Document:

Exhibit 4.2

 

BY ITS ACQUISITION OF THIS SECURITY THE
HOLDER HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I)
NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY
CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I
OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT
ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL

 

 

REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS
OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE
(“SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO
INCLUDE “PLAN ASSETS” OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE
PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), NEW YORK, NEW YORK, 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 IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS 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.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

 

Principal Amount: 162,000,000

CUSIP NO:

ISIN NO:

No. 001

 

 

CELLU
TISSUE HOLDINGS, INC.

 

 

93⁄4%
Senior Secured Exchange Note, Series A, due 2010

 

Cellu Tissue Holdings Inc.,
a Delaware corporation, promises to pay to Cede & Co., or its
registered assigns, the principal sum of One Hundred Sixty-Two Million Dollars,
as revised by the Schedule of Increases and Decreases in Global Security
attached hereto, on March 15, 2010.

 

Interest
Payment Dates: March 15 and September 15

Record
Dates: March 1 and September 1

 

Additional provisions of
this Security are set forth on the other side of this Security.

 

	
   

  	
  CELLU TISSUE HOLDINGS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dianne M. Scheu

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  and Senior Vice President of Finance

  

 

 

 

 

TRUSTEE'S CERTIFICATE OF

 AUTHENTICATION

 

THE BANK OF NEW YORK,

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.

 

 

	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  	
  Date: 

  

 

 

 

 

 

 

[FORM
OF REVERSE SIDE OF NOTE]

 

CELLU TISSUE HOLDINGS,
INC.

 

93⁄4% Senior Secured Note,
Series A, due 2010

 

1.             Interest

 

Cellu Tissue Holdings Inc., a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the “Company”), promises to
pay interest on the principal amount of this Security at the rate per annum
shown above.

 

The Company will pay interest semiannually on
March 15 and September 15 of each year commencing September 15,
2004. Interest on the Securities will accrue from the most recent date to which
interest has been paid on the Securities or, if no interest has been paid, from
March 12, 2004. The Company shall pay interest on overdue principal, and
on overdue premium or Additional Amounts, if any (plus interest on such
interest to the extent lawful), at any rate borne by the Securities to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

 

If an exchange offer (the “Exchange Offer”)
registered under the Securities Act is not consummated or a shelf registration
statement (the “Shelf Registration Statement”) under the Securities Act
with respect to resale of the Securities is not declared effective by the SEC
on or before the date that is 270 days after the Issue Date (the “Target
Registration Date”) in accordance with the terms of the Registration Rights
Agreement, dated as of March 12, 2004 (the “Registration Rights
Agreement”), among the Company, the Subsidiary Guarantors and the initial
purchasers named therein, the annual interest rate borne by the Securities
shall be increased from the rate shown above by 1.00% per annum, in each case
until the Exchange Offer is completed or the Shelf Registration Statement, if
required hereby, is declared effective by the SEC or the Securities become
freely tradable under the Securities Act. The Holder of this Note is entitled
to the benefits of such Registration Rights Agreement. Additional Interest
shall be paid to the same Persons, in the same manner and at the same times as
regular interest.

 

2.             Method of
Payment

 

By no later than 10:00 a.m. (New York City time) on
the date on which any principal of, premium, if any, or interest on any
Security is due and payable, the Company shall irrevocably deposit with the
Trustee or the Paying Agent money sufficient to pay such principal, premium, if
any, Additional Amounts, if any, and/or interest (including Additional
Interest). The Company will pay interest (except Defaulted Interest) to the
Persons who are registered Holders of Securities at the close of business on
the March 1 or September 1 next preceding the interest payment date
even if Securities are cancelled, repurchased or redeemed after the record date
and on or before the interest payment date. Holders must surrender Securities
to a Paying Agent to collect principal payments. The Company will pay
principal, premium, if any, and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
Payments in respect of Securities represented by a Global Security (including
principal, premium, if any, and interest) will be made by the transfer of
immediately available funds to the accounts specified by The Depositary Trust
Company or any successor depository.

 

 

The Company will make all payments in respect of a Definitive Security
(including principal, premium, if any, and interest) by mailing a check to the
registered address of each Holder thereof; provided, however, that payments on
the Securities may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Securities, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such Holder
elects payment by wire transfer by giving written notice to the Trustee or the
Paying Agent to such effect designating such account no later than 15 days
immediately preceding the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).

 

3.             Paying Agent and
Registrar

 

Initially, The Bank of New York (the “Trustee”)
will act as Trustee, Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice to any
Securityholder. The Company or any of its domestically organized, wholly owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.

 

4.             Indenture

 

The Company issued the Securities under an Indenture
dated as of March 12, 2004 (as it may be amended or supplemented from time
to time in accordance with the terms thereof, the “Indenture”), among
the Company, the Subsidiary Guarantors and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§
77aaa-77bbbb) as in effect on the date of the Indenture (the “Act”).
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and
provisions of the Indenture, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.

 

The Securities are secured senior obligations of the
Company. The aggregate principal amount of Securities that may be authenticated
and delivered under the Indenture is unlimited, provided that the Net Cash
Proceeds from any issuance of Additional Securities are invested in Additional
Assets in accordance with the Indenture. This security is one of the 93⁄4% Senior
Secured Notes, Series A, due 2010 referred to in the Indenture. The Securities
include (i) $162,000,000 aggregate principal amount of the Company’s
93⁄4% Senior Secured Notes, Series A, due 2010 issued under the Indenture on
March 12, 2004 (herein called “Initial Securities”), (ii) if
and when issued, additional 93⁄4% Senior Secured Notes, Series A, due 2010 or 93⁄4%
Senior Secured Notes, Series B, due 2010 of the Company that may be issued from
time to time under the Indenture subsequent to March 12, 2004 (herein
called “Additional Securities”) as provided in Section 2.1(a)
of the Indenture and (iii) if and when issued, the Company’s 93⁄4% Senior
Secured Notes, Series B, due 2010 that may be issued from time to time under
the Indenture in exchange for Initial Securities or Additional Securities in an
offer registered under the Securities Act as provided in the Registration
Rights Agreement (herein called “Exchange Securities”). The Initial
Securities, Additional Securities and Exchange Securities are treated as a
single class of securities under the Indenture and shall be secured by first
and second priority Liens and security interests, subject to Permitted Liens,
in the Collateral. The Indenture imposes certain limitations on the incurrence
of indebtedness, the making of restricted payments, the sale of assets and
subsidiary stock, the incurrence of certain liens, sale-leaseback transactions,
the

 

 

sale of capital stock of restricted subsidiaries, the making of
payments for consents, the entering into of agreements that restrict
distribution from restricted subsidiaries and the consummation of mergers and
consolidations. The Indenture also imposes requirements with respect to the
provision of financial information and the provision of guarantees of the
Securities by certain subsidiaries.

 

To guarantee the due and punctual payment of the
principal, premium, if any, and interest (including post-filing or
post-petition interest) on the Securities and all other amounts payable by the
Company under the Indenture, the Securities, the Registration Rights Agreement,
the Collateral Documents and the Intercreditor Agreement when and as the same
shall be due and payable, whether at maturity, by acceleration or otherwise,
according to the terms of the Securities and the Indenture, the Subsidiary
Guarantors have unconditionally guaranteed (and future guarantors, together
with the Subsidiary Guarantors, will unconditionally Guarantee), jointly and
severally, such obligations on a senior, secured basis pursuant to the terms of
the Indenture.

 

5.             Redemption

 

Except as set forth below, the Securities will not be
redeemable at the option of the Company prior to March 15, 2007. On and
after such date, the Securities will be redeemable, at the Company’s option, in
whole or in part, at any time upon not less than 30 nor more than
60 days prior to notice mailed by first-class mail to each holder’s
registered address, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest (including
Additional Interest) to the applicable redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):

 

If redeemed during the 12-month period commencing on
March 15 of the years set forth below:

 

	
  Period

  	
   

  	
  Redemption

  Price

  	
   

  
	
  2007

  	
   

  	
  107.313

  	
  %

  
	
  2008

  	
   

  	
  103.656

  	
  %

  
	
  2009 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In addition, at any time and from time to time prior
to March 15, 2007, the Company may redeem in the aggregate up to 35% of
the original principal amount of the Securities with the Net Cash Proceeds of
one or more Public Equity Offerings by the Company or with the Net Cash
Proceeds of one or more Public Equity Offerings by Holdings that are
contributed to the Company as common equity capital at a redemption price
(expressed as a percentage of principal amount) of 109.750% of the principal
amount thereof, plus accrued and unpaid interest (including Additional
Interest), if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, that:

 

 

(1)           there is a Public Market at the time of such redemption;

 

(2)           at least 65% of the original principal amount of the
Securities must remain outstanding after each such redemption; and

 

(3)           each such redemption occurs within 60 days of the date of
closing of such Public Equity Offering.

 

If the optional redemption
date is on or after an interest record date and on or before the related
interest payment date, the accrued and unpaid interest (including Additional
Interest), if any, will be paid on the optional redemption date to the Person
in whose name the Security is registered at the close of business on such
record date, and no additional interest will be payable to Holders whose
Securities will be subject to redemption by the Company.

 

In the case of any partial
redemption, selection of the Securities for redemption will be made by the
Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed or, if the
Securities are not listed, then on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Security of $1,000 in original principal amount or less
will be redeemed in part. If any Security is to be redeemed in part only, the
notice of redemption relating to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
redemption date, interest will cease to accrue on Securities or portions
thereof called for redemption as long as the Company has deposited with the
Paying Agent funds in satisfaction of the applicable redemption price pursuant
to the Indenture.

 

Prior to the mailing of any
notice of redemption of the Securities, the Company shall deliver to the
Trustee an Officers' Certificate stating that the Company is entitled to effect
such redemption, accompanied by an opinion of counsel satisfactory to the
Trustee, acting reasonably, that the conditions precedent to the right of
redemption have occurred. Any such notice to the Trustee may be cancelled at
any time prior to notice of such redemption being mailed to any Holder and
shall thereby be void and of no effect. The Company will be bound to redeem the
Securities on the date fixed for redemption.

 

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

 

6.             Optional
Tax Redemption

 

If any taxes, assessments or
other governmental charges are imposed by any jurisdiction where the Company, a
Subsidiary Guarantor or a successor of either (a "Payor") is
organized or otherwise considered by a taxing authority to be a resident for
tax purpose, any  jurisdiction from or
through which the Payor makes a payment on the Securities, or, in each case,
any political organization or governmental authority thereof or therein having
the power to tax (the "Relevant Tax Jurisdiction") in respect
of any payments under the Securities, the Payor will pay to each Holder of a
Security, to the extent it may lawfully do so, such additional amounts ("Additional
Amounts") as may be necessary in order that the net amounts paid to
such Holder

 

 

will be not less than the amount specified in
such Security to which such Holder is entitled; provided, however,
the Payor will not be required to make any payment of Additional Amounts for or
on account of:

 

(1)                                  any tax,
assessment or other governmental charge which would not have been imposed but
for (A) the existence of any present or former connection between such Holder
(or between a fiduciary, settlor, beneficiary, member or shareholder of, or
possessor of a power over, such Holder, if such Holder is an estate, trust,
partnership, limited liability company or corporation) and the Relevant Tax
Jurisdiction other than solely by the holding of Securities or by the receipt
of principal or interest in respect of the Securities (including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident thereof or
being or having been present or engaged in trade or business therein or having
or having had a permanent establishment therein) or (B) the presentation of a
Security (where presentation is required) for payment on a date more than 30
days after (x) the date on which such payment became due and payable or (y) the
date on which payment thereof is duly provided for and notice of the
availability of the funds has been given, whichever occurs later (in either
case (x) or (y), except to the extent that the Holder would have been entitled
to Additional Amounts had the Security been presented during such 30-day
period;

 

(2)                                  any estate,
inheritance, gift sale, transfer, personal property or similar tax, assessment
or other governmental charge;

 

(3)                                  any tax,
assessment or other governmental charge that is imposed or withheld by reason
of the failure by the Holder or the beneficial owner of the Security to comply
with a reasonable and timely request of the Payor addressed to the Holder to
provide information, documents or other evidence concerning the nationality,
residence or identity of the Holder or such beneficial owner which is required
by a statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or other governmental charge: or

 

(4)                                  any combination
of the above;

 

nor will Additional Amounts be paid with
respect to any payment of the principal of, or any premium or interest
(including Additional Interest) on, any Security to any Holder who is a
fiduciary or partnership or limited liability company or other than the sole
beneficial owner of such payment to the extent that a beneficiary or settlor
with respect to such fiduciary or a member of such partnership, limited
liability company or beneficial owner would not have been entitled to such
Additional Amounts had it been the Holder of such Security.

 

The Payor will provide the
Trustee with the official acknowledgement of the Relevant Tax Authority (or, if
such acknowledgement is not available, a certified copy thereof) evidencing the
payment of the withholding taxes by the Payor. Copies of such documentation

 

 

will be made available to the Holders of the
Securities or the Paying Agent, as applicable, upon request therefore.

 

The Company and the
Subsidiary Guarantors will pay any present or future stamp, court or
documentary taxes, or any other excise or property taxes, charges or similar
levies which arise in any jurisdiction from the execution, delivery or
registration of the Securities or any other document or instrument referred to
therein (other than a transfer of the Securities), or the receipt of any
payments with respect to the Securities, excluding any such taxes, charges or
similar levies imposed by any jurisdiction outside the United States of America
or Canada or any jurisdiction in which a paying agent is located, other than
those resulting from, or required to be paid in connection with, the
enforcement of the Securities or any other such document or instrument
following the occurrence of any Event of Default with respect to the
Securities.

 

All references in the
Indenture to principal of, premium, if any, and interest on the Securities will
include any Additional Interest and any Additional Amounts payable by the Payor
in respect of such principal, such premium, if any, and such interest.

 

The Payor, will be entitled
to redeem all, but not less than all, of the Securities if as a result of any
change in or amendment to the laws, regulations or rulings of any Relevant Tax
Jurisdiction or any change in the official application or interpretation of
such laws, regulations or rulings, or any change in the official application or
interpretation of, or any execution of or amendment to, any treaty or treaties
affecting taxation to which such Relevant Tax Jurisdiction is a party (a "Change
in Tax Law") the Payor is or would be required on the next succeeding
interest payment date to pay Additional Amounts with respect to the Securities
as described under Section 5.9(a) of the Indenture and the Payor delivers to
the Trustee an Officers' Certificate stating that the payment of such
Additional Amounts cannot be avoided by the use of any reasonable measures
available to the Payor and that the Payor is entitled to redeem the Securities
pursuant to their terms. The Change in Tax Law must become effective on or
after the Issue Date. Further, the Payor must deliver to the Trustee at least
30 days before the redemption date an opinion of counsel of recognized standing
to the effect that the Payor has or will become obligated to pay Additional
Amounts as a result of such Change in Tax Law. The Payor must also provide the
Holders with notice of the intended redemption at least 30 days and no more
than 60 days before the redemption date and shall comply with all provisions of
Article V of the Indenture. The redemption price will equal the principal
amount of the Securities plus accrued and unpaid interest thereon (including
Additional Interest), if any to the redemption date, premium, if any, and
Additional Amounts, if any, then due and which otherwise would be payable.

 

7.             Repurchase
Provisions

 

If a Change of Control
occurs, unless the Company has exercised its right to redeem all of the
Securities as described under paragraph 5 of the Securities, each Holder will
have the right to require the Company to repurchase from each Holder all or any
part (equal to $1,000 or an integral multiple thereof) of such holder's
Securities at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.

 

 

8.      Denominations; Transfer; Exchange

The
Securities are in registered form without coupons in denominations of principal
amount of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay a sum sufficient to cover any taxes and fees required by
law or permitted by the indenture. The Registrar need not register the transfer
of or exchange of any Security (A) for a period beginning
(1) 15 days before the mailing of a notice of an offer to repurchase
or redeem Securities and ending at the close of business on the day of such
mailing or (2) 15 days before an interest payment date and ending on
such interest payment date or (B) called for redemption, except the
unredeemed portion of any Security being redeemed in part.

9.      Persons Deemed Owners

The
registered Holder of this Security may be treated as the owner of it for all
purposes.

10.    Unclaimed Money

If
money for the payment of principal, premium, if any, or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company for payment as general creditors unless an abandoned property law
designates another person and not to the Trustee for payment.

11.    Defeasance

Subject
to certain exceptions and conditions set forth in the Indenture, the Company at
any time may terminate some or all of its obligations under the Securities, the
Indenture, the Collateral Documents and the Intercreditor Agreement if the
Company deposits with the Trustee money or U.S. Government Obligations for
the payment of principal, premium, if any, and interest on the Securities to
redemption or maturity, as the case may be.

12.    Amendment, Supplement, Waiver

Subject
to certain exceptions set forth in the Indenture, (i) the Indenture, the
Securities, the Subsidiary Guarantees, the Collateral Documents or the
Intercreditor Agreement may be amended or supplemented by the Company,
Subsidiary Guarantors and Trustee with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and
(ii) any default (other than with respect to nonpayment or in respect of a
provision that cannot be amended without the written consent of each
Securityholder affected) or noncompliance with any provision may be waived with
the written consent of the Holders of a majority in principal amount of the
then outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company, Subsidiary
Guarantors and the Trustee may amend or supplement the Indenture, the
Securities, the Subsidiary Guarantees, the Collateral Documents or the
Intercreditor Agreement to cure any

 

ambiguity,
omission, defect or inconsistency, to comply with Article IV or
Article X of the Indenture, to provide for uncertificated Securities in
addition to, or in place of, certificated Securities, to add Guarantees with
respect to the Securities, to release Subsidiary Guarantors upon their
designation as Unrestricted Subsidiaries or otherwise in accordance with the
Indenture, to secure the Securities, to release Liens in favor of the
Collateral Agent in the Collateral as provided under the collateral release
provisions, to add additional covenants of the Company, to surrender rights and
powers conferred on the Company, to comply with any requirement of the SEC in
connection with qualifying the Indenture under the Act, to make any change that
does not adversely affect the rights of any Securityholder or, in the case of the
Intercreditor Agreement, that does not adversely affect the rights of any
Securityholder in any material respect, or to provide for the issuance of
Exchange Securities.

13.    Defaults and Remedies

Under
the Indenture, Events of Default include (each of which is described in greater
detail in the Indenture) (i) default for 30 days in payment of
interest, Additional Interest or Additional Amounts when due on the Securities;
(ii) default in payment of principal or premium, if any, on the Securities
at Stated Maturity, upon required repurchase or upon optional redemption
pursuant to paragraph 5 of the Securities, upon declaration or otherwise;
(iii) the failure by the Company or any Subsidiary Guarantor to comply
with its obligations under Article IV or Section 10.2 of the
Indenture; (iv) failure by the Company to comply for 30 days after written
notice with any of its obligations under the covenants described under
Sections 3.2 through 3.12 inclusive, Section 3.16 or
Section 3.19 of the Indenture (in each case, other than a failure to
purchase Securities when required under the Indenture, which failure shall
constitute an Event of Default under clause (ii) above) or failure by the
Company or any Subsidiary Guarantor to comply for 30 days after written
notice with any of its obligations under the Collateral Documents; (v) the
failure by the Company to comply for 60 days after written notice with its
other agreements contained in the Indenture or under the Securities (other than
those referred to in clause (i), (ii), (iii) or (iv) above);
(vi) 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), other than Indebtedness owed to the Company or a Restricted
Subsidiary, whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (a) is caused by a failure
to pay principal of, or interest or premium, if any, on such Indebtedness at
maturity prior to the expiration of the grace period provided in such
Indebtedness (“payment default”) or (b) results in the acceleration
of such Indebtedness prior to its maturity (the “cross acceleration
provision”) 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 $5.0 million or more; (vii) certain events
of bankruptcy, insolvency or reorganization of the Company or a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary (the “bankruptcy
provisions”); (viii) failure by the Company or any Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary to pay
final judgments aggregating in excess of

 

$5.0 million
(net of any amounts that reputable and creditworthy insurance company has
acknowledged liability for in writing), which judgments are not paid,
discharged, waived or stayed for a period of 60 days (the “judgment
default provision”); (ix) any Subsidiary Guarantee or Collateral
Document ceases to be in full force and effect (except as contemplated by the
terms of the Indenture) or is declared null and void in a judicial proceeding
or any of the Holdings, the Company or any Subsidiary Guarantor denies or disaffirms
its obligations under the Indenture, any Subsidiary Guarantee, any Collateral
Document to which it is a party or the Intercreditor Agreement; or
(x) with respect to any Collateral having a fair market value in excess of
$5.0 million, individually or in the aggregate, (A) the security
interest under the Collateral Documents, at any time, ceases to be in full
force and effect for any reason other than in accordance with their terms and
the terms of the Indenture and other than the satisfaction in full of all
obligations under the Indenture and discharge of the Indenture, (B) any
security interest created thereunder or under the Indenture is declared invalid
or unenforceable or (C) Holdings, the Company or any Subsidiary Guarantor
asserts, in any pleading in any court of competent jurisdiction, that any such
security interest is invalid or unenforceable. However, a default under
clause (iv) or (v) will not constitute an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in clause (iv) or (v) hereof after
receipt of such notice.

If
an Event of Default (other than an Event of Default described in (vii) hereof)
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in principal amount of the outstanding Securities by notice to
the Company and the Trustee, may, and the Trustee at the request of such
Holders shall, declare all the Securities to be due an payable immediately. In
an Event of Default described in clause (vii) hereof occurs and is
continuing, the principal of, premium, if any, and accrued and unpaid interest
on all the Securities will become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holders.

Securityholders
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Securities
unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in principal amount of the Securities may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.

14.    Trustee Dealings with the Company

Subject
to certain limitations set forth in the Indenture, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with an collect obligations owed
to it by the Company or their Affiliates and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee.

 

15.    No Recourse Against Others

An
incorporator, director, officer, employee or stockholder of each of the Company
or any Subsidiary Guarantor, solely by reason of this status, shall not have
any liability for any obligations of the Company or any Subsidiary Guarantor
under the Securities, the Indenture, the Collateral Documents, the
Intercreditor Agreement, any Subsidiary Guarantees or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting
a Security, each Securityholder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.

16.    Authentication

This
Security shall not be valid until an authorized officer of the Trustee (or an
authenticating agent acting on its behalf) manually signs the certificate of
authentication on the other side of this Security.

17.    Abbreviations

Customary
abbreviations may be used in the name of a Securityholder or an assignee, such
as TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with rights of survivorship and
not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform
Gift to Minors Act).

18.    CUSIP and ISIN Numbers

The
Company has caused CUSIP and ISIN numbers, if applicable, to be printed on the
Securities and has directed the Trustee to use CUSIP and ISIN numbers, if
applicable, in notices of redemption or purchase as a convenience to
Securityholders. No representation is made as to the accuracy of such numbers
either as printed on the Securities or as contained in any notice of redemption
or purchase and reliance may be placed only on the other identification numbers
placed thereon.

19.    Governing Law

This
Security shall be governed by, and construed in accordance with, the laws of
the State of New York.

The
Company will furnish to any Securityholder upon written request and without charge
to the Securityholder a copy of the Indenture, which has in it the text of this
Security in larger type. Requests may be made to:

Cellu
Tissue Holders, Inc.

3440 Francis Road, Suite C

Alpharetta, Georgia 3004

Fax: (678) 393-2657

Attention: Dianne M. Scheu

 

ASSIGNMENT FORM

 

To assign this Security, fill in the form below:

 

I or we assign and transfer this Security to:

 

	
   

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

  

 

	
   

  
	
  (Insert assignee’s
  social security or tax I.D. No.)

  

 

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

 

	
   

  

 

	
  Date:

  	
   

  	
  Your Signature:

  	
   

  

 

 

	
  Signature Guarantee:

  	
   

  
	
   

  	
  (Signature must be
  guaranteed)

  

 

	
   

  
	
  Sign exactly as your name appears on the other page
  of this Security.

  

 

The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program)
pursuant to S.E.C. Rule 17Ad-15.

 

 

SCHEDULE OF INCREASES OR DECREASES
IN GLOBAL SECURITY

 

The following increases or
decreases in this Global Security have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of
  decrease in Principal Amount of this Global Security

  	
   

  	
  Amount of
  increase in Principal Amount of this Global Security

  	
   

  	
  Principal
  Amount of this Global Security following such decrease or increase

  	
   

  	
  Signature
  of authorized signatory of Trustee or Securities Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

OPTION
OF HOLDER TO ELECT PURCHASE

 

If you elect to have this
Security purchased by the Company pursuant to Section 3.5 or 3.10 of the
Indenture, check either box:

 

	
  o

  	
   

  	
  o

  
	
  3.5

  	
   

  	
  3.10

  

 

 

If you want to elect to have
only part of this Security purchased by the Company pursuant to
Section 3.5 or Section 3.10 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000):
$                         
and specify the denomination or denominations (which shall not be less than the
minimum authorized denomination) of the Securities to be issued to the Holder
for the portion of the within Security not being repurchased (in the absence of
any such specification, one such Security will be issued for the portion not
being repurchased)                                    .

 

 

	
  Date:

  	
   

  	
  Your Signature  

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign exactly as your name appears on the other side
  of the Security)

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  
	
   

  	
  (Signature
  must be guaranteed)

  

 

 

The signature(s) should be guaranteed by an
eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

 

 

FORM
OF SUBSIDIARY GUARANTEE

 

Pursuant to the Indenture
(the “Indenture”) dated as of March 12, 2004 among Cellu Tissue
Holdings, Inc., the Subsidiary Guarantors party thereto (each a “Subsidiary
Guarantor” and collectively the “Subsidiary Guarantors”) and The
Bank of New York, as trustee (the “Trustee”), each Subsidiary Guarantor,
subject to the provisions of Article X of the Indenture, hereby fully,
unconditionally and irrevocably guarantees, as primary obligor and not merely
as surety, jointly and severally with each other Subsidiary Guarantor, to each
Holder of the Securities, to the extent lawful, and the Trustee the full and
punctual payment when due, whether at maturity, by acceleration, by redemption
or otherwise, of the principal of, premium, if any, Additional Amounts, if any,
and interest (including Additional Interest) on the Securities and all other
obligations and liabilities of the Company under the Indenture (including
without limitation interest (including Additional Interest) accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company or any Subsidiary
Guarantor whether for a claim for post-filing or post-petition interest is
allowed in such proceeding and the obligations under  Section 7.7 of the
Indenture), the Registration Rights Agreement, the Collateral Documents and
the Intercreditor Agreement (all the foregoing being herein after collectively
called the “Obligations”). Each Subsidiary Guarantor agrees that the
Obligations will rank equally in right of payment with other Indebtedness of
such Subsidiary Guarantor, except to the extent such other Indebtedness is
subordinate to the Obligations. Each subsidiary Guarantor further agrees (to
the extent permitted by law) that the Obligations may be extended or renewed,
in whole or in part, without notice or further assent from it, and that it will
remain bound under this Subsidiary Guarantee notwithstanding any extension or
renewal of any Obligation.

 

Each Subsidiary Guarantor
waives presentation to, demand of payment from and protest to the Company of
any of the Obligations and also waives notice of protest for nonpayment. Each
Subsidiary Guarantor waives notice of any default under the Securities or the
Obligations.

 

Each Subsidiary Guarantor
further agrees that its Subsidiary Guarantee herein constitutes a Guarantee of
payment when due (and not a Guarantee of collection) and waives any right to
require that any resort be had by any Holder to any security held for payment
of the Obligations.

 

Except as set forth in Section 10.2
of the Indenture, the obligations of each Subsidiary Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason (other than payment of the Obligations in full), including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense of setoff, counterclaim, recoupment or termination whatsoever or
by reason of the invalidity, illegality or unenforceability of the Obligations
or otherwise. Without limiting the generality of the foregoing, the obligations
of each Subsidiary Guarantor herein shall not be discharged or impaired or
otherwise affected by (a) the failure of any Holder to assert any claim or
demand or to enforce any right or remedy against the Company or any other person
under the Indenture, the Securities or any other agreement or otherwise;
(b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of the
Indenture, the Securities or any other agreement; (d) the release of any
seucrity held by any Holder or the Collateral Agent for the Obligations or any
of them; (e) the failure of any Holder to exercise any right or remedy
against any other Subsidiary Guarantor; (f) any change in the ownership of
the Company; (g) any default, failure or delay, willful or otherwise, in
the performance of the Obligations, or (h) any other act or thing or
omission or delay to do any other act or thing which may or might in any manner
or to any extent vary the risk of any Subsidiary Guarantor or would otherwise
operate as a discharge of such Subsidiary Guarantor as a matter of law or
equity.

 

 

Each Subsidiary Guarantor
agrees that its Subsidiary Guarantee herein shall remain in full force and
effect until payment in full of all the Obligations or such Subsidiary
Guarantor is realeased from its Subsidiary Guarantee upon the merger or the
sale of all the Capital Stock or assets of the Subsidiary Guarantor or
otherwise in compliance with Section 10.2 or Article VIII of
the Indenture. Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal of, premium,
if any, or interest on any of the Obligations is rescinded or must otherwise be
restored by any Holder upon the bankruptcy or reoganization of the Company or
otherwise.

 

In futherance of the
foregoing and not in limitation of any other right which any Holder has at law
or in equity against any Subsidiary Guarantor by virtue hereof, upon the
failure of the Company to pay any of the Obligations when and as the same shall
become due, whether at maturity, by acceleration, by redemption or otherwise,
each Subsidiary Guarantor hereby promises to and will, upon receipt of written
demand by the Trustee, forthwith pay, or cause to to be paid, in cash, to the
Trustee or the Trustee in behalf of the Holders an amount equal to the sum of
(i) the unpaid amount of such Obligations then due and owing and
(ii) accrued and unpaid interest (including Additional Interest) on such
Obligations then due and owing (but only to the extent not prohibited by law).

 

Each Subsidiary Guarantor
further agrees that, as between such Subsidiary Guarantor, on the one hand, and
the Holders, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in the Indenture for the
purposes of its Subsidiary Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby and (y) in the event of any such declaration
of acceleration of such Obligations, such Obligations (whether or not due and
payable) shall forthwith become due and payable by the Subsidiary Guarantor for
the purposes of this Subsidiary Guarantee.

 

Each Subsidiary Guarantor
also agrees to pay any and all reasonable costs and expenses (including
reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing
any rights under this Subsidiary Guarantee.

 

 

	
   

  	
  CELLU TISSUE CORPORATION—NATURAL DAM

  
	
   

  	
  CELLU TISSUE CORPORATION—NEENAH CELLU TISSUE LLC

  
	
   

  	
  INTERLAKE ACQUISITION CORPORATION LIMITED

  
	
   

  	
  MENOMINEE ACQUISITION
  CORPORATION

  
	
   

  	
  VAN PAPER COMPANY

  
	
   

  	
  VAN TIMBER COMPANY,

  
	
   

  	
  as Subsidiary Guarantors

  

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

	
   

  	
  COASTAL PAPER COMPANY,

  as a Subsidiary Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Van Paper Company, its
  managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:Exhibit
4.4

 

	
   

  	
  EXECUTION COPY

  

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS
AGREEMENT dated March 12, 2004 (the “Agreement”) is entered into by and
among Cellu Tissue Holdings, Inc., a Delaware corporation (the “Company”), the
guarantorslisted in Schedule 1 hereto (the
“Guarantors”) and J.P. Morgan Securities Inc., on behalf of itself and the
initial purchasers listed in Schedule 1 to the Purchase Agreement as
defined below (the “Initial Purchasers”).

 

The Company, the
Guarantors and the Initial Purchasers are parties to the Purchase Agreement
dated March 5, 2004 (the “Purchase Agreement”), which provides for the
sale by the Company to the Initial Purchasers of $162,000,000 aggregate
principal amount of the Company’s 9  % Senior Secured Notes due 2010 (the
“Securities”) which will be guaranteed on a senior secured basis by each of the
Guarantors.  As an inducement to the
Initial Purchasers to enter into the Purchase Agreement, the Company and the
Guarantors have agreed to provide to the Initial Purchasers and their direct
and indirect transferees the registration rights set forth in this
Agreement.  The execution and delivery of
this Agreement is a condition to the closing under the Purchase Agreement.

 

In consideration of the
foregoing, the parties hereto agree as follows:

 

1.                                       Definitions.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Additional
Guarantor” shall mean any subsidiary of the Company that executes a Subsidiary
Guarantee under the Indenture after the date of this Agreement.

 

“Business
Day” shall mean any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain
closed.

 

“Closing Date” shall mean
the Closing Date as defined in the Purchase Agreement.

 

“Company” shall have the
meaning set forth in the preamble and shall also include the Company’s
successors.

 

“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended from time to time.

 

“Exchange Dates” shall have
the meaning set forth in Section 2(a)(ii) hereof.

 

“Exchange Offer” shall
mean the exchange offer by the Company and the Guarantors of Exchange
Securities for Registrable Securities pursuant to Section 2(a) hereof.

 

 

“Exchange Offer
Registration” shall mean a registration under the Securities Act effected
pursuant to Section 2(a) hereof.

 

“Exchange Offer
Registration Statement” shall mean an exchange offer registration statement on
Form S-4 (or, if applicable, on another appropriate form) and all amendments
and supplements to such registration statement, in each case including the
Prospectus contained therein, all exhibits thereto and any document
incorporated by reference therein.

 

“Exchange Securities”
shall mean senior secured notes issued by the Company and guaranteed by the
Guarantors under the Indenture containing terms identical to the Securities
(except that the Exchange Securities will not be subject to restrictions on
transfer or to any increase in annual interest rate for failure to comply with
this Agreement) and to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.

 

“Guarantors” shall have
the meaning set forth in the preamble and shall also include any Guarantor’s
successors and any Additional Guarantors.

 

“Holders” shall mean the
Initial Purchasers, for so long as they own any Registrable Securities, and
each of their successors, assigns and direct and indirect transferees who
become owners of Registrable Securities under the Indenture; provided that
for purposes of Sections 4 and 5 of this Agreement, the term “Holders” shall
include Participating Broker-Dealers.

 

“Initial Purchasers”
shall have the meaning set forth in the preamble.

 

“Indenture” shall mean
the Indenture relating to the Securities dated as of March 12, 2004 among
the Company, the Guarantors and The Bank of New York, as trustee, and as the
same may be amended from time to time in accordance with the terms thereof.

 

“Majority Holders” shall
mean the Holders of a majority of the aggregate principal amount of outstanding
Registrable Securities; provided that whenever the consent or approval
of Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities owned directly or indirectly by the Company
or any of its affiliates shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage or
amount.

 

“Participating
Broker-Dealers” shall have the meaning set forth in Section 4(a) hereof.

 

“Person” shall mean an
individual, partnership, limited liability company, corporation, trust or
unincorporated organization or a government or agency or political subdivision
thereof.

 

“Prospectus” shall mean
the prospectus included in a Registration Statement, including any preliminary
prospectus, and any such prospectus as amended or supplemented by any
prospectus supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by a
Shelf Registration Statement, and by all other amendments and supplements to
such prospectus, and in each case including any document incorporated by
reference therein.

 

2

 

“Purchase Agreement”
shall have the meaning set forth in the preamble.

 

“Registrable Securities”
shall mean the Securities; provided that the Securities shall cease to
be Registrable Securities (i) when a Registration Statement with respect to
such Securities has been declared effective under the Securities Act and such
Securities have been exchanged or disposed of pursuant to such Registration
Statement, (ii) when such Securities are eligible to be sold pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A) under the
Securities Act or (iii) when such Securities cease to be outstanding.

 

“Registration Default”
shall have the meaning set forth in Section 2(d) hereof.

 

“Registration Expenses”
shall mean any and all expenses incident to performance of or compliance by the
Company and the Guarantors with this Agreement, including without limitation:
(i) all SEC, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel for any Underwriters or Holders in connection
with blue sky qualification of any Exchange Securities or Registrable
Securities), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, any
underwriting agreements, securities sales agreements or other similar agreements
and any other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating
to the qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of counsel for the Company and the Guarantors and, in the case of
a Shelf Registration Statement, the fees and disbursements of one counsel for
the Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Initial Purchasers) and (viii) the fees and
disbursements of the independent public accountants of the Company and the
Guarantors, including the expenses of any special audits or “comfort” letters
required by or incident to the performance of and compliance with this
Agreement, but excluding fees and expenses of counsel to the Underwriters
(other than fees and expenses set forth in clause (ii) above) or the Holders
and underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of Registrable Securities by a Holder.

 

“Registration Statement”
shall mean any registration statement of the Company and the Guarantors that
covers any of the Exchange Securities or Registrable Securities pursuant to the
provisions of this Agreement and all amendments and supplements to any such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and any
document incorporated by reference therein.

 

“SEC” shall mean the
Securities and Exchange Commission.

 

“Securities Act” shall
mean the Securities Act of 1933, as amended from time to time.

 

“Shelf Effectiveness
Period” shall have the meaning set forth in Section 2(b) hereof.

 

3

 

“Shelf Registration”
shall mean a registration effected pursuant to Section 2(b) hereof.

 

“Shelf Registration
Statement” shall mean a “shelf” registration statement of the Company and the
Guarantors that covers all the Registrable Securities (but no other securities
unless approved by the Holders whose Registrable Securities are to be covered
by such Shelf Registration Statement) on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and any document incorporated by reference
therein.

 

“Staff” shall have the
meaning set forth in Section 2(a) hereof.

 

“Subsidiary Guarantee”
shall mean the guarantee of the Securities and Exchange Securities by each of
the Guarantors under the Indenture, as amended from time to time.

 

“Trust Indenture Act”
shall mean the Trust Indenture Act of 1939, as amended from time to time.

 

“Trustee” shall mean the
trustee with respect to the Securities under the Indenture.

 

“Underwriter” shall have the
meaning set forth in Section 3 hereof.

 

“Underwritten Offering”
shall mean an offering in which Registrable Securities are sold to an
Underwriter for reoffering to the public.

 

2.                                       Registration
Under the Securities Act.  (a)  To the extent not prohibited by any
applicable law or applicable interpretations of the staff of the SEC (the
“Staff”), the Company and the Guarantors shall use their reasonable best
efforts to (i) cause to be filed an Exchange Offer Registration Statement
covering an offer to the Holders to exchange all the Registrable Securities for
Exchange Securities and (ii) have such Registration Statement remain effective
until 180 days after the closing of the Exchange Offer.  The Company and the Guarantors shall commence
the Exchange Offer promptly after the Exchange Offer Registration Statement is
declared effective by the SEC and use their reasonable best efforts to complete
the Exchange Offer not later than 60 days after such effective date.

 

The Company and the
Guarantors shall commence the Exchange Offer by mailing the related Prospectus,
appropriate letters of transmittal and other accompanying documents to each
Holder stating, in addition to such other disclosures as are required by
applicable law:

 

(i)                                     that
the Exchange Offer is being made pursuant to this Agreement and that all
Registrable Securities validly tendered and not properly withdrawn will be
accepted for exchange;

 

(ii)                                  the
dates of acceptance for exchange (which shall be a period of at least 20
Business Days from the date such notice is mailed) (the “Exchange Dates”);

 

4

 

(iii)                               that
any Registrable Security not tendered, or tendered and properly withdrawn, will
remain outstanding and continue to accrue interest but will not retain any
rights under this Agreement;

 

(iv)                              that
any Holder electing to have a Registrable Security exchanged pursuant to the
Exchange Offer will be required to surrender such Registrable Security,
together with the appropriate letters of transmittal, to the institution and at
the address (located in the Borough of Manhattan, The City of New York) and in
the manner specified in the notice, prior to the close of business on the last
Exchange Date; and

 

(v)                                 that
any Holder will be entitled to withdraw its election, not later than the close
of business on the last Exchange Date, by sending to the institution and at the
address (located in the Borough of Manhattan, The City of New York) specified
in the notice, a telegram, telex, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing its
election to have such Securities exchanged.

 

As
a condition to participating in the Exchange Offer, a Holder will be required
to represent to the Company and the Guarantors that (i) any Exchange Securities
to be received by it will be acquired in the ordinary course of its business,
(ii) at the time of the commencement of the Exchange Offer it has no
arrangement or understanding with any Person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Securities in
violation of the provisions of the Securities Act, (iii) it is not an
“affiliate” (within the meaning of Rule 405 under Securities Act) of the
Company or any Guarantor and (iv) if such Holder is a broker-dealer that will
receive Exchange Securities for its own account in exchange for Registrable
Securities that were acquired as a result of market-making or other trading
activities, then such Holder will deliver a Prospectus in connection with any
resale of such Exchange Securities.

 

As soon as practicable
after the last Exchange Date, the Company and the Guarantors shall:

 

(i)                                     accept
for exchange Registrable Securities or portions thereof validly tendered and
not properly withdrawn pursuant to the Exchange Offer; and

 

(ii)                                  deliver,
or cause to be delivered, to the Trustee for cancellation all Registrable
Securities or portions thereof so accepted for exchange by the Company and
issue, and cause the Trustee to promptly authenticate and deliver to each
Holder, Exchange Securities equal in principal amount to the principal amount
of the Registrable Securities surrendered by such Holder.

 

The Company and the Guarantors
shall use their reasonable best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the
Securities Act, the Exchange Act and other applicable laws and regulations in
connection with the Exchange Offer.  The
Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate any applicable law or applicable
interpretations of the Staff.

 

5

 

(b)                                 In
the event that (i) the Company and the Guarantors determine that the Exchange
Offer Registration provided for in Section 2(a) above is not available or
may not be completed as soon as practicable after the last Exchange Date
because it would violate any applicable law or applicable interpretations of
the Staff, (ii) the Exchange Offer is not for any other reason completed on or
prior to 270 days after the date hereof or (iii) in the case of (A) any Holder
not permitted by applicable law or SEC policy to participate in the Exchange
Offer, (B) any Holder participating in the Exchange Offer that receives
Exchange Securities that may not be sold without restriction under state and
federal securities laws (other than due solely to the status of such Holder as
an affiliate of the Company within the meaning of the Securities Act) or (C)
any Initial Purchaser or any broker-dealer that holds Securities acquired
directly from the Company or any of its affiliates and, in each such case
contemplated by this clause (iii), such Holder, Initial Purchaser or
broker-dealer notifies the Company within six months of consummation of the
Exchange Offer, the Company and the Guarantors shall use their reasonable best
efforts to cause to be filed as soon as practicable after such determination,
date or request, as the case may be, a Shelf Registration Statement providing
for the sale of all the Registrable Securities by the Holders thereof and to
have such Shelf Registration Statement declared effective by the SEC.

 

In the event that the
Company and the Guarantors are required to file a Shelf Registration Statement
pursuant to clause (iii) of the preceding sentence, the Company and the
Guarantors shall use their reasonable best efforts to file and have declared
effective by the SEC both an Exchange Offer Registration Statement pursuant to
Section 2(a) with respect to all Registrable Securities and a Shelf
Registration Statement (which may be a combined Registration Statement with the
Exchange Offer Registration Statement) with respect to offers and sales of
Registrable Securities held by the Initial Purchasers and such Holders and
brokers-dealers referenced in such clause (iii) after completion of the
Exchange Offer.

 

The Company and the
Guarantors agree to use their reasonable best efforts to keep the Shelf
Registration Statement continuously effective until the expiration of the
period referred to in Rule 144(k) under the Securities Act with respect to the
Registrable Securities or such shorter period that will terminate when (i) all
the Registrable Securities covered by the Shelf Registration Statement have
been sold pursuant to the Shelf Registration Statement or (ii) there ceases to
be any outstanding Registrable Securities (the “Shelf Effectiveness
Period”).  The Company and the Guarantors
further agree to supplement or amend the Shelf Registration Statement and the
related Prospectus if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder of Registrable Securities with respect to information relating to such
Holder, and to use their reasonable best efforts to cause any such amendment to
become effective and such Shelf Registration Statement and Prospectus to become
usable as soon as thereafter practicable. 
The Company and the Guarantors agree to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly
after its being used or filed with the SEC.

 

(c)                                  The
Company and the Guarantors shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) and Section 2(b)
hereof.  Each Holder

 

6

 

shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder’s Registrable Securities pursuant to the
Shelf Registration Statement.

 

(d)                                 An
Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a
Shelf Registration Statement pursuant to Section 2(b) hereof will not be
deemed to have become effective unless it has been declared effective by the
SEC.

 

A “Registration Default”
shall occur (1) in the event that the Exchange Offer is not completed or the
Shelf Registration Statement, if required pursuant to Section 2(b)(i), is
not declared effective on or prior to 5:30 p.m., U.S. Eastern Time, on the date
that is 270 days after the date hereof, or (2) in the case a Shelf Registration
Statement is required to be filed pursuant to Section 2(b)(iii), the Shelf
Registration Statement is not declared effective within 90 days of receipt by
the Company of the notice requesting the filing of such Shelf Registration
Statement, provided that the date of such effectiveness shall not be
required to be earlier than 270 days after the date hereof.  In the event of a Registration Default,
additional interest shall accrue at a rate of 1.00% per annum on the
Registrable Securities over and above the interest rates set forth in the
Registrable Securities from and including the date on which any such
Registration Default shall occur until the date on which all such Registration
Defaults have been cured or until the date the Securities become freely
tradable under the Securities Act.

 

If the Shelf Registration
Statement has been declared effective and thereafter either ceases to be
effective or the Prospectus contained therein ceases to be usable at any time
during the Shelf Effectiveness Period, and such failure to remain effective or
usable exists for more than 30 days (whether or not consecutive) in any
12-month period, then the interest rate on the Registrable Securities will be
increased by 1.00% per annum commencing on the 31st day in such
12-month period and ending on such date that the Shelf Registration Statement
has again been declared effective or the Prospectus again becomes usable.

 

Any amounts of additional
interest due pursuant to the terms of this Agreement will be payable in the
same manner as specified in the Indenture for the payment of interest on the
Registrable Securities on the regular interest payment dates with respect to
the Registrable Securities.

 

(e)                                  Without
limiting the remedies available to the Initial Purchasers and the Holders, the
Company and the Guarantors acknowledge that any failure by the Company or the
Guarantors to comply with their obligations under Section 2(a) and
Section 2(b) hereof may result in material irreparable injury to the
Initial Purchasers or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchasers or any Holder
may obtain such relief as may be required to specifically enforce the Company’s
and the Guarantors’ obligations under Section 2(a) and Section 2(b)
hereof.

 

3.                                       Registration
Procedures.  In connection with their
obligations pursuant to Section 2(a) and Section 2(b) hereof, the
Company and the Guarantors shall as expeditiously as possible:

 

7

 

(a)                                  prepare
and file with the SEC a Registration Statement on the appropriate form under
the Securities Act, which form (x) shall be selected by the Company and the
Guarantors, (y) shall, in the case of a Shelf Registration, be available for
the sale of the Registrable Securities by the selling Holders thereof and (z)
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith; and use their reasonable best efforts to cause such
Registration Statement to become effective and remain effective for the
applicable period in accordance with Section 2 hereof;

 

(b)                                 prepare
and file with the SEC such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such Registration Statement
effective for the applicable period in accordance with Section 2 hereof
and cause each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424 under the
Securities Act; and keep each Prospectus current during the period described in
Section 4(3) of and Rule 174 under the Securities Act that is applicable
to transactions by brokers or dealers with respect to the Registrable
Securities or Exchange Securities;

 

(c)                                  in
the case of a Shelf Registration, furnish to each Holder of Registrable Securities,
to counsel for the Initial Purchasers, to counsel for such Holders and to each
Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge, such reasonable number of copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto, as any
such Person may reasonably request in writing, in order to facilitate the sale
or other disposition of the Registrable Securities thereunder; and the Company
and the Guarantors consent to the use of such Prospectus and any amendment or
supplement thereto in accordance with applicable law by each of the selling
Holders of Registrable Securities and any such Underwriters in connection with
the offering and sale of the Registrable Securities covered by and in the
manner described in such Prospectus or any amendment or supplement thereto in
accordance with applicable law;

 

(d)                                 use
their reasonable best efforts to register or qualify the Registrable Securities
under all applicable state securities or blue sky laws of such jurisdictions as
any Holder of Registrable Securities covered by a Registration Statement shall
reasonably request in writing by the time the applicable Registration Statement
is declared effective by the SEC; cooperate with the Holders in connection with
any filings required to be made with the National Association of Securities
Dealers, Inc.; and do any and all other acts and things that may be reasonably
necessary or advisable to enable each Holder to complete the disposition in
each such jurisdiction of the Registrable Securities owned by such Holder; provided
that neither the Company nor any Guarantor shall be required to (i) qualify as
a foreign corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) take
any action that would subject it to any general service of process in any such
jurisdiction where it is not so subject (other than as a result of the sale of
the Securities) or (iii) subject itself to taxation in any such jurisdiction if
it is not so subject;

 

(e)                                  in
the case of a Shelf Registration, notify each Holder of Registrable Securities,
counsel for such Holders and counsel for the Initial Purchasers promptly and,
if requested by any

 

8

 

such Holder or counsel,
confirm such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendment thereto has been filed and
becomes effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement and
Prospectus or for additional information after the Registration Statement has
become effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) if,
between the effective date of a Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company or any Guarantor contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to an offering of such Registrable Securities cease to be true and
correct in all material respects or if the Company or any Guarantor receives
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event during the
period a Shelf Registration Statement is effective that makes any statement
made in such Registration Statement or the related Prospectus untrue in any
material respect or that requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements therein
(in the case of the Prospectus, in light of the circumstances under which they
were made) not misleading and (vi) of any determination by the Company or any
Guarantor that a post-effective amendment to a Registration Statement would be
appropriate;

 

(f)                                    use
their reasonable best efforts to obtain the withdrawal of any order suspending
the effectiveness of a Registration Statement at the earliest possible moment
and provide immediate notice to each Holder of the withdrawal of any such
order;

 

(g)                                 in
the case of a Shelf Registration, furnish to each Holder of Registrable
Securities, without charge, at least one conformed copy of each Registration
Statement and any post-effective amendment thereto (without any documents
incorporated therein by reference or exhibits thereto, unless requested);

 

(h)                                 in
the case of a Shelf Registration, cooperate with the selling Holders of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends and enable such Registrable Securities to be issued in such
denominations and registered in such names (consistent with the provisions of
the Indenture) as the selling Holders may reasonably request at least one
Business Day prior to the closing of any sale of Registrable Securities;

 

(i)                                     in
the case of a Shelf Registration, upon the occurrence of any event contemplated
by Section 3(e)(v) hereof, use their reasonable best efforts to prepare
and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Company and
the Guarantors shall notify the Holders of Registrable Securities to suspend
use of the Prospectus as promptly as practicable after the occurrence of

 

9

 

such an event, and such
Holders hereby agree to suspend use of the Prospectus until the Company and the
Guarantors have amended or supplemented the Prospectus to correct such
misstatement or omission;

 

(j)                                     a
reasonable time prior to the filing of any Registration Statement, any
Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus or of any document that is to be incorporated by
reference into a Registration Statement or a Prospectus after initial filing of
a Registration Statement, provide copies of such document to the Initial
Purchasers and their counsel (and, in the case of a Shelf Registration
Statement, to the Holders of Registrable Securities and their counsel) and make
such of the representatives of the Company and the Guarantors as shall be
reasonably requested by the Initial Purchasers or their counsel (and, in the
case of a Shelf Registration Statement, the Holders of Registrable Securities
or their counsel) available for discussion of such document; and the Company
and the Guarantors shall not, at any time after initial filing of a
Registration Statement, file any Prospectus, any amendment of or supplement to
a Registration Statement or a Prospectus, or any document that is to be
incorporated by reference into a Registration Statement or a Prospectus, of
which the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, the Holders of Registrable Securities and their
counsel) shall not have previously been advised and furnished a copy or to
which the Initial Purchasers or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) shall object;

 

(k)                                  obtain
a CUSIP number for all Exchange Securities or Registrable Securities, as the
case may be, not later than the effective date of a Registration Statement;

 

(l)                                     cause
the Indenture to be qualified under the Trust Indenture Act in connection with
the registration of the Exchange Securities or Registrable Securities, as the
case may be; cooperate with the Trustee and the Holders to effect such changes
to the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; and execute, and use
their reasonable best efforts to cause the Trustee to execute, all documents as
may be required to effect such changes and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so qualified in
a timely manner;

 

(m)                               in
the case of a Shelf Registration, make available for inspection by a
representative of the Holders of the Registrable Securities (an “Inspector”),
any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement and attorneys and accountants designated by the Holders,
at reasonable times and in a reasonable manner, all pertinent financial and
other records, documents and properties of the Company and the Guarantors, and
cause the respective officers, directors and employees of the Company and the
Guarantors to supply all information reasonably requested by any such
Inspector, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement, in each case, as shall be reasonably necessary to
enable such Person to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act or as is customary in such situation; provided that if any such information is identified by the Company or any
Guarantor as being confidential or proprietary, each Person receiving such
information shall take such actions as are reasonably necessary to protect the
confidentiality of such information to the extent such action is otherwise

 

10

 

not
inconsistent with, an impairment of or in derogation of the rights and
interests of any Inspector, Holder or Underwriter;

 

(n)                                 in
the case of a Shelf Registration, use their reasonable best efforts to cause
all Registrable Securities to be listed on any securities exchange or any automated
quotation system on which similar securities issued or guaranteed by the
Company or any Guarantor are then listed if requested by the Majority Holders,
to the extent such Registrable Securities satisfy applicable listing
requirements;

 

(o)                                 if
reasonably requested by any Holder of Registrable Securities covered by a
Registration Statement, promptly incorporate in a Prospectus supplement or
post-effective amendment such information with respect to such Holder as such
Holder reasonably requests in writing to be included therein and make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as the Company has received notification of the matters to be
incorporated in such filing;

 

(p)                                 in
the case of a Shelf Registration, enter into such customary agreements and take
all such other actions in connection therewith (including those requested by
the Holders of a majority in principal amount of the Registrable Securities
being sold) in order to expedite or facilitate the disposition of such
Registrable Securities including, but not limited to, an Underwritten Offering
and in such connection, (i) to the extent possible, make such representations
and warranties to the Holders and any Underwriters of such Registrable Securities
with respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by reference or
deemed incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested, (ii) obtain opinions of
counsel to the Company and the Guarantors (which counsel and opinions, in form,
scope and substance, shall be reasonably satisfactory to the Holders and such
Underwriters and their respective counsel) addressed to each selling Holder and
Underwriter of Registrable Securities, covering the matters customarily covered
in opinions requested in underwritten offerings, (iii) obtain “comfort” letters
from the independent certified public accountants of the Company and the
Guarantors (and, if necessary, any other certified public accountant of any
subsidiary of the Company or any Guarantor, or of any business acquired by the
Company or any Guarantor for which financial statements and financial data are
or are required to be included in the Registration Statement) addressed to each
selling Holder and Underwriter of Registrable Securities, such letters to be in
customary form and covering matters of the type customarily covered in
“comfort” letters in connection with underwritten offerings and (iv) deliver
such documents and certificates as may be reasonably requested by the Holders
of a majority in principal amount of the Registrable Securities being sold or
the Underwriters, and which are customarily delivered in underwritten
offerings, to evidence the continued validity of the representations and
warranties of the Company and the Guarantors made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in an
underwriting agreement; and

 

(q)                                 so
long as any Registrable Securities remain outstanding, cause each Additional
Guarantor upon the creation or acquisition by the Company of such Additional
Guarantor, to

 

11

 

execute a counterpart to
this Agreement in the form attached hereto as Annex A and to deliver such
counterpart, together with an opinion of counsel as to the enforceability
thereof against such entity, to the Initial Purchasers no later than five
Business Days following the execution thereof.

 

In the case of a Shelf
Registration Statement, the Company may require each Holder of Registrable
Securities to furnish to the Company such information regarding such Holder and
the proposed disposition by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in
writing.  No Holder of Registrable
Securities shall be entitled to include any of its Registrable Securities in
any Shelf Registration Statement pursuant to this Agreement unless such Holder
furnishes to the Company and the Trustee in writing, within 30 days after
receipt of a written request therefor, such information as the Company and the
Trustee, after conferring with counsel with regard to information relating to
Holders that would be required by the SEC to be included in such Shelf
Registration Statement or Prospectus included therein, may reasonably request
for inclusion in any Shelf Registration Statement or Prospectus included
therein, and no such Holder shall be entitled to additional interest pursuant
to Section 2(d) hereof in the event such Holder shall not have provided
such information and the 30-day period to produce such information has lapsed.

 

In the case of a Shelf
Registration Statement, each Holder of Registrable Securities agrees that, upon
receipt of any notice from the Company and the Guarantors of the happening of
any event of the kind described in Section 3(e)(iii) or 3(e)(v) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder’s receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i)
hereof and, if so directed by the Company and the Guarantors, such Holder will
deliver to the Company and the Guarantors all copies in its possession, other
than permanent file copies then in such Holder’s possession, of the Prospectus
covering such Registrable Securities that is current at the time of receipt of
such notice.

 

If the Company and the
Guarantors shall give any such notice to suspend the disposition of Registrable
Securities pursuant to a Registration Statement, the Company and the Guarantors
shall extend the period during which the Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during
the period from and including the date of the giving of such notice to and
including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions. The
Company and the Guarantors may give any such notice only twice during any
365-day period (other than notices relating to suspensions where the Company
did not voluntarily take action to cause such suspensions, unless such
voluntary action was required by law) and any such suspensions shall not exceed
30 days for each suspension and there shall not be more than two suspensions in
effect during any 365-day period.  In the
event that the disposition of the Registrable Securities is suspended in
accordance with the restrictions contained in the preceding sentence, the
Holders’ sole remedy shall be that additional interest shall accrue on the
Registrable Securities in accordance with Section 2(d).

 

The Holders of
Registrable Securities covered by a Shelf Registration Statement who desire to
do so may sell such Registrable Securities in an Underwritten Offering.  In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers

 

12

 

(the “Underwriters”) that
will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.

 

4.                                       Participation
of Broker-Dealers in Exchange Offer. 
(a)  The Staff has taken the
position that any broker-dealer that receives Exchange Securities for its own
account in the Exchange Offer in exchange for Securities that were acquired by
such broker-dealer as a result of market-making or other trading activities (a
“Participating Broker-Dealer”) may be deemed to be an “underwriter” within the
meaning of the Securities Act and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Securities.

 

The Company and the
Guarantors understand that it is the Staff’s position that if the Prospectus
contained in the Exchange Offer Registration Statement includes a plan of
distribution containing a statement to the above effect and the means by which
Participating Broker-Dealers may resell the Exchange Securities, without naming
the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the
Securities Act in connection with resales of Exchange Securities for their own
accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.

 

(b)                                 In
light of the above, and notwithstanding the other provisions of this Agreement,
the Company and the Guarantors agree to amend or supplement the Prospectus
contained in the Exchange Offer Registration Statement, as would otherwise be
contemplated by Section 3(i), for a period of up to 180 days after the
last Exchange Date (as such period may be extended pursuant to the penultimate
paragraph of Section 3 of this Agreement), if requested by the Initial
Purchasers or by one or more Participating Broker-Dealers, in order to expedite
or facilitate the disposition of any Exchange Securities by Participating
Broker-Dealers consistent with the positions of the Staff recited in
Section 4(a) above.  The Company and
the Guarantors further agree that Participating Broker-Dealers shall be
authorized to deliver such Prospectus during such period in connection with the
resales contemplated by this Section 4.

 

(c)                                  The
Initial Purchasers shall have no liability to the Company, any Guarantor or any
Holder with respect to any request that they may make pursuant to
Section 4(b) above.

 

5.                                       Indemnification
and Contribution.  (a)  The Company and each Guarantor, jointly and
severally, agree to indemnify and hold harmless each Initial Purchaser and each
Holder, their respective affiliates, directors and officers and each Person, if
any, who controls any Initial Purchaser or any Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities
(including, without limitation, legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or any Prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities arise out of, or are based upon,
any untrue statement or omission or alleged untrue statement or omission made
in reliance

 

13

 

upon and in conformity
with any information relating to any Initial Purchaser or any Holder furnished
to the Company in writing through J.P. Morgan Securities Inc. or any selling
Holder expressly for use therein.  In
connection with any Underwritten Offering permitted by Section 3, the
Company and the Guarantors, jointly and severally, will also indemnify the
Underwriters, if any, selling brokers, dealers and similar securities industry
professionals participating in the distribution, their respective affiliates
and each Person who controls such Persons (within the meaning of the Securities
Act and the Exchange Act) to the same extent as provided above with respect to
the indemnification of the Holders, if requested in connection with any
Registration Statement.

 

(b)                                 Each
Holder agrees, severally and not jointly, to indemnify and hold harmless the
Company, the Guarantors, the Initial Purchasers and the other selling Holders,
their respective affiliates, the directors of the Company and the Guarantors,
each officer of the Company and the Guarantors who signed the Registration
Statement and each Person, if any, who controls the Company, the Guarantors,
any Initial Purchaser and any other selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the indemnity set forth in paragraph (a) above, but only
with respect to any losses, claims, damages or liabilities that arise out of,
or are based upon, any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with any information
relating to such Holder furnished to the Company in writing by such Holder
expressly for use in any Registration Statement and any Prospectus.

 

(c)                                  If
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnification may be sought pursuant to either paragraph
(a) or (b) above, such Person (the “Indemnified Person”) shall promptly notify
the Person against whom such indemnification may be sought (the “Indemnifying
Person”) in writing; provided that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have
under this Section 5 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have to
an Indemnified Person otherwise than under this Section 5.  If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others entitled to indemnification pursuant to this Section 5
that the Indemnifying Person may designate in such proceeding and shall pay the
fees and expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary; (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named parties in any
such proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing

 

14

 

interests between
them.  It is understood and agreed that
the Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred.  Any such separate
firm (x) for any Initial Purchaser, its affiliates, directors and officers and
any control Persons of such Initial Purchaser shall be designated in writing by
J.P. Morgan Securities Inc., (y) for any Holder, its affiliates, directors and
officers and any control Persons of such Holder shall be designated in writing
by the Majority Holders and (z) in all other cases shall be designated in
writing by the Company.  The Indemnifying
Person shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the Indemnifying Person agrees to indemnify
each Indemnified Person from and against any loss or liability by reason of
such settlement or judgment. 
Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested that an Indemnifying Person reimburse the
Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement.  No Indemnifying Person
shall, without the written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have
been sought hereunder by such Indemnified Person, unless such settlement (A)
includes an unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (B) does
not include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.

 

(d)                                 If
the indemnification provided for in paragraphs (a) and (b) above is unavailable
to an Indemnified Person or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraph, in lieu of indemnifying such Indemnified Person thereunder,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Guarantors from the offering of the Securities and the Exchange Securities, on
the one hand, and by the Holders from receiving Securities or Exchange
Securities registered under the Securities Act, on the other hand, or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the
Guarantors on the one hand and the Holders on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.  The relative fault of the Company and the
Guarantors on the one hand and the Holders on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Guarantors
or by the Holders and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

 

15

 

(e)                                  The
Company, the Guarantors and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above.  The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to
in paragraph (d) above shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses incurred by such Indemnified
Person in connection with any such action or claim.  Notwithstanding the provisions of this Section 5,
in no event shall a Holder be required to contribute any amount in excess of
the amount by which the total price at which the Securities or Exchange
Securities sold by such Holder exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.

 

(f)                                    The
remedies provided for in this Section 5 are not exclusive and shall not
limit any rights or remedies that may otherwise be available to any Indemnified
Person at law or in equity.

 

(g)                                 The
indemnity and contribution provisions contained in this Section 5 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of the Initial
Purchasers or any Holder, their respective affiliates or any Person controlling
any Initial Purchaser or any Holder, or by or on behalf of the Company or the
Guarantors, their respective affiliates or the officers or directors of or any
Person controlling the Company or the Guarantors, (iii) acceptance of any of
the Exchange Securities and (iv) any sale of Registrable Securities pursuant to
a Shelf Registration Statement.

 

6.                                       General.

 

(a)                                  No Inconsistent Agreements.   The Company and the Guarantors represent,
warrant and agree that (i) the rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to
the holders of any other outstanding securities issued or guaranteed by the
Company or any Guarantor under any other agreement and (ii) neither the Company
nor any Guarantor has entered into, or on or after the date of this Agreement
will enter into, any agreement that is inconsistent with the rights granted to
the Holders of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof.

 

(b)                                 Amendments and Waivers.   The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company and the Guarantors have obtained the written consent
of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or consent; provided that no amendment, modification,

 

16

 

supplement, waiver or
consent to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder.  Any amendments,
modifications, supplements, waivers or consents pursuant to this
Section 6(b) shall be by a writing executed by each of the parties hereto.

 

(c)                                  Notices.  All notices
and other communications provided for or permitted hereunder shall be made in
writing by hand-delivery, registered first-class mail, telex, telecopier, or
any courier guaranteeing overnight delivery (i) if to a Holder, at the most
current address given by such Holder to the Company by means of a notice given
in accordance with the provisions of this Section 6(c), which address
initially is, with respect to the Initial Purchasers, the address set forth in
the Purchase Agreement; (ii) if to the Company and the Guarantors, initially at
the Company’s address set forth in the Purchase Agreement and thereafter at
such other address, notice of which is given in accordance with the provisions
of this Section 6(c); and (iii) to such other persons at their respective
addresses as provided in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 6(c).  All such notices and
communications shall 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 answered back, if telexed; when
receipt is acknowledged, if telecopied; and on the next Business Day if timely
delivered to an air courier guaranteeing overnight delivery.  Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person giving the same to
the Trustee, at the address specified in the Indenture.

 

(d)                                 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or
the Indenture.  If any transferee of any
Holder shall acquire Registrable Securities in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof.  The Initial Purchasers (in their capacity as
Initial Purchasers) shall have no liability or obligation to the Company or the
Guarantors with respect to any failure by a Holder to comply with, or any
breach by any Holder of, any of the obligations of such Holder under this
Agreement.

 

(e)                                  Purchases and Sales of Securities. The Company and the
Guarantors shall not, and shall use their reasonable best efforts to cause
their affiliates (as defined in Rule 405 under the Securities Act) not to,
purchase and then resell or otherwise transfer any Registrable Securities.

 

(f)                                    Third Party Beneficiaries. 
Each Holder shall be a third party beneficiary to the agreements made
hereunder between the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, and shall have the right to enforce such
agreements directly

 

17

 

to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
other Holders hereunder.

 

(g)                                 Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(h)                                 Headings.  The
headings in this Agreement are for convenience of reference only, are not a
part of this Agreement and shall not limit or otherwise affect the meaning
hereof.

 

(i)                                     Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.

 

(j)                                     Miscellaneous.  This Agreement contains the entire agreement
between the parties relating to the subject matter hereof and supersedes all
oral statements and prior writings with respect thereto.  If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable or against public policy, the
remainder of the terms, provisions, covenants and restrictions contained herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.  The Company, the
Guarantors and the Initial Purchasers shall endeavor in good faith negotiations
to replace the invalid, void or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
void or unenforceable provisions.

 

18

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first written above.

 

	
   

  	
  CELLU TISSUE HOLDINGS,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CELLU TISSUE CORPORATION –
  NATURAL

  DAM

  
	
   

  	
  CELLU
  TISSUE CORPORATION – NEENAH

  
	
   

  	
  CELLU
  TISSUE LLC

  
	
   

  	
  INTERLAKE ACQUISITION
  CORPORATION

  LIMITED

  
	
   

  	
  MENOMINEE
  ACQUISITION CORPORATION

  
	
   

  	
  VAN
  PAPER COMPANY

  
	
   

  	
  VAN
  TIMBER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COASTAL
  PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
  By:  Van Paper Company, its managing partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
  Confirmed and accepted
  as of the date first above written:

  
	
   

  
	
  J.P. MORGAN SECURITIES
  INC.

  
	
   

  
	
  For itself and on
  behalf of the
 several Initial Purchasers

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  

 

 

Schedule 1

 

Guarantors

 

Cellu
Tissue Corporation – Natural Dam

Cellu
Tissue Corporation – Neenah

Cellu
Tissue LLC

Coastal
Paper Company

Interlake
Acquisition Corporation Limited

Menominee
Acquisition Corporation

Van
Paper Company

Van
Timber Company

 

 

Annex A

 

Counterpart
to Registration Rights Agreement

 

The
undersigned hereby absolutely, unconditionally and irrevocably agrees (as a
“Guarantor”) to use all commercially reasonable efforts to include its
Subsidiary Guarantee in any Registration Statement required to be filed by the
Company and the Guarantors pursuant to the Registration Rights Agreement, dated
as of March 12, 2004 (the “Registration Rights Agreement”), by and among
Cellu Tissue Holdings, Inc., a Delaware corporation, the guarantorsparty thereto and J.P. Morgan Securities Inc., on behalf of
itself and the other initial purchasers; to use all commercially reasonable
efforts to cause such Registration Statement to become effective as provided in
the Registration Rights Agreement; and to otherwise be bound by the terms and
provisions of the Registration Rights Agreement.  Capitalized terms used herein but not defined
herein shall have the meanings assigned to such terms in the Registration
Rights Agreement.

 

IN
WITNESS WHEREOF, the undersigned has executed this Counterpart as of
                          .

 

	
   

  	
  [NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

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