent.

 

5.10         Investment Company Act.  No Loan Party nor any of its Subsidiaries is
an “investment company” or a company “controlled” by an “investment company” or
a “subsidiary” of an “investment company,” within the meaning of the Investment
Company Act of 1940.

 

82

 

5.11         Regulation U.  The Borrower is not engaged principally, or
as one of its material activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.

 

5.12         Taxes.  Except as disclosed on Schedule 5.12,
each Loan Party and its Subsidiaries has timely filed all tax returns and
reports required by law to have been filed by it and has paid all taxes and
governmental charges due and payable with respect to such return, except any
such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books. 
The Loan Parties and their Subsidiaries have made adequate reserves on
their books and records in accordance with GAAP for all taxes that have accrued
but which are not yet due and payable. No Loan Party nor any of its
Subsidiaries has participated in any transaction that relates to a year of the
taxpayer (which is still open under the applicable statute of limitations)
which is a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2) (irrespective
of the date when the transaction was entered into).

 

5.13         Solvency, etc.  On the Closing Date (or, if the Commitment
Effective Date has occurred or is occurring simultaneously, the Commitment
Effective Date), and immediately prior to and after giving effect to the
issuance of each Letter of Credit and each borrowing hereunder and the use of
the proceeds thereof, with respect to each Loan Party, individually, (a) the
fair value of its assets is greater than the amount of its liabilities
(including disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated in accordance with GAAP, (b) the
present fair saleable value of its assets is not less than the amount that will
be required to pay the probable liability on its debts as they become absolute
and matured, (c) it is able to pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities) as they mature in
the normal course of business, (d) it does not intend to, and does not
believe that it will, incur debts or liabilities beyond its ability to pay as
such debts and liabilities mature and (e) it is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for which
its property would constitute unreasonably small capital.

 

5.14         Environmental Matters.  The on-going operations of each Loan Party
and its Subsidiaries comply in all respects with all Environmental Laws, except
such non-compliance which could not (if enforced in accordance with applicable
law) reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect. Each Loan Party and its Subsidiaries has
obtained, and maintained in good standing, all licenses, permits, authorizations,
registrations and other approvals required under any Environmental Law and
required for their respective ordinary course operations, and each Loan Party
and its Subsidiaries is in compliance with all terms and conditions thereof,
except, in each case, where the failure to do so could not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect. No Loan Party nor any of its Subsidiaries or any of its
properties or operations is subject to, or reasonably anticipates the issuance
of, any written order from or agreement with any Federal, state or local
Governmental Authority, nor subject to any judicial or docketed administrative
or other proceeding, respecting any Environmental Law, Environmental Claim or
Hazardous Substance, in each case that could reasonably be expected to result
in a Material Adverse Effect.  There are
no Hazardous Substances or other conditions or circumstances

 

83

 

existing
with respect to any property, arising from operations prior to the Closing Date
(or, if the Commitment Effective Date has occurred or is occurring
simultaneously, the Commitment Effective Date), or relating to any waste
disposal, of any Loan Party or its Subsidiaries that would reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.  No Loan Party nor any of
its Subsidiaries has any underground storage tanks that are not properly
registered or permitted under applicable Environmental Laws or that at any time
have released, leaked, disposed of or otherwise discharged Hazardous Substances
in each case that could reasonably be expected to result in a Material Adverse
Effect.

 

5.15         Insurance.  Each
Loan Party and its Subsidiaries and their properties are, to such Loan Party’s
knowledge, insured with financially sound and reputable insurance companies
which are not Affiliates of the Loan Parties or their Subsidiaries, in such
amounts (after giving effect to any self-insurance compatible with the
following standards), with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where such Loan Parties or such Subsidiaries
operate.

 

5.16         Real Property.  Set forth on Schedule 5.16 is a
complete and accurate list, as of the Closing Date (or, if the Commitment
Effective Date has occurred or is occurring simultaneously, the Commitment
Effective Date), of the address of all real property owned or leased by any
Loan Party, together with, in the case of leased property, the name and mailing
address of the lessor of such property.

 

5.17         Information.  All written information heretofore or
contemporaneously herewith furnished by any Loan Party or its Subsidiaries to
the Administrative Agent or any Lender for purposes of or in connection with
this Agreement and the transactions contemplated hereby is, and all written
information hereafter furnished by or on behalf of any Loan Party or its Subsidiaries
to the Administrative Agent or any Lender pursuant hereto or in connection
herewith will be, true and accurate in every material respect on the date as of
which such information is dated or certified, and none of such information is
or will be incomplete by omitting to state any material fact necessary to make
such information not misleading in light of the circumstances under which made
(it being recognized by the Administrative Agent and the Lenders that any
projections and forecasts provided by the Borrower are based on good faith
estimates and assumptions believed by the Borrower to be reasonable as of the
date of the applicable projections or assumptions and that actual results
during the period or periods covered by any such projections and forecasts may
materially differ from projected or forecasted results).

 

5.18         Intellectual Property.  Each Loan Party and its Subsidiaries owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights as are necessary for the conduct of the
businesses of the Loan Parties and their Subsidiaries, without any infringement
upon rights of others which could reasonably be expected to have a Material
Adverse Effect.

 

5.19         Burdensome Obligations.  No Loan Party nor any of its Subsidiaries is
a party to any agreement or contract or subject to any restriction contained in
its organizational documents which could reasonably be expected to have a
Material Adverse Effect.

 

84

 

5.20         Labor Matters.  Except as set forth on Schedule 5.20,
no Loan Party nor any of its Subsidiaries is subject to any labor or collective
bargaining agreement. There are no existing or threatened strikes, lockouts or
other labor disputes involving any Loan Party that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of the Loan Parties and their Subsidiaries are
not in material violation of the Fair Labor Standards Act or any other
applicable law, rule or regulation dealing with such matters.

 

5.21         No Default.  No Default or Event of Default exists or
would result from the incurrence by any Loan Party of any Debt hereunder or
under any other Loan Document.

 

5.22         Related Agreements,
etc.

 

(a)          The Borrower has heretofore furnished the Administrative
Agent a true and correct copy of the Related Agreements;

 

(b)         Each Loan Party and, to the Borrower’s knowledge, each other
party to the Related Agreements, has duly taken all necessary corporate,
partnership or other organizational action to authorize the execution, delivery
and performance of the Related Agreements and the consummation of transactions
contemplated thereby;

 

(c)          The Related Transactions will comply in all material
respects with all applicable legal requirements, and all necessary
governmental, regulatory, creditor, shareholder, partner and other material
consents, approvals and exemptions required to be obtained by the Loan Parties
and, to the Borrower’s knowledge, each other party to the Related Agreements in
connection with the Related Transactions will be, prior to consummation of the
Related Transactions, duly obtained and will be in full force and effect. As of
the date of the Related Agreements, all applicable waiting periods with respect
to the Related Transactions will have expired without any action being taken by
any competent Governmental Auuthority which restrains, prevents or imposes
material adverse conditions upon the consummation of the Related Transactions;

 

(d)         The execution and delivery of the Related Agreements did
not, and the consummation of the Related Transactions will not, violate any
statute or regulation of the United States (including any securities law) or of
any state or other applicable jurisdiction, or any order, judgment or decree of
any court or governmental body binding on any Loan Party or, to the Borrower’s
knowledge, any other party to the Related Agreements, or result in a breach of,
or constitute a default under, any material agreement, indenture, instrument or
other document, or any judgment, order or decree, to which any Loan Party is a
party or by which any Loan Party is bound or, to the Borrower’s knowledge, to
which any other party to the Related Agreements is a party or by which any such
party is bound; and

 

(e)          No statement or representation made in the Related
Agreements by any Loan Party or, to the Borrower’s knowledge, any other Person,
contains any untrue 

 

85

 

statement
of a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they are made, not misleading.

 

5.23         Casualty, Etc.  Except as set forth on Schedule 5.23,
neither the businesses nor the properties of any Loan Party or any of its
Subsidiaries are affected by any fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other casualty (whether or not covered by insurance) that,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

5.24         Collateral Documents.  The provisions of the Collateral Documents
are effective to create in favor of the Collateral Agent for the benefit of the
Secured Parties a legal, valid and enforceable first priority Lien (subject to
Liens permitted by Section 7.02) on all right, title and interest
of the respective Loan Parties in the Collateral described therein.  Except for filings completed prior to the
Commitment Effective Date and as contemplated hereby and by the Collateral
Documents, no filing or other action will be necessary to perfect or protect
such Liens.

 

5.25         Material Contracts.  Schedule 5.25 lists, as of the Closing
Date (or, if the Commitment Effective Date has occurred or is occurring
simultaneously, the Commitment Effective Date), each Material Contract to which
any Loan Party is a party, by which either of them or their respective
properties is bound or to which either of them is subject.  As of the Closing Date (or, if the Commitment
Effective Date has occurred or is occurring simultaneously, the Commitment
Effective Date), except as set forth on Schedule 5.25, (a) each
Material Contract is in full force and effect and is enforceable by the
respective Loan Party or Loan Parties in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws, statutes or rules of general application
affecting the enforcement of creditor’s rights or general principles of equity,
and (b) no Loan Party, nor, to the knowledge of the Loan Parties, any
other party thereto, is in breach of or default under any Material Contract in
any material respect or has given notice of termination or cancellation of any
Material Contract.

 

ARTICLE VI

 

AFFIRMATIVE COVENANTS

 

Until
the expiration or termination of the Commitments and thereafter until all
Obligations hereunder and under the other Loan Documents are paid in full and
all Letters of Credit have been terminated or Cash Collateralized, each Loan
Party agrees that, unless at any time the Required Lenders shall otherwise
expressly consent in writing, it will:

 

6.01         Reports, Certificates and Other Information.  Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

 

86

 

(a)          Annual Report. 
Promptly when available and in any event within 90 days after the close
of each Fiscal Year: (i) a copy of the annual audit report of the Parent
and its Subsidiaries for such Fiscal Year, including therein consolidated
balance sheets and statements of earnings and cash flows of the Parent and its
Subsidiaries as at the end of such Fiscal Year, certified without adverse
reference to going concern value and without qualification by independent
auditors of recognized standing selected by the Borrower and reasonably
acceptable to the Administrative Agent, together with a comparison with the
budget for such Fiscal Year and a comparison with the previous Fiscal Year; and
(ii) a consolidating balance sheet of the Parent and its Subsidiaries as
of the end of such Fiscal Year and consolidating statement of earnings and cash
flows for the Parent and its Subsidiaries for such Fiscal Year, certified as
true and correct in all material respects in accordance with GAAP by a
Responsible Officer of the Parent. Any comparisons delivered in accordance with
this Section 6.01(a) with respect to any period preceding the
Commitment Effective Date shall be made with respect to the Business for such
period;

 

(b)         Interim
Reports.  (i) Promptly when
available and in any event within 45 days after the end of each Fiscal Quarter,
consolidated and consolidating balance sheets of the Parent and its
Subsidiaries as of the end of such Fiscal Quarter, together with consolidated
and consolidating statements of earnings and cash flows for such Fiscal Quarter
and for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter, together with a comparison with the
corresponding period of the previous Fiscal Year and a comparison with the
budget for such period of the current Fiscal Year, certified as true and
correct in all material respects in accordance with GAAP by a Responsible
Officer of the Parent; and (ii) promptly when available and in any event
within 30 days after the end of each month, consolidated and consolidating
balance sheets of the Parent and its Subsidiaries as of the end of such month,
together with consolidated and consolidating statements of earnings and a
consolidated statement of cash flows for such month and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such
month, together with a comparison with the corresponding period of the previous
Fiscal Year. Any comparisons delivered in accordance with this Section 6.01(b) with
respect to any period preceding the Commitment Effective Date shall be made
with respect to the Business for such period;

 

6.02         Certificates; Other Information.  Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

 

(a)          Compliance
Certificates.  Contemporaneously with
the furnishing of a copy of each annual audit report pursuant to Section 6.01(a) and
each set of quarterly statements pursuant to Section 6.01(b), a
duly completed compliance certificate in the form of Exhibit D,
with appropriate insertions, dated the date of such annual report or such
quarterly statements and signed by a Responsible Officer of the Parent,
containing (i) a computation of each of the financial ratios and
restrictions set forth in Section 7.14 and to the effect that such
officer has not become aware of any Default or Event of Default that has
occurred and is continuing or, if there is any such event, describing it and
the steps, if any, being taken to cure it and (ii) a written statement of
the Parent’s 

 

87

 

management setting forth a discussion of the Parent’s
financial condition, changes in financial condition and results of operations.

 

(b)         Reports
to the SEC and to Shareholders. 
Promptly upon the filing or sending thereof, copies of all regular,
periodic or special reports of any Loan Party or its Subsidiaries filed with
the SEC; copies of all registration statements of any Loan Party filed with the
SEC (other than on Form S-8); and copies of all proxy statements or other
communications made to security holders generally.

 

(c)          Notice of Default, Litigation and ERISA Matters.  Promptly upon becoming aware of any of the
following, written notice describing the same and the steps being taken by the
Parent or the Subsidiary affected thereby with respect thereto:

 

(i)            the occurrence of a Default or Event of Default;

 

(ii)           any litigation, arbitration or governmental investigation
or proceeding not previously disclosed by the Borrower to the Administrative
Agent which has been instituted or, to the knowledge of the Borrower, is
threatened against any Loan Party or their Subsidiaries or to which any of the
properties of any thereof is subject which might reasonably be expected to have
a Material Adverse Effect;

 

(iii)          the institution
of any steps by any member of the Controlled Group or any other Person to
terminate any Pension Plan, or the failure of any member of the Controlled
Group to make a required contribution to any Pension Plan (if such failure is
sufficient to give rise to a Lien under Section 302(f) of ERISA) or
to any Multiemployer Pension Plan, or the taking of any action with respect to
a Pension Plan which could result in the requirement that the Borrower furnish
a bond or other security to the PBGC or such Pension Plan, or the occurrence of
any event with respect to any Pension Plan or Multiemployer Pension Plan which
could result in the incurrence by any member of the Controlled Group of any
material liability, fine or penalty (including any claim or demand for
withdrawal liability or partial withdrawal from any Multiemployer Pension
Plan), or any material increase in the contingent liability of the Borrower
with respect to any post-retirement welfare benefit plan or other employee
benefit plan of the Borrower or another member of the Controlled Group, or any
notice that any Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of an excise tax, that any such plan is or has been funded at a rate
less than that required under Section 412 of the Code, that any such plan
is or may be terminated, or that any such plan is or may become insolvent but
only to the extent that the event(s) described in this subsection
individually or in the aggregate might reasonably be expected to have a
Material Adverse Effect;

 

(iv)          any cancellation or material change in any material
insurance maintained by any Loan Party or its Subsidiaries; or

 

88

 

(v)           any other event (including (i) any violation of any
Environmental Law or the assertion of any Environmental Claim or (ii) the
enactment or effectiveness of any law, rule or regulation) which might
reasonably be expected to have a Material Adverse Effect.

 

(d)         Management
Reports.  Promptly upon receipt
thereof, copies of all detailed financial and management reports submitted to
the Parent or the Borrower by independent accountants in connection with each
annual or interim audit made by such auditors of the books of the Parent or the
Borrower;

 

(e)          Projections.  As soon as practicable, and in any event not
later than 45 days after the commencement of each Fiscal Year, financial
projections for the Parent and its Subsidiaries for such Fiscal Year (including
quarterly operating and cash flow budgets) prepared in a manner consistent with
the projections delivered by the Parent to the Administrative Agent prior to
the Commitment Effective Date or otherwise in a manner reasonably satisfactory
to the Administrative Agent, accompanied by a certificate of a Responsible
Officer of the Parent on behalf of the Parent to the effect that (a) such
projections were prepared by the Parent in good faith, (b) the Parent has
a reasonable basis for the assumptions contained in such projections and (c) such
projections have been prepared in accordance with such assumptions;

 

(f)          Related Transactions.  Promptly following receipt, copies of any
material notices (including notices of default or acceleration) received in
connection with the Related Transactions; and

 

(g)         Other Information. 
Promptly from time to time, such other information concerning the Loan
Parties as the Administrative Agent may reasonably request.

 

Documents required to be delivered pursuant to Section 6.01(a) or
(b) or Section 6.02(b) (to the extent any such
documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at the
website address listed on Schedule 11.02; or (ii) on which such
documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: 
(i) the Borrower shall deliver paper copies of such documents to
the Administrative Agent or any Lender that requests the Borrower to deliver
such paper copies until a written request to cease delivering paper copies is
given by the Administrative Agent or such Lender and (ii) the Borrower
shall notify the Administrative Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents.  Notwithstanding
anything contained herein, in every instance the Borrower shall be required to
provide paper copies of the Compliance Certificates required by Section 6.02(a) to
the Administrative Agent.  Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to

 

89

 

request
the delivery or to maintain copies of the documents referred to above, and in
any event shall have no responsibility to monitor compliance by the Borrower
with any such request for delivery, and each Lender shall be solely responsible
for requesting delivery to it or maintaining its copies of such documents.

 

The Borrower hereby acknowledges that (a) the
Administrative Agent and/or the Arranger will make available to the Lenders and
the L/C Issuer materials and/or information provided by or on behalf of the
Borrower hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”)
and (b) certain of the Lenders (each, a “Public Lender”) may have
personnel who do not wish to receive material non-public information with
respect to the Borrower or its Affiliates, or the respective securities of any
of the foregoing, and who may be engaged in investment and other market-related
activities with respect to such Persons’ securities.  The Borrower hereby agrees that it will use
commercially reasonable efforts to identify that portion of the Borrower
Materials that may be distributed to the Public Lenders and that (w) all
such Borrower Materials shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,”
the Borrower shall be deemed to have authorized the Administrative Agent, the
Arranger, the L/C Issuer and the Lenders to treat such Borrower Materials as
not containing any material non-public information (although it may be
sensitive and proprietary) with respect to the Borrower or its securities for
purposes of United States Federal and state securities laws (provided, however,
that to the extent such Borrower Materials constitute Information, they shall
be treated as set forth in Section 11.07); (y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Side Information;” and (z) the
Administrative Agent and the Arranger shall be entitled to treat any Borrower
Materials that are not marked “PUBLIC” as being suitable only for posting on a
portion of the Platform that is not designated “Public Side Information.”  Notwithstanding the foregoing, the Borrower
shall be under no Obligation to mark any Borrower Materials “PUBLIC”.

 

6.03         Books, Records and Inspections.  Keep, and cause each other Loan Party and its
Subsidiaries to keep, its books and records in accordance with sound business
practices sufficient to allow the preparation of financial statements in
accordance with GAAP; permit, and cause each other Loan Party and its
Subsidiaries to permit, the Administrative Agent or any Lender (so long as such
Lender’s visit or inspection is made concurrently with Administrative Agent) or
any representative thereof to inspect the properties and operations of the Loan
Parties and their Subsidiaries; and permit, and cause each other Loan Party and
its Subsidiaries to permit, at any reasonable time and with reasonable notice
(or at any time without notice if an Event of Default exists), the Administrative
Agent or any Lender (so long as such Lender’s visit or inspection is made
concurrently with Administrative Agent) or any representative thereof to visit
any or all of its offices, to discuss its financial matters with its officers
and its independent auditors (and the Borrower hereby authorizes such
independent auditors to discuss such financial matters with any Lender or the
Administrative Agent or any representative thereof), and to examine (and, at
the expense of the Loan Parties, photocopy extracts from) any of its books or
other records; and permit, and cause each other Loan Party and its Subsidiaries
to permit, the Administrative Agent and its representatives to inspect the
Inventory and other tangible assets of the Loan Parties and 

 

90

 

their
Subsidiaries, to perform appraisals of the equipment of the Loan Parties and
their Subsidiaries, and to inspect, audit, check and make copies of and
extracts from the books, records, computer data, computer programs, journals,
orders, receipts, correspondence and other data relating to Inventory, Accounts
and any other collateral. All such inspections or audits by the Administrative
Agent shall be at the Borrower’s expense; provided that following the Closing
Date and so long as no Event of Default has occurred and is continuing, the
Borrower shall only be required to reimburse the Administrative Agent for the
cost of (1) two inspections in any Fiscal Year and (ii) one appraisal
in any Fiscal Year.

 

6.04         Maintenance
of Property; Insurance.

 

(a)          Keep, and cause each other Loan Party and its Subsidiaries
to keep, all property useful and necessary in the business of the Loan Parties
and their Subsidiaries in good working order and condition, ordinary wear and
tear excepted.

 

(b)         Maintain, and cause each other Loan Party and its
Subsidiaries to maintain, with responsible insurance companies, such insurance
coverage as may be required by any law or governmental regulation or court
decree or order applicable to it and such other insurance, to such extent and
against such hazards and liabilities, as is customarily maintained by companies
similarly situated, and, upon request of the Administrative Agent, furnish to
the Administrative Agent a certificate setting forth in reasonable detail the
nature and extent of all insurance maintained by the Loan Parties and their
Subsidiaries. The Borrower shall cause each issuer of an insurance policy to
provide the Administrative Agent with an endorsement (i) showing the
Collateral Agent as loss payee with respect to each policy of property or
casualty insurance and naming the Collateral Agent as an additional insured
with respect to each policy of liability insurance, (ii) providing that 30
days’ notice will be given to the Collateral Agent prior to any cancellation
of, material reduction or change in coverage provided by or other material
modification to such policy and (iii) reasonably acceptable in all other
respects to the Administrative Agent. Each Loan Party shall execute and deliver
to the Collateral Agent a collateral assignment, in form and substance
satisfactory to the Administrative Agent, of each business interruption
insurance policy maintained by such Loan Party.

 

(c)          Unless the Borrower provides the
Administrative Agent with evidence of the insurance coverage required by this
agreement, the Administrative Agent may, following written notice to the
Borrower, purchase insurance at the Borrower’s expense to protect the Collateral Agent’s and the Lenders’ interests in the
Collateral. This insurance may, but need not, protect any Loan Party’s
interests. The coverage that the Administrative Agent purchases may not pay any
claim that is made against any Loan Party in connection with the Collateral.
The Borrower may later cancel any insurance purchased by the Administrative
Agent, but only after providing the Administrative Agent with evidence that the
company has obtained insurance as required by this Agreement. If the
Administrative Agent purchases insurance for the Collateral, the Borrower will
be responsible for the costs of that insurance, including interest and any
other charges that may be imposed with the placement of the insurance, until
the effective date of the cancellation or expiration of the insurance. The
costs of the insurance may be 

 

91

 

added to the principal amount of the Loans owing
hereunder. The costs of the insurance may be more than the cost of the
insurance the Loan Parties may be able to obtain on their own.

 

6.05         Compliance
with Laws; Payment of Taxes and Liabilities.

 

(i) Comply, and cause each other Loan Party and
its Subsidiaries to comply, in all material respects with all applicable Laws,
rules, regulations, decrees, orders, judgments, licenses and permits, except
where failure to comply could not reasonably be expected to have a Material
Adverse Effect, (ii) without limiting clause (a)(i) above, ensure,
and cause each other Loan Party and its Subsidiaries to ensure, that no person
who owns a controlling interest in or otherwise controls a Loan Party or its
Subsidiaries is or shall be (A) listed on the Specially Designated
Nationals and Blocked Person List maintained by the Office of Foreign Assets
Control (“OFAC”), Department of the Treasury, and/or any other similar
lists maintained by OFAC pursuant to any authorizing statute, Executive Order
or regulation or (B) a person designated under Section 1(b), (c) or
(d) of Executive Order No. 13224 (September 23, 2001), any
related enabling legislation or any other similar Executive Orders, (iii) without
limiting clause (a)(i) above, comply, and cause each other Loan Party and
its Subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”)
and anti-money laundering laws and regulations, and (iv) pay, and cause
each other Loan Party and its Subsidiaries to pay, prior to delinquency, all
taxes and other governmental charges against it or any collateral, as well as
claims of any kind which, if unpaid, could become a Lien on any of its
property; provided that the foregoing shall not require any Loan Party or its
Subsidiaries to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside
on its books adequate reserves with respect thereto in accordance with GAAP
and, in the case of a claim which could become a Lien on any collateral, such
contest proceedings shall stay the foreclosure of such Lien or the sale of any
portion of the collateral to satisfy such claim.

 

6.06         Maintenance of Existence, etc.  Maintain and preserve, and (subject to Section 7.05
or 7.06) cause each other Loan Party and its Subsidiaries to maintain
and preserve, (a) its existence and good standing in the jurisdiction of
its organization and (b) its qualification to do business and good
standing in each jurisdiction where the nature of its business makes such
qualification necessary (other than such jurisdictions in which the failure to
be qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect).

 

6.07         Use of Proceeds.  Use the proceeds of the Loans, and the
Letters of Credit, solely to finance the Related Transactions, to refinance
certain existing Debt of the Loan Parties and their Subsidiaries (including
Debt under the Existing Credit Agreement), for working capital purposes, for
Capital Expenditures and for other general business purposes; and not use or
permit any proceeds of any Loan to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of “purchasing or
carrying” any Margin Stock.

 

6.08         Employee Benefit Plans.

 

(a)           Maintain, and cause each other member of the Controlled
Group to maintain, each Pension Plan in compliance with all applicable
requirements of law and

 

92

 

regulations
except where the failure to maintain could not reasonably be expected to have a
Material Adverse Effect;

 

(b)         Make, and cause each other member of the Controlled Group to
make, on a timely basis, all required contributions to any Multiemployer
Pension Plan; and

 

(c)          Not, and not permit any other member of the Controlled
Group to (i) seek a waiver of the minimum funding standards of ERISA, (ii) terminate
or withdraw from any Pension Plan or Multiemployer Pension Plan or (iii) take
any other action with respect to any Pension Plan that would reasonably be
expected to entitle the PBGC to terminate, impose liability in respect of, or
cause a trustee to be appointed to administer, any Pension Plan, unless the
actions or events described in clauses (i), (ii) and (iii) individually
or in the aggregate would not have a Material Adverse Effect.

 

6.09         Environmental Matters.  If any release or threatened release or other
disposal of Hazardous Substances shall occur or shall have occurred on any real
property or any other assets of any Loan Party or its Subsidiaries, the
Borrower shall, or shall cause the applicable Loan Party or applicable
Subsidiary to, cause the prompt containment and removal of such Hazardous
Substances and the remediation of such real property or other assets as
necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Borrower shall, and shall cause each other
Loan Party and each Subsidiary to, comply with any Federal or state judicial or
administrative order requiring the performance at any real property of any Loan
Party or any Subsidiary of activities in response to the release or threatened
release of a Hazardous Substance, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect. To the extent that the
transportation of Hazardous Substances is permitted by this Agreement, the
Borrower shall, and shall cause its Subsidiaries to, dispose of such Hazardous
Substances, or of any other wastes, only at licensed disposal facilities
operating in material compliance with Environmental Laws.

 

6.10         Further
Assurances.

 

(a)          (i) notify the Administrative Agent promptly upon the
formation or acquisition of any direct or indirect Domestic Subsidiary or
Foreign Subsidiary and (ii) take, and cause each other Loan Party to take,
such actions as are necessary or as the Administrative Agent or the Required
Lenders may reasonably request from time to time to ensure that the Obligations
of each Loan Party under the Loan Documents are secured by substantially all of
the assets of the Parent, the Borrower and each Domestic Subsidiary of the
Parent (as well as all Capital Securities of the Borrower and each direct or
indirect Domestic Subsidiary and 65% of all Capital Securities of each direct
Foreign Subsidiary) and guaranteed by each Domestic Subsidiary of the Borrower
(including, upon the acquisition or creation thereof, Cogen JV and any other
Domestic Subsidiary acquired or created after the Closing Date), in each case
as the Administrative Agent may determine, including (a) the execution and
delivery of guaranties, security agreements, pledge agreements, mortgages,
deeds of trust, financing statements and other documents, 

 

93

 

and
the filing or recording of any of the foregoing and (b) the delivery of
certificated securities and other Collateral with respect to which perfection
is obtained by possession.

 

(b)         Cause all collections from Accounts to be either (i) subject
to a Deposit Account Control Agreement or (ii) directed to a bank account
maintained with the Administrative Agent and cause each financial institution
(other than the Administrative Agent) at which the Parent, the Borrower or any
Subsidiary of the Borrower maintains any deposit account or other similar
account (other than petty cash accounts or payroll accounts as long as such
payroll accounts are maintained as zero balance accounts) to deliver to the
Administrative Agent a writing, in form and substance satisfactory to the
Administrative Agent, (A) acknowledging and consenting to the security
interest of the Collateral Agent in such account and all cash, checks, drafts
and other instruments or writings for the payment of money from time to time
therein, (B) confirming such financial institution’s agreement to follow
the instructions of the Collateral Agent with respect to all such cash, checks,
drafts and other instruments or writings for the payment of money following
receipt from the Collateral Agent of notice of the occurrence of any Default or
Event of Default and (C) waiving all rights of setoff and banker’s lien on
all items held in any such account (other than with respect to payment of fees
and expenses for account services).

 

6.11         Deposit Accounts.  Unless the Administrative Agent otherwise
consents in writing, in order to facilitate the Administrative Agent’s and the
Lenders’ maintenance and monitoring of their security interests in the
collateral, not maintain any principal deposit accounts with any bank or
financial institution other than the Administrative Agent unless such deposit
account is subject to a Deposit Account Control Agreement.

 

6.12         Compliance with Terms of Leaseholds.  Make all payments and otherwise perform all
obligations in respect of all leases of real property to which any Loan Party
or any Subsidiary is a party, keep such leases in full force and effect and not
allow such leases to lapse or be terminated or any rights to renew such leases
to be forfeited or cancelled, notify the Administrative Agent of any default by
any party with respect to such leases and cooperate with the Administrative
Agent in all respects to cure any such default, and cause each of its
Subsidiaries to do so, except, in any case, where the failure to do so, either
individually or in the aggregate, could not be reasonably likely to have a
Material Adverse Effect.

 

6.13         Material Contracts.  Perform and observe all the terms and
provisions of each Material Contract to be performed or observed by it,
maintain each such Material Contract in full force and effect (except in
connection with the termination or replacement of such Material Contracts in
the ordinary course of business), enforce each such Material Contract in
accordance with its terms, except, in any case, where the failure to do so,
either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

6.14         Kraft Acquisition Documents.  With respect to each of the Kraft Acquisition
Documents, (i) all representations made by any Loan Party or its
Subsidiaries in the Kraft Acquisition Documents are complete, true and correct
in all material respects as of the Closing Date; (ii) the execution and
delivery by any Loan Party or its Subsidiaries of the Kraft

 

94

 

Acquisition
Documents and the consummation of the transactions therein contemplated or the
compliance with the provisions thereof will not violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on such
Loan Party or its Subsidiaries or any of the provisions of the organizational
documents of any Loan Party or its Subsidiaries or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which any Loan
Party or its Subsidiaries is a party or subject, or by which any Loan Party or
its Subsidiaries or any property of any Loan Party or its Subsidiaries is
bound, or conflict with or constitute a default thereunder or result in the
creation or imposition of any Lien pursuant to the terms of any such indenture,
agreement, document, instrument or undertaking, except to the extent such
violation, conflict or default would not reasonably be likely to result in a
Material Adverse Effect; (iii) no material order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental, regulatory, administrative or public
body or authority, or any subdivision thereof, or any other Person is required
to authorize, or is required in connection with, the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
any of the Kraft Acquisition Documents except those which have already been
obtained or given; and (iv) upon the effectiveness of this Agreement, all
conditions to effectiveness of the Mead Purchase Agreement have been satisfied.

 

6.15         Amendments to Private Placement
Notes or Private Placement Note Purchase Agreement. 
If either the Private Placement Notes or the Private Placement Note
Purchase Agreement is amended after the Commitment Effective Date to change (in
a manner that is more restrictive to the Loan Parties) any financial covenant,
negative covenant or event of default as it exists on the Commitment Effective
Date, or any such section or other provision of such document is amended to
include any additional financial covenants, negative covenants or events of
default that are not set forth in (or that are more restrictive than those set
forth in) this Agreement, then the Loan Parties shall offer to amend this
Agreement and/or the other Loan Documents, as applicable (and, upon the request
of the Administrative Agent or the Required Lenders, the Loan Parties shall
execute appropriate amendment documents) to reflect corresponding changes.

 

ARTICLE VII

 

NEGATIVE COVENANTS

 

Until the expiration or
termination of the Commitments and thereafter until all Obligations hereunder
and under the other Loan Documents are paid in full and all Letters of Credit
have been terminated or Cash Collateralized, each Loan Party agrees that,
unless at any time the Required Lenders shall otherwise expressly consent in
writing, it will:

 

7.01         Debt.  Not, and not permit any other Loan Party or
its Subsidiaries to, create, incur, assume or suffer to exist any Debt, except:

 

(a)          Obligations
under this Agreement and the other Loan Documents;

 

95

 

(b)         Debt
secured by Liens permitted by Section 7.02(d), and extensions,
renewals and refinancings thereof; provided that the aggregate amount of
all such Debt at any time outstanding shall not exceed $5,000,000;

 

(c)          Debt
(other than the Intercompany Subordinated Debt) of the Borrower to any
Guarantor or of any Guarantor to the Borrower; provided that to the
extent requested in writing by the Administrative Agent such Debt shall be
evidenced by a demand note in form and substance reasonably satisfactory to the
Administrative Agent and pledged and delivered to the Collateral Agent pursuant
to the Collateral Documents as additional collateral security for the
Obligations, and the obligations under such demand note shall be subordinated
to the Obligations of the Borrower hereunder in a manner reasonably
satisfactory to the Administrative Agent;

 

(d)         the
Earn-Out Obligations;

 

(e)          Hedging
Obligations incurred for bona fide hedging purposes and not for speculation,
and Debt in respect of Cash Management Agreements;

 

(f)          Debt
outstanding on the date hereof and listed on Schedule 7.01 and any
refinancings, refundings, renewals or extensions thereof; provided  that
(i) the amount of such Debt is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder and (ii) the terms
relating to principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a whole, of any such
refinancing, refunding, renewing or extending Debt, and of any agreement
entered into and of any instrument issued in connection therewith, are no less
favorable in any material respect to the Loan Parties or the Lenders than the
terms of any agreement or instrument governing the Debt being refinanced,
refunded, renewed or extended and the interest rate applicable to any such
refinancing, refunding, renewing or extending Debt does not exceed the then
applicable market interest rate;

 

(g)         the
Debt to be Repaid (so long as such Debt is repaid on the Commitment Effective
Date with the proceeds of the initial Loans hereunder);

 

(h)         Contingent
Liabilities arising with respect to indemnification obligations in favor of (i) sellers
in connection with acquisitions or (ii) purchasers in connection with
dispositions, in each case permitted under Section 7.05;

 

(i)           Intercompany
Subordinated Debt in an aggregate outstanding principal amount not at any time
exceeding $87,000,000 (plus accrued paid-in-kind interest);

 

(j)           Contingent
Liabilities in respect of guarantees of any Loan Party in respect of Debt or
other obligations otherwise permitted hereunder and to the extent such

 

96

 

Debt is required to be
subordinated such Contingent Liabilities will be equally subordinated;

 

(k)          subject
to the terms of the Intercreditor Agreement (to the extent applicable) and so
long as (i) the Intercreditor Agreement has been fully executed and
delivered and is acceptable in form and substance to the Administrative Agent
and (ii) the Term B-2 Loan (if it has been funded prior to the issuance of
the Private Placement Notes) is repaid on a Dollar for Dollar basis in an
amount equal to the aggregate principal amount the Private Placement Notes, Debt pursuant to the Private Placement
Notes and Private Placement Note Purchase Agreement in an aggregate outstanding
principal amount not at any time exceeding $40,000,000 and any refinancings, refundings,
renewals or extensions thereof to the extent permitted under the Intercreditor
Agreement (to the extent applicable);

 

(l)           unsecured Debt and Debt secured by Liens
permitted under Section 7.02(h), in addition to the Debt listed
above, collectively, in an aggregate outstanding principal amount not at any
time exceeding $20,000,000 so long as (A) no Event of Default or Unmatured
Default has occurred and is continuing on the date of any such Debt is incurred
or would result therefrom, and (B) after giving effect to such Debt,
Borrower is in compliance on a pro forma basis with the financial covenants set
forth in Section 7.14 as of the last day of the most recent Fiscal Quarter
for which a Compliance Certificate has been delivered;  and

 

(m)         other unsecured Debt, in addition to the
Debt listed above, in an aggregate outstanding principal amount not at any time
exceeding $30,000,000 so long as (a) such Debt is subordinated to the
Obligations, and pursuant to documentation, on terms satisfactory to the
Administrative Agent, (B) no
Event of Default or Unmatured Default has occurred and is continuing on the
date of any such Debt is incurred or would result therefrom, and (C) after
giving effect to such Debt, Borrower is in compliance on a pro forma basis with
the financial covenants set forth in Section 7.14 as of the last day of the most recent
Fiscal Quarter for which a Compliance Certificate has been delivered.

 

7.02         Liens.  Not, and not permit any other Loan Party or
its Subsidiaries to create or permit to exist any Lien on any of its real or
personal properties, assets or rights of whatsoever nature (whether now owned
or hereafter acquired), except:

 

(a)          Liens
for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves;

 

(b)         Liens
arising in the ordinary course of business (such as (i) Liens of
landlords, carriers, warehousemen, mechanics and materialmen and other similar
Liens imposed by law and (ii) Liens in the form of deposits or pledges
incurred in connection with worker’s compensation, unemployment compensation
and other types of social security (excluding Liens arising under ERISA) or in
connection with surety bonds, bids, performance bonds and similar obligations)
for sums not overdue or being contested in 

 

97

 

good faith by appropriate
proceedings and not involving any advances or borrowed money or the deferred purchase
price of property or services and, in each case, for which it maintains
adequate reserves;

 

(c)          Liens
described on Schedule 7.02 as of the Closing Date (or, if the Commitment
Effective Date has occurred or is occurring simultaneously, the Commitment
Effective Date);

 

(d)         subject
to the limitation set forth in Section 7.01(b), (i) Liens
arising in connection with Capital Leases (and attaching only to the property
being leased), (ii) Liens existing on property at the time of the
acquisition thereof by any Loan Party (and not created in contemplation of such
acquisition) and (iii) Liens that constitute purchase money security
interests on any property securing debt incurred for the purpose of financing
all or any part of the cost of acquiring such property, provided that
any such Lien attaches to such property within 60 days of the acquisition
thereof and attaches solely to the property so acquired;

 

(e)          attachments,
appeal bonds, judgments and other similar Liens, for sums not exceeding
$5,000,000 arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;

 

(f)          easements,
rights of way, restrictions, minor defects or irregularities in title and other
similar Liens not interfering in any material respect with the ordinary conduct
of the business of any Loan Party;

 

(g)         Liens
arising under the Loan Documents, which also may secure, subject to the terms
of the Intercreditor Agreement (to the extent applicable), the Private Placement Notes to the extent
permitted under Section 7.01(k) and related obligations;

 

(h)         Liens
on the property of a Person existing at the time such Person becomes a Subsidiary
of a Loan Party in a transaction permitted hereunder; provided, however,
that any such Lien may not extend to any other property of any Loan Party or
any other Subsidiary that is not a Subsidiary of such Person; provided,
further, that any such Lien was not created in anticipation of or in connection
with the transaction or series of transactions pursuant to which such Person
became a Subsidiary of a Loan Party; and

 

(i)           the
replacement, extension or renewal of any Lien permitted by clause (c) above
upon or in the same property subject thereto arising out of the extension,
renewal or replacement of the Debt secured thereby (without increase in the
amount thereof).

 

7.03         Operating Leases.  Not permit the aggregate amount of all rental
payments under Operating Leases made (or scheduled to be made) by the Loan
Parties and their Subsidiaries (on a consolidated basis) to exceed $5,000,000
in any Fiscal Year.

 

98

 

7.04         Restricted Payments.  Not, and not permit any other Loan Party or
its Subsidiaries to make any distribution to any holders of its Capital
Securities, purchase or redeem any of its Capital Securities, pay any
management fees or similar fees or expenses to any of its equityholders or any
Affiliate thereof, make any redemption, prepayment, defeasance, repurchase or
any other payment in respect of any Intercompany Subordinated Debt or set aside
funds for any of the foregoing. Notwithstanding the foregoing:

 

(a)          the
Borrower may reimburse Parent for out-of-pocket costs and expenses incurred by
Parent on behalf of or for the benefit of the Borrower, and for fees charged by
Parent to the Borrower, in an aggregate amount not to exceed $4,000,000 during
any Fiscal Year.

 

(b)         subject
to the Intercompany Subordination Agreement, the Borrower may make payments in
kind of scheduled interest on the Intercompany Subordinated Note at the
non-default rate of interest set forth in the Intercompany Subordinated Note;

 

(c)          any
Subsidiary may pay dividends or make other distributions to the Borrower or to
a domestic Wholly-Owned Subsidiary;

 

(d)         so
long as the Borrower files a consolidated income tax return with Parent, the
Borrower may make distributions to Parent to permit Parent to pay federal and
state income taxes then due and owing; provided that the amount of such
distribution shall not be greater, nor the receipt by the Borrower of tax
benefits less, than they would have been had the Borrower not filed a
consolidated return with Parent;

 

(e)          Borrower
may make, and Parent may distribute to its shareholders, the Permitted Parent
Dividends and other cash distributions to Parent from time to time so long as (A) no
Event of Default or Unmatured Default has occurred and is continuing on the
date of any such distribution or would result therefrom, (B) after giving
effect to any such distribution (and any Debt incurred to fund such
distribution), Borrower is in compliance on a pro forma basis with the
financial covenants set forth in Section 7.14 as of the last day of
the most recent Fiscal Quarter for which a Compliance Certificate has been delivered, and (C) after
giving effect to any such distribution, the aggregate amount of all such
distributions made following the Commitment Effective Date shall not exceed
Cumulative Available Excess Cash Flow as of the date of such distribution; and

 

(f)          the Parent may satisfy its obligations in
connection with the Warrants and the Underwriting Agreement.

 

7.05         Mergers, Consolidations, Acquisitions, Sales.  Not, and not permit any other Loan Party or
its Subsidiaries to:

 

(a)          be
a party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any Capital Securities of any class of, or
any partnership or joint venture interest in, any other Person other than in
connection with a Permitted Acquisition,

 

99

 

(b)         sell,
transfer, convey or lease all or any substantial part of its assets or Capital
Securities (including the sale of Capital Securities of any Subsidiary) except
for the disposition of assets no longer useful or used in connection with such
Loan Party’s business, sales of inventory in the ordinary course of business
and obsolete or worn-out equipment, or

 

(c)          sell
or assign with or without recourse any receivables, except for (i) any
such merger, consolidation, sale, transfer, conveyance, lease or assignment of
or by any Wholly-Owned Subsidiary into the Borrower or into any other domestic
Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by
the Borrower or any domestic Wholly-Owned Subsidiary of the assets or Capital
Securities of any Wholly-Owned Subsidiary; (iii) sales and dispositions of
assets (including the Capital Securities of Subsidiaries) for at least fair market
value (as determined by the Board of Directors of the Borrower) so long as the
net book value of all assets sold or otherwise disposed of in any Fiscal Year
does not exceed 10% of the net book value of the consolidated assets of the
Loan Parties as of the last day of the preceding Fiscal Year.

 

7.06         Modification of Organization Documents.  Not permit any Organizational Documents of
any Loan Party or its Subsidiaries to be amended or modified in any way which
could reasonably be expected to adversely affect the interests of the Lenders;
and not change, or allow any Loan Party to change, its state of formation or
its organizational form upon less than 30 days’ prior notice to the
Administrative Agent.

 

7.07         Transactions with Affiliates.  Not, and not permit any other Loan Party or
its Subsidiaries to, enter into, or cause, suffer or permit to exist any
transaction, arrangement or contract with any of its other Affiliates (other
than the Loan Parties) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates; provided, that the
transactions contemplated under the Intercompany Subordinated Note shall not be
deemed violative of this Section 7.07.

 

7.08         Unconditional Purchase Obligations.  Except as set forth on Schedule 7.08
hereto, not, and not permit any other Loan Party or its Subsidiaries to, enter
into or be a party to any contract for the purchase of materials, supplies or
other property or services if such contract requires that payment be made by it
regardless of whether delivery is ever made of such materials, supplies or
other property or services.

 

7.09         Inconsistent Agreements.  Not, and not permit any other Loan Party or
its Subsidiaries to, enter into any agreement containing any provision which
would (a) be violated or breached by any borrowing by the Borrower
hereunder or by the performance by any Loan Party of any of its Obligations
hereunder or under any other Loan Document, (b) prohibit any Loan Party
from granting to the Administrative Agent and the Lenders, a Lien on any of its
assets or (c) create or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (i) pay
dividends or make other distributions to the Borrower or any other Subsidiary,
or pay any Debt owed to the Borrower or any other Subsidiary, (ii) make
loans or advances to any Loan Party or (iii) transfer any of its assets or
properties to any Loan Party, 

 

100

 

other
than (A) customary restrictions and conditions contained in agreements
relating to the sale of all or a substantial part of the assets of any
Subsidiary pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary to be sold and such sale is permitted hereunder (B) restrictions
or conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Debt and (C) customary
provisions in leases and other contracts restricting the assignment thereof.

 

7.10         Business Activities; Issuance of Equity.  Not, and not permit any other Loan Party or
its Subsidiaries to, engage in any line of business other than the businesses
engaged in on the date hereof and businesses reasonably related thereto. Not,
and not permit any other Loan Party (other than the Parent) to, issue any Capital
Securities other than any issuance by a Subsidiary to the Borrower or another
Subsidiary in accordance with Section 7.04.

 

7.11         Investments.  Not, and not permit any other Loan Party or
its Subsidiaries to, make or permit to exist any Investment in any other
Person, except the following:

 

(a)          contributions
by the Borrower to the capital of any Wholly-Owned Subsidiary, or by any
Subsidiary to the capital of any other domestic Wholly-Owned Subsidiary, so
long as the recipient of any such capital contribution has guaranteed the
Obligations and such guaranty is secured by a pledge of all of its Capital
Securities and substantially all of its real and personal property, in each
case in accordance with Section 6.10;

 

(b)         Investments
constituting Debt permitted by Section 7.01;

 

(c)          Contingent
Liabilities constituting Debt permitted by Section 7.01 or Liens
permitted by Section 7.02;

 

(d)         Cash
Equivalent Investments;

 

(e)          bank
deposits in the ordinary course of business and in connection with Cash
Management Agreements; provided that any such deposits held in accounts
which are maintained with any bank other than the Administrative Agent shall (A) be
subject to a Deposit Account Control Agreement or other similar arrangement
satisfactory to the Administrative Agent or (B) not at any time exceed
$150,000;

 

(f)          Investments
in securities of Account Debtors received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
account debtors;

 

(g)         Investments
in Foreign Subsidiaries in an aggregate amount not to exceed $500,000 at any
one time outstanding; and

 

(h)         Investments
listed on Schedule 7.11 as of the Commitment Effective Date;

 

101

 

provided that (x) any
Investment which when made complies with the requirements of the definition of
the term “Cash Equivalent Investment” may continue to be held
notwithstanding that such Investment if made thereafter would not comply with
such requirements; and (y) no Investment otherwise permitted by clause (b) or
(c) shall be permitted to be made if, immediately before or after giving
effect thereto, any Default or Event of Default exists.

 

7.12         Restriction of Amendments to Certain Documents.  Not amend or otherwise modify, or waive any
rights under, the Related Agreements if, in any case, such amendment,
modification or waiver could be adverse to the interests of the Lenders.
Without limiting the generality of the foregoing, the Borrower shall not amend
the International Paper Purchase Agreement in any manner which would accelerate
the payment of the Earn-Out Obligations and the Borrower shall not prepay the
Earn-Out Obligations.

 

7.13         Accounting Changes; Fiscal Year.  Not make any change in (a) accounting
policies or reporting practices, except as permitted  by GAAP, or (b) Fiscal Year.

 

7.14         Financial
Covenants.

 

(a)          Total
Leverage Ratio.  Not permit the Total
Leverage Ratio as of the end of any Fiscal Quarter of the Parent set forth
below to be greater than the ratio corresponding to such Fiscal Quarter:

 

	
  Calendar
  Year

  	
   

  	
  March 31

  	
   

  	
  June 30

  	
   

  	
  September 30

  	
   

  	
  December 31

  
	
  2008

  	
   

  	
  N/A

  	
   

  	
  4.00:1.00

  	
   

  	
  4.00:1.00

  	
   

  	
  3.75:1.00

  
	
  2009

  	
   

  	
  3.50:1.00

  	
   

  	
  3.50:1.00

  	
   

  	
  3.50:1.00

  	
   

  	
  3.00:1.00

  
	
  Thereafter

  	
   

  	
  3.00:1.00

  	
   

  	
  3.00:1.00

  	
   

  	
  3.00:1.00

  	
   

  	
  3.00:1.00

  

 

(b)         Fixed
Charge Coverage Ratio.  Not permit
the Fixed Charge Coverage Ratio as of the end of any Fiscal Quarter of the
Parent to be less than (i) from the Closing Date to and including the
Fiscal Quarter ending September 30, 2011, 1.10:1.00 and (ii) commencing
with the Fiscal Quarter ending December 31, 2011 and thereafter,
1.15:1.00.

 

7.15         Prepayments, Etc. of Debt.  Not prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Debt, except (a) the
prepayment of the Credit Extensions in accordance with the terms of this
Agreement, (b) regularly scheduled or required repayments or redemptions
of Debt set forth in Schedule 7.01 and refinancings and refundings of
such Debt in compliance with Section 7.01(c) and (c) with
respect to the Private Placement Notes, (i) scheduled principal
amortization payments, (ii) mandatory prepayments and (iii) so long
as no Default or Event of Default has occurred or is continuing, optional
prepayments, in each case, in accordance with the terms of this Agreement and
the Intercreditor Agreement (to the extent applicable).

 

7.16         Amendment, Etc. of Debt.  Not amend, modify or change in any manner any
term or condition of (a) any Debt set forth in Schedule 7.01,
except for (i) any refinancing, refunding, renewal or extension thereof
permitted by Section 7.01(c), (ii) in connection with
Contingent 

 

102

 

Liabilities
arising with respect to indemnification obligations, any modification or
amendment that does not increase the amount or accelerate the time of payment
of any such Debt and (iii) any other amendment or modification if,  taken as a whole, such amendment or
modification would not (w) be adverse in any material respect to the Loan
Parties, (x) shorten the final maturity or average life to maturity, (y) require
any payment to be made sooner than originally scheduled or (z) increase
the interest rate applicable thereto or (b) the Private Placement Notes or
the Private Placement Note Purchase Agreement, except to the extent permitted
under the Intercreditor Agreement (to the extent applicable) and in accordance
with Section 6.15 hereof.

 

7.17         Use of Proceeds.  Not use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of Regulation
U of the FRB) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred for such
purpose.

 

7.18         Holding Company. 
In the case of the Parent, not engage in any business or activity other
than (a) the ownership of all outstanding Capital Securities of the
Borrower, (b) maintaining its corporate existence, (c) formation and
ownership of direct or indirect Subsidiaries, (d) the issuance of Equity
Interests (subject to compliance with the applicable terms of this Agreement), (e) participating
in tax, accounting and other administrative activities as the parent of the
consolidated group of companies, including the Loan Parties (including
execution and delivery of contracts and agreements in the ordinary course of
business in connection therewith), (f) the execution and delivery of the
Loan Documents to which it is a party and the performance of its obligations
thereunder, (g) fulfilling its obligations as an issuer of publicly traded
securities and an entity subject to (i) regulation by the SEC and (ii) applicable
securities laws and NASDAQ rules, (h) acting as the lender under the
Intercompany Subordinated Note, (i) the performance of its obligations
under the applicable contracts set forth on Schedule 7.18, (j) the
performance of its obligations under the Warrants and the Underwriting
Agreement, (k) guarantees of Loan Party obligations in the ordinary course
of business and (l) activities incidental to the businesses or activities
described in clauses (a) through (k) of this Section.

 

ARTICLE VIII

 

EVENTS OF DEFAULT AND REMEDIES

 

8.01         Events of Default.  Any of the following shall constitute an
Event of Default:

 

(a)          Non-Payment of
the Loans, etc.  Default in the
payment when due of the principal of any Loan; or default, and continuance
thereof for three days, in the payment when due of any interest, fee,
reimbursement obligation with respect to any Letter of Credit or other amount
payable by the Borrower hereunder or under any other Loan Document; or

 

(b)         Non-Payment
of Other Debt.  Except for Contingent
Liabilities arising with respect to indemnification obligations of any Loan
Party or its Subsidiaries being 

 

103

 

contested in good faith by
appropriate proceedings and for which such Loan Party or such Subsidiary
maintains adequate reserves, any default shall occur under the terms applicable
to (i) Debt under the Private Placement Notes and the Private Placement
Note Purchase Agreement or (ii) any other Debt of any Loan Party or its
Subsidiaries in an aggregate amount (for all such Debt so affected and
including undrawn committed or available amounts and amounts owing to all
creditors under any combined or syndicated credit arrangement) exceeding
$5,000,000 and, in either case, such default shall (a) consist of the
failure to pay such Debt when due, whether by acceleration or otherwise, or (b) accelerate
the maturity of such Debt or permit the holder or holders thereof, or any
trustee or agent for such holder or holders, to cause such Debt to become due
and payable (or require any Loan Party or its Subsidiaries to purchase or
redeem such Debt or post cash collateral in respect thereof) prior to its
expressed maturity; or

 

(c)          Other
Material Obligations.  Default in the
payment when due, or in the performance or observance of, any material
obligation of, or condition agreed to by, any Loan Party or its Subsidiaries with
respect to any material purchase or lease of goods or services where such
default, singly or in the aggregate with all other such defaults, could
reasonably be expected to have a Material Adverse Effect; or

 

(d)         Bankruptcy,
Insolvency, etc.  Any Loan Party or
its Subsidiaries becomes insolvent or generally fails to pay, or admits in
writing its inability or refusal to pay, debts as they become due; or any Loan
Party or its Subsidiaries applies for, consents to, or the Parent acquiesces in
the appointment of a trustee, receiver or other custodian for such Person or
any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for any Loan Party or its
Subsidiaries or for a substantial part of the property of any thereof and is
not discharged within 60 days; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding, is commenced in respect of
any Loan Party or its Subsidiaries, and if such case or proceeding is not
commenced by such Person, it is consented to or acquiesced in by such Person,
or remains for 60 days undismissed; or any Loan Party or its Subsidiaries takes
any action to authorize, or in furtherance of, any of the foregoing; or

 

(e)          Non-Compliance
with Loan Documents.  (i) Failure
by any Loan Party to comply with or to perform any covenant set forth in Sections
6.03, 6.07 or 6.05 or Article VII; (ii) failure
by any Loan Party to comply with or to perform any covenant set forth in Sections
6.01(a), 6.01(b), 6.02(a), 6.02(c)(i), 6.02(d) or
6.02(e) and such default shall continue unremedied for a period of
at least 5 Business Days; or (iii) failure by any Loan Party to comply
with or to perform any other provision of this Agreement or any other Loan
Document (and not constituting an Event of Default under any other provision of
this Section 8.01) and continuance of such failure described in
this clause (iii) for 30 days after the earlier of notice to the
Administrative Agent or knowledge of such failure by a Responsible Officer of
the Borrower; or

 

104

 

(f)          Representations; Warranties.  Any representation or warranty made by any
Loan Party herein or in any other Loan Document is breached or is false or
misleading in any material respect, or any schedule, certificate, financial
statement, report, notice or other writing furnished by any Loan Party to the
Administrative Agent or any Lender in connection herewith is false or
misleading in any material respect on the date as of which the facts therein
set forth are stated or certified; or

 

(g)         Pension Plans.  (i) Any Person institutes steps to
terminate a Pension Plan if as a result of such termination the Borrower or any
member of the Controlled Group could be required to make a contribution to such
Pension Plan, or could incur a liability or obligation to such Pension Plan, in
excess of $5,000,000; (ii) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA; (iii) the Unfunded Liability exceeds twenty percent of the Total
Plan Liability, or (iv) there shall occur any withdrawal or partial
withdrawal from a Multiemployer Pension Plan and the withdrawal liability
(without unaccrued interest) to Multiemployer Pension Plans as a result of such
withdrawal (including any outstanding withdrawal liability that the Borrower or
any member of the Controlled Group have incurred on the date of such
withdrawal) exceeds $5,000,000; or

 

(h)         Judgments.  One or more judgments or orders for the
payment of money (not paid or fully covered by insurance maintained in
accordance with the requirements of this Agreement and as to which the relevant
insurance company has acknowledged coverage) aggregating in excess of
$5,000,000 shall be rendered against any or all Loan Parties and their
Subsidiaries and either (a) enforcement proceedings shall have been
commenced by any creditor upon any such judgments or orders or (b) there
shall be any period of thirty (30) consecutive days during which a stay of
enforcement of any such judgments or orders, by reason of a pending appeal,
bond or otherwise, shall not be in effect; or

 

(i)           Invalidity
of Loan Documents.  Any material
provision of any Loan Document, at any time after its execution and delivery
and for any reason other than as expressly permitted hereunder or satisfaction
in full of all the Obligations, ceases to be in full force and effect; or any
Loan Party or any other Person contests in any manner the validity or
enforceability of any provision of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any provision of any Loan Document; or
the Collateral Agent shall not have or shall cease to have a valid and
perfected first priority Lien in any material part of the Collateral purported
to be covered by the Collateral Documents; or

 

(j)           Invalidity of Subordination
Provisions, etc.  Any subordination
provision in the Intercompany Subordination Agreement shall cease to be in full
force and effect, or any Loan Party shall contest in any manner the validity,
binding nature or enforceability of any such provision; or

 

(k)          Change of Control.  A Change of Control shall occur.

 

105

 

8.02         Remedies Upon Event of Default.  If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, (i) in connection with clause (a) below following the
Commitment Effective Date, the Required Revolving Lenders and (ii) otherwise,
the Required Lenders, take any or all of the following actions:

 

(a)          declare the commitment of each Lender
to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions to be terminated, whereupon such commitments and obligation shall be
terminated;

 

(b)         declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;

 

(c)          require that the Borrower Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and

 

(d)         exercise on behalf of itself, the
Lenders and the L/C Issuer all rights and remedies available to it, the Lenders
and the L/C Issuer under the Loan Documents;

 

provided,
however, that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Bankruptcy Code of the United
States, the obligation of each Lender to make Loans and any obligation of the
L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further
act of the Administrative Agent or any Lender.

 

8.03         Application of Funds.  After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become
immediately due and payable and the L/C Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 8.02),
any amounts received on account of the Obligations shall be applied by the
Administrative Agent in the following order:

 

First, to payment of that portion
of the Obligations constituting fees, indemnities, expenses and other amounts
(including fees, charges and disbursements of counsel to the Administrative
Agent and amounts payable under Article III) payable to the Administrative
Agent in its capacity as such;

 

Second, to payment of that portion
of the Obligations constituting fees, indemnities and other amounts (other than
principal, interest and Letter of Credit Fees) payable to the Lenders and the
L/C Issuer (including fees, charges and disbursements of 

 

106

 

counsel
to the respective Lenders and the L/C Issuer and amounts payable under Article III),
ratably among them in proportion to the respective amounts described in this
clause Second payable to them;

 

Third, to payment of that portion
of the Obligations constituting accrued and unpaid Letter of Credit Fees and
interest on the Loans and L/C Borrowings and fees, premiums and scheduled
periodic payments, and any interest accrued thereon, due under any Swap
Contract between any Loan Party and any Lender, or any Affiliate of a Lender,
to the extent such Swap Contract is permitted by Section 7.01(e),
ratably among the Lenders (and, in the case of such Swap Contracts, Hedge
Banks) and the L/C Issuer in proportion to the respective amounts described in
this clause Third held by them;

 

Fourth, to (a) payment of
that portion of the Obligations constituting unpaid principal of the Loans and
L/C Borrowings, (b) payment of breakage, termination or other payments,
and any interest accrued thereon, due under any Swap Contract between any Loan
Party and any Lender, or any Hedge Bank, to the extent such Swap Contract is
permitted by Section 8.03(d), (c) payments of amounts due
under any Cash Management Agreement between any Loan Party and any Lender, or
any Hedge Bank and (d) Cash Collateralize that portion of L/C Obligations
comprised of the aggregate undrawn amount of Letters of Credit, ratably among
the Lenders (and, in the case of such Swap Contracts, Hedge Banks) and the L/C
Issuer in proportion to the respective amounts described in this clause Fourth
held by them; and

 

Last, the balance, if any, after
all of the Obligations have been indefeasibly paid in full, to the Borrower or
as otherwise required by Law.

 

Subject
to Section 2.03(c), amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above
shall be applied to satisfy drawings under such Letters of Credit as they
occur.  If any amount remains on deposit
as Cash Collateral after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Obligations, if
any, in the order set forth above.

 

ARTICLE IX

 

ADMINISTRATIVE
AGENT

 

9.01         Appointment
and Authority.

 

(a)          Each of the Lenders and the L/C Issuer
hereby irrevocably appoints Bank of America to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto.  The provisions of
this Article are solely for the benefit of the 

 

107

 

Administrative
Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as
a third party beneficiary of any of such provisions.

 

(b)         The
Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the
Lenders (in its capacities as a Lender, Swing Line Lender (if applicable),
potential Hedge Bank and potential Cash Management Bank) and the L/C Issuer
hereby irrevocably appoints and authorizes the Administrative Agent to act as
the agent of such Lender and the L/C Issuer for purposes of acquiring, holding
and enforcing any and all Liens on Collateral granted by any of the Loan
Parties to secure any of the Obligations, together with such powers and
discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent,
as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact
appointed by the Administrative Agent pursuant to Section 9.05 for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents, or for exercising any rights
and remedies thereunder at the direction of the Administrative Agent), shall be
entitled to the benefits of all provisions of this Article IX and Article XI
(including Section 11.04(c), as though such co-agents, sub-agents
and attorneys-in-fact were the “collateral agent” under the Loan Documents) as
if set forth in full herein with respect thereto.

 

9.02         Rights as a Lender.  The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the
Person serving as the Administrative Agent hereunder in its individual
capacity.  Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
any Loan Party or any Subsidiary or other Affiliate thereof as if such Person
were not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.

 

9.03         Exculpatory Provisions.  The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents.  Without limiting the
generality of the foregoing, the Administrative Agent:

 

(a)          shall
not be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing;

 

(b)         shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative
Agent is required to exercise as directed in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable law; and

 

108

 

(c)          shall
not, except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to any Loan Party or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

 

The
Administrative Agent shall not be liable for any action taken or not taken by
it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 11.01 and 8.02) or (ii) in
the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until notice describing such
Default is given to the Administrative Agent by the Borrower, a Lender or the
L/C Issuer.

 

The
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document, or the
creation, perfection or priority of any Lien purported to be created by the
Collateral Documents, (v) the value or the sufficiency of any Collateral,
or (v) the satisfaction of any condition set forth in Article IV
or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.

 

9.04         Reliance by Administrative Agent.  The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with
any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
the L/C Issuer, the Administrative Agent may presume that such condition is
satisfactory to such Lender or the L/C Issuer unless the Administrative Agent
shall have received notice to the contrary from such Lender or the L/C Issuer
prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with
legal counsel (who may be counsel for the Loan Parties), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

9.05         Delegation of Duties.  The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative

 

109

 

Agent
and any such sub-agent may perform any and all of its duties and exercise its
rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Administrative
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

9.06         Resignation of Administrative Agent.  The Administrative Agent may at any time give
notice of its resignation to the Lenders, the L/C Issuer and the Borrower.  Upon receipt of any such notice of resignation,
the Required Lenders shall have the right, in consultation with the Borrower,
to appoint a successor, which shall be a bank with an office in the United
States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the Lenders
and the L/C Issuer, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if the Administrative
Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (a) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Secured
Lender Parties or the L/C Issuer under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such
time as a successor Administrative Agent is appointed) and (b) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and
the L/C Issuer directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided
above in this Section).  The fees payable
by the Borrower to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and
such successor.  After the retiring
Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 11.04
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.

 

Any
resignation by Bank of America as Administrative Agent pursuant to this Section shall
also constitute its resignation as L/C Issuer and Swing Line Lender.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (i) such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring L/C Issuer and Swing Line Lender, (ii) the retiring
L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (iii) the successor L/C Issuer shall issue letters of credit in
substitution for the 

 

110

 

Letters
of Credit, if any, outstanding at the time of such succession or make other
arrangements satisfactory to the retiring L/C Issuer to effectively assume the
obligations of the retiring L/C Issuer with respect to such Letters of Credit.

 

9.07         Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender or any of their Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender and the L/C Issuer also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder.

 

9.08         No Other Duties, Etc.  Anything herein to the contrary
notwithstanding, none of the Bookrunners or Arrangers listed on the cover page hereof
shall have any powers, duties or responsibilities under this Agreement or any
of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the L/C Issuer hereunder.

 

9.09         Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any
Loan Party, the Administrative Agent (irrespective of whether the principal of
any Loan or L/C Obligation shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether the Administrative
Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise

 

(a)          to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the L/C Issuer and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative
Agent and their respective agents and counsel and all other amounts due the
Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(i) and
(j), 2.09 and 11.04) allowed in such judicial proceeding;
and

 

(b)         to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender and the L/C Issuer to make such payments to the Administrative Agent
and, if the Administrative Agent shall consent to the making of such payments
directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent
any amount due for the reasonable compensation, expenses, disbursements and
advances 

 

111

 

of
the Administrative Agent and its agents and counsel, and any other amounts due
the Administrative Agent under Sections 2.09 and 11.04.

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender or the L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or the L/C Issuer to
authorize the Administrative Agent to vote in respect of the claim of any
Lender or the L/C Issuer or in any such proceeding.

 

9.10         Collateral and Guaranty Matters.  The Lenders and the L/C Issuer irrevocably
authorize the Administrative Agent or the Collateral Agent, as applicable,

 

(a)          to
release any Lien on any property granted to or held by the Administrative Agent
or the Collateral Agent, as applicable, under any Loan Document (i) upon
termination of the Aggregate Commitments and payment in full of all Obligations
(other than contingent indemnification obligations) and the expiration or
termination of all Letters of Credit (other than Letters of Credit as to which
other arrangements satisfactory to the Administrative Agent and the L/C Issuer
shall have been made), (ii) that is sold or to be sold as part of or in
connection with any sale permitted hereunder or under any other Loan Document,
or (iii)  if approved, authorized or ratified in writing in accordance
with Section 11.01;

 

(b)         to
release any Guarantor from its obligations under the Guaranty if such Person
ceases to be a Subsidiary as a result of a transaction permitted hereunder; and

 

(c)          to
subordinate any Lien on any property granted to or held by the Administrative
Agent or the Collateral Agent, as applicable, under any Loan Document to the
holder of any Lien on such property that is permitted by Section 7.02(i).

 

Upon
request by the Administrative Agent or Collateral Agent, as applicable, at any
time, the Required Lenders will confirm in writing the Administrative Agent’s
or Collateral Agent’s, as applicable, authority to release or subordinate its
interest in particular types or items of property, or to release any Guarantor
from its obligations under the Guaranty pursuant to this Section 9.10.  In each case as specified in this Section 9.10,
the Administrative Agent or the Collateral Agent, as applicable, will, at the
Borrower’s expense, execute and deliver to the applicable Loan Party such
documents as such Loan Party may reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted under
the Collateral Documents or to subordinate its interest in such item, or to
release such Guarantor from its obligations under the Guaranty, in each case in
accordance with the terms of the Loan Documents and this Section 9.10.

 

9.11         Secured Cash Management Agreements and Secured Hedge
Agreements.  No Cash
Management Bank or Hedge Bank that obtains the benefits of Section 8.03,
any Guaranty or any Collateral by virtue of the provisions hereof or any
Collateral by virtue of the provisions hereof or of any Collateral Document
shall have any right to notice of any action or to consent to, direct or object
to any action hereunder or under any other Loan Document or otherwise in 

 

112

 

respect
of the Collateral (including the release or impairment of any Collateral) other
than in its capacity as a Lender and, in such case, only to the extent
expressly provided in the Loan Documents. 
Notwithstanding any other provision of this Article IX to the
contrary, the Administrative Agent shall not be required to verify the payment
of, or that other satisfactory arrangements have been made with respect to,
Obligations arising under Secured Cash Management Agreements and Secured Hedge
Agreements unless the Administrative Agent has received written notice of such
Obligations, together with such supporting documentation as the Administrative
Agent may request, from the applicable Cash Management Bank or Hedge Bank, as
the case may be.

 

9.12         Lenders’ Enforcement Rights. 
Anything contained in any of the Loan Documents to the contrary
notwithstanding, Borrower, Administrative Agent and each Secured Lender Party
hereby agree that (i) no Secured Lender Party shall have any right
individually to realize upon any of the Collateral or to enforce the Guaranty,
it being understood and agreed that all powers, rights and remedies hereunder
and under the Collateral Documents may be exercised solely by Administrative
Agent or the Collateral Agent, as applicable, on behalf of the Secured Lender
Parties in accordance with the terms hereof and thereof and (ii) in the
event of a foreclosure by the Administrative Agent or the Collateral Agent, as
applicable, on any of the Collateral pursuant to a public or private sale or
other disposition, the Administrative Agent or the Collateral Agent, as
applicable, or any Lender may be the purchaser or licensor of any or all of
such Collateral at any such sale or other disposition and the Administrative
Agent or the Collateral Agent, as applicable, as agent for and representative
of Secured Lender Parties (but not any Lender or Lenders in its or their respective
individual capacities unless Required Lenders shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any Collateral payable by the Administrative
Agent or the Collateral Agent, as applicable, at such sale or other
disposition.

 

ARTICLE X

 

GUARANTY

 

10.01       The Guaranty.  Each of the Guarantors hereby jointly and
severally guarantees to each Lender, Hedge Bank, Cash Management Bank and the
Administrative Agent as hereinafter provided, as primary obligor and not as
surety, the prompt payment of the Obligations in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) strictly in accordance with the terms
thereof.  The Guarantors hereby further
agree that if any of the Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.

 

113

 

Notwithstanding
any provision to the contrary contained herein or in any other of the Loan
Documents, Swap Contracts or Cash Management Agreements, the obligations of
each Guarantor under this Agreement and the other Loan Documents shall not
exceed an aggregate amount equal to the largest amount that would not render
such obligations subject to avoidance under applicable Debtor Relief Laws.

 

10.02       Obligations Unconditional.  The obligations of the Guarantors under Section 10.01
are joint and several, absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Loan
Documents, Swap Contracts or Cash Management Agreements, or any other agreement
or instrument referred to therein, or any substitution, release, impairment or
exchange of any other guarantee of or security for any of the Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this Section 10.02
that the obligations of the Guarantors hereunder shall be absolute and
unconditional under any and all circumstances. 
Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor for amounts paid under this Article X until
such time as the Obligations have been paid in full and the Commitments have
expired or terminated.  Without limiting
the generality of the foregoing, it is agreed that, to the fullest extent
permitted by law, the occurrence of any one or more of the following shall not
alter or impair the liability of any Guarantor hereunder, which shall remain
absolute and unconditional as described above:

 

(a)          at any time or from time to time,
without notice to any Guarantor, the time for any performance of or compliance
with any of the Obligations shall be extended, or such performance or
compliance shall be waived;

 

(b)         any of the acts mentioned in any of the
provisions of any of the Loan Documents, any Swap Contract or Cash Management
Agreement between any Loan Party and any Lender, or any Affiliate of a Lender,
or any other agreement or instrument referred to in the Loan Documents, such
Swap Contracts or such Cash Management Agreements shall be done or omitted;

 

(c)          the maturity of any of the Obligations
shall be accelerated, or any of the Obligations shall be modified, supplemented
or amended in any respect, or any right under any of the Loan Documents, any
Swap Contract or Cash Management Agreement between any Loan Party and any Lender,
or any Affiliate of a Lender, or any other agreement or instrument referred to
in the Loan Documents, such Swap Contracts or such Cash Management Agreements
shall be waived or any other guarantee of any of the Obligations or any
security therefor shall be released, impaired or exchanged in whole or in part
or otherwise dealt with;

 

(d)         any Lien granted to, or in favor of,
the Administrative Agent or any Lender or Lenders as security for any of the
Obligations shall fail to attach or be perfected; or

 

114

 

(e)           any of the Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any Person (including,
without limitation, any creditor of any Guarantor).

 

With
respect to its obligations hereunder, each Guarantor hereby expressly waives
diligence, presentment, demand of payment, protest and all notices whatsoever,
and any requirement that the Administrative Agent or any Lender exhaust any
right, power or remedy or proceed against any Person under any of the Loan
Documents, any Swap Contract or any Cash Management Agreement between any Loan
Party and any Lender, or any Affiliate of a Lender, or any other agreement or
instrument referred to in the Loan Documents, such Swap Contracts or such Cash
Management Agreements, or against any other Person under any other guarantee
of, or security for, any of the Obligations.

 

10.03       Reinstatement.  The obligations of the Guarantors under this Article X
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Obligations is
rescinded or must be otherwise restored by any holder of any of the
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, the fees, charges and disbursements of
counsel) incurred by the Administrative Agent or such Lender in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.

 

10.04       Certain Additional Waivers.  Each Guarantor agrees that such Guarantor
shall have no right of recourse to security for the Obligations, except through
the exercise of rights of subrogation pursuant to Section 10.02 and
through the exercise of rights of contribution pursuant to Section 10.06.

 

10.05       Remedies.  The Guarantors agree that, to the fullest
extent permitted by law, as between the Guarantors, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, the Obligations may be
declared to be forthwith due and payable as provided in Section 9.02
(and shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 9.02) for purposes of Section 10.01
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of such declaration
(or the Obligations being deemed to have become automatically due and payable),
the Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by the Guarantors for purposes of Section 10.01.  The Guarantors acknowledge and agree that
their obligations hereunder are secured in accordance with the terms of the
Collateral Documents and that the Lenders may exercise their remedies
thereunder in accordance with the terms thereof.

 

10.06       Rights of Contribution.  The Guarantors agree among themselves that,
in connection with payments made hereunder, each Guarantor shall have
contribution rights against the other Guarantors as permitted under applicable
law.  Such contribution rights shall be

 

115

 

subordinate
and subject in right of payment to the obligations of such Guarantors under the
Loan Documents and no Guarantor shall exercise such rights of contribution
until all Obligations have been paid in full and the Commitments have
terminated.

 

10.07       Guarantee of Payment; Continuing Guarantee.  The guarantee in this Article X
is a guaranty of payment and not of collection, is a continuing guarantee, and
shall apply to all Obligations whenever arising.

 

ARTICLE XI

 

MISCELLANENOUS

 

11.01       Amendments, Etc.  No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however,
that no such amendment, waiver or consent shall:

 

(a)           waive any condition set forth in Section 4.01,
4.02 (other than Section 4.02(b)(i)(A) or 4.02(b)(ii)),
or, in the case of the initial Credit Extension, Section 4.03,
without the written consent of each Lender;

 

(b)           extend or increase the Commitment of
any Lender (or reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender;

 

(c)           postpone any date fixed by this Agreement
or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or
any of them) hereunder or under such other Loan Document without the written
consent of each Lender entitled to such payment;

 

(d)           reduce the principal of, or the rate
of interest specified herein on, any Loan or L/C Borrowing, or (subject to
clause (iv) of the proviso to this Section 11.01) any fees or other
amounts payable hereunder or under any other Loan Document without the written
consent of each Lender entitled to such amount; provided, however,
that only the consent of the Required Lenders shall be necessary (i) to amend
the definition of “Default Rate” or to waive any obligation of the Borrower to
pay interest or Letter of Credit Fees at the Default Rate or (ii) to amend any financial covenant
hereunder (or any defined term used therein) even if the effect of such
amendment would be to reduce the rate of interest on any Loan or L/C Borrowing
or to reduce any fee payable hereunder;

 

(e)           change (i) Section 8.02
in a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender or (ii) Section

 

116

 

2.06(c) in
a manner that would alter the pro rata sharing of Commitment reductions without
the consent of each Lender with a Revolving Credit Commitment or (iii) the
order of application of any reduction in the Commitments or any prepayment of
Loans among the Facilities from the application thereof set forth in the
applicable provisions of Section 2.05(b) or 2.06(b),
respectively, in any manner that materially and adversely affects the Lenders
under a Facility without the written consent of (i) if such Facility is
the Term A Loan, the Required Term A Loan Lenders, (ii) if such Facility
is the Term B Loan, the Required Term B Loan Lenders and (iii)  if such
Facility is the Revolving Credit Facility, the Required Revolving Lenders;

 

(f)            change (i) any provision of this
Section 11.01 or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
amend, waive or otherwise modify any rights hereunder or make any determination
or grant any consent hereunder (other than the definitions specified in clause (ii) of
this Section 11.01(f)), without the written consent of each Lender
or (ii) the definition of “Required Revolving Lenders,” “Required Term A
Loan Lenders” or “Required Term B Loan Lenders” without the written consent of
each Lender under the applicable Facility;

 

(g)           release all or substantially all of
the Collateral in any transaction or series of related transactions, without
the written consent of each Lender;

 

(h)           release all or substantially all of
the value of the Guaranty, without the written consent of each Lender, except
to the extent the release of any Subsidiary from the Guaranty is permitted
pursuant to Section 9.10 (in which case such release may be made by
the Administrative Agent acting alone);

 

(i)            impose any greater restriction on
the ability of any Lender under a given Facility to assign any of its rights or
obligations hereunder without the written consent of (i) if such Facility
is the Term A Loan, the Required Term A Loan Lenders, (ii) if such
Facility is the Term B Loan, the Required Term B Loan Lenders and (ii) if
such Facility is the Revolving Credit Facility, the Required Revolving Lenders;
or

 

(j)            prior to the termination of the Revolving Credit
Commitments, unless also signed by Lenders (other than Defaulting Lenders)
holding in the aggregate at least a majority of the Revolving Credit
Commitments, (i) waive any Default for purposes of Section 4.03(b),
(ii) amend, change, waive, discharge or terminate Sections 4.03
or 8.01 in a manner adverse to such Lenders or (iii) amend, change,
waive, discharge or terminate this Section 11.01(j);

 

and
provided, further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the L/C Issuer in addition to the
Lenders required above, affect the rights or duties of the L/C Issuer under
this Agreement or any Issuer Document relating to any Letter of Credit issued
or to be issued by it; (ii) no amendment, waiver or consent shall, unless
in writing and signed by the Swing Line Lender in addition to the Lenders
required above, affect the rights or duties of the Swing Line Lender under this
Agreement; (iii) no amendment, waiver or consent

 

117

 

shall,
unless in writing and signed by the Administrative Agent in addition to the
Lenders required above, affect the rights or duties of the Administrative Agent
under this Agreement or any other Loan Document; and (iv) the Fee Letter
and the L/C Side Letter may be amended, or rights or privileges thereunder
waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender.

 

If
any Lender does not consent to a proposed amendment, waiver, consent or release
with respect to any Loan Document that requires the consent of each Lender and
that has been approved by the Required Lenders, the Borrower may replace such
non-consenting Lender in accordance with Section 11.13; provided
that such amendment, waiver, consent or release can be effected as a result of
the assignment contemplated by such Section (together with all other such
assignments required by the Borrower to be made pursuant to this paragraph).

 

Notwithstanding the foregoing, (A) any
provision of this Agreement may be amended by an agreement in writing entered
into by the Loan Parties and the Administrative Agent with the express consent
of the Required Lenders (calculated after giving effect to the Commitment
terminations and repayments that will result from the effectiveness of such
amendment) and, if its rights or obligations are affected thereby, the L/C
Issuer if (i) by the terms of such agreement the Revolving Credit
Commitment of each Lender not consenting to the amendment provided for therein
shall terminate upon the effectiveness of such amendment and (ii) at the
time such amendment becomes effective, each Lender not consenting thereto
receives payment in full of the principal of and interest accrued on each Loan
made by it and all other amounts owing to it or accrued for its account under
this Agreement, and (B) any waiver, amendment or modification of this
Agreement that by its terms affects the rights or duties under this Agreement
of the Lenders under one or more tranches but not under any other tranche may
be effected by an agreement or agreements in writing entered into by the
Borrower and the requisite percentage in interest of the affected tranche or
tranches of Lenders that would be required to consent thereto under this Section 11.01
if such tranche or tranches of Lenders were the only tranche or tranches of
Lenders hereunder at the time.

 

For the avoidance of doubt and notwithstanding any
provision to the contrary contained in this Section 11.01, this
Agreement may be amended (or amended and restated) with the written consent of
the Loan Parties and the Required Lenders (i) to increase the aggregate
Revolving Credit Commitments of the Lenders, (ii) to add one or more
additional borrowing tranches to this Agreement and to provide for the ratable
sharing of the benefits of this Agreement and the other Loan Documents with the
other then outstanding Obligations in respect of the extensions of credit from
time to time outstanding under such additional borrowing tranche(s) and
the accrued interest and fees in respect thereof and (iii) to include
appropriately the lenders under such additional borrowing tranches in any
determination of the Required Lenders and/or to provide consent rights to such
lenders under subsections (ii), (ii) and/or (iv) of Section 11.01(a) corresponding
to the consent rights of the other Lenders thereunder.

 

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11.02       Notices; Effectiveness;
Electronic Communications.

 

(a)           Notices Generally. 
Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in subsection (b) below),
all notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier as follows, and all notices
and other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:

 

(i)            if to any Loan Party, the
Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 11.02; and

 

(ii)           if to any other Lender, to the
address, telecopier number, electronic mail address or telephone number
specified in its Administrative Questionnaire.

 

Notices
sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient).  Notices delivered through
electronic communications to the extent provided in subsection (b) below
shall be effective as provided in such subsection (b).

 

(b)           Electronic Communications.  Notices and other communications to the
Lenders and the L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or the L/C Issuer
pursuant to Article II if such Lender or the L/C Issuer, as
applicable, has notified the Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.

 

Unless
the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening
of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

119

 

(c)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR
OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER
MATERIALS OR THE PLATFORM.  In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to the Borrower, any Lender, the L/C
Issuer or any other Person for losses, claims, damages, liabilities or expenses
of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s
or the Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities
or expenses are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to the Borrower, any Lender, the
L/C Issuer or any other Person for indirect, special, incidental, consequential
or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc.  Each of the Borrower, the Administrative
Agent, the L/C Issuer and the Swing Line Lender may change its address,
telecopier or telephone number for notices and other communications hereunder
by notice to the other parties hereto. 
Each other Lender may change its address, telecopier or telephone number
for notices and other communications hereunder by notice to the Borrower, the
Administrative Agent, the L/C Issuer and the Swing Line Lender.  In addition, each Lender agrees to notify the
Administrative Agent from time to time to ensure that the Administrative Agent
has on record (i) an effective address, contact name, telephone number,
telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such
Lender.  Furthermore, each Public Lender
agrees to cause at least one individual at or on behalf of such Public Lender
to at all times have selected the “Private Side Information” or similar
designation on the content declaration screen of the Platform in order to
enable such Public Lender or its delegate, in accordance with such Public
Lender’s compliance procedures and applicable Law, including United States
Federal and state securities Laws, to make reference to Borrower Materials that
are not made available through the “Public Side Information” portion of the
Platform and that may contain material non-public information with respect to
the Borrower or its securities for purposes of United States Federal or state
securities laws.

 

(e)           Reliance by Administrative Agent,
L/C Issuer and Lenders.  The
Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely
and act upon any notices (including telephonic Committed Loan Notices and Swing
Line Loan 

 

120

 

Notices) purportedly given by or on behalf of any Loan
Party even if (i) such notices were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof.  The Loan Parties shall indemnify the Administrative
Agent, the L/C Issuer, each Lender and the Related Parties of each of them from
all losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of a Loan Party.  All telephonic notices to and other
telephonic communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

11.03       No Waiver; Cumulative Remedies.  No failure by any Lender, the L/C Issuer or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.  The rights, remedies,
powers and privileges herein provided, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

 

Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
authority to enforce rights and remedies hereunder and under the other Loan
Documents against the Loan Parties or any of them shall be vested exclusively
in, and all actions and proceedings at law in connection with such enforcement
shall be instituted and maintained exclusively by, the Administrative Agent in
accordance with Section 8.02 for the benefit of all the Lenders and
the L/C Issuer; provided, however, that the foregoing shall not
prohibit (a) the Administrative Agent from exercising on its own behalf
the rights and remedies that inure to its benefit (solely in its capacity as
Administrative Agent) hereunder and under the other Loan Documents, (b) the
L/C Issuer or the Swing Line Lender from exercising the rights and remedies
that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line
Lender, as the case may be) hereunder and under the other Loan Documents, (c) any
Lender from exercising setoff rights in accordance with Section 11.08
(subject to the terms of Section 2.13), or (d) any Lender from
filing proofs of claim or appearing and filing pleadings on its own behalf
during the pendency of a proceeding relative to any Loan Party under any Debtor
Relief Law; and provided, further, that if at any time there is
no Person acting as Administrative Agent hereunder and under the other Loan
Documents, then (i) the Required Lenders shall have the rights otherwise
ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in
addition to the matters set forth in clauses (b), (c) and (d) of the
preceding proviso and subject to Section 2.13, any Lender may, with
the consent of the Required Lenders, enforce any rights and remedies available
to it and as authorized by the Required Lenders

 

11.04       Expenses; Indemnity; Damage
Waiver.

 

(a)           Costs and Expenses. 
The Loan Parties shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in

 

121

 

connection
with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the L/C Issuer in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all out-of-pocket expenses incurred by
the Administrative Agent, any Lender or the L/C Issuer (including the fees,
charges and disbursements of any counsel for the Administrative Agent, any
Lender or the L/C Issuer), and shall pay all fees and time charges for
attorneys who may be employees of the Administrative Agent, any Lender or the
L/C Issuer, in connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section, or (B) in connection with Loans made or Letters
of Credit issued hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans or
Letters of Credit.

 

(b)           Indemnification by the Loan Parties.  The Loan Parties shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and the L/C
Issuer, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the fees, charges and disbursements of any counsel for any
Indemnitee), and shall indemnify and hold harmless each Indemnitee from all
fees and time charges and disbursements for attorneys who may be employees of
any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by any Loan Party arising out of, in connection with, or
as a result of (i) the execution or delivery of this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby or thereby,
the performance by the parties hereto of their respective obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Administrative Agent (and any sub-agent
thereof) and its Related Parties only, the administration of this Agreement and
the other Loan Documents (including in respect of any matters addressed in Section 3.01),
(ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the L/C Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous
Substances on or from any property owned or operated by a Loan Party or any of
its Subsidiaries, or any Environmental Liability related in any way to a Loan
Party or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by any Loan Party, and regardless of whether any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Indemnitee or (y) result from a

 

122

 

claim
brought by any Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if such
Loan Party has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that the Loan Parties for any
reason fail to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to be paid by them to the Administrative Agent (or any
sub-agent thereof), the L/C Issuer or any Related Party of any of the
foregoing, but without affecting the payment obligation of the Loan Parties
with respect thereto, each Lender severally agrees to pay to the Administrative
Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the
case may be, such Lender’s Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount, provided that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent (or any such
sub-agent) or the L/C Issuer in its capacity as such, or against any Related
Party of any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or L/C Issuer in connection with such capacity.  The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.12(d).

 

(d)           Waiver of Consequential Damages,
Etc.  To the fullest extent permitted
by applicable law, no Loan Party shall assert, and each Loan Party hereby
waives, any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or
the use of the proceeds thereof.  No
Indemnitee referred to in subsection (b) above shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

 

(e)           Payments.  All amounts due under this Section shall
be payable not later than ten Business Days after demand therefor.

 

(f)            Survival.  The agreements in this Section shall
survive the resignation of the Administrative Agent, the L/C Issuer and the
Swing Line Lender, the replacement of any Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all the other
Obligations.

 

11.05       Payments Set Aside.  To the extent that any payment by or on
behalf of any Loan Party is made to the Administrative Agent, the L/C Issuer or
any Lender, or the Administrative

 

123

 

Agent,
the L/C Issuer or any Lender exercises its right of setoff, and such payment or
the proceeds of such setoff or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Administrative Agent, the L/C
Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Law
or otherwise, then (a) to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such setoff
had not occurred, and (b) each Lender and the L/C Issuer severally agrees
to pay to the Administrative Agent upon demand its applicable share (without
duplication) of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to the Federal Funds Rate from time
to time in effect.  The obligations of
the Lenders and the L/C Issuer under clause (b) of the preceding sentence
shall survive the payment in full of the Obligations and the termination of
this Agreement.

 

11.06       Successors and Assigns.

 

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither the
Borrower nor any other Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of Section 11.06(b), (ii) by
way of participation in accordance with the provisions of Section 11.06(d),
or (iii) by way of pledge or assignment of a security interest subject to
the restrictions of Section 11.06(f) (and any other attempted
assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment(s) and the Loans
(including for purposes of this Section 11.06(b), participations in
L/C Obligations and in Swing Line Loans) at the time owing to it); provided
that any such assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts.

 

(A)          in the case of an
assignment of the entire remaining amount of the assigning Lender’s Commitment
under any Facility and the Loans at the time owing to it under such Facility or
in the case of an assignment

 

124

 

to a Lender, an Affiliate of a Lender or an
Approved Fund, no minimum amount need be assigned; and

 

(B)           in any case not
described in subsection (b)(i)(A) of this Section, the aggregate amount of
the Commitment (which for this purpose includes Loans outstanding thereunder)
or, if the Commitment is not then in effect, the principal outstanding balance
of the Loans of the assigning Lender subject to each such assignment,
determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date, shall not be
less than $5,000,000, in the case
of any assignment in respect of the Revolving Credit Facility, or $1,000,000,
in the case of any assignment in respect of a Term Loan, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that
concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount has
been met;

 

(ii)           Proportionate Amounts.  Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not (A) apply to the
Swing Line Lender’s rights and obligations in respect of Swing Line Loans or (B) prohibit
any Lender from assigning all or a portion of its rights and obligations among
separate Facilities on a non-pro rata basis;

 

(iii)          Required Consents.  No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of this Section and,
in addition:

 

(A)          the consent of
the Borrower (such consent not to be unreasonably withheld or delayed) shall be
required unless (1) an Event of Default has occurred and is continuing at
the time of such assignment or (2) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund;

 

(B)           the consent of the Administrative Agent (such
consent not to be unreasonably withheld or delayed) shall be required for
assignments in respect of (1) any Term Loan Commitment or Revolving Credit
Commitment if such assignment is to a Person that is not a Lender with a
Commitment in respect of the applicable Facility, an Affiliate of such Lender
or an Approved Fund with respect to such Lender or (2) a Term

 

125

 

Loan to a Person that is not a Lender, an
Affiliate of a Lender or an Approved Fund;

 

(C)           the consent of the L/C Issuer (such consent not to
be unreasonably withheld or delayed) shall be required for any assignment that
increases the obligation of the assignee to participate in exposure under one
or more Letters of Credit (whether or not then outstanding); and

 

(D)          the consent of
the Swing Line Lender (such consent not to be unreasonably withheld or delayed)
shall be required for any assignment in respect of the Revolving Credit
Facility.

 

(iv)          Assignment and Assumption.  The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee in the amount of $3,500; provided,
however, that the Administrative Agent may, in its sole discretion,
elect to waive such processing and recordation fee in the case of any
assignment.  The assignee, if it is not a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

 

(v)           No Assignment to Borrower.  No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.

 

(vi)          No Assignment to Natural
Persons.  No such assignment shall be
made to a natural person.

 

Subject
to acceptance and recording thereof by the Administrative Agent pursuant to
subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 3.01, 3.04, 3.05 and 11.04
with respect to facts and circumstances occurring prior to the effective date
of such assignment.  Upon request, the
Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender.  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
Section 11.06(d).

 

(c)           Register.  The Administrative Agent,
acting solely for this purpose as an agent of the Borrower, shall maintain at
the Administrative Agent’s Office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amounts of 

 

126

 

the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.  The Administrative Agent shall
use commercially reasonable efforts to record as promptly as practicable each
Assignment and Assumption received in accordance with the terms of this Section 11.06.

 

(d)           Participations.  Any Lender may at any time,
without the consent of, or notice to, the Borrower or the Administrative Agent,
sell participations to any Person (other than a natural person or the Borrower
or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under
this Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations and/or Swing Line
Loans) owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Borrower, the Administrative Agent, the Lenders
and the L/C Issuer shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 11.01 that
affects such Participant.  Subject to subsection
(e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to Section 11.06(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.08  as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13 as though it were
a Lender.

 

(e)           Limitations
upon Participant Rights.  A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04  than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.01(e) as
though it were a Lender.

 

(f)            Certain
Pledges.  Any Lender
may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement (including under its Note, if any) to secure
obligations of such Lender, including any pledge or assignment to secure

 

127

 

obligations to a Federal Reserve Bank; provided that
no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

(g)           [Reserved].

 

(h)           Resignation as L/C Issuer or Swing Line Lender after
Assignment. 
Notwithstanding anything to the contrary contained herein, if at any
time Bank of America assigns all of its Revolving Credit Commitment and
Revolving Credit Loans pursuant to Section 11.06(b), Bank of
America may, (i) upon 30 days’ notice to the Borrower and the Lenders,
resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower,
resign as Swing Line Lender.  In the
event of any such resignation as L/C Issuer or Swing Line Lender, the Borrower
shall be entitled to appoint from among the Lenders a successor L/C Issuer or
Swing Line Lender hereunder; provided, however, that no failure
by the Borrower to appoint any such successor shall affect the resignation of
Bank of America as L/C Issuer or Swing Line Lender, as the case may be.  If Bank of America resigns as L/C Issuer, it
shall retain all the rights, powers, privileges and duties of the L/C Issuer
hereunder with respect to all Letters of Credit outstanding as of the effective
date of its resignation as L/C Issuer and all L/C Obligations with respect
thereto (including the right to require the Lenders to make Base Rate Loans or
fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of the Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and outstanding as of the
effective date of such resignation, including the right to require the Lenders
to make Base Rate Loans or fund risk participations in outstanding Swing Line
Loans pursuant to Section 2.04(c). 
Upon the appointment of a successor L/C Issuer and/or Swing Line Lender,
(a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line
Lender, as the case may be, and (b) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any, outstanding
at the time of such succession or make other arrangements satisfactory to Bank
of America to effectively assume the obligations of Bank of America with
respect to such Letters of Credit.

 

11.07       Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent, the Lenders
and the L/C Issuer agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, trustees, advisors and representatives (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 purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same

 

128

 

as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Administrative Agent, any Lender, the L/C Issuer or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower.

 

For
purposes of this Section, “Information” means all information received
from any Loan Party or any Subsidiary thereof relating to any Loan Party or any
Subsidiary thereof or their respective businesses, other than any such
information that is available to the Administrative Agent, any Lender or the
L/C Issuer on a nonconfidential basis prior to disclosure by any Loan Party or
any Subsidiary thereof, provided that, in the case of information
received from a Loan Party or any such Subsidiary 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
of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning the Borrower
or a Subsidiary, as the case may be, (b) it has developed compliance
procedures regarding the use of material non-public information and (c) it
will handle such material non-public information in accordance with applicable
Law, including United States Federal and state securities Laws.

 

11.08       Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender, the L/C Issuer and each of their respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such Lender, the L/C Issuer or any such Affiliate to or for the
credit or the account of the Borrower or any other Loan Party against any and
all of the obligations of the Borrower or such Loan Party now or hereafter
existing under this Agreement or any other Loan Document to such Lender or the
L/C Issuer, irrespective of whether or not such Lender or the L/C Issuer shall
have made any demand under this Agreement or any other Loan Document and
although such obligations of the Borrower or such Loan Party may be contingent
or unmatured or are owed to a branch or office of such Lender or the L/C Issuer
different from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Lender,
the L/C Issuer and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender, the L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to
notify the Borrower and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.

 

129

 

11.09       Interest Rate Limitation.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under
the Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. 
In determining whether the interest contracted for, charged, or received
by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder.

 

11.10       Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature
page of this Agreement by telecopy or other electronic imaging means shall
be effective as delivery of a manually executed counterpart of this Agreement.

 

11.11       Survival of Representations and Warranties.  All representations and warranties made hereunder
and in any other Loan Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and
delivery hereof and thereof.  Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

11.12       Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

130

 

11.13       Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender is a Defaulting Lender, or if any Lender does not consent to a
proposed amendment, waiver, discharge or termination with respect to any Loan
Document that requires the consent of each Lender and that has been approved by
the Required Lenders, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 11.06),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

 

(a)           the
Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 11.06(b);

 

(b)           such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 3.05) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts);

 

(c)           in the
case of any such assignment resulting from a claim for compensation under Section 3.04
or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments
thereafter; and

 

(d)           such
assignment does not conflict with applicable Laws.

 

(e)           in the case of any such assignment resulting from a
Lender’s failure to consent to a proposed amendment, waiver, discharge or
termination with respect to any Loan Document, the applicable amendment, modification
and/or waiver of this Agreement that the Borrower has requested shall become
effective upon giving effect to such assignment (and any related assignments
required to be effected in connection therewith in accordance with this Section 11.13).

 

A
Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

11.14       Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.

 

131

 

(b)           SUBMISSION
TO JURISDICTION. 
THE BORROWER AND
EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS  SITTING IN COOK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF ILLINOIS, AND ANY APPELLATE COURT  FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR  RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS  STATE
COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE 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 IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF
VENUE.  THE
BORROWER AND EACH OTHER LOAN PARTY  IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE
OF PROCESS. 
EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 11.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW

 

11.15       Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY

 

132

 

OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

11.16         No Advisory or Fiduciary Responsibility.  In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), each of the
Loan Parties acknowledges and agrees, and acknowledges its Affiliates’
understanding, that: (i) (A) the arranging and other services
regarding this Agreement provided by the Administrative Agent and the Arranger
are arm’s-length commercial transactions between the Loan Parties and their respective
Affiliates, on the one hand, and the Administrative Agent and the Arranger, on
the other hand, (B) each of the Loan Parties has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed
appropriate, and (C) each of the Loan Parties is capable of evaluating,
and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents; (ii) (A) the
Administrative Agent and the Arranger, each is and has been acting solely as a
principal and, except as expressly agreed in writing by the relevant parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary
for the Loan Parties or any of their respective Affiliates, or any other Person
and (B) neither the Administrative Agent nor the Arranger has any
obligation to the Loan Parties or any of their respective Affiliates with
respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; and (iii) the
Administrative Agent and the Arranger and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ
from those of the Loan Parties and their respective Affiliates, and neither the
Administrative Agent nor the Arranger has any obligation to disclose any of
such interests to the Loan Parties and their respective Affiliates.  To the fullest extent permitted by law, each
of the Loan Parties hereby waives and releases any claims that it may have
against the Administrative Agent and the Arranger with respect to any breach or
alleged breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.

 

11.17         Electronic Execution of Assignments and Certain Other Documents.  The words “execution,” “signed,” “signature”
and words of like import in any Assignment and Assumption or in any amendment
or other modification hereof (including waivers and consents) shall be deemed
to include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.

 

133

 

11.18         USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower 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 each Loan Party, which information includes the
name and address of each Loan Party and other information that will allow such
Lender or the Administrative Agent, as applicable, to identify each Loan Party
in accordance with the Act.  The Borrower
shall, promptly following a request by the Administrative Agent or any Lender,
provide all documentation and other information that the Administrative Agent
or such Lender requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and
regulations, including the Act.

 

11.19         Intercreditor Agreement.  Each Lender hereby agrees that the Administrative
Agent, on behalf of the Lenders and Secured Lender Parties, may, and is hereby
authorized to, enter into the Intercreditor Agreement, which shall provide,
among other things, for the pro rata sharing among the Secured Lender Parties
and the Private Placement Noteholders of any proceeds received from Collateral,
in connection with certain mandatory prepayment events and/or from the Guaranty
hereunder and any corresponding guarantee provided to the Private Placement
Noteholders.  Once the Intercreditor
Agreement is executed by the Administrative Agent, each Lender that is or
becomes a party to this Agreement from time to time and each other Secured
Lender Party shall be bound by the terms thereof.  Without limiting the foregoing, each Lender
from time to time party to this Agreement agrees, if requested, to execute a
counterpart signature page or joinder agreement to such Intercreditor
Agreement.

 

134

 

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

 

	
  BORROWER:

  	
  KAPSTONE
  KRAFT PAPER CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger W. Stone

  
	
   

  	
  Name:

  	
  Roger W. Stone

  
	
   

  	
  Title:

  	
  CEO

  

 

 

	
  GUARANTORS:

  	
  KAPSTONE
  PAPER AND PACKAGING

  
	
   

  	
  CORPORATION,
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger W. Stone

  
	
   

  	
  Name:

  	
  Roger W. Stone

  
	
   

  	
  Title:

  	
  CEO

  

 

 

	
   

  	
  KAPSTONE CHARLESTON
  KRAFT LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger W. Stone

  
	
   

  	
  Name:

  	
  Roger W. Stone

  
	
   

  	
  Title:

  	
  CEO

  

 

135

 

	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Suzanne M. Paul

  
	
   

  	
  Name:

  	
  Suzanne M. Paul

  
	
   

  	
  Title:

  	
  Vice President

  

 

136

 

	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
  as
  L/C Issuer and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Bacon

  
	
   

  	
  Name:

  	
  David Bacon

  
	
   

  	
  Title:

  	
  Vice President

  

 

137

 

	
   

  	
  CoBank,
  ACB, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Tousignant

  
	
   

  	
  Name:

  	
  Michael Tousignant

  
	
   

  	
  Title:

  	
  Vice President

  

 

138

 

	
   

  	
  Northwest
  Farm Credit Services, PCA

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim D. Allen

  
	
   

  	
  Name:

  	
  Jim D. Allen

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

139

 

	
   

  	
  Farm
  Credit Services of America, PCA,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven L. Moore

  
	
   

  	
  Name:

  	
  Steven L. Moore

  
	
   

  	
  Title:

  	
  Vice President

  

 

140

 

	
   

  	
  AgFirst
  Farm Credit Bank,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matt Jeffords

  
	
   

  	
  Name:

  	
  Matt Jeffords

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  

 

141

 

	
   

  	
  THE
  PRIVATE BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Manas N. Athanikar

  
	
   

  	
  Name:

  	
  Manas N. Athanikar

  
	
   

  	
  Title:

  	
  Associate Managing
  Director

  

 

142

 

	
   

  	
  BARCLAYS
  BANK PLC,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ann E. Sutton

  
	
   

  	
  Name:

  	
  Ann E. Sutton

  
	
   

  	
  Title:

  	
  Associate Director

  

 

143

 

	
   

  	
  Fifth
  Third Bank

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles Smith

  
	
   

  	
  Name:

  	
  Charles Smith

  
	
   

  	
  Title:

  	
  Vice President

  

 

144

 

	
   

  	
  COOPERATIEVE
  CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK
  BRANCH,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael L. Laurie

  
	
   

  	
  Name:

  	
  Michael L. Laurie

  
	
   

  	
  Title:

  	
  Executive Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brett Delfino

  
	
   

  	
  Name:

  	
  Brett Delfino

  
	
   

  	
  Title:

  	
  Executive Director

  

 

145

 

	
   

  	
  SUNTRUST
  BANK

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brad Staples

  
	
   

  	
  Name:

  	
  Brad Staples

  
	
   

  	
  Title:

  	
  Managing Director

  

 

146

 

	
   

  	
  TD
  Bank, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susanna C. Satten

  
	
   

  	
  Name:

  	
  Susanna C. Satten

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  

 

147

 

	
   

  	
  AgStar
  Financial Services, PCA,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald G. Lindeman

  
	
   

  	
  Name:

  	
  Donald G. Lindeman

  
	
   

  	
  Title:

  	
  Vice President

  

 

148

 

	
   

  	
  Allied
  Irish Banks, plc,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joanne Gibson

  
	
   

  	
  Name:

  	
  Joanne Gibson

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Des Brennan

  
	
   

  	
  Name:

  	
  Des Brennan

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  

 

149

 

	
   

  	
  Caterpillar
  Financial Services Corporation

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher C.
  Patterson

  
	
   

  	
  Name:

  	
  Christopher C.
  Patterson

  
	
   

  	
  Title:

  	
  Global Operations
  Manager-Capital Markets

  

 

150

 

	
   

  	
  THE
  NORTHERN TRUST COMPANY,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brandon Rolek

  
	
   

  	
  Name:

  	
  Brandon Rolek

  
	
   

  	
  Title:

  	
  Vice President

  

 

151

 

	
   

  	
  First
  Tennessee Bank National Association

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James H. Moore, Jr.

  
	
   

  	
  Name:

  	
  James H. Moore, Jr.

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

152

 

	
   

  	
  GreenStone
  Farm Credit Services ACA/FLCA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff Pavlik

  
	
   

  	
  Name:

  	
  Jeff Pavlik

  
	
   

  	
  Title:

  	
  Vice President

  

 

153

 

SCHEDULES TO

 

CREDIT AGREEMENT

 

Dated as of July 1,
2008

 

among

 

KAPSTONE KRAFT PAPER CORPORATION,

as the Borrower,

 

KAPSTONE PAPER AND PACKAGING CORPORATION,

as the Parent,

 

THE SUBSIDIARIES OF THE
BORROWER IDENTIFIED HEREIN,

as Guarantors,

 

BANK OF AMERICA, N.A.,

as Administrative Agent,
Swing Line Lender and L/C Issuer,

 

and

 

THE OTHER LENDERS PARTY
HERETO

 

Arranged By:

 

BANC OF AMERICA SECURITIES
LLC,

as Sole Lead Arranger and Sole  Book
Manager

 

1

 

NOTES TO SCHEDULES

 

1.               The disclosures made in
these Schedules are intended to provide information to the other parties to the
Credit Agreement of even date herewith by and among Borrower, Parent, the
Guarantors identified therein, Bank of America, N.A. and other parties
identified therein as Lenders thereto (the “Agreement”).

 

2.               Capitalized terms used in
these Schedules but not defined herein shall have the meanings ascribed to such
terms in the Agreement.

 

 

TABLE OF CONTENTS

 

	
  Schedule 1.01

  	
  Existing Letters of Credit

  
	
  Schedule
  2.01

  	
  Commitments and Applicable Percentages

  
	
  Schedule 4.02(a)

  	
  Excluded Estoppel and Consent Agreements

  
	
  Schedule 4.02(b)

  	
  Material Adverse Effect

  
	
  Schedule 5.02

  	
  No Conflict

  
	
  Schedule 5.05

  	
  Changes in Business

  
	
  Schedule 5.06

  	
  Litigation and Contingent Liabilities

  
	
  Schedule 5.07

  	
  Ownership of Properties; Liens

  
	
  Schedule 5.08

  	
  Ownership of Loan Parties and Subsidiaries

  
	
  Schedule 5.12

  	
  Taxes

  
	
  Schedule 5.16

  	
  Real Property

  
	
  Schedule 5.20

  	
  Labor Matters

  
	
  Schedule
  5.23

  	
  Casualty,
  Etc.

  
	
  Schedule 5.25

  	
  Material Contracts

  
	
  Schedule
  7.01

  	
  Existing
  Debt

  
	
  Schedule
  7.01(g)

  	
  Debt
  To Be Repaid

  
	
  Schedule
  7.02

  	
  Existing
  Liens

  
	
  Schedule
  7.08

  	
  Unconditional
  Purchase Obligations

  
	
  Schedule
  7.11

  	
  Investments

  
	
  Schedule
  7.18

  	
  Holding
  Company Contracts

  
	
  Schedule
  11.02

  	
  Administrative
  Agent’s Office, Certain Addresses for Notice

  

 

3

 

Schedule 1.01

 

Existing Letters of Credit

 

1.               Amended Letter of Credit
dated as of January 25, 2008, issued by LaSalle Bank National Association
for the account of KapStone Kraft Paper Corporation in favor of Sentry
Insurance as beneficiary in the amount of $350,000.00.

 

2.               Letter of Credit dated as of
January 9, 2008, issued by LaSalle Bank National Association for the
account of KapStone Kraft Paper Corporation in favor of Potash Corporation as
beneficiary in the amount of $300,000.00.

 

 

Schedule 2.01

 

Commitments and Applicable Percentages

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

	
  Lender

  	
   

  	
  Term A Loan

  Commitment

  	
   

  	
  Term B-1 Loan

  Commitment

  	
   

  	
  Term B-2 Loan

  Commitment

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Term A Loan

  Applicable

  Percentage

  	
   

  	
  Term B-1 Loan

  Applicable

  Percentage

  	
   

  	
  Term B-2 Loan

  Applicable

  Percentage

  	
   

  	
  Revolving Credit Loan

  Applicable

  Percentage

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  71,632,653.07

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  $

  	
  40,000,000

  	
   

  	
  $

  	
  15,306,122.44

  	
   

  	
  18.367346941

  	
  %

  	
  100.000000000

  	
  %

  	
  100.000000000

  	
  %

  	
  15.306122440

  	
  %

  
	
  CoBank, ACB

  	
   

  	
  $

  	
  54,122,448.98

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  13,877,551.02

  	
   

  	
  13.877551021

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  13.877551020

  	
  %

  
	
  Farm Credit Services of
  America, PCA

  	
   

  	
  $

  	
  39,795,918.37

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  10,204,081.63

  	
   

  	
  10.204081633

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  10.204081630

  	
  %

  
	
  Agfirst Farm Credit
  Bank

  	
   

  	
  $

  	
  31,040,816.33

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  7,959,183.67

  	
   

  	
  7.959183674

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  7.959183670

  	
  %

  
	
  The Private Bank

  	
   

  	
  $

  	
  27,857,142.86

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  7,142,857.14

  	
   

  	
  7.142857144

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  7.142857140

  	
  %

  
	
  Barclays Bank PLC

  	
   

  	
  $

  	
  26,265,306.12

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  6,734,693.88

  	
   

  	
  6.734693877

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  6.734693880

  	
  %

  
	
  Fifth Third Bank

  	
   

  	
  $

  	
  23,877,551.02

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  6,122,448.98

  	
   

  	
  6.122448979

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  6.122448980

  	
  %

  
	
  Rabobank Nederland, New
  York Branch

  	
   

  	
  $

  	
  19,897,959.18

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  5,102,040.82

  	
   

  	
  5.102040815

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  5.102040820

  	
  %

  
	
  Suntrust Bank

  	
   

  	
  $

  	
  19,897,959.18

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  5,102,040.82

  	
   

  	
  5.102040815

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  5.102040820

  	
  %

  
	
  TD Bank, N.A.

  	
   

  	
  $

  	
  15,918,367.35

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  4,081,632.65

  	
   

  	
  4.081632650

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  4.081632650

  	
  %

  
	
  AgStar Financial
  Services, PCA

  	
   

  	
  $

  	
  11,938,775.51

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  3,061,224.49

  	
   

  	
  3.061224490

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  3.061224490

  	
  %

  
	
  Allied Irish Banks, plc

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  3,061,224.49

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  3.061224490

  	
  %

  
	
  Caterpillar Financial
  Services Corporation

  	
   

  	
  $

  	
  11,938,775.51

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  3,061,224.49

  	
   

  	
  3.061224490

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  3.061224490

  	
  %

  
	
  The Northern Trust
  Company

  	
   

  	
  $

  	
  11,938,775.51

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  3,061,224.49

  	
   

  	
  3.061224490

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  3.061224490

  	
  %

  
	
  First Tennessee Bank
  National Association

  	
   

  	
  $

  	
  7,959,183.67

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  2,040,816.33

  	
   

  	
  2.040816326

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  2.040816330

  	
  %

  
	
  GreenStone Farm Credit
  Services ACA/FLCA

  	
   

  	
  $

  	
  7,959,183.67

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  2,040,816.33

  	
   

  	
  2.040816326

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  2.040816330

  	
  %

  
	
  Northwest Farm Credit
  Services, PCA

  	
   

  	
  $

  	
  7,959,183.67

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  2,040,816.33

  	
   

  	
  2.040816326

  	
  %

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  2.040816330

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  390,000,000

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  $

  	
  40,000,000

  	
   

  	
  $

  	
  100,000,000

  	
   

  	
  100.000000000

  	
  %

  	
  100.000000000

  	
  %

  	
  100.000000000

  	
  %

  	
  100.000000000

  	
  %

  

 

 

Schedule 4.02(a)

 

Excluded Estoppel and Consent Agreements

 

	
  Location of Leased Property

  	
   

  	
  Landlord’s Name and Address

  
	
   

  	
   

  	
   

  
	
  KapStone
  Paper and Packaging Corporation

  1101 Skokie Blvd., Suite 300

  Northbrook, IL 60062

  	
   

  	
  PCS
  Administration (USA), Inc.

  1101 Skokie Blvd., Suite 400

  Northbrook, IL 60062

  
	
   

  	
   

  	
   

  
	
  KapStone
  Kraft Paper Corporation

  300 S. Edgar Street

  Fordyce, AR 71742

  	
   

  	
  City
  of Fordyce, Arkansas

  City Hall, 101 South Main

  Fordyce, AR 71742

  Attention: Mayor

  

 

 

Schedule 4.02(b)

 

Material Adverse Effect

 

1.               On January 8, 2008, an
electrical fire occurred in ECR 82.  The
fire was extinguished quickly, but resulted in loss of power resulting in
approximately 8 hours of down time at the waste and water treatment plants.  The Business will incur additional costs in
2008 to repair the resulting damage.  The
current estimate to repair damage in connection with the assets acquired under
the Mead Purchase Agreement is approximately $5,300,000, of which approximately
$2,600,000 shall be paid by Sellers through the working capital adjustment
under such agreement.

 

 

Schedule 5.02

 

No Conflict

 

None.

 

 

Schedule 5.05

 

Changes in Business

 

1.               On January 8, 2008, an
electrical fire occurred in ECR 82.  The
fire was extinguished quickly, but resulted in loss of power resulting in
approximately 8 hours of down time at the waste and water treatment
plants.  The Business will incur
additional costs in 2008 to repair the resulting damage.  The current estimate to repair damage in
connection with the assets acquired under the Mead Purchase Agreement is
approximately $5,300,000, of which approximately $2,600,000 shall be paid by
Sellers through the working capital adjustment under such agreement.

 

2.               In April 2008, a smelt
water explosion in the Recovery Boiler caused the boiler and a paper machine to
shut down for 6 days.  All damages have
been repaired and both machines are now operating normally.

 

 

Schedule 5.06

 

Litigation and Contingent Liabilities

 

I.  LITIGATION

 

None.

 

II.  CONTINGENT LIABILITIES

 

1.               All Contingent Liabilities arising under the Purchase
Agreement dated as of June 23, 2006, by and between International Paper
Company, Stone Arcade Acquisition Corporation, and KapStone Kraft Paper
Corporation (as amended).

 

2.               All Contingent Liabilities arising under the Asset Purchase
Agreement dated as of April 4, 2008 (as amended), among MeadWestvaco South
Carolina, LLC, MeadWestvaco Corporation, KapStone Paper and Packaging
Corporation and Oak Acquisition LLC (as amended), together with the Additional
Documents as defined therein.

 

3.               All Contingent Liabilities arising under the FILOT Agreement
dated on or about July 1, 2008 among MeadWestvaco Corporation,
MeadWestvaco South Carolina LLC, KapStone Charleston Kraft LC, KapStone Paper
and Packaging Corporation and Cogen South L.L.C.

 

4.               All Contingent Liabilities arising under the Underwriting
Agreement dated on or about August 15, 2005, among Stone Arcade
Acquisition Corporation, Morgan Joseph & Co., Inc., as
Representative, and the other Underwriters identified therein.

 

5.               All Contingent Liabilities arising under the Warrant
Agreement dated on or about August 15, 2005 by and between Stone Arcade
Acquisition Corporation and Continental Stock Transfer & Trust
Company.

 

6.               The Contingent Liabilities reflected on KapStone Paper and
Packaging Corporation’s most recent audited financial statements as of December 31,
2007.

 

7.               Contingent Liabilities arising under the contracts identified
on Schedule 5.25 which is hereby incorporated by reference herein.

 

 

Schedule 5.07

 

Ownership of Properties; Liens

 

I.  LIENS

 

KapStone Paper and Packaging Corporation

 

	
  Secured Party

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Astenjohnson, Inc.

  	
   

  	
  70412469

  	
   

  	
  2/1/07

  	
   

  	
  Goods
  and Inventory on consignment and proceeds thereof

  

 

KapStone Kraft Paper Corporation

 

	
  Secured Party

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  73536439

  	
   

  	
  9/19/07

  	
   

  	
  Equipment:
  2002 Hyster S100XM Cushioned Diesel Lift Truck, serial number E004V02027Z

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minority
  Alliance Capital, LLC

  	
   

  	
  80434348

  	
   

  	
  2/5/08

  	
   

  	
  Equipment:
  Yale Model GLC080VXNGSF084, serial numbers E818V02224E and E818VO2227E

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First
  Independence Bank

  	
   

  	
  80533339

  	
   

  	
  2/13/08

  	
   

  	
  Equipment:
  New Yale Model GLC080VXNGSF084, serial numbers: E818V02224E and E818V02227E

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leasenet
  Group LLC

  	
   

  	
  80663003

  	
   

  	
  2/25/08

  	
   

  	
  Equipment
  described in Schedule KS-003 to Master Equipment Lease KS-01 dated
  May 5, 2007. UCC filed for informational purposes only.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minority
  Alliance Capital, LLC

  	
   

  	
  80665669

  	
   

  	
  2/25/08

  	
   

  	
  Equipment:
  Yale Model GLC120VXNGSF085, serial numbers E818V02339E and E818VO2357E

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First
  Independence Bank

  	
   

  	
  81375326

  	
   

  	
  4/21/08

  	
   

  	
  Equipment:
  Yale Model GLC120VXNGSF085, serial numbers E818V02339E and E818VO2357E

  

 

 

MeadWestvaco Corporation

 

	
  Secured Party

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Atel Leasing Corporation

  	
   

  	
  41875824

  	
   

  	
  7/6/04

  	
   

  	
  Equipment
  and Related Software under Lease Agreement No. MEAD1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Precautionary
  filing

  
	
  - partial assignment

  	
   

  	
  503363193

  	
   

  	
  2/2/05

  	
   

  	
  Assignment
  to Atel Capital Equipment Fund IX, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/7/07

  	
   

  	
  Assignment
  to Atel Capital Equipment Fund IX, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/7/07

  	
   

  	
  Assignment
  to Atel Capital Equipment Fund X, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/7/07

  	
   

  	
  Assignment
  to Atel Capital Equipment Fund XI, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/8/07

  	
   

  	
  Assignment
  to Atel Capital Equipment Fund IX, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/8/07

  	
   

  	
  Assignment
  to Atel Capital Equipment Fund X, LLC

  
	
  - amendment

  	
   

  	
  41875824

  	
   

  	
  3/14/08

  	
   

  	
  Amended
  Debtor’s address

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/19/08

  	
   

  	
  Assignment
  to Atel Capital Equipment Fund X, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eplus Group, Inc.

  	
   

  	
  51580548

  	
   

  	
  5/23/05

  	
   

  	
  Equipment
  on Schedule 371 of an Equipment Lease Agreement, dated 1/28/92

  Filed for informational purposes only

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Banc of America Leasing & Capital, LLC

  	
   

  	
  61267731

  	
   

  	
  4/16/07

  	
   

  	
  Equipment:
  Case 41 Skid Steer Loader 

  *Precautionary lease notice filing

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Banc of America Leasing & Capital, LLC

  	
   

  	
  63425691

  	
   

  	
  9/15/06

  	
   

  	
  Equipment
  subject to schedule no. 017 to Lease Agreement, dated 8/3/06 

  *Precautionary lease notice filing

  

 

II.  OWNERSHIP OF PROPERTY

 

Real Property

 

*The
following real property is not owned by any Loan Party or its Subsidiaries:

 

1.               Location:

KapStone Paper and Packaging Corporation

1101 Skokie Blvd., Suite 300

Northbrook,
IL 60062

 

12

 

Landlord’s Name:

PCS
Administration (USA), Inc.

1101
Skokie Blvd., Suite 400

Northbrook,
IL 60062

 

2.               Location:

KapStone Kraft Paper Corporation**

300 S. Edgar Street

Fordyce, AR 71742

(“Fordyce Property”)

Landlord’s Name:

City of Fordyce, Arkansas

City hall, 101 South Main

Fordyce, AR 71742

 

3.               Location:

KapStone Charleston Kraft LLC

107 Motel Drive

St. George, SC 29477

Landlord’s Name:

MeadWestvaco South Carolina, LLC

11013 West Broad Street

Glen Allen, VA 23060

 

4.               Location:

KapStone Charleston Kraft LLC**

391 Rosom Hill Extension

Ridgeville, SC 29472

(“Beech Hill Chip Mill”)

Landlord’s Name:

MeadWestvaco Forestry, LLC

PO Box 118005

Charleston, SC 29423-8005

 

5.               Location:

KapStone Charleston Kraft LLC

665 Chip Mill Road

Andrews, SC 29510

Landlord’s Name:

MeadWestvaco Forestry, LLC

PO Box 118005

Charleston, SC 29423-8005

 

6.               Location:

KapStone Charleston Kraft LLC

7 miles west of Givans Town and 4 miles west of
Givans Ferry Bridge

Badham, SC

(“Badham Chip Mill”)

 

13

 

Landlord’s Name:

MeadWestvaco Forestry, LLC

PO Box 118005

Charleston, SC 29423-8005

 

7.               Water Leases located at
Tracts 21-24 and Tract 17

Landlord’s Name:

Commissioners of Public Works of the City of
Charleston

PO Box B

Charleston, SC 29402

 

8.               Water Agreement dated on or
about June 18, 1936, as amended by that certain Supplemental Agreement
dated June 25, 1956, and as further amended by that certain 1966
Supplemental Agreement dated November     , 1966.

 

** None of
the Loan Parties makes any representation with respect to the state of title of
the Fordyce Property, the Beech Hill Chip Mill, [the Badham Chip Mill] or the
Airstrip Property (as defined on Attachment 1 to Schedule 5.07).

 

14

 

Attachment 1 to Schedule 5.07

 

1.               Description
of Airstrip Property:

 

All that
certain tract or parcel of land, together with all improvements thereon, lying
and being situated in Gaston Township, Northampton County, North Carolina,
containing approximately 29.29 acres, as shown and designated as Tract E on
that ‘Plat Showing Property Being Conveyed to Champion International Corp. By
W. J. Long, Jr., & June B. Long’, dated December 12,
1987, revised December 22, 1987, prepared by Burr & Associates,
P.A., recorded in Map Book 23, Page 94, Northampton Public Registry;
reference to said map is made for greater certainty of description.

 

2.     Definition of Retained Park
Property:

 

That certain parcel of land
of approximately 40 acres situated partially in North Charleston County, South
Carolina and partially in Hanahan, Berkeley County, South Carolina and located
near the intersection of Remount Road and North Rhett Avenue.

 

 

Schedule 5.08

 

Ownership of Loan Parties and Subsidiaries

 

Subsidiaries

 

1.               KapStone Paper and Packaging
Corporation:

a.               KapStone Kraft Paper
Corporation, a Delaware corporation and wholly-owned subsidiary.

 

2.               KapStone Kraft Paper
Corporation:

a.               KapStone Charleston Kraft
LLC, a Delaware limited liability company and wholly-owned subsidiary.

b.              KapStone Asia Limited, a
Hong Kong limited liability company and wholly-owned subsidiary.

c.               KapStone Europe SPRL, a
Belgium limited liability company. 
KapStone Kraft Paper Corporation holds a 99% interest in KapStone Europe
SRLP.

 

3.               KapStone Charleston Kraft
LLC:

a.               KapStone Europe SPRL, a
Belgium limited liability company. 
KapStone Charleston Kraft LLC holds a 1% interest in KapStone Europe
SRLP.

b.              Cogen South L.L.C., a
Delaware limited liability company and wholly-owned subsidiary.

 

Equity Ownership

 

1.               Underwriting Agreement dated
on or about August 15, 2005 among Stone Arcade Acquisition Corporation,
Morgan Joseph & Co., Inc., as Representative, and the other
Underwriters identified therein.

 

2.               Warrant Agreement dated on
or about August 15, 2005 by and between Stone Arcade Acquisition
Corporation and Continental Stock Transfer & Trust Company.

 

3.               Pursuant to the KapStone
Paper and Packaging Corporation 2006 Incentive Plan dated December 15,
2006, as amended April 10, 2008, KapStone Paper and Packaging Corporation’s
Compensation Committee approved the issuance of 631,050 stock options to its
directors, executive officers and employees. 
As of March 31, 2008, 631,050 stock options were outstanding.

 

4.               Pursuant to the KapStone
Paper and Packaging Corporation 2006 Incentive Plan dated December 15,
2006, as amended April 10, 2008, KapStone Paper and Packaging’s
Compensation Committee approved the issuance of 174,000 shares of restricted
stock to its directors, executive officers and employees.  As of March 31, 2008, 174,000 shares of
restricted stock were outstanding.

 

 

Schedule 5.12

 

Taxes

 

1.               The October 2006 South
Carolina sales and use tax return for Cogen South L.L.C. was filed late as a
result of an error by the group to which the tax return filing process had been
outsourced.  (This was the first month
that the outsourcing engagement was in place.) 
A notice sent by South Carolina regarding this issue was resolved in
2007.  Penalties and interest ($37.17)
were paid by the outsourcing firm.

 

2.               Certain Fee-in-Lieu of Tax (“FILOT”)
schedules of assets submitted to the South Carolina Department of Revenue
contained errors, the net result of which appears to have been the
overreporting of assets held by approximately $400,000.  Additionally, within the classification of
assets between Seller’s Chemicals Business and North Charleston Mill
facilities, certain transfers and administrative assets were not reflected, and
certain assets were reported twice.  As a
consequence of this, assets associated with the North Charleston Mill facility
were overstated by approximately $10 million and assets associated with the
Chemicals Business facility were understated by approximately $10 million;
since both facilities are comprehended under the FILOT Arrangements, a
misclassification of assets between the facilities does not affect total assets
reported with respect to the particular FILOT Arrangement.  Finally, certain dispositions of assets were
not reflected on the FILOT schedules of assets for the Chemicals Business
facility, the North Charleston Mill and for Cogen South L.L.C..  Modified reports are being prepared and will
be filed with the South Carolina Department of Revenue, which has been
consulted regarding the appropriate reporting. 
It is expected that the cumulative tax effect of these matters will be
minor.

 

17

 

Schedule 5.16

 

Real Property

 

	
  Location

  	
   

  	
  Leased/Owned

  	
   

  	
  Landlord’s Name and Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone Paper
  and Packaging Corporation

  1101 Skokie Blvd.,
  Suite 300

  Northbrook, IL
  60062

  	
   

  	
  Leased

  	
   

  	
  PCS
  Administration (USA), Inc.

  1101 Skokie Blvd.,
  Suite 400

  Northbrook, IL
  60062

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone Kraft
  Paper Corporation

  100 Gaston Road

  Roanoke Rapids, NC
  27870

  	
   

  	
  Owned

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone Kraft
  Paper Corporation

  Airstrip
  Property(1) (as defined in Attachment 1 to Schedule 5.07)

  	
   

  	
  Owned

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone Kraft
  Paper Corporation(2)

  300 S. Edgar Street

  Fordyce, AR 71742

  (“Fordyce
  Property”)

  	
   

  	
  Leased

  	
   

  	
  City of Fordyce,
  Arkansas

  City Hall, 101
  South Main

  Fordyce, AR 71742

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC(3)

  5600 Virginia
  Avenue

  North Charleston,
  SC 29406

  	
   

  	
  Owned

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC

  309 N. Maple Street

  Summerville, SC
  29483

  	
   

  	
  Owned

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC

  707 Whitehead Road

  Elgin, SC 29045

  	
   

  	
  Owned

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC

  1382 Elm Street

  Hampton, SC 29924

  	
   

  	
  Owned

  	
   

  	
   

  

 

(1) The
Airstrip Property is of negligible value and not material to the business of
the company, and therefore no real estate collateral documents (other than a
mortgage) will be delivered pursuant to Section 4.02(a)(iv) of the
Credit Agreement.

 

(2) The
lease of the Fordyce Property is of negligible value and not material to the
business of the company, and therefore no real estate collateral documents will
be delivered pursuant to Section 4.02(a)(iv) of the Credit Agreement.

 

(3) KapStone
Charleston Kraft LLC does not own the entire property located at this
address.  Pursuant to the Kraft
Acquisition, excluded is all the real property primarily related to or primarily
used by MeadWestvaco Corporation and its Subsidiaries in the Sellers’ Chemicals
Business.  Kapstone Charleston Kraft LLC
also leases the Berkeley County portion of the property which is in the process
of being subdivided from the Retained Park Property (as defined in Attachment 1
to Schedule 5.07).  The Express Map for
this location required to be delivered pursuant to Section 4.02(a)(iv) of
the Credit Agreement will be delivered to the Collateral Agent within 7 days of
the Closing Date.

 

18

 

	
  Location

  	
   

  	
  Leased/Owned

  	
   

  	
  Landlord’s Name and Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC

  28026 U.S. Highway
  76

  Kinards, SC 29355

  	
   

  	
  Owned

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone Charleston Kraft LLC

  Harvey Tract
  Landfill

  Highway 16

  Summerville, SC
  29483

  	
   

  	
  Owned

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC(4)

  665 Chip Mill Road

  Andrews, SC 29510

  	
   

  	
  Leased

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC(5)

  391 Rosom Hill
  Extension

  Ridgeville, SC
  29472

  (“Beech Hill Chip
  Mill”)

  	
   

  	
  Leased

  	
   

  	
  MeadWestvaco
  Forestry, LLC

  PO Box 118005

  Charleston, SC
  29423-8005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC(6)

  665 Chip Mill Road

  Andrews, SC 29510

  	
   

  	
  Leased

  	
   

  	
  MeadWestvaco
  Forestry, LLC

  PO Box 118005

  Charleston, SC
  29423-8005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC

  107 Motel Drive

  St. George, SC
  29477

  	
   

  	
  Leased

  	
   

  	
  MeadWestvaco
  Forestry, LLC

  PO Box 118005

  Charleston, SC
  29423-8005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC(7)

  7 miles west of
  Givans Town and 4 miles west of Givans Ferry Bridge

  Badham, SC

  (“Badham Chip
  Mill”)

  	
   

  	
  Leased

  	
   

  	
  MeadWestvaco Forestry,
  LLC

  PO Box 118005

  Charleston, SC
  29423-8005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KapStone
  Charleston Kraft LLC

  Water Leases

  Tracts 21-24

  Tract 17

  Charleston, SC

  	
   

  	
  Leased

  	
   

  	
  Commissioners of
  Public Works of the City of Charleston, SC

  PO Box B

  Charleston, SC
  29402

  

 

(4) KapStone Charleston Kraft LLC owns the improvements only,
consisting of the chip mill facility and related improvements (excluding the
approximately 2,200 square foot office building owned by MW Forestry, LLC and
leased to KapStone Charleston Kraft LLC).

(5) It is anticipated that the Beech Hill Chip Mill will be closed
shortly after the Commitment Effective Date and consolidated with the Badham
Chip Mill, and therefore, no real estate collateral documents will be delivered
pursuant to Section 4.02(a)(iv) of the Credit Agreement.

(6) KapStone Charleston Kraft LLC owns only the improvements and
leases the ground site and the office building.

(7) [The real estate deliverables in connection with the Badham
Chip Mill as required by Section 4.02(a)(iv) of the Credit Agreement
will be delivered to the Collateral Agent on a post-closing basis.]

 

19

 

Schedule 5.20

 

Labor Matters

 

1.               Labor Agreement between
International Paper Ride Rite Fordyce and Paper, Allied-Industrial, Chemical
and Energy Workers International Union and Local 5-368.

 

2.               Letter Agreement between
Harry Johnson and International Paper Company dated December 10, 2004.

 

3.               Letter Agreement between
Paul Evans and International Paper Company dated March 21, 2006.

 

4.               Agreement between Ideal
Technical Services and Jesse Windred Whiddon, Jr. dated August 20,
2001.

 

5.               Agreement between KapStone
Kraft Paper Corporation and  United
Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-International
and Service Workers Union, AFL-CIO, CLC, Local 9-425 effective February 1,
2007.

 

6.               Staffing Agreement between
Employers Staffing of America, Inc. and International Paper dated September 13,
2005.

 

7.               Labor Agreement effective July 2,
2006 by and between the Charleston, South Carolina plant of MeadWestvaco and
the International Association of Machinists and Aerospace Workers and its
Charleston Lodge No. 183.

 

8.               Labor Agreement effective July 2,
2006 by and between the Charleston, South Carolina plant of MeadWestvaco and
the Local Union No. 1753 of the International Brotherhood of Electrical
Workers.

 

9.               Labor Agreement effective July 2,
2006 by and between the Charleston, South Carolina plant of MeadWestvaco and
the Paper, Allied-Industrial, Chemical and Energy Workers International Union
and its Local Unions 3-0508 and 3-1435.

 

20

 

Schedule 5.23

 

Casualty, Etc.

 

1.               On January 8, 2008, an
electrical fire occurred in ECR 82.  The
fire was extinguished quickly, but resulted in loss of power resulting in
approximately 8 hours of down time at the waste and water treatment plants.  The Business will incur additional costs in
2008 to repair the resulting damage.  The
current estimate to repair damage in connection with the assets acquired under
the Mead Purchase Agreement is approximately $5,300,000, of which approximately
$2,600,000 shall be paid by Sellers through the working capital adjustment
under such agreement.

 

2.               In April 2008, a smelt
water explosion in the Recovery Boiler caused the boiler and a paper machine to
shut down for 6 days.  All damages have
been repaired and both machines are now operating normally.

 

21

 

Schedule 5.25

 

Material Contracts

 

Roanoke Rapids

 

	
  Customer

  	
   

  	
  Address

  	
   

  	
  Term of Contract

  
	
  Graphic Packaging

  	
   

  	
  450 East North Avenue  

  Carol Stream, IL
  60188

  	
   

  	
  Expires 12/11/08

  
	
  Exopack

  	
   

  	
  3070 Southport Road  

  Spartanburg, SC
  29302

  	
   

  	
  Expires 12/31/08

  
	
  Hood Packaging

  	
   

  	
  25 Woodgreen Place  

  Madison, MS 39110

  	
   

  	
  Expires 8/31/09

  
	
  Ampac

  	
   

  	
  18 Neil Court  

  Oceanside, NY 11572

  	
   

  	
  Expires 12/31/08

  
	
  Bancroft Bag

  	
   

  	
  425 Bancroft blvd  

  West Monroe, LA
  71292

  	
   

  	
  Expires 3/31/09

  
	
  Arizona Chemical
  Company

  	
   

  	
  4600 Touchton Road
  East, 

  Suite 500  Jacksonville, FL

  	
   

  	
  Expires 1/1/26

  

 

	
  Supplier

  	
   

  	
  Address

  	
   

  	
  Term of contract

  
	
  CSXT

  	
   

  	
  Jacksonville, FL

  	
   

  	
  Expires June 30,
  2008

  
	
  Dominion Power

  	
   

  	
  Portsmouth VA

  	
   

  	
  Expires 01-07 unless
  renewed

  
	
  PPG

  	
   

  	
  Pittsburgh, PA

  	
   

  	
  Expires 1/31/09

  
	
  West Fraser Timber

  	
   

  	
  1900 Exeter Rd.,
  Suite 105  

  Germantown, TN
  38138

  	
   

  	
  13.5 years remaining on
  a  15 year
  contract

  
	
  Broad Arrow Timber
  Company

  	
   

  	
  15 Piedmont Center,
  Suite 1250  

  Atlanta, GA 30350

  	
   

  	
  13.5 years remaining on
  a  15 year
  contract*

  

 

[*Additional 5 years are
in place for ROFO on thinnings.  This is
not included in the aggregated purchase customer-supplier contracts.]

 

22

 

Charleston

 

	
  Supplier

  	
   

  	
  Address

  	
   

  	
  Term of
  Contract

  
	
  CSXT — Coal
  inbound only

  	
   

  	
  500 Water Street
  - J865 

  Jacksonville, FL 32202

  	
   

  	
  November 1,
  2005 to December 31, 2010

  
	
  Old World
  Trading — caustic soda

  	
   

  	
  4065 Commercial
  Avenue 

  Northbrook, IL 60062

  	
   

  	
  January 1,
  2008 to December 31, 2009

  
	
  SCE&G — electric
  power — E9096103

  	
   

  	
  SCE&G  

  Columbia, SC 29218

  	
   

  	
  January 1,
  1999 to December 31, 2018

  
	
  Hess
  Corporation— fuel oil

  	
   

  	
  1 Hess Plaza  

  Woodbridge, NJ
  07095

  	
   

  	
  August 9,
  2006 to August 31, 2008

  
	
  Nalco Chemical
  Co

  	
   

  	
  1601 W. Diehl
  Road  

  Naperville, IL
  60563

  	
   

  	
  August 1,
  2003 to December 31, 2008

  
	
  Massey Industrial Sales
  - coal

  	
   

  	
  4 North Fourth Street 

  Richmond, VA

  	
   

  	
  January 1, 2008 to
  December 31, 2009

  
	
  Godfrey Lumber
  Company, Inc.

  	
   

  	
  P.O. Box 615  

  Statesville, NC
  28687

  	
   

  	
  Start 1-6-08 and ends
  1-5-11. 3-year agreement

  
	
  Williams Brothers
  Trucking, Inc.

  	
   

  	
  P.O. Box 188  

  Hazlehurst, GA
  31539

  	
   

  	
  Start 11-14-05 and ends
  11-14-15. 10-year agreement

  
	
  National City Leasing

  	
   

  	
  101 South 5th Street  

  Louisville, KY
  40202

  	
   

  	
  Start Dec-1995 and ends
  December 2015. 20-year lease

  
	
  MeadWestvaco Forestry,
  LLC

  	
   

  	
  P.O. Box 118005  

  Charleston, SC
  29423-8005

  	
   

  	
  Start July 1, 2008
  and ends July 1, 2023. 15-year agreement

  
	
  Key Container

  	
   

  	
  P.O. Box 2370  

  21 Campbell Street  

  Pawtucket, RI
  02861-2370

  	
   

  	
  September 1, 2006
  through September 1, 2011

  
	
  New England Woodenware

  	
   

  	
  205 School Street  

  Gardner, MA 01440

  	
   

  	
  July 1, 2007
  through July 1, 2012

  

 

Purchase
Agreement dated as of June 23, 2006, by and between International Paper
Company, Stone Arcade Acquisition Corporation and KapStone Kraft Paper
Corporation (as amended).

 

Asset Purchase Agreement dated as of April 4,
2008, among MeadWestvaco South Carolina, LLC, MeadWestvaco Corporation,
KapStone Paper and Packaging Corporation and Oak Acquisition LLC (as amended).

 

Registration Rights Agreement dated on or
about August 15, 2005 by and among Stone Arcade Acquisition Corporation,
Roger W. Stone, Matthew Kaplan, Jonathan R. Furer, John M. Chapman and Muhit U.
Rhaman  (each an “Initial Stockholder”
and collectively the “Initial Stockholders”).

 

Letter
Agreement dated on or about August 15, 2005 by and between Stone-Kaplan
Investments LLC and Stone Arcade Acquisition Corporation regarding
administrative support.

 

Investment
Management Trust Agreement dated on or about 
August 15, 2005 by and between Stone Arcade Acquisition Corporation
and Continental Stock Transfer & Trust Company.

 

23

 

Letter
Agreements among Stone Arcade Acquisition Corporation, Morgan Joseph &
Co. Inc. and each of the Initial Stockholders dated on or about August 15,
2005.

 

Inter-Company Loan Agreement dated as of January 2,
2007 by and between KapStone Paper and Packaging Corporation and KapStone Kraft
Paper Corporation.

 

KapStone
Paper and Packaging Corporation 2006 Incentive Plan dated December 15, 2006,
as amended April 10, 2008.

 

Pulpwood
Supply Agreement dated as of January 1, 2007, between International Paper
Company and KapStone Kraft Paper Corporation;

 

Residual
Chip Agreement dated as of January 1, 2007, between International Paper
Company and KapStone Kraft Paper Corporation.

 

Reciprocal
Plant Operating Agreement dated on or about July 1, 2008 between KapStone
Charleston Kraft LLC and MeadWestvaco South Carolina LLC.

 

Air
Permit Modeling Agreement dated on or about July 1, 2008, among KapStone Charleston
Kraft LLC, Cogen South L.L.C. and MeadWestvaco South Carolina LLC.

 

Long-Term
Fiber Supply Agreement dated on or about July 1, 2008 by and between
MeadWestvaco Forestry, LLC and KapStone Charleston Kraft LLC.

 

Amended
and Restated Lease Agreement dated as of December 1, 1998 by and between
Charleston County, South Carolina and Cogen South L.L.C.

 

Amended
and Restated Lease Agreement dated as of July 1, 2008 by and between
Charleston County, South Carolina and KapStone Charleston Kraft LLC.

 

Generator
Site Sublease dated as of June 1, 1996 between South Carolina Electric &
Gas Company and Cogen South L.L.C.

 

Shaft
Horsepower Agreement dated as of June 1, 1996 between Cogen South L.L.C.
and South Carolina Electric & Gas Company.

 

Service
Agreement dated February 2, 2005 by and between Cogen South, L.L.C. and
South Carolina Electric & Gas Company.

 

Contract
for Electric Service dated June 11, 2008 between KapStone Charleston Kraft
LLC and South Carolina Electric & Gas Company.

 

24

 

Schedule 7.01

 

Existing Debt

 

1.               All Contingent Liabilities
arising under the Purchase Agreement dated as of June 23, 2006, by and
between International Paper Company, Stone Arcade Acquisition Corporation, and
KapStone Kraft Paper Corporation (as amended).

2.               Contingent Liabilities
arising under the Asset Purchase Agreement dated as of April 4, 2008 (as
amended), among MeadWestvaco South Carolina, LLC, MeadWestvaco Corporation,
KapStone Paper and Packaging Corporation and Oak Acquisition LLC (as amended),
together with the Additional Documents as defined therein.

3.               Contingent Liabilities
arising under the FILOT Agreement dated on or about July 1, 2008 among
MeadWestvaco Corporation, MeadWestvaco South Carolina LLC, KapStone Charleston
Kraft LC, KapStone Paper and Packaging Corporation and Cogen South L.L.C.

4.               Contingent Liabilities under
the Underwriting Agreement dated on or about August 15, 2005, among Stone
Arcade Acquisition Corporation, Morgan Joseph & Co., Inc., as
Representative, and the other Underwriters identified therein.

5.               Contingent Liabilities under
Warrant Agreement dated on or about August 15, 2005 by and between Stone
Arcade Acquisition Corporation and Continental Stock Transfer & Trust
Company.

6.               The debt (other than Debt to
be Repaid) reflected on KapStone Paper and Packaging Corporation’s most recent
audited financial statements as of December 31, 2007.

7.               Contingent Liabilities
arising under the contracts identified on Schedule 5.25 which is hereby
incorporated by reference herein.

8.               Debt secured by Liens listed
on Schedule 7.02.

 

25

 

Schedule 7.01(g)

 

Debt To Be Repaid

 

1.               Credit Agreement dated as of
January 2, 2007 among KapStone Kraft Paper Corporation, the Lenders
identified therein and LaSalle Bank National Association, as Administrative
Agent.(1)

 

2.     Obligations in respect of
the following filing:

 

	
  The Bank of New York, as Agent, as successor in interest to
  NationsBank, N.A., as Agent - assignment(2)

  	
   

  	
  52386358

  

  52419902

  	
   

  	
  8/2/05

  

  8/4/05

  	
   

  	
  All rights, title and interests in Cogen South LLC

  

  Assignment to The Bank of New York, N.A.

  

 

(1) To be repaid and terminated on
Commitment Effective Date as provided in payoff letter.

(2) To be assigned to the Borrower on
the Commitment Effective Date and terminated in connection herewith.

 

26

 

Schedule 7.02

 

Existing Liens

 

1.               The following Liens:

 

KapStone Paper and Packaging Corporation

 

	
  Secured Party

  	
   

  	
  Filing
  Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Astenjohnson, Inc.

  	
   

  	
  70412469

  	
   

  	
  2/1/07

  	
   

  	
  Goods and Inventory on consignment and proceeds thereof

  

 

KapStone Kraft Paper Corporation

 

	
  Secured Party

  	
   

  	
  Filing
  Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  73536439

  	
   

  	
  9/19/07

  	
   

  	
  Equipment: 2002 Hyster S100XM Cushioned Diesel Lift Truck, serial
  number E004V02027Z

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minority Alliance Capital, LLC

  	
   

  	
  80434348

  	
   

  	
  2/5/08

  	
   

  	
  Equipment: Yale Model GLC080VXNGSF084, serial numbers E818V02224E and
  E818VO2227E

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Independence Bank

  	
   

  	
  80533339

  	
   

  	
  2/13/08

  	
   

  	
  Equipment: New Yale Model GLC080VXNGSF084, serial numbers:
  E818V02224E and E818V02227E

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leasenet Group LLC

  	
   

  	
  80663003

  	
   

  	
  2/25/08

  	
   

  	
  Equipment described in Schedule KS-003 to Master Equipment Lease
  KS-01 dated May 5, 2007. UCC filed for informational purposes only.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minority Alliance Capital, LLC

  	
   

  	
  80665669

  	
   

  	
  2/25/08

  	
   

  	
  Equipment: Yale Model GLC120VXNGSF085, serial numbers E818V02339E and
  E818VO2357E

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Independence Bank

  	
   

  	
  81375326

  	
   

  	
  4/21/08

  	
   

  	
  Equipment: Yale Model GLC120VXNGSF085, serial numbers E818V02339E and
  E818VO2357E

  

 

27

 

MeadWestvaco Corporation

 

	
  Secured
  Party

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Collateral

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Atel Leasing Corporation

  	
   

  	
  41875824

  	
   

  	
  7/6/04

  	
   

  	
  Equipment and Related
  Software under Lease Agreement No. MEAD1 

  Precautionary filing

  
	
  - partial assignment

  	
   

  	
  503363193

  	
   

  	
  2/2/05

  	
   

  	
  Assignment to Atel Capital
  Equipment Fund IX, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/7/07

  	
   

  	
  Assignment to Atel Capital
  Equipment Fund IX, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/7/07

  	
   

  	
  Assignment to Atel Capital
  Equipment Fund X, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/7/07

  	
   

  	
  Assignment to Atel Capital
  Equipment Fund XI, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/8/07

  	
   

  	
  Assignment to Atel Capital
  Equipment Fund IX, LLC

  
	
  - partial assignment

  	
   

  	
  41875824

  	
   

  	
  5/8/07

  	
   

  	
  Assignment to Atel Capital
  Equipment Fund X, LLC

  
	
  - amendment

  	
   

  	
  41875824

  	
   

  	
  3/14/08

  	
   

  	
  Amended Debtor’s address

  
	
  - partial assignment 

  	
   

  	
  41875824

  	
   

  	
  5/19/08

  	
   

  	
  Assignment to Atel Capital
  Equipment Fund X, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eplus Group, Inc.

  	
   

  	
  51580548

  	
   

  	
  5/23/05

  	
   

  	
  Equipment on Schedule 371 of an Equipment Lease Agreement, dated
  1/28/92 

  Filed for informational purposes only

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Banc of America Leasing & Capital, LLC

  	
   

  	
  61267731

  	
   

  	
  4/16/07

  	
   

  	
  Equipment: Case 41 Skid Steer Loader 

  *Precautionary lease notice filing

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Banc of America Leasing & Capital, LLC

  	
   

  	
  63425691

  	
   

  	
  9/15/06

  	
   

  	
  Equipment subject to schedule no. 017 to Lease Agreement, dated
  8/3/06 

  *Precautionary lease notice filing

  

 

2.               Lien pursuant to Sublease
Agreement by and between Royal Bank of Scotland and KapStone Charleston Kraft
LLC.

3.               Lien pursuant to Sublease
Agreement by and between Bank of America and KapStone Charleston Kraft LLC.

4.               Lien pursuant to Lease
Agreement by and between PHH Vehicle Management Services, LLC and KapStone
Paper and Packaging Corporation.

5.               Lien pursuant to Railroad
Equipment Lease Agreement by and between Wells Fargo and KapStone Charleston
Kraft LLC.

 

28

 

Schedule 7.08

 

Unconditional Purchase Obligations

 

1.               Long-Term Fiber Supply
Agreement dated on or about July 1, 2008 by and between MeadWestvaco
Forestry, LLC and KapStone Charleston Kraft LLC.

 

29

 

Schedule 7.11

 

Investments

 

None.

 

30

 

Schedule 7.18

 

Holding Company Contracts

 

1.               Lease Agreement dated as of January 1,
1997 by and between the City of Fordyce, Arkansas and International Paper
Company.

 

2.               Registration Rights
Agreement dated on or about August 15, 2005 by and among Stone Arcade
Acquisition Corporation, Roger W. Stone, Matthew Kaplan, Jonathan R. Furer,
John M. Chapman and Muhit U. Rhaman 
(each an “Initial Stockholder” and collectively the “Initial
Stockholders”).

 

3.               Letter Agreement dated on or
about August 15, 2005 by and between Stone-Kaplan Investments LLC and
Stone Arcade Acquisition Corporation regarding administrative support.

 

4.               Investment Management Trust
Agreement dated on or about  August 15,
2005 by and between Stone Arcade Acquisition Corporation and Continental Stock
Transfer & Trust Company.

 

5.               Letter Agreements among
Stone Arcade Acquisition Corporation, Morgan Joseph & Co. Inc. and
each of the Initial Stockholders dated on or about August 15, 2005.

 

6.               Purchase Agreement dated as
of June 23, 2006 by and between International Paper Company, Stone Arcade
Acquisition Corporation and KapStone Kraft Paper Corporation.

 

7.               Inter-Company Loan Agreement
dated as of January 2, 2007 by and between KapStone Paper and Packaging
Corporation and KapStone Kraft Paper Corporation.

 

8.               Asset Purchase Agreement dated
April 4, 2008 among MeadWestvaco South Carolina, LLC, MeadWestvaco
Corporation, KapStone Paper and Packaging Corporation and Oak Acquisition LLC.

 

9.               KapStone Paper and Packaging
Corporation 2006 Incentive Plan dated December 15, 2006, as amended April 10,
2008.

 

10.         Indemnity Agreement dated on
or about July 1, 2008 among MeadWestvaco Corporation, MeadWestvaco South
Carolina LLC, KapStone Charleston Kraft LLC, KapStone Paper and Packaging
Corporation and Cogen South L.L.C. re: FILOT Arrangement.

 

11.         KapStone Paper and Packaging
Corporation’s Guaranty of Service Agreement dated February 2, 2005 by and
between Cogen South, L.L.C. and South Carolina Electric & Gas Company.

 

12.         KapStone Paper and Packaging
Corporation’s Guaranty of Purchase and Supply Agreement dated January 1,
2008 by and between KapStone Charleston Kraft LLC and Old World Industries, Inc.

 

31

 

Schedule 11.02

 

Administrative Agent’s Office, Certain Addresses for Notice

 

BORROWER:

 

KapStone Kraft Paper Corporation

1101 Skokie Blvd., STE 300

Northbrook, IL 60062

Attention:  Andrea K. Tarbox

Telephone:  847-239-8812

Telecopier:  847-919-3833

Electronic
Mail:  Andrea.Tarbox@kapstonepaper.com

 

ADMINISTRATIVE
AGENT:

 

Administrative Agent’s Office

(for payments and Requests for Credit Extensions):

Bank
of America, N.A.

901
Main Street

Mail
Code:  TX1-492-14-14

Dallas,
TX  75202

Attention:  Denise Wolfenberger

Telephone:  214-209-3175

Telecopier:  214-290-8373

Electronic
Mail:  denise.m.wolfenberger@bankofamerica.com

Account
No.:  129-2000-883

Ref:  KapStone Kraft Paper Corporation

ABA#
026009593

 

Other Notices as Administrative Agent:

Bank
of America, N.A.

Agency Management

231 S. LaSalle Street

Mail
Code:  IL1-231-10-41

Chicago, IL  60697

Attention:
  Suzanne M. Paul

Telephone:  312-923-1640

Telecopier:  877-206-8435

Electronic
Mail:  suzanne.m.paul@bankofamerica.com

 

1

 

L/C
ISSUER:

 

Bank of America, N.A., as L/C Issuer

Trade Operation

1000 W. Temple Street

Mail Code: 
CA9-705-07-05

Los Angeles, CA 
90012-1514

Attention:  Tai
Anh Lu

Telephone:  
213-481-7840

Telecopier: 
213-580-8442

E-mail:  tai_anh.lu@bankofamerica.com

 

SWING
LINE LENDER:

 

Bank
of America, N.A.

901
Main Street

Mail
Code:  TX1-492-14-14

Dallas,
TX  75202

Attention:  Denise Wolfenberger

Telephone:  214-209-3175

Telecopier:  214-290-8373

Electronic
Mail: 
denise.wolfenberger@bankofamerica.com

Account
No.:  129-2000-883

Ref:  KapStone Kraft Paper Corporation

ABA#
026009593

 

2

 

EXHIBIT A

 

FORM OF COMMITTED LOAN NOTICE

 

Date: 
                      ,            

 

To:       Bank of America, N.A., as
Administrative Agent

 

Ladies
and Gentlemen:

 

Reference
is made to that certain Credit Agreement, dated as of June 12, 2008 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among Kapstone Kraft Paper Corporation, a Delaware
corporation (the “Borrower”), Kapstone Paper and Packaging Corporation,
a Delaware corporation (the “Parent”), the Guarantors from time to time
party thereto, the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

 

The
undersigned hereby requests (select one):

 

o  A Borrowing of Revolving Credit Loans

 

o  A conversion or continuation of [Revolving
Credit][Term] Loans

 

	
  1.

  	
   

  	
  On                                                                     (a
  Business Day).

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  In
  the amount of $                                            

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Comprised
  of                                                                  

  
	
   

  	
   

  	
   

  	
  [Type
  of Loan requested]

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  For
  Eurodollar Rate Loans: with an Interest Period of                  months.

  

 

[The
Revolving Credit Borrowing requested herein complies with the proviso to the
first sentence of Section 2.01(b) of the Agreement.](10)

 

(10)        Include this sentence in the
case of a Revolving Credit Borrowing.

 

A-1

 

The
Borrower hereby represents and warrants that the conditions specified in Sections
4.03(a) and (b) shall be satisfied on and as of the date
of the applicable Credit Extension.

 

 

	
   

  	
  KAPSTONE
  KRAFT PAPER CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-2

 

EXHIBIT B

 

FORM OF SWING LINE LOAN NOTICE

 

Date: 
                      ,             

 

To:       Bank of America, N.A., as
Swing Line Lender

Bank of America, N.A., as Administrative Agent

 

Ladies
and Gentlemen:

 

Reference
is made to that certain Credit Agreement, dated as of June 12, 2008 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among Kapstone Kraft Paper Corporation, a Delaware
corporation (the “Borrower”), Kapstone Paper and Packaging Corporation,
a Delaware corporation (the “Parent”), the Guarantors from time to time
party thereto, the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

 

The
undersigned hereby requests a Swing Line Loan:

 

	
  1.

  	
   

  	
  On                                                                     (a
  Business Day).

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  In
  the amount of $                                            .

  

 

The
Swing Line Borrowing requested herein complies with the requirements of the
provisos to the first sentence of Section 2.04(a) of the
Agreement.

 

The
Borrower hereby represents and warrants that the conditions specified in Sections
4.03(a) and (b) shall be satisfied on and as of the date
of the applicable Credit Extension.

 

 

	
   

  	
  KAPSTONE
  KRAFT PAPER CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

B-1

 

EXHIBIT C-1

 

FORM OF TERM A NOTE

 

                      ,             

 

FOR
VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay
to
                                          
or registered assigns (the “Lender”), in accordance with the provisions
of the Agreement (as hereinafter defined), the principal amount of the Term A
Loan from time to time made by the Lender to the Borrower under that certain
Credit Agreement, dated as of June 12, 2008 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among the
Borrower, the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

 

The
Borrower promises to pay interest on the unpaid principal amount of the Term A
Loan made by the Lender from the date of such Loan until such principal amount
is paid in full, at such interest rates and at such times as provided in the
Agreement.  All payments of principal and
interest shall be made to the Administrative Agent for the account of the
Lender in Dollars in immediately available funds at the Administrative Agent’s
Office.  If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

 

This
Term A Note is one of the Term A Notes referred to in the Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. 
This Term A Note is also entitled to the benefits of the Guaranty and is
secured by the Collateral.  Upon the
occurrence and continuation of one or more of the Events of Default specified
in the Agreement, all amounts then remaining unpaid on this Term A Note shall
become, or may be declared to be, immediately due and payable all as provided
in the Agreement.  The Term A Loan made
by the Lender shall be evidenced by one or more loan accounts or records
maintained by the Lender in the ordinary course of business.  The Lender may also attach schedules to this
Term A Note and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.

 

The
Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Term A Note.

 

C-1-1

 

THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.

 

	
   

  	
  KAPSTONE
  KRAFT PAPER CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

C-1-2

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

	
  Date

  	
   

  	
  Type of

  Loan Made

  	
   

  	
  Amount of

  Loan Made

  	
   

  	
  End of

  Interest

  Period

  	
   

  	
  Amount of

  Principal or

  Interest Paid

  This Date

  	
   

  	
  Outstanding

  Principal

  Balance This

  Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

C-1-3

 

EXHIBIT C-2

 

FORM OF TERM B NOTE

 

                      ,             

 

FOR
VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay
to
                                          
or registered assigns (the “Lender”), in accordance with the provisions
of the Agreement (as hereinafter defined), the principal amount of the Term B
Loan from time to time made by the Lender to the Borrower under that certain
Credit Agreement, dated as of June 12, 2008 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among the
Borrower, the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

 

The
Borrower promises to pay interest on the unpaid principal amount of the Term B
Loan made by the Lender from the date of such Loan until such principal amount
is paid in full, at such interest rates and at such times as provided in the
Agreement.  All payments of principal and
interest shall be made to the Administrative Agent for the account of the
Lender in Dollars in immediately available funds at the Administrative Agent’s
Office.  If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

 

This
Term B Note is one of the Term B Notes referred to in the Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. 
This Term B Note is also entitled to the benefits of the Guaranty and is
secured by the Collateral.  Upon the
occurrence and continuation of one or more of the Events of Default specified
in the Agreement, all amounts then remaining unpaid on this Term B Note shall
become, or may be declared to be, immediately due and payable all as provided
in the Agreement.  The Term B Loan made
by the Lender shall be evidenced by one or more loan accounts or records
maintained by the Lender in the ordinary course of business.  The Lender may also attach schedules to this
Term B Note and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.

 

The
Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Term B Note.

 

C-2-1

 

THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.

 

	
   

  	
  KAPSTONE
  KRAFT PAPER CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

C-2-2

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

	
  Date

  	
   

  	
  Type of

  Loan Made

  	
   

  	
  Amount of

  Loan Made

  	
   

  	
  End of

  Interest

  Period

  	
   

  	
  Amount of

  Principal or

  Interest Paid

  This Date

  	
   

  	
  Outstanding

  Principal

  Balance This

  Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

C-2-3

 

EXHIBIT C-3

 

FORM OF REVOLVING CREDIT NOTE

 

                      ,             

 

FOR
VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay
to
                                          
or registered assigns (the “Lender”), in accordance with the provisions
of the Agreement (as hereinafter defined), the principal amount of each
Revolving Credit Loan from time to time made by the Lender to the Borrower
under that certain Credit Agreement, dated as of June 12, 2008 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among the Borrower, the Lenders from time to time
party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer
and Swing Line Lender.

 

The
Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement.  All payments of principal and
interest shall be made to the Administrative Agent for the account of the
Lender in Dollars in immediately available funds at the Administrative Agent’s
Office.  If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

 

This
Revolving Credit Note is one of the Revolving Credit Notes referred to in the
Agreement, is entitled to the benefits thereof and may be prepaid in whole or
in part subject to the terms and conditions provided therein.  This Revolving Credit Note is also entitled
to the benefits of the Guaranty and is secured by the Collateral.  Upon the occurrence and continuation of one
or more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Revolving Credit Note shall become, or may be declared
to be, immediately due and payable all as provided in the Agreement.  Revolving Credit Loans made by the Lender
shall be evidenced by one or more loan accounts or records maintained by the
Lender in the ordinary course of business. 
The Lender may also attach schedules to this Revolving Credit Note and
endorse thereon the date, amount and maturity of its Revolving Credit Loans and
payments with respect thereto.

 

The
Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Revolving Credit Note.

 

C-3-1

 

THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.

 

 

	
   

  	
  KAPSTONE
  KRAFT PAPER CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

C-3-2

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

	
  Date

  	
   

  	
  Type of

  Loan Made

  	
   

  	
  Amount of

  Loan Made

  	
   

  	
  End of

  Interest

  Period

  	
   

  	
  Amount of

  Principal or

  Interest Paid

  This Date

  	
   

  	
  Outstanding

  Principal

  Balance This

  Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

C-3-3

 

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:                        ,             

 

To:       Bank of America, N.A., as
Administrative Agent

 

Ladies
and Gentlemen:

 

Reference
is made to that certain Credit Agreement, dated as of June 12, 2008 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among KAPSTONE KRAFT PAPER CORPORATION, a Delaware
corporation (the “Borrower”), KAPSTONE PAPER AND PACKAGING CORPORATION,
a Delaware corporation (the “Parent”), the Guarantors from time to time
party thereto, the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.

 

The
undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the
                                                         
of the Parent, and that, as such, he/she is authorized to execute and deliver
this Certificate to the Administrative Agent on the behalf of the Parent and
the Borrower, and, after due and diligent investigation, that:

 

[Use following paragraph 1 for fiscal year-end
financial statements]

 

1.             The Borrower
has delivered (i) the year-end audited financial statements required by Section 6.01(a) of
the Agreement for the fiscal year of the Parent ended as of the above date,
together with the report and opinion of an independent certified public
accountant required by such section and (ii) the consolidating balance
sheet of the Parent and its Subsidiaries as at the end of such fiscal year and
the related consolidating statements of income or operations, shareholders’
equity and cash flows for such Fiscal Year. 
Such consolidating statements are fairly stated in all material respects
when considered in relation to the consolidated financial statements of the
Parent and its Subsidiaries].

 

[Use following paragraph 1 for fiscal quarter-end
financial statements]

 

1.             The Borrower
has delivered the unaudited financial statements required by Section 6.01(b) of
the Agreement for the fiscal quarter of the Parent ended as of the above
date.  Such consolidated financial
statements fairly present the financial condition, results of operations and
cash flows of the Parent and its Subsidiaries in accordance with GAAP as at
such date and for such period, subject only to normal year-end audit
adjustments and the absence of footnotes and such consolidating financial
statements are fairly stated in all material respects when considered in relation
to the consolidated financial statements of the Parent and its Subsidiaries.

 

2.             The undersigned
has reviewed and is familiar with the terms of the Agreement and has made, or
has caused to be made under his/her supervision, a detailed review 

 

D-1

 

of
the transactions and condition (financial or otherwise) of the Borrower and the
Parent during the accounting period covered by such financial statements.

 

3.             A review of the
activities of the Borrower and the Parent during such fiscal period has been
made under the supervision of the undersigned with a view to determining
whether during such fiscal period each of the Borrower and the Parent performed
and observed all of its respective Obligations under the Loan Documents, and

 

[select one:]

 

[to
the best knowledge of the undersigned, during such fiscal period the Borrower
and the Parent performed and observed each covenant and condition of the Loan
Documents applicable to it, and no Default has occurred and is continuing.]

 

—or—

 

[to
the best knowledge of the undersigned, the following covenants or conditions
have not been performed or observed and the following is a list of each such
Default and its nature and status:]

 

4.             The
representations and warranties of the Borrower contained in Article V
of the Agreement and all representations and warranties of any Loan Party that
are contained in any document furnished at any time under or in connection with
the Loan Documents, are true and correct in all material respects (except to
the extent already qualified by materiality pursuant to the terms thereof) on
and as of the date hereof, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true and
correct as of such earlier date, and except that for purposes of this
Compliance Certificate, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 of the Agreement
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01 of the
Agreement, including the statements in connection with which this Compliance
Certificate is delivered.

 

5.             The financial
covenant analyses and information set forth on Schedules 1 and  2 attached hereto are true and accurate on
and as of the date of this Certificate.

 

IN WITNESS WHEREOF, the undersigned has
executed this Certificate as of                      ,             .

 

	
   

  	
  KAPSTONE
  PAPER AND PACKAGING CORPORATION,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

D-2

 

For the Quarter/Year ended
                            ,
         (“Statement Date”)

 

SCHEDULE 1

to the Compliance Certificate

($ in 000’s)

 

	
  I.

  	
   

  	
  Section 7.14(a) —
  Total Leverage Ratio.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.

  	
  Total
  Debt at Statement Date

  	
   

  	
  $

  	
                

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B.

  	
  EBITDA
  for the four Fiscal Quarter period ending on above date (“Subject Period”)(1):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  1

  	
  Consolidated
  Net Income for Subject Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  2

  	
  Interest
  Expense for Subject Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  3

  	
  Income
  tax expense for Subject Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4

  	
  Depreciation
  and amortization expenses for Subject Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  5

  	
  Extraordinary
  losses (or less gains), net of related tax effects for Subject Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  6

  	
  Other
  non-cash charges or losses (or less gains or income) for which no cash outlay
  (or cash receipt) is foreseeable for Subject Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  7

  	
  “Cold
  mill” maintenance outage costs in an aggregate amount of up to $7,500,000 for
  the term of the Credit Agreement (it being understood that such add-back
  shall only be permitted in connection with one such outage during the term of
  the Credit Agreement) but only to the extent that (i) the aggregate
  amount of such costs for the Subject Period exceeds the actual expense
  allocable to such outage during the Subject Period and (ii) any such
  resulting add-back is applied to reduce EBITDA in the future periods to which
  such expenses actually relate on a Dollar for Dollar basis:

  	
   

  	
   

  

 

(1) For
purposes of calculating the Total Leverage Ratio and the Fixed Charge Coverage
Ratio, (i) EBITDA shall be deemed to be: $38,877,600 for the Fiscal
Quarter ending September 30, 2007, $39,298,700 for the Fiscal Quarter
ending December 31, 2007 and $33,475,400 for the Fiscal Quarter ending March 31,
2008 and (ii) EBITDA for the period from April 1, 2008 to the Closing
Date shall be determined in a manner consistent with clause (i) of the
definition thereof.

 

D-3

 

	
   

  	
   

  	
   

  	
  8

  	
  Expenses
  and fees incurred in the Subject Period to consummate the transactions
  contemplated by the Loan Documents in an aggregate amount not exceeding
  $13,500,000:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  9

  	
  EBITDA
  (Lines I.B.1 + 2 + 3 + 4 + 5 + 6 + 7+8):

  	
   

  	
  $

  	
                    

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C.

  	
  Total
  Leverage Ratio (Line I.A  ̧ Line I.B.9):

  	
   

  	
                 to
  1

  

 

Maximum permitted:

 

	
  Calendar Year

  	
   

  	
  March 31

  	
   

  	
  June 30

  	
   

  	
  September 30

  	
   

  	
  December 31

  
	
  2008

  	
   

  	
  N/A

  	
   

  	
  4.00:1.00

  	
   

  	
  4.00:1.00

  	
   

  	
  3.75:1.00

  
	
  2009

  	
   

  	
  3.50:1.00

  	
   

  	
  3.50:1.00

  	
   

  	
  3.50:1.00

  	
   

  	
  3.00:1.00

  
	
  Thereafter

  	
   

  	
  3.00:1.00

  	
   

  	
  3.00:1.00

  	
   

  	
  3.00:1.00

  	
   

  	
  3.00:1.00

  

 

	
  II.

  	
   

  	
  Section 7.14(d) -
  Fixed Charge Coverage Ratio

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.

  	
  EBITDA for Subject Period (Line I.B.9 above)(2):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B.

  	
  The
  sum of income taxes paid in cash by the Loan Parties for Subject Period(3):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  C.

  	
  Cash
  dividends paid during Subject Period(3):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  D.

  	
  All
  unfinanced Capital Expenditures during Subject Period(3):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E.

  	
  Cash
  Interest Expense for Subject Period(3):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  F.

  	
  Required
  payments of principal of Funded Debt (including the Term Loans but excluding
  the Revolving Credit Loans and the Intercompany Subordinated Debt) (3):

  	
   

  	
  $

  

 

(2) For purposes of calculating the Total
Leverage Ratio and the Fixed Charge Coverage Ratio, (i) EBITDA shall be
deemed to be: $38,877,600 for the Fiscal Quarter ending September 30,
2007, $39,298,700 for the Fiscal Quarter ending December 31, 2007 and
$33,475,400 for the Fiscal Quarter ending March 31, 2008 and
(ii) EBITDA for the period from April 1, 2008 to the Closing Date
shall be determined in a manner consistent with clause (i) of the
definition thereof.

(3) For any Fiscal Quarter ending during the
first three full Fiscal Quarters following the Commitment Effective Date, this
amount shall be determined not by taking the actual amount for such four
consecutive Fiscal Quarter period but instead by dividing (x) the actual
amount of this item from the Commitment Effective Date to such Fiscal Quarter
end by (y) the number of days from (and including) the Commitment
Effective Date to (and including) such Fiscal Quarter end and multiplying the
quotient by 365.

 

D-4

 

	
   

  	
   

  	
  G.

  	
  Fixed
  Charge Coverage Ratio (Line II.A - Line II.B — Line II.C - Line II.D)  ̧ (Line II.E +
  Line II.F):

  	
   

  	
   

  

 

Minimum required:

 

	
  Four
  Fiscal Quarters Ending

  	
   

  	
  Minimum Consolidated Fixed

  Charge Coverage Ratio

  	
   

  
	
  Closing Date through September 30, 2011

  	
   

  	
  1.10:1.00

  	
   

  
	
  Fiscal Quarter ending December 31, 2011 and
  each fiscal quarter thereafter

  	
   

  	
  1.15:1.00

  	
   

  

 

D-5

 

For the Quarter/Year ended
                                      (“Statement
Date”)

 

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

 

Consolidated EBITDA

(in accordance with the definition of EBITDA

as set forth in the Agreement)

 

	
  EBITDA

  	
   

  	
  Quarter

  Ended

  	
   

  	
  Quarter

  Ended

  	
   

  	
  Quarter

  Ended

  	
   

  	
  Quarter

  Ended

  	
   

  	
  Twelve

  Months

  Ended

  
	
  Consolidated
  Net Income

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +
  Interest Expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +
  income taxes

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +
  depreciation expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +
  amortization expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + extraordinary losses (or less gains), net of
  related tax effects

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + other non-cash charges or losses (or less gains
  or income) for which no cash outlay (or cash receipt) is foreseeable

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + “cold mill” maintenance outage costs in an
  aggregate amount of up to $7,500,000 for the term of the Credit Agreement (it
  being understood that such add-back shall only be permitted in 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

D-6

 

	
  connection
  with one such outage during the term of the Credit Agreement) but only to the
  extent that (i) the aggregate amount of such costs for such period
  exceeds the actual expense allocable to such outage during such period and
  (ii) any such resulting add-back is applied to reduce EBITDA in the
  future periods to which such expenses actually relate on a Dollar for Dollar
  basis

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + expenses and fees incurred to consummate the
  transactions contemplated by the Loan Documents in an aggregate amount for
  all periods not exceeding $13,500,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  =
  Consolidated EBITDA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

D-7

 

EXHIBIT E-1

 

ASSIGNMENT AND ASSUMPTION

 

This
Assignment and Assumption (this “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between [the][each]
Assignor identified in item 1 below ([the][each, an] “Assignor”) and
[the][each] Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights
and obligations of [the Assignors][the Assignees] hereunder are several and not
joint.]  Capitalized terms used but not
defined herein shall have the meanings given to them in the Credit Agreement
identified below (the “Credit Agreement”), receipt of a copy of which is
hereby acknowledged by the Assignee.  The
Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby
agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

 

For
an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
under the respective facilities identified below (including, without
limitation, the Letters of Credit and the Swing Line Loans included in such
facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any
other right of [the Assignor (in its capacity as a Lender)][the respective
Assignors (in their respective capacities as Lenders)] against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i) above
(the rights and obligations sold and assigned by [the][any] Assignor to
[the][any] Assignee pursuant to clauses (i) and (ii) above being
referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by [the][any]
Assignor.

 

1.             Assignor[s]:

 

2.             Assignee[s]:

 

[for each Assignee, indicate [Affiliate][Approved
Fund] of [identify Lender]]

 

E-1-1

 

3.             Borrower:         Kapstone Kraft
Paper Corporation, a Delaware corporation

 

4.             Administrative Agent: Bank of
America, N.A., as the administrative agent under the Credit Agreement

 

5.             Credit Agreement:         Credit
Agreement, dated as of June 12, 2008, among the Borrower, the Guarantors
from time to time party thereto, the Lenders from time to time party thereto,
and Bank of America, N.A., as Administrative Agent, L/C Issuer, and Swing Line
Lender

 

6.             Assigned Interest:

 

	
  Assignor[s]

  	
   

  	
  Assignee[s]

  	
   

  	
  Facility

  Assigned

  	
   

  	
  Aggregate

  Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount
  of

  Commitment/

  Loans

  Assigned

  	
   

  	
  Percentage

  Assigned of

  Commitment/

  Loans

  	
   

  	
  CUSIP

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

[7.            Trade Date:                                            ]

 

Effective
Date: 
                                    ,
20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

The
terms set forth in this Assignment and Assumption are hereby agreed to:

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME
  OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

E-1-2

 

	
  [Consented to and](14)
  Accepted:

  	
   

  
	
   

  	
   

  
	
  BANK OF AMERICA, N.A., as

  	
   

  
	
  Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

	
  [Consented
  to:](15)

  	
   

  
	
   

  	
   

  
	
  KAPSTONE
  KRAFT PAPER CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

	
  [Consented
  to:](6)

  	
   

  
	
   

  	
   

  
	
  [OTHER]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

(14) To be added only if the
consent of the Administrative Agent is required by the terms of the Credit
Agreement.

(15)
To be added only if the consent of the Borrower and/or other parties (e.g.
Swing Line Lender, L/C Issuer) is required by the terms of the Credit
Agreement.

 

E-1-3

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.             Representations and
Warranties.

 

1.1.          Assignor.  [The][Each] Assignor (a) represents and
warrants that (i) it is the legal and beneficial owner of [the][[the
relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

 

1.2.          Assignee.  [The][Each] Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it meets all the requirements to be an assignee
under Section 10.06(b)(iv) and (v) of the Credit
Agreement (subject to such consents, if any, as may be required under Section 10.06(b)(ii) of
the Credit Agreement), (iii) from and after the Effective Date, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and,
to the extent of [the][the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect
to decisions to acquire assets of the type represented by [the][such] Assigned
Interest and either it, or the Person exercising discretion in making its
decision to acquire [the][such] Assigned Interest, is experienced in acquiring
assets of such type, (v) it has received a copy of the Credit Agreement,
and has received or has been accorded the opportunity to receive copies of the
most recent financial statements delivered pursuant to Section     
thereof, as applicable, and such other documents and information as it deems
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if
it is a Foreign Lender, attached hereto is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by [the][such] Assignee; and (b) agrees that (i) it
will, independently and without reliance upon the Administrative Agent,
[the][any] Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and (ii) it
will perform in accordance with their terms 

 

E-1-4

 

all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

 

2.             Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of [the][each] Assigned
Interest (including payments of principal, interest, fees and other amounts) to
[the][the relevant] Assignor for amounts which have accrued to but excluding
the Effective Date and to [the][the relevant] Assignee for amounts which have
accrued from and after the Effective Date.

 

3.             General Provisions.  This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. 
Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be
governed by, and construed in accordance with, the law of the State of
                                        
[confirm that choice of law provision
parallels the Credit Agreement].

 

E-1-5

 

EXHIBIT E-2

 

FORM OF ADMINISTRATIVE QUESTIONNAIRE

 

1.     FAX ALONG WITH COMMITMENT LETTER TO:  Taylor McLemore

FAX (704) 208.3021

 

I.  Borrower Name:        KapStone
Kraft Paper Corporation

 

$                                               Type
of Credit Facility                               

 

II.
Legal Name of Lender of Record for Signature Page:

 

·      Signing
Credit Agreement        o YES  o NO

·      Coming
in via Assignment        o YES  o NO

 

III.
Type of Lender:

(Bank,
Asset Manager, Broker/Dealer, CLO/CDO, Finance Company, Hedge Fund, Insurance,
Mutual Fund, Pension Fund, Other Regulated Investment Fund, Special Purpose
Vehicle, Other — please specify)

 

	
  IV.
  Domestic Address:

  	
   

  	
  V.
  Eurodollar Address:

  

 

VI.  Contact Information:

 

Syndicate level
information (which may contain material non-public information about the
Borrower and its related parties or their respective securities will be made
available to the Credit Contact(s).  The Credit Contacts identified must
be able to receive such information in accordance with his/her institution’s
compliance procedures and applicable laws, including Federal and State
securities laws.

 

	
   

  	
   

  	
  Credit Contact

  	
   

  	
  Primary

  Operations Contact

  	
   

  	
  Secondary

  Operations Contact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E Mail Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Does Secondary
Operations Contact need copy of notices?  o YES 
o NO

 

	
   

  	
   

  	
  Letter of Credit

  Contact

  	
   

  	
  Draft Documentation

  Contact

  	
   

  	
  Legal Counsel

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

E-2-1

 

	
  Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E Mail Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

VII.
Lender’s Standby Letter of Credit, Commercial Letter of Credit, and Bankers’
Acceptance Fed Wire Payment Instructions (if applicable):

 

	
  Pay to:

  	
   

  
	
   

  	
  (Bank
  Name)

  
	
   

  	
   

  
	
   

  	
  (ABA
  #)

  
	
   

  	
   

  
	
   

  	
  (Account
  #)

  
	
   

  	
   

  
	
   

  	
  (Attention)

  

 

VIII.
Lender’s Fed Wire Payment Instructions:

 

	
  Pay to:

  	
   

  	
   

  
	
   

  	
  (Bank
  Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ABA
  #)

  	
   

  	
  (City/State)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Account
  #)

  	
   

  	
  (Account
  Name)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Attention)

  	
   

  	
   

  
					

 

IX.
Organizational Structure and Tax Status

 

Please
refer to the enclosed withholding tax instructions below and then complete this
section accordingly:

 

Lender Taxpayer
Identification Number (TIN):                      -                      

 

Tax Withholding Form Delivered
to Bank of America*:

 

o  W-9

 

o  W-8BEN

 

o  W-8ECI

 

o  W-8EXP

 

o  W-8IMY

 

NON–U.S. LENDER
INSTITUTIONS

 

1. Corporations:

 

If your
institution is incorporated outside of the United States for U.S. federal
income tax purposes, and is the beneficial owner of the interest and other
income it receives, you must complete one of the following three tax forms, as
applicable to your institution: a.) Form W-8BEN (Certificate of Foreign
Status of Beneficial Owner), b.)

 

E-2-2

 

Form W-8ECI
(Income Effectively Connected to a U.S. Trade or Business), or c.) Form W-8EXP
(Certificate of Foreign Government or Governmental Agency).

 

A U.S. taxpayer
identification number is required for any institution submitting a Form W-8
ECI.  It is also required on Form W-8BEN
for certain institutions claiming the benefits of a tax treaty with the
U.S.  Please refer to the instructions
when completing the form applicable to your institution.  In addition, please be advised that U.S. tax
regulations do not permit the acceptance of faxed forms.  An original
tax form must be submitted.

 

2. Flow-Through
Entities

 

If your
institution is organized outside the U.S., and is classified for U.S. federal
income tax purposes as either a Partnership, Trust, Qualified or Non-Qualified
Intermediary, or other non-U.S. flow-through entity, an original Form

 

W-8IMY
(Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain
U.S. branches for United States Tax Withholding) must be completed by the
intermediary together with a withholding statement.  Flow-through entities other than Qualified
Intermediaries are required to include tax forms for each of the underlying
beneficial owners.

 

Please refer to
the instructions when completing this form. 
In addition, please be advised that U.S. tax regulations do not permit
the acceptance of faxed forms.  Original tax form(s) must be submitted.

 

U.S. LENDER
INSTITUTIONS:

 

If your
institution is incorporated or organized within the United States, you must
complete and return Form W-9 (Request for Taxpayer Identification Number
and Certification).  Please be advised that we require an original form W-9.

 

Pursuant to the language contained in the tax section of the
Credit Agreement, the applicable tax form for your institution must be
completed and returned on or prior to the date on which your institution
becomes a lender under this Credit Agreement. 
Failure to provide the proper tax form when requested will subject your
institution to U.S. tax withholding.

 

*Additional
guidance and instructions as to where to submit this documentation can be found
at this link:

 

X.
Bank of America Payment Instructions:

 

	
  Pay
  to:

  	
  Bank of America, N.A.

  
	
   

  	
  ABA
  # 026009593

  
	
   

  	
  Dallas,
  TX

  
	
   

  	
  Acct.
  # 129-2000-883

  
	
   

  	
  Attn:
  Credit Services

  
	
   

  	
  Ref:
  KapStone Kraft Paper Corporation

  
	
   

  	
  Phone
  Advise: Denise Wolfenberger, 214-209-3175

  

 

E-2-3

 

EXHIBIT F

 

FORM OF SECURITY AGREEMENT

 

THIS
SECURITY AND PLEDGE AGREEMENT (this “Agreement”) is entered into as of July 1,
2008 among KAPSTONE KRAFT PAPER CORPORATION, a Delaware corporation (the “Borrower”),
KAPSTONE PAPER AND PACKAGING CORPORATION, a Delaware corporation (the “Parent”),
the other parties identified as “Obligors” on the signature page hereto
and such other parties that may become Obligors hereunder after the date hereof
(together with the Borrower and the Parent, individually an “Obligor”,
and collectively the “Obligors”) and BANK OF AMERICA, N.A., in its
capacity as collateral agent (in such capacity, the “Collateral Agent”)
for the Secured Parties (defined below).

 

RECITALS

 

WHEREAS,
pursuant to that certain Credit Agreement dated as of the date hereof (as
amended, modified, extended, renewed or replaced from time to time, the “Credit
Agreement”) among the Borrower, the Guarantors identified therein, the
Lenders identified therein and Bank of America, N.A., as Administrative Agent,
the Lenders have agreed to make Loans and issue Letters of Credit upon the
terms and subject to the conditions set forth therein;

 

WHEREAS,
pursuant to that certain Note Purchase Agreement dated as of the date hereof
(as amended, modified, extended, renewed or replaced from time to time, the “Note
Agreement”) among the Borrower, the Parent and the Purchasers identified
therein (the “Purchasers”), the Borrower has issued to the Purchasers
its senior secured notes due July 1, 2015 (as amended, modified, extended,
renewed or replaced from time to time, the “Private Placement Notes”)
upon the terms and subject to the conditions set forth therein;

 

WHEREAS,
the Parent and the other Obligors (other than the Borrower) have entered into
that certain Guaranty Agreement, dated as of the date hereof (as amended,
restated, supplemented or otherwise 
modified from time to time, the “2008  Guaranty”) in favor
of the holders of the Private Placement Notes (the “Noteholders”),
pursuant to which the Guarantors (as defined in the Note Agreement) have
guarantied all obligations of the Borrower and the Guarantors under the Note
Agreement and the other Transaction Documents (as defined in the Note
Agreement);

 

WHEREAS,
the Collateral Agent has been appointed to act as the collateral agent for the
Noteholders, the Administrative Agent and the Secured Lender Parties with
respect to certain matters pursuant to the Intercreditor and Collateral Agency
Agreement, dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the “Intercreditor Agreement”), by
and among the Noteholders, the Administrative Agent and the Collateral Agent;
and

 

WHEREAS,
this Agreement is required by the terms of the Credit Agreement and the Note
Agreement.

 

NOW,
THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

F-1

 

1.   Definitions.

 

(a)   Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Intercreditor Agreement, and if not defined therein, then the meanings ascribed
to such terms in the Credit Agreement, and the following terms shall have the
meanings set forth in the UCC (defined below): 
Accession, Account, Adverse Claim, As-Extracted Collateral, Certificated
Security, Chattel Paper, Commercial Tort Claim, Commingled Goods, Consumer
Goods, Control, Deposit Account, Document, Electronic Chattel Paper, Equipment,
Farm Products, Financial Asset, Fixtures, General Intangible, Goods,
Instrument, Inventory, Investment Company Security, Investment Property,
Letter-of-Credit Right, Manufactured Home, Money, Payment Intangible, Proceeds,
Promissory Note, Securities Account, Securities Intermediary, Security
Entitlement, Security, Software, Supporting Obligation and Tangible Chattel
Paper and Uncertificated Security.

 

(b)   In addition, the following terms shall have
the meanings set forth below:

 

“Collateral”
has the meaning provided in Section 2 hereof.

 

“Copyright
License” means any written agreement, naming any Obligor as licensor,
granting any right under any Copyright.

 

“Copyrights”
means (a) all registered United States copyrights in all Works, now
existing or hereafter created or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, registrations, recordings and applications in the United States
Copyright Office, and (b) all renewals thereof.

 

“Deposit Account Control Agreement” has the meaning set forth in
Section 3(c) hereof.

 

“Financing
Documents” means the “Financing Documents” as defined in the Intercreditor
Agreement.

 

“Patent
License” means any agreement, whether written or oral, providing for the
grant by or to an Obligor of any right to manufacture, use or sell any
invention covered by a Patent.

 

“Patents” means (a) all letters patent of the United States
or any other country and all reissues and extensions thereof, and (b) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof.

 

“Pledged Bonds” mean, collectively, (i) those certain State
of South Carolina Charleston County Industrial Development Revenue Bonds, Series 1998
(Westvaco Corporation Project) issued pursuant to Charleston County
Ordinance adopted October 20, 1998 and assigned by MeadWestvaco South
Carolina LLC (“MWSC”) to KapStone Charleston Kraft LLC (“KSCK”) pursuant
the terms of the Charleston County Ordinance adopted June 17, 2008
and by Assignment and Assumption of Agreements and Bonds and Release from
Agreements dated as of July 1, 2008 by and among MVSC, KSCK and Charleston
County in the principal amount of up to $420,000,000 and (ii) those
certain State of South Carolina Charleston County Industrial Development
Revenue Bonds, Series 1998 (Cogen South L.L.C. Project) in the principal
amount of up to $160,000,000 issued pursuant to Charleston County Ordinance
adopted October 20, 1998.

 

“Permitted Unpledged Account” means, with respect to any
Obligor, any Deposit Account of such Obligor that is used solely as a payroll
or employee benefit account or an operating expenses disbursement account, all
of which Deposit Accounts are set forth opposite the name of such Obligor

 

F-2

 

on Schedule 3(m) hereto on the date of this Agreement (or,
in the case of any additional Obligors on the date such additional Obligor
becomes a party to this Agreement) or are deposit accounts for such permitted
purposes for which the Collateral Agent
has received prior written notice of such addition (and, upon the receipt by
the Collateral Agent of such notice,
Schedule 3(m) hereto shall be deemed automatically amended to
include the additional Permitted Unpledged Account).

 

“Pledged Deposit Account” means any Deposit Account of an
Obligor, other than a Permitted Unpledged Account.

 

“Pledged Equity” means, with respect to each Obligor, (i) 100%
of the issued and outstanding Equity Interests of each Domestic Subsidiary of
the Borrower that is directly owned by such Obligor and (ii) 66% (or such
greater percentage that, due to a change in an applicable Law after the date
hereof, (A) could not reasonably be expected to cause the undistributed
earnings of such Foreign Subsidiary as determined for United States federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary’s United States parent and (B) could not reasonably be expected
to cause any material adverse tax consequences) of the issued and outstanding
Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
and 100% of the issued and outstanding Equity Interests not entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign
Subsidiary of the Borrower that is directly owned by such Obligor, including
the Equity Interests of the Subsidiaries owned by such Obligor as set forth on Schedule 1(b) hereto,
in each case together with the certificates (or other agreements or
instruments), if any, representing such shares, and all options and other
rights, contractual or otherwise, with respect thereto, including, but not
limited to, the following:

 

(1)   subject to the limitation in clause (ii) above,
all Equity Interests representing a dividend thereon, or representing a
distribution or return of capital upon or in respect thereof, or resulting from
a stock split, revision, reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder thereof, or
otherwise in respect thereof; and

 

(2)   subject to the limitation in clause (ii) above,
in the event of any consolidation or merger involving the issuer thereof and in
which such issuer is not the surviving Person, all shares of each class of the
Equity Interests of the successor Person formed by or resulting from such
consolidation or merger, to the extent that such successor Person is a direct
Subsidiary of an Obligor.

 

“Secured Obligations” means the “Senior Secured Obligations” as
defined in the Intercreditor Agreement.

 

“Secured Parties” means the “Creditors” as defined in the
Intercreditor Agreement.

 

“Securities Account Control Agreement” has the meaning set forth
in Section 3(c) hereof.

 

“Trademark
License” means any agreement, written or oral, providing for the grant by
or to an Obligor of any right to use any Trademark.

 

“Trademarks” means (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States,

 

F-3

 

any state thereof or any other country or any political subdivision
thereof, or otherwise and (b) all renewals thereof.

 

“UCC”
means the Uniform Commercial Code as in effect from time to time in the state
of Illinois except as such term may be used in connection with the perfection of
the Collateral and then the applicable jurisdiction with respect to such
affected Collateral shall apply.

 

“Work”
means any work that is subject to copyright protection pursuant to Title 17 of
the United States Code.

 

2.     Grant of Security Interest in
the Collateral.  To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Obligor hereby grants to the Collateral Agent, for the benefit of the Secured
Parties, a continuing security interest in, and a right to set off against, any
and all right, title and interest of such Obligor in and to all of the
following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Collateral”):

 

(a) all
Accounts;

 

(b) all
Chattel Paper;

 

(c) those
certain Commercial Tort Claims set forth on Schedule 2(c) hereto;

 

(d) all
Copyrights;

 

(e) all
Copyright Licenses;

 

(f) all
Documents;

 

(g) all
Equipment, including Equipment governed by the provisions of the FILOT Leases;

 

(h) all
Fixtures;

 

(i) all
General Intangibles, including any Obligor’s rights, title and interest as
lessee with respect to the FILOT Leases;

 

(j) all
Goods;

 

(k) all
Instruments, including without limitation the Instruments evidencing the
Indebtedness described on Schedule 2(k) and owing to such Obligor
by the issuers named therein, and all interest, cash, Instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Instruments evidencing such
Indebtedness;

 

(l) all
Inventory;

 

(m) all
Investment Property;

 

(n) all
Letter-of-Credit Rights;

 

(o) all
Money;

 

F-4

 

(p) all
Patents;

 

(q) all
Patent Licenses;

 

(r) all
Pledged Bonds;

 

(s) all
Pledged Deposit Accounts;

 

(t) all
Pledged Equity;

 

(u) all
Software;

 

(v) all
Supporting Obligations;

 

(w) all
Trademarks;

 

(x) all
Trademark Licenses; and

 

(y) all
Accessions and all Proceeds of any and all of the foregoing.

 

Notwithstanding
anything in this Section 2 to the contrary, the foregoing grant of
a security interest shall not be deemed to grant a security interest in any of
the property described below and the term Collateral shall exclude the property
described below (such property being hereinafter referred to as “Specific
Excluded Property”):

 

(I)            any
property or rights described in clauses (a) through (y) above, to the
extent that, under applicable Laws, the applicable Obligor is expressly
prohibited from granting a security interest therein or applicable Laws provide
for the involuntary forfeiture of the property in the event a security interest
is granted therein without the consent of the appropriate Governmental Authority;
provided,  however, that if such prohibition or the condition
requiring such consent relates only to the foreclosure of a security interest
or the exercise of other rights and remedies upon a default but not to the
granting of a security interest therein, then a security interest in such
property shall be deemed to be granted by this Agreement subject to the
condition that the consent of such Governmental Authority is obtained by the
Collateral Agent prior to foreclosure or exercising its other rights or
remedies hereunder as to which such consent is required, and

 

(II)           any
property or rights described in clauses (a) through (y) above, to the
extent that the terms and provisions of a written agreement, document or
instrument in effect on the date hereof (or after the date hereof unless the
relevant prohibition is prohibited under any Financing Document) creating or
evidencing such property or any rights relating thereto expressly prohibit the
granting of a security interest therein or condition the granting of a security
interest therein on the consent of a third party whose consent has not been
obtained or would cause, or allow a third party to cause, the forfeiture of
such property upon the granting of a security interest therein (other than to the
extent that any such requirement or restriction would be rendered ineffective
pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of Revised Article 9 of
the UCC (or any successor provision or provisions)); provided,  however,
that if such prohibition or the condition requiring such consent relates only
to the foreclosure of a security interest or the exercise of other rights or
remedies upon a default, then a security interest in such property shall be
deemed to be granted by this Agreement subject to the condition that the
consent of such third party is obtained 

 

F-5

 

by the Collateral Agent prior to foreclosure or
exercising of its other rights or remedies hereunder as to which such consent
is required; and

 

(III)         prior to an Event of Default and,
following an Event of Default unless otherwise requested by Agent, motor
vehicles;

 

provided  that,

 

(A)          In the event of the termination or
elimination of any prohibition or the requirement for any consent contained in
any applicable Law, agreement, document or instrument to the extent sufficient
to permit any Specific Excluded Property to become Collateral hereunder, or
upon the granting of any such consent, or waiving or terminating any
requirement for such consent, a security interest in such Specific Excluded
Property shall be automatically and simultaneously granted hereunder in such
Specific Excluded Property, and the Specific Excluded Property automatically
and simultaneously shall be deemed to be assigned and pledged to the Collateral
Agent and shall be included as Collateral hereunder; and

 

(B)           the
foregoing limitations on the security interests created hereby shall not apply (1) to
the extent any such prohibition on the creation of a security interest is rendered
ineffective under the UCC or other applicable Law or (2) to the extent
such General Intangible, agreement, license, permit or other instrument was
entered into with the sole intent of avoiding the requirement that a security
interest be granted therein pursuant to this Agreement;

 

(C)           in
no event shall the foregoing be construed to exclude from the security
interests created by this Agreement any proceeds of any Specific Excluded
Property of such Obligor, the monetary value of the goodwill or other General
Intangibles relating thereto, or any Accounts or the right to payments that are
due or become due to such Obligor under any such agreement or other instrument,
in each case to the extent the same would otherwise constitute Collateral.

 

The
Obligors and the Collateral Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interests created hereby in the
Collateral constitute continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and, in each
case, are not to be construed as an assignment of any copyrights, patents,
trademarks or any licenses therefor.

 

3.               Representations and Warranties.  Each Obligor hereby represents and warrants
to the Collateral Agent, for the benefit of the Secured Parties, that:

 

(a)           Ownership. 
Each Obligor is the legal and beneficial owner of its Collateral and has
the right to pledge, sell, assign or transfer the same.  Subject to any Liens permitted under the Credit
Agreement or the Note Agreement, there exists no Adverse Claim with respect to
the Pledged Equity of such Obligor.

 

(b)           Chief Executive Office; Books & Records; Legal
Name; State of Organization.  As of
the Commitment Effective Date, each Obligor’s chief executive office and
principal place of business are (and for the prior four months have been)
located at the locations set forth on Schedule 3(b) attached
hereto, and, as of the Commitment Effective Date, each Obligor keeps its books
and records at such applicable locations. 
As of the Commitment Effective Date, each Obligor’s exact legal name is
as shown in this Agreement and its location (within the meaning of Section 9-307
of the UCC) is (and for the prior four months has been) its state of
organization as shown in this Agreement. 
As of the Commitment Effective Date, no Obligor has in the past four
months

 

F-6

 

changed its name, been party to a merger, consolidation or other change
in structure or used any tradename not disclosed on Schedule 3(b) attached
hereto.

 

(c)           Security Interest/Priority.  This Agreement creates a valid security
interest in favor of the Collateral Agent, for the benefit of the Secured
Parties, in the Collateral of such Obligor and, when properly perfected by filing,
shall constitute a valid and perfected, first priority security interest in
such Collateral (including all uncertificated Pledged Equity consisting of
partnership or limited liability company interests that do not constitute
Securities), to the extent such security interest can be perfected by filing
under the UCC, free and clear of all Liens except for Permitted Liens.  The taking possession by the Collateral Agent
of the Certificated Securities (if any) evidencing the Pledged Equity and all
other Instruments constituting Collateral will perfect and establish the first
priority of the Collateral Agent’s security interest in all the Pledged Equity
evidenced by such Certificated Securities and such Instruments.  With respect to any Collateral consisting of
a Deposit Account, Securities Entitlement or held in a Securities Account, upon
execution and delivery by the applicable Obligor, the applicable Depository
Bank or Securities Intermediary, as applicable, and the Collateral Agent of an
agreement granting control to the Collateral Agent over such Collateral (a “Deposit
Account Control Agreement” or “Securities Account Control Agreement”,
as applicable), in each case in form and substance reasonably satisfactory to
the Collateral Agent, the Collateral Agent shall have a valid and perfected,
first priority security interest in such Collateral substantially in form and
substance reasonably satisfactory to the Collateral Agent.

 

(d)           Types of Collateral.  Unless the relevant Obligor has provided the
Collateral Agent with 30 days prior written notice thereof, none of the
Collateral consists of, or is the Proceeds of, As-Extracted Collateral,
Consumer Goods, Farm Products, Manufactured Homes or standing timber that is to
be cut and removed under a conveyance or contract for sale (other than with
respect to an Obligor’s contractual right to obtain such standing timber owned
by Seller pursuant to the long term fiber supply agreement and logger contracts
in connection with transactions contemplated by the Mead Purchase Agreement).

 

(e)           Accounts.  (i) Each
Account of the Obligors and the papers and documents relating thereto are
genuine and in all material respects what they purport to be, (ii) each
Account arises out of (A) a bona fide sale of goods sold and delivered by
such Obligor (or is in the process of being delivered) or (B) services
theretofore actually rendered by such Obligor to, the account debtor named
therein, (iii) no Account of an Obligor is evidenced by any Instrument or
Chattel Paper unless such Instrument or Chattel Paper, to the extent requested
by the Collateral Agent, has been endorsed over and delivered to, or submitted
to the control of, the Collateral Agent, (iv) unless the relevant Obligor
has provided the Collateral Agent with 30 days prior written notice to the
contrary, no surety bond has been required or given in connection with any
Account of an Obligor or the contracts or purchase orders out of which they
arose and (v) the right to receive payment under each Account is
assignable.

 

(f)            Equipment and Inventory.  With respect to any Equipment and/or
Inventory of an Obligor, each such Obligor has exclusive possession and control
of such Equipment and Inventory of such Obligor except for (i) Equipment
leased by such Obligor as a lessee, (ii) Equipment or Inventory in transit
with common carriers, (iii) Equipment that has been temporarily sent
off-site for the purposes of repair and maintenance or (iv) certain
Equipment subject to that certain Reciprocal Plant Operating Agreement between
the Borrower and MeadWestvaco Corporation, as in effect on the date
hereof.  Unless the relevant Obligor has
provided the Collateral Agent with ten (10) days prior written notice to
the contrary, no Inventory of an Obligor with an aggregate value of $100,000 or
more is held by a Person other than an Obligor pursuant to consignment, sale or
return, sale on approval or similar arrangement.

 

F-7

 

(g)           Authorization of Pledged Equity.  All Pledged Equity is duly authorized and
validly issued, is fully paid and, to the extent applicable, nonassessable and
is not subject to the preemptive rights of any Person.

 

(h)           No Other Equity Interests, Instruments, Etc.   As of the Commitment Effective Date, (i) no
Obligor owns any Certificated Securities in any Subsidiary that are required to
be pledged and delivered to the Collateral Agent hereunder except as set forth
on Schedule 1(b) hereto, and (ii) no Obligor holds any
Instruments, Documents or Tangible Chattel Paper required to be pledged and
delivered to the Collateral Agent pursuant to Section 4(a)(i) of this
Agreement other than as set forth on Schedule 3(h) hereto.  All such Certificated Securities,
Instruments, Documents and Tangible Chattel Paper have been or shall be
delivered to the Collateral Agent to the extent required to be so delivered
pursuant to Section 3(e).

 

(i)            Partnership and Limited Liability Company Interests.  Subject to the proviso set forth below, none
of the Subsidiary Equity consisting of partnership or limited liability company
interests (i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that it is a
security governed by Article 8 of the UCC, (iii) is an investment
company security, (iv) is held in a securities account or (v) constitutes
a “Security” or a “Financial Asset” as such terms are defined in Article 8
of the UCC; provided, however, that all Subsidiary Equity
consisting of a partnership or limited liability company interest that
constitutes a Security because the relevant limited liability company agreement
or partnership agreement expressly provides that it is a Security pursuant to Section 8-103(c) of
the UCC has been evidenced by a certificate and delivered to the Collateral
Agent.

 

(j)            Contracts; Agreements; Licenses.  The Obligors have no material contracts,
agreements or licenses which are non-assignable by their terms, or as a matter
of law, or which prevent the granting of a security interest therein other than
such contracts, agreements or licenses which are replaceable by the applicable
Obligor in the ordinary course of business on terms, taken as a whole, that are
substantially as favorable (or more favorable) to such Obligor.

 

(k)           Mergers, Etc. 
Other than as set forth on Schedule 3(k) hereto, no Obligor
has been party to a merger, consolidation or other change in structure or used
any tradename in the prior five years.

 

(l)            Consents; Etc. 
There are no restrictions in any Organization Document governing any
Pledged Equity or any other document related thereto which would limit or
restrict (i) the grant of a Lien pursuant to this Agreement on such
Pledged Equity, (ii) the perfection of such Lien or (iii) the
exercise of remedies in respect of such perfected Lien in the Pledged Equity as
contemplated by this Agreement.  Except
for (i) the filing or recording of UCC financing statements, (ii) the
filing of appropriate notices with the United States Patent and Trademark
Office and the United States Copyright Office, (iii) obtaining control to
perfect the Liens created by this Agreement (to the extent required under Section 4(a) hereof),
(iv) such actions as may be required by Laws affecting the offering and
sale of securities, (v) such actions as may be required by applicable
foreign Laws affecting the pledge of the Pledged Equity of Foreign
Subsidiaries, (vi) consents, authorizations, filings or other actions
which have been obtained or made and (vii) consents with respect to
contracts which are either (x) not material to the business of the
Obligors or (y) replaceable in the ordinary course of business, no consent
or authorization of, filing with, or other act by or in respect of, any
arbitrator or Governmental Authority and no consent of any other Person
(including, without limitation, any stockholder, member or creditor of such
Obligor), is required for (A) the grant by such Obligor of the security
interest in the Collateral granted hereby or for the execution, delivery or
performance of this Agreement by such Obligor, (B) the perfection of such
security interest (to the

 

F-8

 

extent such security interest can be perfected by filing under the UCC,
the granting of control (to the extent required under Section 4(a) hereof)
or by filing an appropriate notice with the United States Patent and Trademark
Office or the United States Copyright Office) or (C) the exercise by the
Collateral Agent or the Secured Parties of the rights and remedies provided for
in this Agreement.

 

(m)          Commercial Tort Claims.  As of the Commitment Effective Date, no
Obligor has any Commercial Tort Claims with a value of $100,000 or more, other
than as set forth on Schedule 2(c) hereto.

 

(n)           Copyrights, Patents and Trademarks.

 

(i)            Set
forth on Schedule 3(n) is a list of each Copyright, Copyright
License, Patent, Patent License, Trademark and Trademark License registered or
pending registration with the United States Copyright Office or the United
States Patent and Trademark Office and owned by each Loan Party.

 

(ii)           To
the best of each Obligor’s knowledge, each Copyright, Patent and Trademark of
such Obligor is valid, subsisting, unexpired, enforceable and has not been
abandoned.

 

(iii)          To
the best of each Obligor’s knowledge, no holding, decision or judgment has been
rendered by any Governmental Authority that would limit, cancel or question the
validity of any Copyright, Patent or Trademark of any Obligor.

 

(iv)          No
action or proceeding is pending seeking to limit, cancel or question the
validity of any Copyright, Patent or Trademark of any Obligor, or that, if
adversely determined, could reasonably be expected to have a material adverse
effect on the value of any material Copyright, Patent or Trademark of any
Obligor.

 

(v)           All
applications pertaining to the Copyrights, Patents and Trademarks of each
Obligor have been duly and properly filed, and all registrations or letters
pertaining to such Copyrights, Patents and Trademarks have been duly and
properly filed and issued.

 

(vi)          No
Obligor has made any assignment or agreement in conflict with the security
interest in the Copyrights, Patents or Trademarks of any Obligor hereunder.

 

(o)           Exercising
of Rights.  The exercise by the
Collateral Agent of its rights and remedies hereunder will not violate any
material contractual restriction or, to the knowledge of any Obligor, any Law
or governmental regulation binding on or affecting an Obligor or any of its
Property except for such violations as will not interfere with the principal
benefits, rights and remedies provided for, and granted to, the Collateral
Agent and the Secured Parties hereunder.

 

(p)           Deposit
Accounts.  As of the Commitment
Effective Date, set forth on Schedule 3(p) attached hereto is a
list of all of the Deposit Accounts of the Obligors and an indication whether
such Deposit Account is a Pledged Deposit Account or a Permitted Unpledged
Account.

 

(q)           Securities
Accounts.  As of the Commitment
Effective Date, set forth on Schedule 3(p) attached hereto is a
list of all of the Securities Accounts of the Obligors.

 

8.               Covenants. Each Obligor
covenants that until such time as the Secured Obligations arising under the
Financing Documents have been paid in full and the Commitments have expired or
been terminated, such Obligor shall:

 

F-9

 

(a)           Instruments/Chattel Paper/Pledged Equity/Control.

 

(i)  If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or Tangible Chattel
Paper, or if any property constituting Collateral shall be stored or shipped
subject to a Document, ensure that such Instrument, Tangible Chattel Paper or
Document is either in the possession of such Obligor at all times or, if
requested by the Collateral Agent to perfect its security interest in such Collateral,
is delivered to the Collateral Agent duly endorsed in a manner satisfactory to
the Collateral Agent.  Such Obligor shall
ensure that any Collateral consisting of Tangible Chattel Paper is marked with
a legend acceptable to the Collateral Agent indicating the Collateral Agent’s
security interest in such Tangible Chattel Paper.    Without limiting the foregoing, all
intercompany Indebtedness owed to an Obligor in excess of $100,000,
individually or in the aggregate, must be evidenced by a promissory note, in a
form reasonably satisfactory to the Collateral Agent, and delivered to the
Collateral Agent.

 

(ii)  Deliver to the Collateral Agent promptly upon the receipt
thereof by or on behalf of an Obligor, all certificates and instruments
constituting Pledged Equity.  Prior to
delivery to the Collateral Agent, all such certificates constituting Pledged
Equity shall be held in trust by such Obligor for the benefit of the Collateral
Agent pursuant hereto.  All such
certificates representing Pledged Equity shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed instruments
of transfer or assignment in blank, substantially in the form provided in Exhibit 4(a)(ii) hereto.

 

(iii)  Execute and deliver all agreements, assignments,
instruments or other documents as reasonably requested by the Collateral Agent
for the purpose of obtaining and maintaining Control with respect to any
Collateral consisting of (i) Deposit Accounts, (ii) Investment
Property, (iii) Letter-of-Credit Rights and (iv) Electronic Chattel
Paper including, without limitation, any Deposit Account Control Agreements or
Securities Account Control Agreements.

 

(b)           Filing of Financing Statements, Notices, etc.  Authorize the Collateral Agent to prepare and
file such financing statements (including continuation statements) or
amendments thereof or supplements thereto or other instruments as the
Collateral Agent may from time to time deem necessary or appropriate in order
to perfect and maintain the security interest granted hereunder in accordance
with the UCC (including authorization to describe the collateral as “all
personal property” or “all assets”). 
Each Obligor shall also execute and deliver to the Collateral Agent such
agreements, assignments or instruments (including affidavits, notices,
reaffirmations and amendments and restatements of existing documents, as the
Collateral Agent may reasonably request) and do all such other things as the
Collateral Agent may reasonably deem necessary or appropriate (i) to
assure to the Collateral Agent its security interests hereunder are perfected
and maintained, including (A) such instruments as the Collateral Agent may
from time to time reasonably request in order to perfect and maintain the
security interests granted hereunder in accordance with the UCC, (B) with
regard to Copyrights, a Notice of Grant of Security Interest in Copyrights in
the form of Schedule 4(b)(i), (C) with regard to Patents, a
Notice of Grant of Security Interest in Patents for filing with the United
States Patent and Trademark Office in the form of Schedule 4(b)(ii) hereto
and (D) with regard to Trademarks, a Notice of Grant of Security Interest
in Trademarks for filing with the United States Patent and Trademark Office in
the form of Schedule 4(b)(iii) hereto, (ii) to consummate
the transactions contemplated hereby and (iii) to otherwise protect and
assure the Collateral Agent of its rights and interests hereunder.  Furthermore, each Obligor also hereby
irrevocably makes, constitutes and appoints the Collateral Agent, its

 

F-10

 

nominee or any other person whom the Collateral Agent may designate, as
such Obligor’s attorney in fact with full power and for the limited purpose to
sign in the name of such Obligor any financing statements, or amendments and
supplements to financing statements, renewal financing statements, notices or
any similar documents which in the Collateral Agent’s reasonable discretion
would be necessary or appropriate in order to perfect and maintain perfection
of the security interests granted hereunder, such power, being coupled with an
interest, being and remaining irrevocable until such time as the Secured
Obligations arising under the Financing Documents have been paid in full and
the Commitments have expired or been terminated.  Each Obligor hereby agrees that a carbon,
photographic or other reproduction of this Agreement or any such financing
statement is sufficient for filing as a financing statement by the Collateral
Agent without notice thereof to such Obligor wherever the Collateral Agent may
in its sole discretion desire to file the same. 
In the event for any reason the Law of any jurisdiction other than
Illinois becomes or is applicable to the Collateral of any Obligor or any part
thereof, or to any of the Secured Obligations, such Obligor agrees to execute
and deliver all such instruments and to do all such other things as the
Collateral Agent in its sole discretion reasonably deems necessary or
appropriate to preserve, protect and enforce the security interest of the
Collateral Agent under the Law of such other jurisdiction (and, if an Obligor
shall fail to do so promptly upon the request of the Collateral Agent, then the
Collateral Agent may execute any and all such requested documents on behalf of
such Obligor pursuant to the power of attorney granted hereinabove).  Each Obligor agrees to mark its books and
records to reflect the security interest of the Collateral Agent in the
Collateral.

 

(c)           Pledged Deposit Accounts.

 

(i)            (A) Maintain Pledged Deposit Accounts only with the
Collateral Agent or banks that have entered into a Deposit Account Control
Agreement (each such bank, a “Depositary Bank”) and (B) Deposit in
a Pledged Deposit Account all of its cash balances and the proceeds of all of
the other Collateral received from time to time thereby other than cash
balances necessary to pay salaries to and benefits to the employees of such
Obligor and to pay other administrative and operating expenses incurred by such
Obligor in the ordinary course of business, in each case to the extent that
such payments are not prohibited by the terms of any Financing Document.

 

(ii)           Not add any bank as a Depositary Bank (other than in
connection with a Permitted Unpledged Account) or add any Deposit Account as a
Pledged Deposit Account to those set forth on Schedule 3(p) hereto,
unless the Collateral Agent shall have received at least ten (10) days’
prior written notice of such addition and shall have received a Deposit Account
Control Agreement or a supplement to an existing Deposit Account Control
Agreement, covering such new Pledged Deposit Account and duly executed by such
Depositary Bank and such Obligor (and, upon the receipt by Collateral Agent of
any such Deposit Account Control Agreement or supplement to an existing Deposit
Account Control Agreement, Schedule 3(p) shall be automatically
amended to include the additional Pledged Deposit Account and, if applicable,
the new Depositary Bank).

 

(iii)          Each of the Pledged Deposit Accounts shall be subject to
applicable Laws (including, without limitation, such applicable regulations of
the Board of Governors of the Federal Reserve System and of any other
appropriate banking authority or Governmental Authority) as are in effect from
time to time.

 

(iv)          So long as no Event of Default shall have occurred and be
continuing or would occur as a result thereof, each of the Obligors may
withdraw, and the Collateral Agent and each of the Secured Parties hereby
authorize each of the Obligors and the Depositary Banks 

 

F-11

 

to have paid and released to any Permitted Unpledged Account or to any
other Person designated by such Obligor, any amounts on deposit in their
Pledged Deposit Accounts for the conduct of the business of such Obligor and
its Subsidiaries in the ordinary course or otherwise expressly permitted under
the terms of each of the Financing Documents.

 

(d)           Securities
Accounts.  Not maintain any
Securities Account other than those set forth on Schedule 3(p) hereto,
unless the Collateral Agent shall have received at least ten (10) days’
prior written notice of such addition and shall have received a Securities
Account Control Agreement or a supplement to an existing Securities Account
Control Agreement, covering such new Securities Account and duly executed by
the Securities Intermediary for such Securities Account and such Obligor (and,
upon the receipt by the Collateral Agent of any such Securities Account Control
Agreement or supplement to an existing Securities Account Control Agreement, Schedule
3(p) shall be automatically deemed amended to include the additional
Securities Account and, if applicable, the new Securities Intermediary).

 

(e)           Defense
of Title.  Warrant and defend title
to and ownership of the Collateral (except as otherwise permitted under each of
the Financing Documents) of such Obligor at its own expense against the claims
and demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Liens permitted by each of the
Financing Documents and not sell, exchange, transfer, assign, lease or
otherwise dispose of the Collateral of such Obligor or any interest therein,
except as permitted under each of the Financing Documents.

 

(f)            Collateral Held by Warehouseman, Bailee, etc.  If any Collateral with a value of $100,000 or
more is at any time in the possession or control of a warehouseman, bailee or
any agent or processor of such Obligor and the Collateral Agent so requests (i) notify
such Person in writing of the Collateral Agent’s security interest therein, (ii) instruct
such Person to hold all such Collateral for the Collateral Agent’s account and
subject to the Collateral Agent’s instructions and (iii) use reasonable
best efforts to obtain a written acknowledgment from such Person that it is
holding such Collateral for the benefit of the Collateral Agent.

 

(g)           Treatment of Accounts.  Not grant or extend the time for payment of
any Account, or compromise or settle any Account for less than the full amount
thereof, or release any person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, other than as normal and
customary in the ordinary course of an Obligor’s business.

 

(h)           Commercial Tort Claims.  (i) Promptly forward to the Collateral
Agent an updated Schedule 2(c) listing any and all Commercial Tort
Claims with a value of $100,000 or more by or in favor of such Obligor and (ii) execute
and deliver such statements, documents and notices and do and cause to be done
all such things as may be required by the Collateral Agent, or required by Law
to create, preserve, perfect and maintain the Collateral Agent’s security
interest in any Commercial Tort Claims initiated by or in favor of any Obligor.

 

(i)            Books and Records. 
Mark its books and records (and shall cause the issuer of the Pledged
Equity of such Obligor to mark its books and records) to reflect the security
interest granted pursuant to this Agreement.

 

(j)            Nature
of Collateral.  At all times maintain
the Collateral as personal property and not affix any of the Collateral to any
real property in a manner which would change its nature from personal property
to real property or a Fixture to real property, unless the Collateral Agent
shall have a perfected Lien on such Fixture or real property or shall have
agreed otherwise.

 

F-12

 

(k)           Issuance
or Acquisition of Equity Interests. 
Not without executing and delivering, or causing to be executed and
delivered, to the Collateral Agent such agreements, documents and instruments
as the Collateral Agent may reasonably require, issue or acquire any Pledged
Equity consisting of an interest in a partnership or a limited liability
company that (i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that it is a
Security governed by Article 8 of the UCC, (iii) is an investment
company security, (iv) is held in a Securities Account or (v) constitutes
a Security or a Financial Asset.

 

(l)            Intellectual Property.

 

(i)            Not
do any act or knowingly omit to do any act whereby any material Copyright may
become invalidated and (A) not do any act, or knowingly omit to do any
act, whereby any material Copyright may become injected into the public domain;
(B) notify the Collateral Agent immediately if it knows that any material
Copyright may become injected into the public domain or of any materially
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any court or
tribunal in the United States or any other country) regarding an Obligor’s
ownership of any such Copyright or its validity; (C) take all necessary
steps as it shall deem appropriate under the circumstances, to maintain and
pursue each application (and to obtain the relevant registration) of each
material Copyright owned by an Obligor and to maintain each registration of
each material Copyright owned by an Obligor including, without limitation,
filing of applications for renewal where necessary; and (D) promptly
notify the Collateral Agent of any material infringement of any material
Copyright of an Obligor of which it becomes aware and take such actions as it
shall reasonably deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit for infringement,
seeking injunctive relief and seeking to recover any and all damages for such
infringement.

 

(ii)           Not
make any assignment or agreement in conflict with the security interest in the
Copyrights of each Obligor hereunder (except as permitted by each of the
Financing Documents).

 

(iii)          (A) Continue
to use each material Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current catalogs, brochures
and price lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (B) maintain as in the past the quality
of products and services offered under such Trademark, (C) employ such
Trademark with the appropriate notice of registration, if applicable, (D) not
adopt or use any mark that is confusingly similar or a colorable imitation of
such Trademark unless the Collateral Agent, for the ratable benefit of the
Secured Parties, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (E) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
such Trademark may become invalidated.

 

(iv)          Not
do any act, or omit to do any act, whereby any material Patent may become
abandoned or dedicated.

 

(v)           Notify
the Collateral Agent and the Secured Parties immediately if it knows that any
application or registration relating to any material Patent or Trademark may
become abandoned or dedicated, or of any materially adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal

 

F-13

 

in
any country) regarding such Obligor ownership of any Patent or Trademark or its
right to register the same or to keep and maintain the same.

 

(vi)          Take
all reasonable and necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark Office, or any similar
office or agency in any other country or any political subdivision thereof, to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of each material Patent and Trademark,
including, without limitation, filing of applications for renewal, affidavits
of use and affidavits of incontestability.

 

(vii)         Promptly
notify the Collateral Agent and the Secured Parties after it learns that any
material Patent or Trademark included in the Collateral is infringed,
misappropriated or diluted by a third party and promptly sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and
to recover any and all damages for such infringement, misappropriation or
dilution, or to take such other actions as it shall reasonably deem appropriate
under the circumstances to protect such Patent or Trademark.

 

(viii)        Not make any assignment or agreement in conflict with the
security interest in the Patents or Trademarks of each Obligor hereunder
(except as permitted by each of the Financing Documents).

 

Notwithstanding the foregoing, the Obligors may, in their reasonable
business judgment, fail to maintain, pursue, preserve or protect any Copyright,
Patent or Trademark which is not material to their businesses.

 

(m)          Insurance.
Insure, repair and replace the Collateral of such Obligor as set forth in each
of the Financing Documents.  All
insurance proceeds paid in connection with any insurance providing coverage
with respect to any Collateral shall be subject to the security interests of
the Collateral Agent hereunder and shall be paid or applied in accordance with
the terms of the Intercreditor Agreement.

 

(n)           Amendments.  Not make or consent to any amendment or other
modification or waiver with respect to any of the Collateral of such Obligor or
enter into any agreement or allow to exist any restriction with respect to any
of the Collateral of such Obligor other than pursuant hereto or as may be
permitted under the each of the Financing Documents, except for such
amendments, modifications or waivers that would not be reasonably expected to
be materially adverse to the interests of the Secured Parties.

 

9.               Authorization to File
Financing Statements.  Each
Obligor hereby authorizes the Collateral Agent to prepare and file such
financing statements (including continuation statements) or amendments thereof
or supplements thereto or other instruments as the Collateral Agent may from
time to time deem necessary or appropriate in order to perfect and maintain the
security interests granted hereunder in accordance with the UCC (including authorization
to describe the Collateral as “all personal property”, “all assets” or words of
similar meaning).

 

10.         Advances.  On failure of any Obligor to perform any of
the covenants and agreements contained herein, the Collateral Agent may, at its
sole option and in its sole discretion upon prior notice to the relevant
Obligor, perform the same and in so doing may expend such sums as the
Collateral Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim and all other
expenditures which the Collateral Agent may make for the protection of the security
hereof or which may be compelled to make by

 

F-14

 

operation
of Law.  All such sums and amounts so
expended shall be repayable by the Obligors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at the Default Rate. 
No such performance of any covenant or agreement by the Collateral Agent
on behalf of any Obligor, and no such advance or expenditure therefor, shall
relieve the Obligors of any Default or Event of Default.  The Collateral Agent may make any payment
hereby authorized in accordance with any bill, statement or estimate procured
from the appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by an
Obligor in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.

 

11.           Remedies.

 

(a)           General Remedies.  Upon the occurrence of an Event of Default
and during continuation thereof, the Collateral Agent shall have, in addition
to the rights and remedies provided herein, in any of the Financing Documents,
in any other documents relating to the Secured Obligations, or by Law
(including, but not limited to, levy of attachment, garnishment and the rights
and remedies set forth in the UCC of the jurisdiction applicable to the
affected Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the rights
and remedies are asserted and regardless of whether the UCC applies to the
affected Collateral), and further, the Collateral Agent may, with or without
judicial process or the aid and assistance of others, (i) enter on any
premises on which any of the Collateral may be located and, without resistance
or interference by the Obligors, take possession of the Collateral, (ii) dispose
of any Collateral on any such premises, (iii) require the Obligors to
assemble and make available to the Collateral Agent at the expense of the
Obligors any Collateral at any place and time designated by the Collateral
Agent which is reasonably convenient to both parties, (iv) remove any
Collateral from any such premises for the purpose of effecting sale or other
disposition thereof, and/or (v) without demand and without advertisement,
notice, hearing or process of law, all of which each of the Obligors hereby
waives to the fullest extent permitted by Law, at any place and time or times,
sell and deliver any or all Collateral held by or for it at public or private
sale (which in the case of a private sale of Pledged Equity, shall be to a restricted
group of purchasers who will be obligated to agree, among other things, to
acquire such securities for their own account, for investment and not with a
view to the distribution or resale thereof), at any exchange or broker’s board
or elsewhere, by one or more contracts, in one or more parcels, for Money, upon
credit or otherwise, at such prices and upon such terms as the Collateral Agent
deems advisable, in its sole discretion (subject to any and all mandatory legal
requirements). Each Obligor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the prices and other
terms which might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to have been made in a
commercially reasonable manner and, in the case of a sale of Pledged Equity,
that the Collateral Agent shall have no obligation to delay sale of any such
securities for the period of time necessary to permit the issuer of such securities
to register such securities for public sale under the Securities Act of
1933.  Neither the Collateral Agent’s
compliance with applicable Law nor its disclaimer of warranties relating to the
Collateral shall be considered to adversely affect the commercial
reasonableness of any sale.  To the
extent the rights of notice cannot be legally waived hereunder, each Obligor
agrees that any requirement of reasonable notice shall be met if such notice,
specifying the place of any public sale or the time after which any private
sale is to be made, is personally served on or mailed, postage prepaid, to the
Borrower in accordance with the notice provisions of Section 11.02
of the Credit Agreement or paragraph 11I of the Note Agreement at least 10 days
before the time of sale or other event giving rise to the requirement of such
notice.  The Collateral Agent may adjourn
any public

 

F-15

 

or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. 
Each Obligor further acknowledges and agrees that any offer to sell any
Pledged Equity which has been (i) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of 1933), or (ii) made
privately in the manner described above shall be deemed to involve a “public
sale” under the UCC, notwithstanding that such sale may not constitute a “public
offering” under the Securities Act of 1933, and the Collateral Agent may, in
such event, bid for the purchase of such securities.  The Collateral Agent shall not be obligated
to make any sale or other disposition of the Collateral regardless of notice
having been given.  To the extent
permitted by applicable Law, any Secured Party may be a purchaser at any such
sale.  To the extent permitted by
applicable Law, each of the Obligors hereby waives all of its rights of
redemption with respect to any such sale. 
Subject to the provisions of applicable Law, the Collateral Agent may
postpone or cause the postponement of the sale of all or any portion of the
Collateral by announcement at the time and place of such sale, and such sale
may, without further notice, to the extent permitted by Law, be made at the
time and place to which the sale was postponed, or the Collateral Agent may further
postpone such sale by announcement made at such time and place.

 

(b)           Remedies relating
to Accounts.  During the continuation
of an Event of Default, whether or not the Collateral Agent has exercised any
or all of its rights and remedies hereunder, (i) each Obligor will
promptly upon request of the Collateral Agent instruct all account debtors to
remit all payments in respect of Accounts to a mailing location selected by the
Collateral Agent and (ii) the Collateral Agent shall have the right to
enforce any Obligor’s rights against its customers and account debtors, and the
Collateral Agent or its designee may notify any Obligor’s customers and account
debtors that the Accounts of such Obligor have been assigned to the Collateral
Agent or of the Collateral Agent’s security interest therein, and may (either
in its own name or in the name of an Obligor or both) demand, collect
(including without limitation by way of a lockbox arrangement), receive, take
receipt for, sell, sue for, compound, settle, compromise and give acquittance
for any and all amounts due or to become due on any Account, and, in the
Collateral Agent’s discretion, file any claim or take any other action or
proceeding to protect and realize upon the security interest of the Secured
Parties in the Accounts.  Each Obligor
acknowledges and agrees that the Proceeds of its Accounts remitted to or on
behalf of the Collateral Agent in accordance with the provisions hereof shall
be solely for the Collateral Agent’s own convenience and that such Obligor
shall not have any right, title or interest in such Accounts or in any such
other amounts except as expressly provided herein.  Neither the Collateral Agent nor the Secured
Parties shall have any liability or responsibility to any Obligor for acceptance
of a check, draft or other order for payment of money bearing the legend “payment
in full” or words of similar import or any other restrictive legend or
endorsement or be responsible for determining the correctness of any
remittance.  Furthermore, during the
continuation of an Event of Default, (i) the Collateral Agent shall have
the right, but not the obligation, to make test verifications of the Accounts
in any manner and through any medium that it reasonably considers advisable,
and the Obligors shall furnish all such assistance and information as the
Collateral Agent may reasonably require in connection with such test
verifications, (ii) upon the Collateral Agent’s request and at the expense
of the Obligors, the Obligors shall cause independent public accountants or
others satisfactory to the Collateral Agent to furnish to the Collateral Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts and (iii) the Collateral Agent in its own name
or in the name of others may communicate with account debtors on the Accounts
to verify with them to the Collateral Agent’s satisfaction the existence,
amount and terms of any Accounts.

 

F-16

 

(c)           Access.  In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and during the
continuance thereof, the Collateral Agent shall have the right to enter and
remain upon the various premises of the Obligors without cost or charge to the
Collateral Agent, and use the same, together with materials, supplies, books
and records of the Obligors for the purpose of collecting and liquidating the
Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise.  In addition, the Collateral Agent may remove
Collateral, or any part thereof, from such premises and/or any records with
respect thereto, in order to effectively collect or liquidate such Collateral.

 

(d)           Nonexclusive
Nature of Remedies.  Failure by the
Collateral Agent or the Secured Parties to exercise any right, remedy or option
under this Agreement, any other Financing Document, any other document relating
to the Secured Obligations, or as provided by Law, or any delay by the Collateral
Agent or the Secured Parties in exercising the same, shall not operate as a
waiver of any such right, remedy or option. 
No waiver hereunder shall be effective unless it is in writing, signed
by the party against whom such waiver is sought to be enforced and then only to
the extent specifically stated, which in the case of the Collateral Agent or
the Secured Parties shall only be granted as provided herein.  To the extent permitted by Law, neither the
Collateral Agent, the Secured Parties, nor any party acting as attorney for the
Collateral Agent or the Secured Parties, shall be liable hereunder for any acts
or omissions or for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct hereunder.  The rights and remedies of the Collateral
Agent and the Secured Parties under this Agreement shall be cumulative and not
exclusive of any other right or remedy which the Collateral Agent or the
Secured Parties may have.

 

(e)           Retention of Collateral.  In addition to the rights and remedies
hereunder, the Collateral Agent may, in compliance with Sections 9-620 and
9-621 of the UCC or otherwise complying with the requirements of applicable Law
of the relevant jurisdiction, accept or retain the Collateral in satisfaction of
the Secured Obligations.  Unless and
until the Collateral Agent shall have provided such notices, however, the
Collateral Agent shall not be deemed to have retained any Collateral in
satisfaction of any Secured Obligations for any reason.

 

(f)            Deficiency.  In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Collateral Agent or the Secured Parties are legally entitled, the Obligors
shall be jointly and severally liable for the deficiency, together with
interest thereon at the Default Rate, together with the costs of collection and
the fees, charges and disbursements of counsel. 
Any surplus remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to the Obligors or to whomsoever a court
of competent jurisdiction shall determine to be entitled thereto.

 

(g)           Indemnification.  Each Obligor hereby agrees to indemnify the
Collateral Agent and the Secured Parties in accordance with the terms of Section 11.04
of the Credit Agreement, paragraph 11B of the Note Agreement, each of the other
Financing Documents and the Intercreditor Agreement with respect to the actions
taken by the Collateral Agent in accordance with the foregoing.  The foregoing indemnity shall survive the
repayment of the Secured Obligations.

 

12.           Rights of the Collateral Agent.

 

(a)           Power of Attorney. 
In addition to other powers of attorney contained herein, each Obligor
hereby designates and appoints the Collateral Agent, on behalf of the Secured
Parties, and each of its designees or agents, as attorney-in-fact of such
Obligor, irrevocably and with power of substitution, with authority to take any
or all of the following actions upon the occurrence and during the continuance
of an Event of Default:

 

F-17

 

(i)            to demand, collect, settle, compromise, adjust, give
discharges and releases, all as the Collateral Agent may reasonably determine;

 

(ii)           to commence and prosecute any actions at any court for the
purposes of collecting any Collateral and enforcing any other right in respect
thereof;

 

(iii)          to defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as the Collateral Agent
may deem reasonably appropriate;

 

(iv)          receive, open and dispose of mail addressed to an Obligor
and endorse checks, notes, drafts, acceptances, money orders, bills of lading,
warehouse receipts or other instruments or documents evidencing payment,
shipment or storage of the goods giving rise to the Collateral of such Obligor
on behalf of and in the name of such Obligor, or securing, or relating to such
Collateral;

 

(v)           sell, assign, transfer, make any agreement in respect of,
or otherwise deal with or exercise rights in respect of, any Collateral or the
goods or services which have given rise thereto, as fully and completely as
though the Collateral Agent were the absolute owner thereof for all purposes;

 

(vi)          adjust and settle claims under any insurance policy
relating thereto;

 

(vii)         execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements, security
agreements, affidavits, notices and other agreements, instruments and documents
that the Collateral Agent may determine necessary in order to perfect and
maintain the security interests and liens granted in this Agreement and in
order to fully consummate all of the transactions contemplated therein;

 

(viii)        institute any foreclosure proceedings that the Collateral
Agent may deem appropriate;

 

(ix)           to sign and endorse any drafts, assignments, proxies,
stock powers, verifications, notices and other documents relating to the
Collateral;

 

(x)            to exchange any of the Pledged Equity or other property
upon any merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof and, in connection therewith, deposit any of
the Pledged Equity with any committee, depository, transfer agent, registrar or
other designated agency upon such terms as the Collateral Agent may reasonably
deem appropriate;

 

(xi)           to vote for a shareholder resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all of the Pledged
Equity into the name of the Collateral Agent or one or more of the Secured
Parties or into the name of any transferee to whom the Pledged Equity or any
part thereof may be sold pursuant to Section 7 hereof;

 

(xii)          to
pay or discharge taxes, liens, security interests or other encumbrances levied
or placed on or threatened against the Collateral;

 

F-18

 

(xiii)         to
direct any parties liable for any payment in connection with any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct;

 

(xiv)        to
receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; and

 

(xv)         do and perform all such other acts and things as the
Collateral Agent may reasonably deem to be necessary, proper or convenient in
connection with the Collateral.

 

This power of attorney is a power coupled with an interest and shall be
irrevocable until such time as the Secured Obligations arising under the
Financing Documents have been paid in full and the Commitments have expired or
been terminated.  The Collateral Agent
shall be under no duty to exercise or withhold the exercise of any of the
rights, powers, privileges and options expressly or implicitly granted to the
Collateral Agent in this Agreement, and shall not be liable for any failure to
do so or any delay in doing so.  The
Collateral Agent shall not be liable for any act or omission or for any error
of judgment or any mistake of fact or law in its individual capacity or its
capacity as attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct.  This
power of attorney is conferred on the Collateral Agent solely to protect,
preserve and realize upon its security interest in the Collateral.

 

(b)           Assignment by the Collateral Agent. The Collateral
Agent may from time to time assign its security interests in the Collateral to
a successor Collateral Agent appointed in accordance with the Intercreditor
Agreement, and such successor shall be entitled to all of the rights and
remedies of the Collateral Agent under this Agreement in relation thereto.

 

(c)           The Collateral Agent’s Duty of Care.  Other than the exercise of reasonable care to
assure the safe custody of the Collateral while being held by the Collateral
Agent hereunder, the Collateral Agent shall have no duty or liability to
preserve rights pertaining thereto, it being understood and agreed that the
Obligors shall be responsible for preservation of all rights in the Collateral,
and the Collateral Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to the
Obligors.  The Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own
property, which shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that the Collateral
Agent shall not have responsibility for taking any necessary steps to preserve
rights against any parties with respect to any of the Collateral.  In the event of a public or private sale of
Collateral pursuant to Section 7 hereof, the Collateral Agent shall have
no responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relating to
any Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or (ii) taking any steps to clean, repair or
otherwise prepare the Collateral for sale.

 

(d)           Liability with Respect to Accounts.  Anything herein to the contrary
notwithstanding, each of the Obligors shall remain liable under each of the
Accounts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to each such Account. 
Neither the Collateral Agent nor any Secured Party shall have any
obligation or liability under any Account (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any Secured Party of any payment relating to such Account
pursuant hereto, nor shall the Collateral Agent or any Secured Party be
obligated in any manner to perform any of the obligations of an

 

F-19

 

Obligor under or pursuant to any Account (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

 

(e)           Voting and Payment Rights in Respect of the Pledged
Equity.

 

(i)            So long as no Event
of Default shall exist, each Obligor may (A) exercise any and all voting
and other consensual rights pertaining to the Pledged Equity of such Obligor or
any part thereof for any purpose not inconsistent with the terms of this
Agreement or any Financing Document and (B) receive and retain any and all
dividends (other than stock dividends and other dividends constituting
Collateral which are addressed hereinabove), principal or interest paid in
respect of the Pledged Equity to the extent they are allowed under each of the
Financing Documents; and

 

(ii)           During the
continuance of an Event of Default, (A) all rights of an Obligor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to clause (i)(A) above shall cease and all
such rights shall thereupon become vested in the Collateral Agent which shall
then have the sole right to exercise such voting and other consensual rights, (B) all
rights of an Obligor to receive the dividends, principal and interest payments
which it would otherwise be authorized to receive and retain pursuant to clause
(i)(B) above shall cease and all such rights shall thereupon be vested in
the Collateral Agent which shall then have the sole right to receive and hold
as Collateral such dividends, principal and interest payments, and (C) all
dividends, principal and interest payments which are received by an Obligor
contrary to the provisions of clause (ii)(B) above shall be received in
trust for the benefit of the Collateral Agent, shall be segregated from other
property or funds of such Obligor, and shall be forthwith paid over to the
Collateral Agent as Collateral in the exact form received, to be held by the
Collateral Agent as Collateral and as further collateral security for the
Secured Obligations.

 

F-20

 

(f)            Releases
of Collateral.

 

(i)            If any Collateral shall be sold, transferred or otherwise
disposed of by any Obligor in a transaction permitted by each of the Financing
Documents, then the Collateral Agent, at the request and sole expense of such
Obligor, shall promptly execute and deliver to such Obligor all releases and
other documents, and take such other action, reasonably necessary for the
release of the Liens created hereby or by any other Collateral Document on such
Collateral.

 

(ii)           The Collateral
Agent may release any of the Pledged Equity from this Agreement or may
substitute any of the Pledged Equity for other Pledged Equity without altering,
varying or diminishing in any way the force, effect, lien, pledge or security
interest of this Agreement as to any Pledged Equity not expressly released or
substituted, and this Agreement shall continue as a first priority lien on all
Pledged Equity not expressly released or substituted.

 

13.         Application of Proceeds.  Upon the acceleration of any of the Secured
Obligations pursuant to any of the Financing Documents, any payments in respect
of the Secured Obligations and any proceeds of the Collateral, when received by
the Collateral Agent or any Secured Party in Money, will be applied in
reduction of the Secured Obligations in the order set forth in the
Intercreditor Agreement.

 

14.           Continuing Agreement.

 

(a)           This Agreement shall
remain in full force and effect until such time as the Secured Obligations
arising under the Financing Documents have been paid in full and the
Commitments have expired or been terminated, at which time this Agreement shall
be automatically terminated and the Collateral Agent shall, upon the request
and at the expense of the Obligors, forthwith release all of its liens and
security interests hereunder and shall execute and deliver all UCC termination
statements and/or other documents reasonably requested by the Obligors
evidencing such termination.

 

(b)           This Agreement shall
continue to be effective or be automatically reinstated, as the case may be, if
at any time payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Collateral Agent or
any Secured Party as a preference, fraudulent conveyance or otherwise under any
Debtor Relief Law, all as though such payment had not been made; provided that
in the event payment of all or any part of the Secured Obligations is rescinded
or must be restored or returned, all reasonable costs and expenses (including
without limitation any reasonable legal fees and disbursements) incurred by the
Collateral Agent or any Secured Party in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.

 

15.         Amendments; Waivers; Modifications,
etc.  This Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in the Intercreditor Agreement; provided
that any update or revision to Schedule 2(c) or Schedule 2(k) hereof
delivered by any Obligor shall not constitute an amendment for purposes of this
Section 11 or any of the Financing Documents.

 

16.         Successors in Interest.  This Agreement shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Collateral Agent and the Secured Parties hereunder, to the
benefit of the Collateral Agent and the Secured Parties and their successors
and permitted assigns.

 

F-21

 

17.         Notices.  All notices required or
permitted to be given under this Agreement shall be in conformance with Section 11.02
of the Credit Agreement and paragraph 11I of the Note Agreement.

 

18.         Counterparts; Signatures.  This Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.  It shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.  Any signature delivered by facsimile or
electronic mail shall be deemed to be an original signature hereto, provided
that the Obligors shall deliver an original to the Collateral Agent upon the
Collateral Agent’s request.

 

19.         Headings.  The headings of the sections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

 

20.           Governing Law; Submission to Jurisdiction; Venue;
WAIVER OF JURY TRIAL.

 

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.

 

(b)           SUBMISSION TO JURISDICTION.  THE BORROWER AND EACH OTHER OBLIGOR
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS SITTING IN
COOK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF
ILLINOIS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT,
OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE 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 IN ANY OTHER
FINANCING DOCUMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT, THE
ADMINISTRATIVE AGENT, THE NOTEHOLDERS OR ANY OTHER SECURED PARTY MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
FINANCING DOCUMENT AGAINST THE BORROWER OR ANY OTHER OBLIGOR OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE.  THE BORROWER AND EACH OTHER OBLIGOR
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT 

 

F-22

 

FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(f)            SERVICE
OF PROCESS.  EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES
IN SECTION 11.02 OF THE CREDIT AGREEMENT AND PARAGRAPH 11I OF THE
NOTE AGREEMENT.  NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

(g)           WAIVER OF JURY TRIAL. 
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER FINANCING DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

 

21.         Severability.  If any provision of any of the Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.

 

22.         Entirety.  This Agreement, the other Financing Documents
and the other documents relating to the Secured Obligations represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to any of the Financing
Documents, any other documents relating to the Secured Obligations, or the
transactions contemplated herein and therein.

 

23.         Other Security.  To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by an
Obligor), or by a guarantee, endorsement or property of any other Person, then
the Collateral Agent shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default,
and the Collateral Agent shall have the right, in its sole discretion, to
determine which rights, security, liens, security interests or remedies the Collateral
Agent shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or the
Secured Obligations or any of the rights of the Collateral Agent or the Secured
Parties under this Agreement, under any other of the Financing Documents or
under any other document relating to the Secured Obligations.

 

F-23

 

24.         Joint and Several Obligations of
Obligors.

 

(a)           Subject
to clause (c) below, each of the Obligors is accepting joint and
several liability hereunder in consideration of the financial accommodations to
be provided by the Lenders under the Credit Agreement and the Noteholders under
the Note Agreement, for the mutual benefit, directly and indirectly, of each of
the Obligors and in consideration of the undertakings of each of the Obligors
to accept joint and several liability for the obligations of each of them.

 

(b)           Subject
to clause (c) below, each of the Obligors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Obligors with respect to
the payment and performance of all of the Secured Obligations arising under
this Agreement and the other Financing Documents, it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each of the Obligors without preferences or distinction among
them.

 

(c)           Notwithstanding
any provision to the contrary contained herein or in any other of the Financing
Documents, to the extent the obligations of an Obligor shall be adjudicated to
be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal Law relating to fraudulent
conveyances or transfers) then the obligations of such Obligor hereunder shall
be limited to the maximum amount that is permissible under applicable Law
(whether federal or state and including, without limitation, Debtor Relief
Laws).

 

25.         Joinder.  At any time after the date of this Agreement,
one or more additional Persons may become party hereto by executing and
delivering to the Collateral Agent a Joinder Agreement.  Immediately upon such execution and delivery
of such Joinder Agreement (and without any further action), each such
additional Person will become a party to this Agreement as an “Obligor” and
have all of the rights and obligations of an Obligor hereunder and this
Agreement and the schedules hereto shall be deemed amended by such Joinder
Agreement.

 

26.         Rights of Required Creditors.  All rights of the Collateral Agent hereunder,
if not exercised by the Collateral Agent, unless waived in writing may be
exercised by the Required Creditors.

 

27.           Consent of Issuers of Pledged Equity.  Each issuer of Pledged Equity party to this
Agreement hereby acknowledges, consents and agrees to the grant of the security
interests in such Pledged Equity by the applicable Obligors pursuant to this
Agreement, together with all rights accompanying such security interest as
provided by this Agreement and applicable law, notwithstanding any
anti-assignment provisions in any operating agreement, limited partnership
agreement or similar organizational or governance documents of such issuer.

 

[remainder of page intentionally left
blank]

 

F-24

 

                                Each
of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

 

	
   

  	
  OBLIGORS:

  	
  KAPSTONE
  KRAFT PAPER CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KAPSTONE
  PAPER AND PACKAGING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KAPSTONE
  CHARLESTON KRAFT LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accepted and agreed to as
  of the date first above written.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANK
  OF AMERICA, N.A., as Collateral Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  

 

F-25

 

SCHEDULE 1(b)

 

PLEDGED
EQUITY

 

Obligor:

 

	
  Name
  of Subsidiary

  	
   

  	
  Number of Shares

  	
   

  	
  Certificate

  Number

  	
   

  	
  Percentage

  Ownership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Obligor:

 

	
  Name
  of Subsidiary

  	
   

  	
  Number of Shares

  	
   

  	
  Certificate

  Number

  	
   

  	
  Percentage

  Ownership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

F-26

 

SCHEDULE 2(c)

 

COMMERCIAL TORT CLAIMS

 

F-27

 

SCHEDULE 2(k)

 

INDEBTEDNESS EVIDENCED BY
PLEDGED INSTRUMENTS

 

F-28

 

SCHEDULE 3(B)

 

CHIEF EXECUTIVE OFFICE,
PRINCIPAL PLACE OF BUSINESS,

MERGERS, CONSOLIDATIONS OR
TRADENAMES

 

F-29

 

SCHEDULE 3(H)

 

INSTRUMENTS, DOCUMENTS OR
TANGIBLE CHATTEL PAPER  

 

F-30

 

SCHEDULE 3(K)

 

NOTICE OF MERGERS, CONSOLIDATIONS, CHANGES IN
STRUCTURE, USE OF TRADENAMES

 

F-31

 

SCHEDULE 3(M)

 

PERMITTED UNPLEDGED ACCOUNTS

 

F-32

 

SCHEDULE 3(N)

 

INTELLECTUAL PROPERTY

 

F-33

 

SCHEDULE 3(P)

 

DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS  

 

F-34

 

EXHIBIT 4(a)(ii)

 

IRREVOCABLE STOCK POWER

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
to

 

the following Equity Interests of
                                          ,
a
                        
corporation:

 

	
  No. of Shares

  	
   

  	
  Certificate No.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

and irrevocably appoints
                                                                    
its agent and attorney-in-fact to transfer all or any part of such Equity
Interests and to take all necessary and appropriate action to effect any such
transfer.  The agent and attorney-in-fact
may substitute and appoint one or more persons to act for him.  The effectiveness of a transfer pursuant to
this stock power shall be subject to any and all transfer restrictions
referenced on the face of the certificates evidencing such interest or in the
certificate of incorporation or bylaws of the subject corporation, to the
extent they may from time to time exist.

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

F-35

 

SCHEDULE 4(b)(i)

 

NOTICE

 

OF

 

GRANT OF SECURITY INTEREST

 

IN

 

COPYRIGHTS

 

United
States Copyright Office

 

Ladies
and Gentlemen:

 

Please
be advised that pursuant to the Security and Pledge Agreement dated as of July 1,
2008 (as the same may be amended, modified, extended or restated from time to
time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor”
and collectively, the “Obligors”) and Bank of America, N.A., as
collateral agent (the “Collateral Agent”) for the Secured Parties
referenced therein, the undersigned Obligor has granted a continuing security
interest in and continuing lien upon the copyrights and copyright applications
shown below to the Collateral Agent for the ratable benefit of the Secured
Parties:

 

COPYRIGHTS

 

	
  Copyright
  No.

  	
   

  	
  Description of Copyright

  	
   

  	
  Date of

  Copyright

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

COPYRIGHT APPLICATIONS

 

	
  Copyright

  Applications No.

  	
   

  	
  Description of Copyright

  Applied For

  	
   

  	
  Date of Copyright

  Applications

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

F-36

 

The
Obligors and the Collateral Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interest in the foregoing copyrights
and copyright applications (i) may only be terminated in accordance with the
terms of the Agreement and (ii) is not to be construed as an assignment of
any copyright or copyright application.

 

	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Obligor]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Acknowledged
  and Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BANK
  OF AMERICA, N.A., as Collateral Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

F-37

 

SCHEDULE 4(b)(ii)

 

NOTICE

 

OF

 

GRANT OF SECURITY INTEREST

 

IN

 

PATENTS

 

United
States Patent and Trademark Office

 

Ladies
and Gentlemen:

 

Please
be advised that pursuant to the Security and Pledge Agreement dated as of July 1,
2008 (as the same may be amended, modified, extended or restated from time to
time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor”
and collectively, the “Obligors”) and Bank of America, N.A., as
collateral agent (the “Collateral Agent”) for the Secured Parties
referenced therein, the undersigned Obligor has granted a continuing security
interest in and continuing lien upon the patents and patent applications shown
below to the Collateral Agent for the ratable benefit of the Secured Parties:

 

PATENTS

 

	
  Patent
  No.

  	
   

  	
  Description of Patent

  Item

  	
   

  	
  Date of

  Patent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

PATENT APPLICATIONS

 

	
  Patent

  Applications No.

  	
   

  	
  Description of Patent

  Applied For

  	
   

  	
  Date of Patent

  Applications

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

F-38

 

The
Obligors and the Collateral Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interest in the foregoing patents and
patent applications (i) may only be terminated in accordance with the
terms of the Agreement and (ii) is not to be construed as an assignment of
any patent or patent application.

 

	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Obligor]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Acknowledged
  and Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BANK
  OF AMERICA, N.A., as Collateral Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

F-39

 

SCHEDULE 4(b)(iii)

 

NOTICE

 

OF

 

GRANT OF SECURITY INTEREST

 

IN

 

TRADEMARKS

 

United
States Patent and Trademark Office

 

Ladies
and Gentlemen:

 

Please
be advised that pursuant to the Security and Pledge Agreement dated as of July 1,
2008 (as the same may be amended, modified, extended or restated from time to
time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor”
and collectively, the “Obligors”) and Bank of America, N.A., as
collateral agent (the “Collateral Agent”) for the Secured Parties
referenced therein, the undersigned Obligor has granted a continuing security
interest in and continuing lien upon the trademarks and trademark applications
shown below to the Collateral Agent for the ratable benefit of the Secured
Parties:

 

TRADEMARKS

 

	
  Trademark
  No.

  	
   

  	
  Description of Trademark

  Item

  	
   

  	
  Date of

  Trademark

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

TRADEMARK APPLICATIONS

 

	
  Trademark

  Applications No.

  	
   

  	
  Description of Trademark

  Applied For

  	
   

  	
  Date of Trademark

  Applications

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

F-40

 

The
Obligors and the Collateral Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interest in the foregoing trademarks
and trademark applications (i) may only be terminated in accordance with
the terms of the Agreement and (ii) is not to be construed as an
assignment of any trademark or trademark application.

 

	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Obligor]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Acknowledged
  and Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BANK
  OF AMERICA, N.A., as Collateral Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

F-41

EXHIBIT G

 

FORM OF MORTGAGE

 

[see attached]

 

G-1

EXHIBIT H

 

FORM OF SECURED PARTY DESIGNATION NOTICE

 

Date: 
                  ,            

 

To:          Bank
of America, N.A.,
                 as Administrative Agent
                 Agency Management
                 901 Main Street, 14th Floor
                 TX1-492-14-14
                 Dallas, TX  75202
                 Attention:  Denise Wolfenberger

 

Ladies and Gentlemen:

 

THIS SECURED PARTY DESIGNATION NOTICE (this “Designation Notice”)
is made by                                                ,
a
                            
corporation (the “[Cash
Management Bank/Hedge Bank”), to BANK OF AMERICA, N.A. (“Bank of America”), as administrative agent
under the Credit Agreement referred to below (in such capacity, together with
its successors and assigns in such capacity, the “Administrative Agent”).  All capitalized terms not defined herein
shall have the meaning ascribed to them in the Credit Agreement.

 

W I T N E S S E T H :

 

WHEREAS, KAPSTONE KRAFT PAPER CORPORATION, a
Delaware corporation (the “Borrower”), KAPSTONE PAPER AND PACKAGING
CORPORATION and certain Subsidiaries of the Borrower (the “Guarantors”),
the Lenders party thereto and the Administrative Agent have entered into that
certain Credit Agreement, dated as of June 12, 2008 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
pursuant to which certain loans and financial accommodations have been made to
the Borrower;

 

WHEREAS, in connection with the Credit
Agreement, the Borrower and the Guarantors have executed certain Collateral
Documents in favor of certain holders of the Obligations (the “Secured Parties”);

 

WHEREAS, in connection with the Credit
Agreement, a [Cash Management Bank/Hedge
Bank] is permitted to designate its [Cash Management Agreement/Swap Contract] as a [“Secured Cash Management Agreement”/“Secured Hedge
Agreement”] under the Credit Agreement and the Collateral Documents;

 

WHEREAS, the Credit Agreement requires that
the [Cash Management Bank/Hedge Bank]
deliver this Designation Notice to the Administrative Agent; and

 

H-1

 

WHEREAS, the [Cash Management Bank/Hedge Bank] has agreed to execute and
deliver this Designation Notice in order to become a [Cash Management Bank/Hedge Bank] and Secured Party under the
Credit Agreement and the other Loan Documents.

 

1.             Designation.  [                          ]
hereby designates (x) itself as a [Cash
Management Bank/Hedge Bank] under the Credit Agreement and (y) the
[Cash Management Agreement/Swap Contract]
described on Schedule 1 hereto to be a “[Secured Cash Management Agreement/Secured Hedge Agreement]”
and hereby represents and warrants to the Administrative Agent that such [Cash Management Agreement/Swap Contract]
satisfies all the requirements under the Loan Documents to be so designated
including that such [Cash Management
Bank/Hedge Bank] was a Lender or Affiliate of a Lender at the time
such [Cash Management Agreement/Swap
Contract] was entered into. 
By executing and delivering this Designation Notice, the [Cash Management Bank/Hedge Bank], as
provided in the Credit Agreement, hereby agrees to be bound by all of the
provisions of the Loan Documents which are applicable to it as a [Cash Management Bank/Hedge Bank] or a
Secured Party thereunder and hereby (a) confirms that it has received a
copy of the Loan Documents and such other documents and information as it has
deemed appropriate to make its own decision to enter into this Designation
Notice, (b) appoints and authorizes the Administrative Agent and the
Collateral Agent to take such action as agent on its behalf and to exercise such
powers and discretion under the Credit Agreement, the other Loan Documents or
any other instrument or document furnished pursuant hereto or thereto as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are incidental thereto, and (c) agrees that it will be bound by
the provisions of the Loan Documents and will perform in accordance with its
terms all the obligations which by the terms of the Loan Documents are required
to be performed by it as a [Cash Management Bank/Hedge
Bank] or Secured Party, including without limitation its obligations
as a Creditor under the Intercreditor Agreement.  Notwithstanding anything to the contrary
contained in Section 11.04 of the Credit Agreement, to the extent (w) there
are any amounts owed to the [Cash Management
Bank/Hedge Bank] in respect of Secured Hedge Agreements or Cash
Management Agreements, (x) the Loan Parties for any reason fail to
indefeasibly pay any amount required under subsection (a) or (b) of
Section 11.04 of the Credit Agreement to be paid by them to the
Administrative Agent, (y) the Administrative Agent has taken action with
respect of the Collateral or any breach of the Loan Documents by a Loan Party,
and (z) the [Cash Management Bank/Hedge
Bank] shares in the proceeds of such Collateral, the [Cash Management Bank/Hedge Bank] agrees to
indemnify the Administrative Agent with respect to any action taken by it in
respect of (i) the Collateral or (ii) any breach of the Loan
Documents by any Loan Party, and agrees to undertake and fulfill a portion of
the liability of the Lenders under Section 11.04 of the Credit
Agreement (without relieving the Lenders of their obligations) in an amount
equal to, as of any date of determination, the product of (a) the
aggregate liability of the Lenders under Section 11.04 as of such date multiplied
by (b) a fraction, the numerator of which shall be the aggregate
amount owed to the [Cash Management
Bank/Hedge Bank] in respect of Secured Hedge Agreements or Cash
Management Agreements and the denominator of which shall be the sum of the
aggregate outstanding principal amount of indebtedness evidenced by the Private
Placement Notes, the aggregate Outstanding Amount under the Credit Agreement
and all amounts owed in respect of Secured Hedge Agreements or Cash Management
Agreements.

 

H-2

 

2.             The address and
facsimile number for notices to the undersigned pursuant to the Credit
Agreement is as follows:

 

[set forth address and facsimile number for notices]

 

3.             GOVERNING LAW.  THIS DESIGNATION NOTICE SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS.

 

[Remainder of page intentionally left blank.]

 

H-3

 

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

 

	
   

  	
   

  	
  [CASH MANAGEMENT BANK/HEDGE BANK]

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCEPTED AND

  	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED BY:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A.,

  	
   

  	
   

  	
   

  
	
  as the Administrative Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
						

 

H-4

 

Schedule
1

 

[CASH MANAGEMENT AGREEMENT/SWAP
CONTRACT]  

TO BE SPECIFIED AS A [SECURED CASH MANAGEMENT
AGREEMENT/

SECURED HEDGE AGREEMENT]

 

H-5Exhibit 10.8

 

EXECUTION COPY

 

FIRST AMENDMENT TO CREDIT
AGREEMENT

 

THIS
FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of August 25,
2008 is by and among KAPSTONE KRAFT PAPER CORPORATION,  a
Delaware corporation (the “Borrower”), KAPSTONE PAPER AND PACKAGING
CORPORATION, a Delaware corporation (the “Parent”), certain subsidiaries
of the Parent identified on the signature pages hereto as Guarantors, the
Lenders identified on the signature pages hereto and BANK OF AMERICA,
N.A.,  as Administrative Agent (the “Administrative
Agent”), Swing Line Lender and L/C Issuer.

 

W I T N E S S E T H

 

WHEREAS,
the Borrower, the Parent, the other Guarantors party thereto, the Lenders party
thereto, and the Administrative Agent have entered into that certain Credit
Agreement dated as of June 12, 2008 (as modified by this Amendment, that
certain Joinder Agreement dated as of July 15, 2008 among Cogen South
L.L.C., the Administrative Agent and Bank of America, N.A., as Collateral
Agent, and as may be further amended, restated, modified or supplemented from
time to time, the “Credit Agreement”);

 

WHEREAS,
the Borrower has requested that the Lenders amend the Credit Agreement to
modify certain provisions contained therein; and

 

WHEREAS,
the Required Lenders have agreed to amend the Credit Agreement on the terms and
subject to the conditions set forth herein.

 

NOW,
THEREFORE, IN CONSIDERATION of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

1.             Defined
Terms.  Capitalized terms used herein
but not otherwise defined herein shall have the meanings provided to such terms
in the Credit Agreement, as amended hereby.

 

2.             Amendments.  Subject to the satisfaction of
the conditions precedent set forth in Section 3 hereof, clause (v) contained
in Section 2.05(b) of the Credit
Agreement is hereby amended by (a) deleting the word “Immediately”
appearing at the beginning of the first sentence thereof, (b) capitalizing
the word “upon” appearing at the beginning of the first sentence thereof and (c) adding
the following sentence to the end of such clause:

 

Such
Net Cash Proceeds shall be used to prepay the Senior Debt as follows: (A) with
respect to all such Net Cash Proceeds received during the Fiscal Year ending December 31,
2008, (x) within seven (7) days of each date on which the aggregate
amount of all Net Cash Proceeds received by the Loan Parties or their
Subsidiaries from the exercise of any Warrants not previously used to prepay
the Senior Debt in accordance with Section

 

 

2.05(b) (the
“Unremitted Warrant Proceeds”) equals $10,000,000 or more and (y) with
respect to all remaining Unremitted Warrant Proceeds from such period, within
90 days after the end of such Fiscal Year and (B) with respect to all such
Net Cash Proceeds received during each fiscal quarter thereafter, (x) within
seven (7) days of each date on which the aggregate amount of all
Unremitted Warrant Proceeds equals $10,000,000 or more and (y) with
respect to all remaining Unremitted Warrant Proceeds from such period, within
seven (7) days after the end of each fiscal quarter.

 

3.             Condition Precedent to Effectiveness.  This Amendment shall become effective as of
the date hereof upon the satisfaction of the following conditions:

 

(a)           Execution
of Counterparts of Amendment. 
Receipt by the Administrative Agent of counterparts of this Amendment
duly executed by the Borrower, the Parent, the Guarantors, the Administrative
Agent and the Required Lenders;

 

(b)           Amendment
to Note Purchase Agreement.  Receipt
by the Administrative Agent of a copy of an amendment under that certain Note
Purchase Agreement, dated as of July 1, 2008, among the Borrower, the
Parent, and the Purchasers identified therein, amending (among other things)
paragraph 4E(5) thereof and otherwise in form and substance satisfactory
to the Administrative Agent, executed by the Borrower, the Parent and the
Purchasers, and such amendment shall be in full force and effect; and

 

(c)           Fees
and Expenses.  The payment by the
Borrower to the Administrative Agent (or its Affiliates) of all fees and
expenses which are due and payable as of the date hereof under the Credit
Agreement, including all reasonable out of pocket costs and expenses of the
Administrative Agent in connection with the preparation, execution and delivery
of this Amendment (including, without limitation, the reasonable fees and
expenses of Moore & Van Allen PLLC, special counsel to the
Administrative Agent).

 

4.             Representations
and Warranties.  Each Loan Party
hereby represents and warrants that (a) it has the requisite corporate
power and authority to execute, deliver and perform this Amendment, (b) it
is duly authorized to, and has been authorized by all necessary corporate
action to, execute, deliver and perform this Amendment, (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 it of this Amendment,
(d) the execution, delivery and performance by it of this Amendment do not
and will not (i) require any consent or approval of any governmental
agency or authority (other than any consent or approval which has been obtained
and is in full force and effect), (ii) conflict with (A) any
provision of Law, (B) the charter, by-laws or other organizational
documents of any Loan Party or (C) any agreement, indenture, instrument or
other document material to the business of any Loan Party, or any judgment,
order or decree, which is binding upon any Loan Party or any of their
respective properties, (e) the representations and warranties contained in
Article V of the Credit Agreement are true and correct in all material
respects on and as of the date hereof as though made on and as of such date
(except for those which expressly relate to an earlier date, in which 

 

2

 

case
they are true and correct in all material respects as of such date) and (f) no
Default or Event of Default exists under the Credit Agreement on and as of the
date hereof and after giving effect to this Amendment, or will occur as a
result of the transactions contemplated hereby.

 

5.             No
Other Changes; Ratification.  Except
as expressly modified or waived hereby, all of the terms and provisions of the
Credit Agreement (including schedules and exhibits thereto) and the other Loan
Documents shall remain in full force and effect.  The term “this Agreement” or “Credit
Agreement” and all similar references as used in each of the Loan Documents
shall hereafter mean the Credit Agreement as amended by this Amendment.  This Amendment shall constitute a “Loan
Document” under, and as defined in, the Credit Agreement.  Except as herein specifically agreed, the
Credit Agreement is hereby ratified and confirmed and shall remain in full
force and effect according to its terms. 
This Amendment shall be effective only to the extent specifically set
forth herein and shall not (i) be construed as a waiver of any breach or
default other than as specifically waived herein nor as a waiver of any breach
or default of which the Lenders have not been informed by the Borrower, (ii) affect
the right of the Lenders to demand compliance by the Loan Parties with all
terms and conditions of the Credit Agreement in all other instances, (iii) be
deemed a waiver of any transaction or future action on the part of the Loan
Parties requiring the Lenders’ or the Required Lenders’ consent or approval
under the Credit Agreement, or (iv) be deemed or construed to be a wavier
or release of, or a limitation upon, the Administrative Agent’s or the Lenders’
exercise of any rights or remedies under the Credit Agreement or any other
document executed or delivered in connection therewith, whether arising as a
consequence of any Event of Default which may now exist or otherwise, all such
rights and remedies hereby being expressly reserved.

 

6.             Expenses.  The Borrower agrees to pay all reasonable
costs and expenses in connection with the preparation, execution and delivery
of this Amendment, including without limitation the reasonable fees and
expenses of Moore & Van Allen PLLC, special counsel to the
Administrative Agent.

 

7.             Acknowledgment
of Guarantors.  The Guarantors
acknowledge and consent to all of the terms and conditions of this Amendment
and agree that this Amendment and any documents executed in connection herewith
do not operate to reduce or discharge the Guarantors’ obligations under the
Credit Agreement or the other Loan Documents.

 

8.             Affirmation
of Liens. Each Loan Party affirms the liens and security interests created
and granted by it in the Loan Documents (including, but not limited to, the
Security Agreement) and agrees that this Amendment shall in no manner adversely
affect or impair such liens and security interests.

 

9.             Counterparts;
Facsimile/Email.  This Amendment may
be executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original and it shall not be necessary in making
proof of this Amendment to produce or account for more than one such
counterpart.  Delivery of an executed
counterpart of this Amendment by telecopy or 

 

3

 

electronic
mail by any party hereto shall be effective as such party’s original executed
counterpart.

 

10.           Governing
Law.  This Amendment shall be deemed
to be a contract made under, and for all purposes shall be construed in
accordance with, the laws of the State of Illinois.

 

11.           Entirety.
This Amendment and the other Loan Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof. 
These Loan Documents represent the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties.  There
are no oral agreements between the parties.

 

[SIGNATURE PAGES FOLLOW]

 

4

 

IN WITNESS WHEREOF, each of the parties hereto has
caused a counterpart of this Amendment to be duly executed and delivered as of
the date first above written.

 

	
  BORROWER:

  	
  KAPSTONE KRAFT PAPER CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrea Tarbox

  
	
   

  	
  Name:

  	
  Andrea Tarbox

  
	
   

  	
  Title:

  	
  Treasurer and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTORS:

  	
  KAPSTONE PAPER AND PACKAGING CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrea Tarbox

  
	
   

  	
  Name:

  	
  Andrea Tarbox

  
	
   

  	
  Title:

  	
  VP and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KAPSTONE CHARLESTON KRAFT LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrea Tarbox

  
	
   

  	
  Name:

  	
  Andrea Tarbox

  
	
   

  	
  Title:

  	
  Treasurer and CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COGEN SOUTH L.L.C.,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrea Tarbox

  
	
   

  	
  Name:

  	
  Andrea Tarbox

  
	
   

  	
  Title:

  	
  Treasurer and CFO

  

 

 

 

	
  ADMINISTRATIVE

  	
  BANK OF AMERICA, N.A.,

  
	
  AGENT:

  	
  as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Suzanne M. Paul

  
	
   

  	
  Name:

  	
  Suzanne M. Paul

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
  LENDERS:

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as a Lender, L/C Issuer and Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Balon

  
	
   

  	
  Name:

  	
  David Balon

  
	
   

  	
  Title:

  	
  VP

  

 

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dwayne Coker

  
	
   

  	
  Name:

  	
  Dwayne Coker

  
	
   

  	
  Title:

  	
  Duly Authorized Signatory

  

 

 

 

	
   

  	
  COBANK, ACB,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Tousignant

  
	
   

  	
  Name:

  	
  Michael Tousignant

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
   

  	
  NORTHWEST FARM CREDIT SERVICES, PCA,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim D. Allen

  
	
   

  	
  Name:

  	
  Jim D. Allen

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

 

	
   

  	
  FARM CREDIT SERVICES OF AMERICA, PCA,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven L. Moore

  
	
   

  	
  Name:

  	
  Steven L. Moore

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
   

  	
  AGFIRST FARM CREDIT BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matt Jeffords

  
	
   

  	
  Name:

  	
  Matt Jeffords

  
	
   

  	
  Title:

  	
  Assistant Vice President

  

 

 

 

	
   

  	
  COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
  “RABOBANK NEDERLAND” NEW YORK BRANCH,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Andrew Sherman

  
	
   

  	
  Name:

  	
  Andrew Sherman

  
	
   

  	
  Title:

  	
  Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Peter Duncan

  
	
   

  	
  Name:

  	
  Peter Duncan

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

	
   

  	
  SUNTRUST BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Maddox

  
	
   

  	
  Name:

  	
  Robert Maddox

  
	
   

  	
  Title:

  	
  Director

  

 

 

 

	
   

  	
  TD BANK, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susanna C. Satten

  
	
   

  	
  Name:

  	
  Susanna C. Satten

  
	
   

  	
  Title:

  	
  Assistant Vice President

  

 

 

 

	
   

  	
  THE NORTHERN TRUST COMPANY,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brandon Rolek

  
	
   

  	
  Name:

  	
  Brandon Rolek

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
   

  	
  FIRST TENNESSEE BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James H. Moore, Jr.

  
	
   

  	
  Name:

  	
  James H. Moore, Jr.

  
	
   

  	
  Title:

  	
  Sr. Vice President

  

 

 

 

	
   

  	
  GREENSTONE FARM CREDIT SERVICES ACA/FLCA

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Jeff Pavlik

  
	
   

  	
  Name:

  	
  Jeff Pavlik

  
	
   

  	
  Title:

  	
  Vice President

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