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Exhibit 4.1

MERCER INTERNATIONAL INC.  

9.25% SENIOR NOTES DUE 2013  

FIRST
SUPPLEMENTAL INDENTURE 

Dated
as of February 14, 2005 

to
Indenture dated as of December 10, 2004 

Wells
Fargo Bank, N.A. 

Trustee 

CROSS-REFERENCE TABLE*  

	Trust Indenture Act Section
 
	 	Indenture Section

	310	(a)(1)	 	N.A.
	 	 	(a)(2)	 	N.A.
	 	 	(a)(3)	 	N.A.
	 	 	(a)(4)	 	N.A.
	 	 	(a)(5)	 	N.A.
	 	 	(b)	 	N.A.
	 	 	(c)	 	N.A.
	311	(a)	 	N.A.
	 	 	(b)	 	N.A.
	 	 	(c)	 	N.A.
	312	(a)	 	2.05
	 	 	(b)	 	12.03
	 	 	(c)	 	12.03
	313	(a)	 	N.A.
	 	 	(b)(1)	 	N.A.
	 	 	(b)(2)	 	N.A.
	 	 	(c)	 	12.02
	 	 	(d)	 	N.A.
	314	(a)	 	4.03; 12.02
	 	 	(b)	 	N.A.
	 	 	(c)(1)	 	N.A.
	 	 	(c)(2)	 	N.A.
	 	 	(c)(3)	 	N.A.
	 	 	(d)	 	N.A.
	 	 	(e)	 	N.A.
	 	 	(f)	 	N.A.
	315	(a)	 	N.A.
	 	 	(b)	 	12.02
	 	 	(c)	 	N.A.
	 	 	(d)	 	N.A.
	 	 	(e)	 	6.11
	316	(a) (last sentence)	 	2.09
	 	 	(a)(1)(A)	 	6.05
	 	 	(a)(1)(B)	 	6.04
	 	 	(a)(2)	 	N.A.
	 	 	(b)	 	6.07
	 	 	(c)	 	2.12
	317	(a)(1)	 	6.08
	 	 	(a)(2)	 	6.09
	 	 	(b)	 	2.04
	318	(a)	 	12.01
	 	 	(b)	 	N.A.
	 	 	(c)	 	12.01

        N.A.
means not applicable. 

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

  

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	Page

	ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE
	Section 1.01	 	Definitions	 	1
	Section 1.02	 	Other Definitions	 	19
	Section 1.03	 	Incorporation by Reference of Trust Indenture Act	 	19
	Section 1.04	 	Rules of Construction	 	20
	Section 1.05	 	Conflicts with Base Indenture	 	20
	
ARTICLE 2

THE NOTES
	Section 2.01	 	Form and Dating	 	20
	Section 2.02	 	Execution and Authentication	 	21
	Section 2.03	 	Registrar and Paying Agent	 	21
	Section 2.04	 	Paying Agent to Hold Money in Trust	 	22
	Section 2.05	 	Holder Lists	 	22
	Section 2.06	 	Transfer and Exchange	 	22
	Section 2.07	 	Replacement Notes	 	26
	Section 2.08	 	Outstanding Notes	 	26
	Section 2.09	 	Treasury Notes	 	27
	Section 2.10	 	Temporary Notes	 	27
	Section 2.11	 	Cancellation	 	27
	Section 2.12	 	Defaulted Interest	 	27
	
ARTICLE 3

REDEMPTION AND PREPAYMENT
	Section 3.01	 	Notices to Trustee	 	28
	Section 3.02	 	Selection of Notes to Be Redeemed or Purchased	 	28
	Section 3.03	 	Notice of Redemption	 	28
	Section 3.04	 	Effect of Notice of Redemption	 	29
	Section 3.05	 	Deposit of Redemption or Purchase Price	 	29
	Section 3.06	 	Notes Redeemed or Purchased in Part	 	30
	Section 3.07	 	Optional Redemption	 	30
	Section 3.08	 	Mandatory Redemption; No Sinking Fund	 	30
	Section 3.09	 	Offer to Purchase by Application of Excess Proceeds	 	31
	
ARTICLE 4

COVENANTS
	Section 4.01	 	Payment of Notes	 	32
	Section 4.02	 	Maintenance of Office or Agency	 	32
	Section 4.03	 	Reports	 	33
	Section 4.04	 	Compliance Certificate	 	34
	Section 4.05	 	Taxes	 	34
	Section 4.06	 	Stay, Extension and Usury Laws	 	34
	Section 4.07	 	Restricted Payments	 	35
	Section 4.08	 	Dividend and Other Payment Restrictions Affecting Subsidiaries	 	39
	Section 4.09	 	Incurrence of Indebtedness and Issuance of Preferred Stock	 	40
	Section 4.10	 	Asset Sales	 	44
	Section 4.11	 	Transactions with Affiliates	 	45
	Section 4.12	 	Liens	 	47
	Section 4.13	 	Business Activities	 	47
	Section 4.14	 	Corporate Existence	 	47
	Section 4.15	 	Offer to Repurchase Upon Change of Control	 	47
	Section 4.16	 	No Amendment to Subordination Provisions	 	49
	Section 4.17	 	Limitation on Sale and Leaseback Transactions	 	49
	Section 4.18	 	Payments for Consent	 	50
	Section 4.19	 	Limitation on Issuances of Guarantees of Indebtedness	 	50
	Section 4.20	 	Note Guarantees	 	50
	Section 4.21	 	Designation of Restricted and Unrestricted Subsidiaries	 	50
	
ARTICLE 5

SUCCESSORS
	Section 5.01	 	Merger, Consolidation, or Sale of Assets	 	51
	Section 5.02	 	Successor Corporation Substituted	 	52
	
ARTICLE 6

DEFAULTS AND REMEDIES
	Section 6.01	 	Events of Default	 	52
	Section 6.02	 	Acceleration	 	54
	Section 6.03	 	Other Remedies	 	54
	Section 6.04	 	Waiver of Past Defaults	 	55
	Section 6.05	 	Control by Majority	 	55
	Section 6.06	 	Limitation on Suits	 	55
	Section 6.07	 	Rights of Holders of Notes to Receive Payment	 	55
	Section 6.08	 	Collection Suit by Trustee	 	56
	Section 6.09	 	Trustee May File Proofs of Claim	 	56
	Section 6.10	 	Priorities	 	56
	Section 6.11	 	Undertaking for Costs	 	57
	
ARTICLE 7

[INTENTIONALLY OMITTED]
	
ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE
	Section 8.01	 	Option to Effect Legal Defeasance or Covenant Defeasance	 	57
	Section 8.02	 	Legal Defeasance and Discharge	 	57
	Section 8.03	 	Covenant Defeasance	 	58
	Section 8.04	 	Conditions to Legal or Covenant Defeasance	 	58
	Section 8.05	 	Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions	 	59
	Section 8.06	 	Repayment to Company	 	60
	Section 8.07	 	Reinstatement	 	60
	
ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER
	Section 9.01	 	Without Consent of Holders of Notes	 	60
	Section 9.02	 	With Consent of Holders of Notes	 	61
	Section 9.03	 	Compliance with Trust Indenture Act	 	63
	Section 9.04	 	Revocation and Effect of Consents	 	63
	Section 9.05	 	Notation on or Exchange of Notes	 	63
	Section 9.06	 	Trustee to Sign Amendments, etc	 	63
	
ARTICLE 10

NOTE GUARANTEES
	Section 10.01	 	Guarantee	 	63
	Section 10.02	 	Limitation on Guarantor Liability	 	64
	Section 10.03	 	Execution and Delivery of Note Guarantee	 	65
	Section 10.04	 	Guarantors May Consolidate, etc., on Certain Terms	 	65
	Section 10.05	 	Releases	 	66
	
ARTICLE 11

SATISFACTION AND DISCHARGE
	Section 11.01	 	Satisfaction and Discharge	 	66
	Section 11.02	 	Application of Trust Money	 	67
	
ARTICLE 12

MISCELLANEOUS
	Section 12.01	 	Trust Indenture Act Controls	 	68
	Section 12.02	 	Notices	 	68
	Section 12.03	 	Governing Law	 	69
	Section 12.04	 	No Adverse Interpretation of Other Agreements	 	69
	Section 12.05	 	Successors	 	69
	Section 12.06	 	Severability	 	69
	Section 12.07	 	Counterpart Originals	 	70
	Section 12.08	 	Table of Contents, Headings, etc	 	70

 
 

EXHIBITS    
    

	Exhibit A	 	FORM OF NOTE
	Exhibit B	 	FORM OF NOTATION OF GUARANTEE
	Exhibit C	 	FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS

i

  

        FIRST SUPPLEMENTAL INDENTURE dated as of February 14, 2005 between Mercer International Inc., a Washington business trust,
and Wells Fargo Bank, N.A., as trustee. 

        WHEREAS,
the Company and the Trustee entered into an indenture in respect of the issuance of Debt Securities by Mercer International Inc., dated as of December 10, 2004
(the "Base Indenture"); 

        WHEREAS,
Section 10.01(g) of the Base Indenture provides that the Company and Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the
Base Indenture to establish the form or terms of Debt Securities of any series as permitted by Sections 2.01 and 2.03 thereof; 

        WHEREAS,
the Company has duly authorized the creation of a series of its Debt Securities denominated as the "9.25% Senior Notes due 2013" (the
"Notes"); 

        WHEREAS,
the entry into this Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Base Indenture; and 

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

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

 
 

ARTICLE 1
  DEFINITIONS AND INCORPORATION
  BY REFERENCE    
    

Section 1.01    Definitions.

        "Acquired Debt" means, with respect to any specified Person: 

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

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

        "Acquisition" means the acquisition by 0706906 B.C. Ltd. of substantially all of the assets of Stone Venepal (Celgar)
Pulp Inc., a corporation organized under the laws of Canada. 

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

        "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of more than 15% (measured on a fully diluted basis) of the Voting Stock of a Person (except as reportable on Form 13-F or Form 13-G of the
SEC) will be deemed to be control. For purposes of this definition, the terms "controlling," "controlled
by" and "under common control with" have correlative meanings. 

1

 

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

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

        "Asset Sale" means: 

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

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

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

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

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

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

        (4)   the
sale or lease of products, services, accounts receivable or current assets in the ordinary course of business and any sale or other disposition of damaged,
worn-out or obsolete assets in the ordinary course of business; 

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

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

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

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

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

2

 

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

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

        "Base Indenture" has the meaning specified in the recitals of this Supplemental Indenture. 

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

        "Board of Directors" means: 

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

        (2)   with
respect to a partnership, the Board of Directors of the general partner of the partnership; 

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

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

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

        (1)   80%
of the face amount of all accounts receivable owned by the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such
date, calculated on a consolidated basis and in accordance with GAAP; plus

        (2)   50%
of the book value of all inventory owned by the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date,
calculated on a consolidated basis and in accordance with GAAP. 

        "Business Day" means any day other than a Legal Holiday. 

3

 

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

        "Capital Stock" means: 

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

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

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

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

        "Cash Equivalents" means: 

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

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

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

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

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

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

        "Change of Control" means the occurrence of any of the following: 

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

4

 

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

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

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

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

        "Clearstream" means Clearstream Banking, S.A. 

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

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

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

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

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

5

 

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

        (5)   any
expenses directly related to consummation of the Acquisition, the offering of these Notes and concurrent offering of Capital Stock of the Company, to the extent such
amounts were deducted in computing such Consolidated Net Income; plus

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

        (a)   nonrecurring
or unusual recruiting, severance and restructuring costs or gains during such period, as determined in good faith by the Board of Directors of the Company;  provided that the total of such costs shall
not exceed $2.0 million per twelve-month period; 

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

        (c)   expenses
related to any special meetings of shareholders, including any proxy solicitation costs, settlement and related costs; and 

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

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

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

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

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

6

 

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

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

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

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

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

        "Corporate Trust Office of the Trustee" will be at the address of the Trustee specified in Section 12.02 hereof or such other
address as to which the Trustee may give notice to the Company. 

        "Credit Agreements" means (i) that certain Credit Agreement by and among 0706906 B.C. Ltd. and Royal Bank of Canada, as
Agent, providing for up to $30.0 million of revolving credit borrowings, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection
therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities
to institutional investors) in whole or in part from time to time, and (ii) that certain Credit Agreement by and among Zellstoff-und Papierfabrik
Rosenthal GmbH & Co. KG and Bayerische Hypo-und Vereinsbank AG, as Lead Arranger, providing for up to €40.0 million of revolving credit
borrowings, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed,
refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. 

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

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

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

7

 

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

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

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

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

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

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

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

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

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

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

8

 

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

        (1)   acquisitions
that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its
Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted
Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance
with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period; 

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

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

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

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

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

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

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

9

 

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

        (3)   any
interest on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries (other than Indebtedness of the Paper
Subsidiaries, not to exceed €4.7 million, in existence as of the date of this Supplemental Indenture and guaranteed by the Company) or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

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

        "Foreign Subsidiary" means any Restricted Subsidiary that is not a Domestic Subsidiary. 

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

        "Global Note Legend" means the legend set forth in Section 2.06(f)(1) hereof, which is required to be placed on all Global Notes
issued under this Supplemental Indenture. 

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

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

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

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

10

 

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

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

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

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

        "Holder" means a Person in whose name a Note is registered. 

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

        (1)   in
respect of borrowed money; 

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

        (3)   in
respect of banker's acceptances; 

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

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

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

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

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

11

  

        "Initial Notes" means the first $310.0 million aggregate principal amount of Notes issued under this Supplemental Indenture on the date
hereof. 

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

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

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

        "Moody's" means Moody's Investors Service, Inc. 

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

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

        (a)   any
Asset Sale; or 

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

12

 

        (2)   any
extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss); 

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

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

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

        "Non-Recourse Debt" means Indebtedness: 

        (1)   as
to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender, other than the guarantees by the Company of Indebtedness of the Paper
Subsidiaries not to exceed €4.7 million in existence as of the date of this Supplemental Indenture; and 

        (2)   no
default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries (other than Credit Facilities) to declare a default on such other
Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity. 

        "Note Guarantee" means the Guarantee by each Guarantor of the Company's obligations under this Supplemental Indenture and the Notes,
executed pursuant to the provisions of this Supplemental Indenture. 

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

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

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

13

 

        "Paper Subsidiaries" means Dresden Papier GmbH and Fährbrücke GmbH. 

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

        "Permitted Business" means any business conducted by the Company and its Restricted Subsidiaries on the date of this Supplemental
Indenture, including the pulp and paper manufacturing and sales business and any business reasonably related thereto, ancillary or complimentary to reasonable extensions thereof, including, without
limitation, transportation, logistics and wood harvesting and procurement. 

        "Permitted Investments" means: 

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

        (2)   any
Investment in Cash Equivalents; 

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

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

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

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

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

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

        (7)   Investments
represented by Hedging Obligations; 

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

        (9)   repurchases
of the Notes; 

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

14

 

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

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

        (13) other
Investments in any Person (other than an Affiliate of the Company that is not a Subsidiary of the Company) having an aggregate Fair Market Value (measured on the
date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time
outstanding not to exceed $15.0 million. 

        "Permitted Liens" means: 

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

        (2)   Liens
in favor of the Company; 

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

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

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

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

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

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

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

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

15

 

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

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

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

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

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

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

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

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

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

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

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

16

 

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

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

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

        "Restricted Investment" means an Investment other than a Permitted Investment. 

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

        "Rosenthal" means Zellstoff-und Papierfabrik Rosenthal GmbH & Co. KG and any and all successors thereto. 

        "S&P" means Standard & Poor's Ratings Group. 

        "SEC" means the Securities and Exchange Commission. 

        "Securities Act" means the Securities Act of 1933, as amended. 

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

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

        "Subordinated Note Indenture" means the indenture governing the Subordinated Notes. 

        "Subordinated Notes" means the Company's 8.5% Convertible Senior Subordinated Notes Due 2010. 

        "Subsidiary" means, with respect to any specified Person: 

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

17

 

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

        "Supplemental Indenture" means this First Supplemental Indenture, as amended or supplemented from time to time. 

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

        "Trading Day" means: 

        (1)   if
the Company's common Capital Stock is quoted on NASDAQ, a day on which trades may be made on NASDAQ; or 

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

        "Trustee" means Wells Fargo Bank, N.A. until a successor replaces it in accordance with the applicable provisions of this Supplemental
Indenture and thereafter means the successor serving hereunder. 

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

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

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

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

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

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

18

 

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

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

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

        "Wholly-Owned Restricted Subsidiary" of any specified Person means a Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares) will at the time be owned by such Person or by one or more Wholly-Owned Restricted Subsidiaries of such Person. 

Section
1.02    Other Definitions.

	Term

	 	Defined in Section

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

        Other
capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Base Indenture. 

Section
1.03    Incorporation by Reference of Trust Indenture Act.

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

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

19

 

        "indenture securities" means the Notes; 

        "indenture security Holder" means a Holder of a Note; 

        "indenture to be qualified" means this Indenture; 

        "indenture trustee" or "institutional trustee" means the Trustee; and 

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

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

Section
1.04    Rules of Construction.

        Unless
the context otherwise requires: 

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

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

        (3)   "or"
is not exclusive; 

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

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

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

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

Section
1.05    Conflicts with Base Indenture.

        In
the event that any provision of this Indenture limits, qualifies or conflicts with a provision of the Base Indenture, such provision of this Indenture shall control. 

 
 

ARTICLE 2
  THE NOTES    
    

Section
2.01    Form and Dating.

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

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

20

 

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

Section
2.02    Execution and Authentication.

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

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

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

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

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

Section
2.03    Registrar and Paying Agent.

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

21

  

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

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

Section
2.04    Paying Agent to Hold Money in Trust.

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

Section
2.0.5    Holder Lists.

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

Section
2.0.6    Transfer and Exchange.

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

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

        (2)   the
Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to
such effect to the Trustee; or 

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

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

22

 

        (b)   Transfer and Exchange of Beneficial Interests in the Global Notes.    The transfer and exchange of beneficial
interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Supplemental Indenture and the Applicable Procedures. Transfers of beneficial interests
in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: 

        (1)   Transfer of Beneficial Interests in the Same Global Note.    Beneficial interests in any Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial interest in a Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(1). 

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

        (A)  both:

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

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

        (B)  both:

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

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

Upon
satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Supplemental Indenture and the Notes or otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. 

23

 

        (c)   Transfer or Exchange of Beneficial Interests in Global Notes for Definitive Notes.    If any holder of a
beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a
Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Global Note to be
reduced accordingly pursuant to Section 2.06(g) hereof, and the Company will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) will be registered in such name or names
and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or
Indirect Participant. 

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

        (e)   Transfer and Exchange of Definitive Notes for Definitive Notes.    Upon request by a Holder of Definitive Notes
and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar
duly executed by such Holder or by its attorney, duly authorized in writing. A Holder of Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of a Definitive
Note. 

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

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

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

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

24

 

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

        (h)   General Provisions Relating to Transfers and Exchanges.

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

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

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

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

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

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

25

 

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

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

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

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

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

Section
2.07    Replacement Notes.

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

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

        Section
2.08    Outstanding Notes.

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

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

26

 

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

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

Section
2.09    Treasury Notes.

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

Section
2.10    Temporary Notes.

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

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

Section
2.11    Cancellation.

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

Section
2.12    Defaulted Interest.

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

27

 
 
 

ARTICLE 3
  REDEMPTION AND PREPAYMENT    
    

Section
3.01    Notices to Trustee.

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

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

        (2)   the
redemption date; 

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

        (4)   the
redemption price. 

Section
3.02    Selection of Notes to Be Redeemed or Purchased.

        If
less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select Notes for redemption or purchase pursuant to the rules of DTC,
if applicable, or on a pro rata basis except: 

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

        (2)   if
otherwise required by law. 

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

        The
Trustee will promptly notify the Company in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the
principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to
be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except as provided in the preceding sentence,
provisions of this Supplemental Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase. 

Section
3.03    Notice of Redemption.

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

28

 

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

        (1)   the
redemption date; 

        (2)   the
redemption price; 

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

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

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

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

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

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

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

Section
3.04    Effect of Notice of Redemption.

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

Section
3.05    Deposit of Redemption or Purchase Price.

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

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

29

 

Section
3.06    Notes Redeemed or Purchased in Part.

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

Section
3.07    Optional Redemption.

        (a)   At
any time prior to February 15, 2008, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under this
Supplemental Indenture at a redemption price of 109.25% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of a sale of Equity
Interests (other than Disqualified Stock) of the Company; provided that: 

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

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

        (b)   Except
pursuant to the preceding paragraph, the Notes will not be redeemable at the Company's option prior to February 15, 2009. 

        (c)   On
or after February 15, 2009, the Company may redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month
period beginning on February 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date: 

	Year
 
	 	Percentage

	2009	 	104.6250%
	2010	 	102.3125%
	2011 and thereafter	 	100.0000%

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

Section
3.08    Mandatory Redemption; No Sinking Fund.

        The
Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. 

30

 

Section
3.09    Offer to Purchase by Application of Excess Proceeds.

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

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

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

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

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

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

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

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

        (5)   that
Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in integral multiples of $1,000 only; 

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

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

31

 

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

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

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

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

 
 

ARTICLE 4
  COVENANTS    
    

Section
4.01    Payment of Notes.

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

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

Section
4.02    Maintenance of Office or Agency.

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

32

 

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

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

Section
4.03    Reports.

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

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

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

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

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

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

33

 

        (c)   For
so long as any Notes remain outstanding, if at any time they are not required to file with the SEC the reports required by paragraphs (a) and (b) of
this Section 4.03, the Company and the Guarantors will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act. 

Section
4.04    Compliance Certificate.

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

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

Section
4.05    Taxes.

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

Section
4.06    Stay, Extension and Usury Laws.

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

34

   
Section 4.07    Restricted Payments.

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

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

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

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

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

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

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

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

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

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

35

 

        (B)  100%
of the aggregate net cash proceeds received by the Company since the date of this Supplemental Indenture (i) as a contribution to its common equity capital
or from the issue or sale of Equity Interests of the Company including upon exercise of stock options whether issued before or after the date of this Supplemental Indenture (other than Disqualified
Stock) (excluding the issue or sale of common stock of the Company being used to finance, in part, the Acquisition, other than any common stock of the Company issued pursuant to any
over-allotment option granted to the underwriters in connection therewith) or (ii) from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or
exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company); plus

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

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

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

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

36

 

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

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

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

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

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

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

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

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

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

37

 

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

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

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

        (13) other
Restricted Payments in an aggregate amount not to exceed $15.0 million since the date of this Supplemental Indenture. 

        The
amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or
issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this
Section 4.07 will be determined in good faith (a) in the case of assets or securities of $5.0 million or less by the Chief Financial Officer, Controller or Treasurer of the
Company set forth in a certificate delivered to the Trustee, and (b) in the case of assets or securities valued at more than $5.0 million by the Board of Directors of the Company, and
set forth in an Officers Certificate delivered to the Trustee. The Board of Directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing in the United States or Canada if the Fair Market Value of any such non-cash Restricted Payment exceeds $20.0 million. 

38

 

Section 4.08    Dividend and Other Payment Restrictions Affecting Subsidiaries.

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

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

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

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

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

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

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

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

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

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

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

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

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

39

 

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

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

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

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

Section 4.9    Incurrence of Indebtedness and Issuance of Preferred Stock.

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

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

        (1)   the
incurrence by the Company and its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount
at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted
Subsidiaries thereunder) not to exceed the greater of (x) $85.0 million less the aggregate amount of all Net Proceeds of Asset Sales
applied by the Company or any of its Restricted Subsidiaries since the date of this Supplemental Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit
Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof, or (y) the amount of the Borrowing Base on the date of
incurrence; 

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

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

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

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

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

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

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

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

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

41

 

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

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

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

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

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

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

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

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

        (14) the
incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness (which may, but need not, be pursuant to Credit Facilities) in an
aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or
discharge any Indebtedness incurred pursuant to this clause (14), not to exceed $20.0 million. 

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

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

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

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

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

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

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

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

43

 

Section 4.10    Asset Sales.

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

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

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

        (A)  Cash
Equivalents; 

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

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

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

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

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

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

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

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

44

 

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

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

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

Section 4.11    Transactions with Affiliates.

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

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

        (2)   the
Company delivers to the Trustee: 

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

45

 

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

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

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

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

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

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

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

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

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

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

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

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

46

 

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

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

Section 4.12    Liens.

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

Section 4.13    Business Activities.

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

Section 4.14    Corporate Existence.

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

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

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

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

Section 4.15    Offer to Repurchase Upon Change of Control.

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

47

 

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

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

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

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

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

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

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

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

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

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

        (2)   deposit
with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and 

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

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

48

 

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

Section 4.16    No Amendment to Subordination Provisions.

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

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

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

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

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

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

Section 4.17    Limitation on Sale and Leaseback Transactions.

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

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

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

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

49

  

Section 4.18    Payments for Consent.

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

Section 4.19    Limitation on Issuances of Guarantees of Indebtedness.

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

Section 4.20    Note Guarantees.

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

Section 4.21    Designation of Restricted and Unrestricted Subsidiaries.

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

50

 

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

 
 

ARTICLE 5
  SUCCESSORS    
    

Section 5.01
Merger, Consolidation, or Sale of Assets.

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

        (1)   either:

        (A)  the
Company is the surviving corporation; or 

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

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

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

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

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

51

 

        This
Section 5.01 will not apply to: 

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

        (2)   a
conversion of the Company from a business trust into a corporation organized or existing under the laws of the United States, any state of the
United States or the District of Columbia, including by way of a merger with an Affiliate; or 

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

Section 5.2    Successor Corporation Substituted.

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

 
 

ARTICLE 6
  DEFAULTS AND REMEDIES    
    

Section 6.01    Events of Default.

        Each
of the following is an "Event of Default": 

        (1)   default
for 30 days in the payment when due of interest on the Notes; 

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

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

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

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

52

 

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

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

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

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

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

        (A)  commences
a voluntary case, 

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

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

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

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

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

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

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

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

53

 

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

Section 6.02    Acceleration.

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

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

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

        If
an Event of Default occurs by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also
become and be immediately due and payable, to the extent permitted by law, anything in this Supplemental Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior
to February 15, 2009 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes
prior to such date, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable, to the extent permitted by law, in an amount, for each of the
years beginning on February 15 of the years set forth below, as set forth below (expressed as a percentage of the principal amount of the Notes on the date of payment that would otherwise be
due but for the provisions of this sentence): 

	Year 
	 	Percentage

	2005	 	113.8750%
	2006	 	111.5625%
	2007	 	109.2500%
	2008	 	106.9375%

Section 6.03    Other Remedies.

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

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

54

 

Section 6.04    Waiver of Past Defaults.

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

Section 6.05    Control by Majority.

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

Section 6.06    Limitation on Suits.

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

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

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

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

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

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

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

Section 6.07    Rights of Holders of Notes to Receive Payment.

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

55

 

Section 6.08    Collection Suit by Trustee.

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

Section 6.09    Trustee May File Proofs of Claim.

        The
Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.06 of the Base Indenture. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 7.06 of the Base Indenture out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding. 

Section 6.10    Priorities.

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

        First:    to the Trustee, its agents and attorneys for amounts due under Section 7.06 of the Base Indenture, including
payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; 

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

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

56

 

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

Section 6.11    Undertaking for Costs.

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

 
 

ARTICLE 7
  [INTENTIONALLY OMITTED]    
    

 
 

ARTICLE 8
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE    
    

Section 8.01    Option to Effect Legal Defeasance or Covenant Defeasance.

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

Section 8.02    Legal
Defeasance and Discharge. 

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

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

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

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

57

 

        (4)   this
Article 8. 

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

Section 8.03    Covenant Defeasance.

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

Section 8.04    Conditions to Legal or Covenant Defeasance.

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

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

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

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

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

58

 

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

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

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

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

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

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

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

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

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

59

 

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

Section 8.06    Repayment to Company.

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

Section 8.07    Reinstatement.

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

 
 

ARTICLE 9
  AMENDMENT, SUPPLEMENT AND WAIVER    
    

Section 9.01    Without Consent of Holders of Notes.

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

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

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

60

 

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

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

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

        (6)   to
conform the text of this Supplemental Indenture or the Notes to any provision of the "Description of Notes" section of the Company's Prospectus Supplement dated
February 8, 2005, relating to the initial offering of the Notes, to the extent that such provision in that "Description of Notes" was intended to be a verbatim recitation of a provision of this
Supplemental Indenture, the Note Guarantees or the Notes; 

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

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

        Upon
the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 14.04 of the Base Indenture, the Trustee will join with the Company and the Guarantors in the execution of any amended or supplemental indenture
authorized or permitted by the terms of this Supplemental Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated
to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Supplemental Indenture or otherwise. 

Section 9.02    With Consent of Holders of Notes.

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

        Upon
the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with
the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 14.04 of the Base
Indenture, the Trustee will join with the Company and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the
Trustee's own rights, duties or immunities under this Supplemental Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or
supplemental indenture. 

61

 

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

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

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

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

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

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

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

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

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

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

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

62

  

Section 9.03    Compliance with Trust Indenture Act.

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

Section 9.04    Revocation and Effect of Consents.

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

Section 9.05    Notation on or Exchange of Notes.

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

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

Section 9.06    Trustee to Sign Amendments, etc.

        The
Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an amended or supplemental indenture until the Board of Directors of the Company approves it. In executing any amended or
supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01 of the Base
Indenture) will be fully protected in relying upon, in addition to the documents required by Section 14.04 of the Base Indenture, an Officers' Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or permitted by this Supplemental Indenture. 

 
 

ARTICLE 10
  NOTE GUARANTEES    
    

Section 10.01    Guarantee.

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

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

63

 

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

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

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

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

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

Section 10.02    Limitation on Guarantor Liability.

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

64

 

Section 10.03    Execution and Delivery of Note Guarantee.

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

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

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

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

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

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

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

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

        (2)   either:

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

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

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

65

 

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

Section 10.05    Releases.

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

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

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

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

 
 

ARTICLE 11
  SATISFACTION AND DISCHARGE    
    

Section 11.01    Satisfaction and Discharge.

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

66

 

        (1)   either:

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

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

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

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

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

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

        Notwithstanding
the satisfaction and discharge of this Supplemental Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this
Section 11.01, the provisions of Sections 11.02 and 8.06 hereof will survive. In addition, nothing in this Section 11.01 will be deemed to discharge those provisions of
Section 7.06 of the Base Indenture, that, by their terms, survive the satisfaction and discharge of this Supplemental Indenture. 

Section 11.02    Application of Trust Money.

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

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

67

 
 
 

ARTICLE 12
  MISCELLANEOUS    
    

Section 12.01    Trust Indenture Act Controls.

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

Section 12.02    Notices.

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

If
to the Company and/or any Guarantor: 

Mercer
International, Inc.

14900 Interurban Avenue South, Suite 282

Seattle, Washington 98168

Attention: Chief Financial Officer

Facsimile No.: (604) 683-3205 

with
copies to: 

Mercer
International, Inc.

Suite 2840

650 West Georgia

Vancouver, British Columbia

Canada V6B 498

Attention: Chief Financial Officer

Facsimile No.: (604) 684-1094 

and

Sangra,
Moller

Barristers & Solicitors

1000 Cathedral Place

925 West Georgia Street

Vancouver, British Columbia

Canada V6C 3L2

Attention: Harjit Sangra

Facsimile No.: (604) 669-8803 

68

 

If
to the Trustee: 

Wells
Fargo Bank, N.A.

Sixth and Marquette, N9303-120,

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services

Facsimile No.: (612) 667-9825 

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

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

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

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

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

Section 12.03    Governing Law.

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

Section 12.04    No Adverse Interpretation of Other Agreements.

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

Section 12.05    Successors.

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

Section 12.06    Severability.

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

69

 

Section 12.07    Counterpart Originals.

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

Section 12.08    Table of Contents, Headings, etc.

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

[Signatures on following page] 

70

 
 
 

SIGNATURES    
    

Dated
as of February 14, 2005 

	 	 	MERCER INTERNATIONAL, INC.
	
 	
 	

By:	
 	

                                         
                                          
   

Name:

Title:
	
 	
 	
WELLS FARGO BANK, N.A.
	
 	
 	

By:	
 	

                                         
                                          
   

Name:

Title:

71

   EXHIBIT A 

[Face of Note]

CUSIP/CINS
                       

9.25%
Senior Notes due 2013 

	No.             	 	$                             

MERCER
INTERNATIONAL INC. 

promises
to pay to [                   ] or registered assigns, 

the
principal sum of
                                         
                                          
                                          
 DOLLARS

on February 15, 2013. 

Interest
Payment Dates: February 15 and August 15 

Record
Dates: February 1 and August 1 

Dated:
                                ,
             

	 	 	MERCER INTERNATIONAL INC.
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	
 	
 	

 	

 

This
is one of the Notes referred to

in the within-mentioned Supplemental Indenture: 

[TRUSTEE],

as Trustee 

	

By:	

 	

 
	 	
 Authorized Signatory	 

A-1

 
[Back of Note]

9.25% Senior Notes due 2013 

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

        Capitalized
terms used herein have the meanings assigned to them in the Supplemental Indenture referred to below unless otherwise indicated. 

        (1)   INTEREST.    Mercer International, Inc., a Washington Business trust (the
"Company"), promises to pay interest on the principal amount of this Note at 9.25% per annum from February 14, 2005 until maturity. The Company
will pay interest semi-annually in arrears on February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided
further that the first Interest Payment Date shall be August 15, 2005. The Company will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect to the extent lawful; it will pay
interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 

        (2)   METHOD OF PAYMENT.    The Company will pay interest on the Notes (except defaulted interest) to the Persons who
are registered Holders of Notes at the close of business on the February 1 or August 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12 of the First Supplemental Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company,
payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required with respect to principal of and interest, and premium, if any, on, all Global Notes and all other Notes the Holders of which will have
provided wire transfer instructions to the Company or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender
for payment of public and private debts. 

        (3)   PAYING AGENT AND REGISTRAR.    Initially, Wells Fargo Bank, N.A., the Trustee under the First Supplemental
Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity. 

        (4)   INDENTURE.    The Company issued the Notes under a First Supplemental Indenture dated as of February 14,
2005 and a Base Indenture dated as of December 10, 2004 (collectively, the "Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. To the extent any provision of this Note is inconsistent with or conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern
and be controlling. The Notes are unsecured obligations of the Company. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder. 

A-2

 

        (5)   OPTIONAL REDEMPTION. 

        (a)   Except
as set forth in subparagraph (b) of this Paragraph 5, the Company will not have the option to redeem the Notes prior to February 15, 2009. On
or after February 15, 2009, the Company will have the option to redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on
February 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date: 

	Year
 
	 	Percentage

	2009	 	104.6250%
	2010	 	102.3125%
	2011 and thereafter	 	100.0000%

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

        (b)   Notwithstanding
the provisions of subparagraph (a) of this Paragraph 5, at any time prior to February 15, 2008, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture with the net cash proceeds of a sale of Equity Interests (other than Disqualified Stock) of the Company
at a redemption price equal to 109.25% of the aggregate principal amount thereof, plus accrued and unpaid interest to the redemption date; provided that
at least 65% in aggregate principal amount of the Notes originally issued under the
Indenture (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and that such redemption occurs within 90 days of
the date of the closing of such sale of Equity Interests. 

        (6)   MANDATORY REDEMPTION. 

        The
Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. 

        (7)   REPURCHASE AT THE OPTION OF HOLDERS. 

        (a)   If
there is a Change of Control, as and to the extent required by Section 4.15 of the First Supplemental Indenture, the Company will be required to make an offer
(a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to the date of purchase, subject to the rights of Holders on the relevant record
date to receive interest due on the relevant interest payment date (the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. 

A-3

 

        (b)   If
the Company or a Restricted Subsidiary of the Company consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $15.0 million, the Company will commence an offer to all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset
Sale Offer") pursuant to Section 3.09 of the First Supplemental Indenture to purchase the maximum principal amount of Notes (including any Additional Notes) and such
other pari passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of
Notes (including any Additional Notes) and other pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other  pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such
other pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes that
are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" attached to the Notes. 

        (8)   NOTICE OF REDEMPTION.    Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a
redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture. Notes in denominations larger than $1,000 may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. 

        (9)   DENOMINATIONS, TRANSFER, EXCHANGE.    The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need
not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not
exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest
Payment Date. 

        (10) PERSONS DEEMED OWNERS.    The registered Holder of a Note may be treated as its owner for all purposes. 

        (11) AMENDMENT, SUPPLEMENT AND WAIVER.    Subject to certain exceptions, the Indenture or the Notes or the Note
Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting
as a single class, and any existing Default or Event or Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class. Without the consent of any Holder of a Note, the Indenture or the
Notes or the Note Guarantees may be amended or supplemented: (i) to cure any ambiguity, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of
certificated Notes, or in order to comply with any Applicable Procedures, or otherwise alter the provisions of Article 2 of the Indenture in a manner that does not materially adversely affect
any Holder; (iii) to provide for the assumption of the Company's or a Guarantor's obligations to Holders of the Notes and Note Guarantees in case of a merger or consolidation; (iv) to
make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not, in the good faith opinion of the Board of Directors of the Company, adversely affect
the legal rights under the Indenture of any Holder in any material respect; (v) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA; (vi) to conform the text of the Indenture or the Notes to any provision of the "Description of Notes" section of the Company's Prospectus Supplement dated February 8, 2005
relating to the initial offering of the Notes, to the extent that such provision in that "Description of Notes" was intended to be a verbatim recitation of a provision of the Indenture, the Note
Guarantees or the Notes; (vii) to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture; or (viii) to allow any Restricted Subsidiary
to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes. 

A-4

 

        (12) DEFAULTS AND REMEDIES.    Events of Default include: (i) default for 30 days in the payment when
due of interest on the Notes; (ii) default in the payment when due of the principal of, or premium, if any, on, the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure by the Company or any of its Restricted Subsidiaries to comply with Section 4.10, 4.15 or 5.01 of the
First Supplemental Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes including Additional Notes, if any, then outstanding voting as a single class to comply with any of the other agreements in the Indenture or the Notes;
(v) default under certain other agreements relating to Indebtedness of the Company or its Restricted Subsidiaries which default is caused by a failure to pay principal of, or interest or
premium, if any, on, such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default, or results in the acceleration of such Indebtedness prior
to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary; and (viii) except as permitted by the Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force
and effect or any Guarantor or any Person acting on its behalf denies or disaffirms its obligations under such Guarantor's Note Guarantee. If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the
payment of principal or interest or premium, if any,) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the then outstanding
Notes by notice to the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required, upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or
Event of Default. 

A-5

 

        (13) TRUSTEE DEALINGS WITH COMPANY.    The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 

        (14) NO RECOURSE AGAINST OTHERS.    A director, trustee, officer, employee, incorporator or stockholder of the
Company or any of the Guarantors, as such, will not have any liability for any obligations of the Company or the Guarantors under the Notes, the Note Guarantees or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for
the issuance of the Notes. 

        (15) AUTHENTICATION.    This Note will not be valid until authenticated by the manual signature of the Trustee or
an authenticating agent. 

        (16) ABBREVIATIONS.    Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act). 

        (17) CUSIP NUMBERS.    Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon. 

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

        The
Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: 

Mercer
International, Inc.

14900 Interurban Avenue South, Suite 282

Seattle, Washington 98168

Attention: Chief Financial Officer 

A-6

 

with
a copy to: 

Mercer
International, Inc.

Suite 2840

650 West Georgia

Vancouver, British Columbia

Canada V6B 498

Attention: Chief Financial Officer 

A-7

  

EXHIBIT A 

 
 

ASSIGNMENT FORM    
    

        To
assign this Note, fill in the form below: 

	(I) or (we) assign and transfer this Note to:	 
	 	
(Insert assignee's legal name)
	

 (Insert assignee's soc. sec. or tax I.D. no.)
	

	

	

	

 (Print or type assignee's name, address and zip code)

and
irrevocably
appoint                                        
                                          
                                         
             to transfer this Note on the books of the Company. The agent may substitute another to act for him.
 

Date:
                                   

	 	 	Your Signature:	 
	 	 	 	
(Sign exactly as your name appears on the face of this Note)
	
 	
 	

 	

 

Signature
Guarantee*:
                                         
               

	*
	Participant
in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

A-8

 
EXHIBIT A 

 
 

OPTION OF HOLDER TO ELECT PURCHASE

        If
you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the First Supplemental Indenture, check the appropriate box below: 

	 o    Section 4.10	 	o    Section 4.15

        If
you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the First Supplemental Indenture, state the amount
you elect to have purchased: 

$                                  

Date:
                                   

	 	 	Your Signature:	 
	 	 	 	
(Sign exactly as your name appears on the face of this Note)
	

 	
 	
Tax Identification No.:	

 
	 	 	 	

Signature Guarantee*:
                                         
                  

	*
	Participant
in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

A-9

 
EXHIBIT A 

 
 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

        The
following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note
for an interest in this Global Note, have been made: 

	Date of Exchange 
	 	Amount of decrease in Principal Amount of this Global Note
	 	Amount of increase in Principal Amount of this Global Note
	 	Principal Amount of this Global Note following such decrease (or increase)
	 	Signature of authorized officer of Trustee or Custodian

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

*  This schedule should be included only if the Note is issued in global form. 

A-10

QuickLinks

TABLE OF CONTENTS

EXHIBITS

ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE

ARTICLE 2 THE NOTES

ARTICLE 3 REDEMPTION AND PREPAYMENT

ARTICLE 4 COVENANTS

ARTICLE 5 SUCCESSORS

ARTICLE 6 DEFAULTS AND REMEDIES

ARTICLE 7 [INTENTIONALLY OMITTED]

ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE

ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER

ARTICLE 10 NOTE GUARANTEES

ARTICLE 11 SATISFACTION AND DISCHARGE

ARTICLE 12 MISCELLANEOUS

SIGNATURES

ASSIGNMENT FORM

OPTION OF HOLDER TO ELECT PURCHASE

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTEQuickLinks
 -- Click here to rapidly navigate through this document
  

EXHIBIT B 

 
 

FORM OF NOTATION OF GUARANTEE    
    

        For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the
extent set forth in the Indenture and subject to the provisions in the First Supplemental Indenture dated as of February 14, 2005 (the
"Indenture") among Mercer International, Inc. (the "Company"),  [the Guarantors party thereto] and Wells
Fargo Bank, N.A., as trustee (the
"Trustee") to the Base Indenture dated as of December 10, 2004, (a) the due and punctual payment of the principal of, premium, if any, and
interest on, the Notes, whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal of and interest on the Notes, if any, if lawful,
and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly
set forth in Article 10 of the First Supplemental Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. 

        Capitalized
terms used but not defined herein have the meanings given to them in the Indenture. 

	 	 	[NAME OF GUARANTOR(S)]
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	
 	
 	

 	

 

B-1

  

EXHIBIT C 

 
 

FORM OF SUPPLEMENTAL INDENTURE
  TO BE DELIVERED BY SUBSEQUENT GUARANTORS    
    

        SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as
of                                       ,
200          , among
                                         
   (the "Guaranteeing
Subsidiary"), a subsidiary of
                                         
   (or its permitted successor), a                          corporation (the
"Company"), the Company, the other Guarantors (as defined in the Indenture referred to herein) and
                                         
  , as
trustee under the Indenture referred to below (the "Trustee"). 

 
 

W I T N E S S E T H    
    

        WHEREAS,
the Company has heretofore executed and delivered to the Trustee an indenture dated as of December 10, 2004 (the "Base
Indenture") providing for the issuance of debt securities of the Company; 

        WHEREAS,
the Company has heretofore executed and delivered to the Trustee a First Supplemental Indenture (the "Indenture"), dated as of
February 14, 2005, to the Base Indenture, providing for the issuance of 9.25% Senior Notes due 2013 (the "Notes"); 

        WHEREAS,
the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the
"Note Guarantee"); and 

        WHEREAS,
pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. 

        NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee
mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 

        1.     CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the
Indenture. 

        2.     AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and
subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 10 thereof. 

        4.     NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of
the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or this
Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of
the SEC that such a waiver is against public policy. 

        5.     NEW
YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 

C-1

 

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

        7.     EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 

        8.     THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. 

        IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. 

        Dated:
                                  ,
20           

	 	 	[GUARANTEEING SUBSIDIARY]
	
 	
 	

 	
 	

 
	 	 	By:	 	
 Name:

Title:
	
 	
 	
MERCER INTERNATIONAL, INC.
	
 	
 	

 	
 	

 
	 	 	By:	 	
 Name:

Title:
	
 	
 	
[EXISTING GUARANTORS]
	
 	
 	

 	
 	

 
	 	 	By:	 	
 Name:

Title:
	
 	
 	
[TRUSTEE],

as Trustee
	
 	
 	

 	
 	

 
	 	 	By:	 	
 Authorized Signatory

C-2

Exhibit 4.2  

[Face of Note]

CUSIP/CINS
                       

9.25%
Senior Notes due 2013 

	No.             	 	$                             

MERCER
INTERNATIONAL INC. 

promises
to pay to [                   ] or registered assigns, 

the
principal sum of
                                         
                                          
                                          
 DOLLARS on February 15, 2013.
 

Interest
Payment Dates: February 15 and August 15 

Record
Dates: February 1 and August 1 

Dated:
                                ,
             

	 	 	MERCER INTERNATIONAL INC.
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:
	
 	
 	

 	

 

This
is one of the Notes referred to

in the within-mentioned Supplemental Indenture: 

[TRUSTEE],

as Trustee 

	

By:	

 	

 
	 	
 Authorized Signatory	 

[Back of Note]

9.25% Senior Notes due 2013 

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

        Capitalized
terms used herein have the meanings assigned to them in the Supplemental Indenture referred to below unless otherwise indicated. 

        (1)   INTEREST.    Mercer International, Inc., a Washington Business trust (the
"Company"), promises to pay interest on the principal amount of this Note at 9.25% per annum from February 14, 2005 until maturity. The Company
will pay interest semi-annually in arrears on February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided
further that the first Interest Payment Date shall be August 15, 2005. The Company will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect to the extent lawful; it will pay
interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 

        (2)   METHOD OF PAYMENT.    The Company will pay interest on the Notes (except defaulted interest) to the Persons who
are registered Holders of Notes at the close of business on the February 1 or August 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12 of the First Supplemental Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company,
payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required with respect to principal of and interest, and premium, if any, on, all Global Notes and all other Notes the Holders of which will have
provided wire transfer instructions to the Company or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender
for payment of public and private debts. 

        (3)   PAYING AGENT AND REGISTRAR.    Initially, Wells Fargo Bank, N.A., the Trustee under the First Supplemental
Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity. 

        (4)   INDENTURE.    The Company issued the Notes under a First Supplemental Indenture dated as of February 14,
2005 and a Base Indenture dated as of December 10, 2004 (collectively, the "Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. To the extent any provision of this Note is inconsistent with or conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern
and be controlling. The Notes are unsecured obligations of the Company. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder. 

        (5)   OPTIONAL REDEMPTION. 

        (a)   Except
as set forth in subparagraph (b) of this Paragraph 5, the Company will not have the option to redeem the Notes prior to February 15, 2009. On
or after February 15, 2009, the Company will have the option to redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on
February 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date: 

	Year 
	 	Percentage

	2009	 	104.6250%
	2010	 	102.3125%
	2011 and thereafter	 	100.0000%

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

        (b)   Notwithstanding
the provisions of subparagraph (a) of this Paragraph 5, at any time prior to February 15, 2008, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture with the net cash proceeds of a sale of Equity Interests (other than Disqualified Stock) of the Company
at a redemption price equal to 109.25% of the aggregate principal amount thereof, plus accrued and unpaid interest to the redemption date; provided that
at least 65% in aggregate principal amount of the Notes originally issued under the Indenture (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the
occurrence of such redemption and that such redemption occurs within 90 days of the date of the closing of such sale of Equity Interests. 

        (6)   MANDATORY REDEMPTION. 

        The
Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. 

        (7)   REPURCHASE AT THE OPTION OF HOLDERS. 

        (a)   If
there is a Change of Control, as and to the extent required by Section 4.15 of the First Supplemental Indenture, the Company will be required to make an offer
(a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to the date of purchase, subject to the rights of Holders on the relevant record
date to receive interest due on the relevant interest payment date (the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. 

        (b)   If
the Company or a Restricted Subsidiary of the Company consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $15.0 million, the Company will commence an offer to all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset
Sale Offer") pursuant to Section 3.09 of the First Supplemental Indenture to purchase the maximum principal amount of Notes (including any Additional Notes) and such
other pari passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of
Notes (including any Additional Notes) and other pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other  pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such
other pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes that
are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" attached to the Notes. 

        (8)   NOTICE OF REDEMPTION.    Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a
redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture. Notes in denominations larger than $1,000 may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. 

        (9)   DENOMINATIONS, TRANSFER, EXCHANGE.    The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need
not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not
exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest
Payment Date. 

        (10) PERSONS DEEMED OWNERS.    The registered Holder of a Note may be treated as its owner for all purposes. 

        (11) AMENDMENT, SUPPLEMENT AND WAIVER.    Subject to certain exceptions, the Indenture or the Notes or the Note
Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting
as a single class, and any existing Default or Event or Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class. Without the consent of any Holder of a Note, the Indenture or the
Notes or the Note Guarantees may be amended or supplemented: (i) to cure any ambiguity, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of
certificated Notes, or in order to comply with any Applicable Procedures, or otherwise alter the provisions of Article 2 of the Indenture in a manner that does not materially adversely affect
any Holder; (iii) to provide for the assumption of the Company's or a Guarantor's obligations to Holders of the Notes and Note Guarantees in case of a merger or consolidation; (iv) to
make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not, in the good faith opinion of the Board of Directors of the Company, adversely affect
the legal rights under the Indenture of any Holder in any material respect; (v) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA; (vi) to conform the text of the Indenture or the Notes to any provision of the "Description of Notes" section of the Company's Prospectus Supplement dated February 8, 2005
relating to the initial offering of the Notes, to the extent that such provision in that "Description of Notes" was intended to be a verbatim recitation of a provision of the Indenture, the Note
Guarantees or the Notes; (vii) to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture; or (viii) to allow any Restricted Subsidiary
to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes. 

        (12) DEFAULTS AND REMEDIES.    Events of Default include: (i) default for 30 days in the payment when
due of interest on the Notes; (ii) default in the payment when due of the principal of, or premium, if any, on, the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure by the Company or any of its Restricted Subsidiaries to comply with Section 4.10, 4.15 or 5.01 of the
First Supplemental Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes including Additional Notes, if any, then outstanding voting as a single class to comply with any of the other agreements in the Indenture or the Notes;
(v) default under certain other agreements relating to Indebtedness of the Company or its Restricted Subsidiaries which default is caused by a failure to pay principal of, or interest or
premium, if any, on, such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default, or results in the acceleration of such Indebtedness prior
to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary; and (viii) except as permitted by the Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force
and effect or any Guarantor or any Person acting on its behalf denies or disaffirms its obligations under such Guarantor's Note Guarantee. If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the
payment of principal or interest or premium, if any,) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the then outstanding
Notes by notice to the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required, upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or
Event of Default. 

        (13) TRUSTEE DEALINGS WITH COMPANY.    The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 

        (14) NO RECOURSE AGAINST OTHERS.    A director, trustee, officer, employee, incorporator or stockholder of the
Company or any of the Guarantors, as such, will not have any liability for any obligations of the Company or the Guarantors under the Notes, the Note Guarantees or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for
the issuance of the Notes. 

        (15) AUTHENTICATION.    This Note will not be valid until authenticated by the manual signature of the Trustee or
an authenticating agent. 

        (16) ABBREVIATIONS.    Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act). 

        (17) CUSIP NUMBERS.    Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon. 

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

        The
Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: 

Mercer
International, Inc.

14900 Interurban Avenue South, Suite 282

Seattle, Washington 98168

Attention: Chief Financial Officer 

with
a copy to: 

Mercer
International, Inc.

Suite 2840

650 West Georgia

Vancouver, British Columbia

Canada V6B 498

Attention: Chief Financial Officer 

 
 

ASSIGNMENT FORM    
    

        To
assign this Note, fill in the form below: 

	(I) or (we) assign and transfer this Note to:	 
	 	
(Insert assignee's legal name)
	

 (Insert assignee's soc. sec. or tax I.D. no.)
	

	

	

	

 (Print or type assignee's name, address and zip code)

and
irrevocably
appoint                                        
                                          
                                         
             to transfer this Note on the books of the Company. The agent may substitute another to act for him.
 

Date:
                                   

	 	 	Your Signature:	 
	 	 	 	
(Sign exactly as your name appears on the face of this Note)
	
 	
 	

 	

 

Signature
Guarantee*:
                                         
               

	*
	Participant
in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

 
 

OPTION OF HOLDER TO ELECT PURCHASE

        If
you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: 

	 o    Section 4.10	 	o    Section 4.15

        If
you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have
purchased: 

$                                  

Date:
                                   

	 	 	Your Signature:	 
	 	 	 	
(Sign exactly as your name appears on the face of this Note)
	

 	
 	
Tax Identification No.:	

 
	 	 	 	

Signature Guarantee*:
                                         
                  

	*
	Participant
in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

 
 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

        The
following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note
for an interest in this Global Note, have been made: 

	Date of Exchange 
	 	Amount of decrease in Principal Amount of this Global Note
	 	Amount of increase in Principal Amount of this Global Note
	 	Principal Amount of this Global Note following such decrease (or increase)
	 	Signature of authorized officer of Trustee or Custodian

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

*  This schedule should be included only if the Note is issued in global form.  

QuickLinks

FORM OF NOTATION OF GUARANTEE

FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS

W I T N E S S E T H

ASSIGNMENT FORM

OPTION OF HOLDER TO ELECT PURCHASE

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

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