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Exhibit 10.2 

2001 LP CANADA CREDIT AGREEMENT

Dated for Reference November 30, 2001  

AMONG:  

LOUISIANA-PACIFIC CANADA LTD.  

AND:  

LOUISIANA-PACIFIC CORPORATION  

AND:  

ROYAL BANK OF CANADA  

  

 
  TABLE OF CONTENTS    
  

	1.	 	INTERPRETATION	 	1
	

 	
 	

1.1	
 	

Definitions	
 	

1
	 	 	1.2	 	Applicable Law	 	16
	 	 	1.3	 	Severability	 	16
	 	 	1.4	 	Successors and Assigns	 	16
	 	 	1.5	 	Included Words	 	16
	 	 	1.6	 	Headings and Marginal References	 	16
	 	 	1.7	 	Cross References	 	16
	 	 	1.8	 	Use of Word "Including"	 	16
	 	 	1.9	 	Expiration of Summary of Terms and Conditions	 	16
	 	 	1.10	 	Currency	 	17
	 	 	1.11	 	Payment Dates and Interest Calculation	 	17
	 	 	1.12	 	Accounting Terms	 	17
	 	 	1.13	 	Schedules	 	17
	
2.	
 	

REPRESENTATIONS AND WARRANTIES	
 	
18
	

 	
 	

2.1	
 	

Representations and Warranties	
 	

18
	 	 	2.2	 	Status of the Borrower	 	18
	 	 	2.3	 	Status of Guarantor	 	18
	 	 	2.4	 	Power and Authority	 	18
	 	 	2.5	 	Due Authorization	 	18
	 	 	2.6	 	No Contravention	 	18
	 	 	2.7	 	No Breach	 	19
	 	 	2.8	 	Leases and Licences	 	19
	 	 	2.9	 	No Financial Default	 	19
	 	 	2.10	 	Disclosure of Material Facts	 	20
	 	 	2.11	 	Consents and Approvals	 	20
	 	 	2.12	 	Title	 	20
	 	 	2.13	 	Borrower's Financial Statements Furnished	 	20
	 	 	2.14	 	No Change in Borrower's Financial Condition	 	20
	 	 	2.15	 	Guarantor's Financial Status	 	20
	 	 	2.16	 	No Change in Guarantor's Financial Condition	 	21
	 	 	2.17	 	Financial Statements Not Misleading	 	21
	 	 	2.18	 	Taxes	 	21
	 	 	2.19	 	Environmental Law Compliance	 	21
	 	 	2.20	 	Insurance	 	21
	 	 	2.21	 	ERISA Compliance by Guarantor	 	22
	
3.	
 	

THE CREDIT FACILITY	
 	
22
	

 	
 	

3.1	
 	

Establishment of the Credit Facility	
 	

22
	 	 	3.2	 	Nature of the Credit Facility	 	23
	 	 	3.3	 	Extension of Maturity Date	 	23
	 	 	3.4	 	Currencies and Other Options Available Under the Credit Facility	 	23
	 	 	3.5	 	Swap Contracts	 	23
	 	 	3.6	 	Interest on Advances Under the Credit Facility	 	24
	 	 	3.7	 	Interest and Fee Rate Adjustments	 	34
	 	 	3.8	 	Interest on Eurocurrency Advances Spanning More Than One Applicable Interest Rate	 	24
	 	 	3.9	 	Interest Act of Canada	 	25

i

 

	 	 	3.10	 	Manner of Making Advances	 	25
	 	 	3.11	 	Amounts and Notice for Canadian Advances and U.S. Advances	 	25
	 	 	3.12	 	Notice for Eurocurrency Advances	 	25
	 	 	3.13	 	Eurocurrency Notice Particulars	 	25
	 	 	3.14	 	Conversions of Borrowings under §3.1 (a)	 	26
	 	 	3.15	 	Payment of Interest on Eurocurrency Advances	 	27
	 	 	3.16	 	Default Interest	 	27
	 	 	3.17	 	Indemnity for Out-of-Pocket Expenses	 	27
	 	 	3.18	 	Effective Time for Section 3 Notices	 	27
	 	 	3.19	 	Increased Costs	 	28
	 	 	3.20	 	Borrower's Option on Receipt of an Increased Costs Certificate	 	28
	 	 	3.21	 	Increased Costs Limitation	 	29
	 	 	3.22	 	Eurocurrency Funds Not Available	 	29
	 	 	3.23	 	Payment of Compensation Amount	 	29
	 	 	3.24	 	Borrower's Right to Revolve the Credit Facility	 	29
	 	 	3.25	 	Repayment of Credit Facility	 	30
	 	 	3.26	 	Currency of All Payments	 	30
	 	 	3.27	 	Borrower's Right to Cancel Available Amount of Credit Facility	 	30
	 	 	3.28	 	Standby Fees	 	31
	 	 	3.29	 	Standby Fees Waived	 	31
	 	 	3.30	 	Arrangement Fee	 	31
	 	 	3.31	 	Documentary Credits	 	31
	 	 	3.32	 	Evidence of Indebtedness	 	32
	 	 	3.33	 	Substitute Basis of Borrowing for Eurocurrency Advances	 	32
	 	 	3.34	 	Illegality for Eurocurrency Advances	 	33
	 	 	3.35	 	Exchange Rate Fluctuations	 	33
	 	 	3.36	 	Determination of Available Amount of the Credit Facility	 	33
	
4.	
 	

BANKERS' ACCEPTANCES	
 	
33
	

 	
 	

4.1	
 	

Issuing Bankers' Acceptances	
 	

33
	 	 	4.2	 	Calculation of Borrowings	 	33
	 	 	4.3	 	Notice	 	34
	 	 	4.4	 	Form of Undertaking	 	34
	 	 	4.5	 	Power of Attorney Respecting Bankers' Acceptances	 	34
	 	 	4.6	 	Negotiation and Purchase of Drafts	 	34
	 	 	4.7	 	Issuance and Maturity	 	34
	 	 	4.8	 	Failure to Provide Notice	 	34
	 	 	4.9	 	Payment to Borrower	 	35
	 	 	4.10	 	No Days of Grace	 	35
	 	 	4.11	 	Acceptance Fees	 	35
	 	 	4.12	 	Calculation of Acceptance Fees	 	35
	 	 	4.13	 	Change of Acceptance Fee During Term of Bankers' Acceptance	 	35
	 	 	4.14	 	Increased Costs	 	35
	 	 	4.15	 	DBNA	 	36
	 	 	4.16	 	Maturity Date Restriction	 	36
	
5.	
 	

SECURITY FOR BORROWINGS	
 	
36
	

 	
 	

5.1	
 	

Security for Borrowings	
 	

36
	 	 	5.2	 	Conflict Between the Agreement and Royal's Security	 	37
	 	 	5.3	 	Restrictions on Demanding Payment	 	37

ii

 

	
6.	
 	

CREDIT FACILITY CONDITIONS PRECEDENT	
 	
37
	

 	
 	

6.1	
 	

Conditions Precedent to Initial Borrowings	
 	

37
	 	 	6.2	 	Conditions Precedent to Subsequent Borrowings	 	40
	
7.	
 	

COVENANTS OF THE BORROWER AND THE GUARANTOR	
 	
41
	

 	
 	

7.1	
 	

Borrower's Covenants	
 	

41
	 	 	7.2	 	Guarantor's Covenants	 	44
	 	 	7.3	 	Environmental Law	 	47
	
8.	
 	

EVENTS OF DEFAULT	
 	
47
	

 	
 	

8.1	
 	

Definition of Event of Default	
 	

47
	 	 	8.2	 	Remedies	 	49
	 	 	8.3	 	Remedies Cumulative	 	50
	 	 	8.4	 	Waivers	 	50
	 	 	8.5	 	Application of Payments Following Acceleration	 	50
	 	 	8.6	 	Royal May Perform Covenants	 	50
	
9.	
 	

GENERAL	
 	
50
	

 	
 	

9.1	
 	

Waiver	
 	

50
	 	 	9.2	 	Effect of Amendment, Modification or Waiver	 	51
	 	 	9.3	 	Time of the Essence	 	51
	 	 	9.4	 	Further Assurances	 	51
	 	 	9.5	 	Set-Off	 	51
	 	 	9.6	 	Judgement Currency	 	51
	 	 	9.7	 	Account Debit Authorization	 	52
	 	 	9.8	 	Expenses	 	52
	 	 	9.9	 	Survival of Representations and Warranties	 	52
	 	 	9.10	 	Notice	 	52
	 	 	9.11	 	General Indemnity	 	52
	 	 	9.12	 	Counterparts	 	53
	 	 	9.13	 	Reasonable Consent or Approval of the Parties	 	53
	 	 	9.14	 	Evidence of London Interbank Offered Rate	 	53
	 	 	9.15	 	Entire Agreement	 	53
	 	 	9.16	 	No Deduction for Taxes	 	53
	 	 	9.17	 	Participations and Assignments	 	53
	 	 	9.18	 	Assignment After Default	 	54
	 	 	9.19	 	Obligations of Borrower Re Facility Disposition	 	54

        SCHEDULE
A—INTEREST AND FEE RATES 

        SCHEDULE
B—GUARANTEE 

        SCHEDULE
C—OFFICER'S COMPLIANCE CERTIFICATE 

        SCHEDULE
D—UNFUNDED PENSION LIABILITIES 

        SCHEDULE
E—BORROWING BASE REPORT 

        SCHEDULE
F—PERMITTED ENCUMBRANCES 

        SCHEDULE
G—OTHER PERMITTED INDEBTEDNESS 

iii

2001 LP CANADA CREDIT AGREEMENT  

THIS
2001 LP Canada Credit Agreement is dated for reference November 30, 2001 

AMONG:  

LOUISIANA-PACIFIC CANADA LTD., a British Columbia company having an office at 2100 - 1075 West Georgia Street,
Vancouver, British Columbia, V6E 3G2 

AND:  

LOUISIANA-PACIFIC CORPORATION, a Delaware corporation having an office at Suite 1200, 805 S.W. Broadway, Portland, Oregon, U.S.A., 97205 

AND:  

ROYAL BANK OF CANADA, a Canadian chartered bank, having its head office in Montreal, Quebec, and a branch office at 1025 West Georgia Street, Vancouver,
British Columbia, V6E 3N9 

WHEREAS:

	A.
	Royal
has offered to make available to the Borrower:

	(a)
	a
committed revolving operating credit facility of up to $25,000,000 or the Equivalent Amount in US$ or any combination thereof, and

	(b)
	a
line of credit of up to $35,000,000 or the Equivalent Amount in US$ to cover Swap Termination Values, EFT Transfers, and PDS Services, 

to
be used by the Borrower for its general corporate purposes which shall include the refinancing of its existing credit facility with Royal; 

	B.
	The
Borrower has accepted Royal's offer and the Guarantor has agreed to provide the Guarantee. 

1.    INTERPRETATION  

1.1  Definitions  

Where
used in this Agreement, the following terms shall have the following meanings: 

	 	 	(a)	"1997 LP Canada Credit Agreement" means the credit agreement named as such and dated for reference June 15, 1997 among the Borrower, the Guarantor and Royal as
amended;
	

 	
 	

(b)	

"Additional Amount" means the amount defined as such in §3.19;
	

 	
 	

(c)	

"Advances" means Canadian Advances, Eurocurrency Advances and U.S. Advances;
	

 	
 	

(d)	

"Affiliate" means, in relation to a specified Person, any other Person which directly (or indirectly through one or more intermediaries) controls, or is controlled by, or is under common control with,
the specified Person or any Subsidiary of the specified Person. The term "control" (including the phrases "controlled by" or "under common control with") means the possession, directly or indirectly, of the effective power to direct or cause the
direction of the management and policies of such Person, whether through ownership of voting securities or by contract or otherwise;
	

 	
 	

(e)	

"Agreement" means this credit agreement entitled "2001 LP Canada Credit Agreement" dated for reference November 30, 2001 as amended, restated, modified, supplemented, extended, renewed or replaced
from time to time;
	
 	
 	

 	

 

 

	

 	
 	

(f)	

"Announcement Date" means the date on which either of the Rating Agencies announces a rating change which will increase or decrease the rates of interest, acceptance fees, Documentary Credit Fees and
Standby Fees payable by the Borrower pursuant to this Agreement;
	

 	
 	

(g)	

"BA Discount Rate" means the CDOR Rate for the period of time for which a Bankers' Acceptance will be outstanding;
	

 	
 	

(h)	

"Bankers' Acceptances" means Drafts in multiples of not less than $100,000 Face Amount and aggregating immediately following availment on any day at least $500,000 each for periods of not less than one
month nor more than six months (excluding in each case days of grace) drawn by the Borrower in Canadian Funds and accepted as provided in Section 4;
	

 	
 	

(i)	

"Basis Point" and "BP" each means one one-hundredth (1/100) of one percent or .01%;
	

 	
 	

(j)	

"Banking Day" means a day which is both a Business Day and a day on which dealings in U.S. Funds by and between banks in the London, England interbank market may be conducted;
	

 	
 	

(k)	

"Borrower" means Louisiana-Pacific Canada Ltd., its successors and permitted assigns;
	

 	
 	

(l)	

"Borrower Guarantees" means the limited liability gurantee, in form and content satisfactory to Royal, to be provided by the Borrower guaranteeing the present and future, direct and indirect obligations
of LP Engineered Wood Products Ltd. and Louisiana-Pacific B.C. Forest Products Limited to Royal under the credit facility established pursuant to §3.1(b) in favour of the Borrower and, with the consent of Royal, to be available for
utilization by Subsidiaries of the Borrower in respect of EFT Transfers and PDS Services including overdrafts and cash management debits and liabilities, as amended, modified, supplemented, extended, renewed or replaced from time to time;
	

 	
 	

(m)	

"Borrower Subsidiaries" means all Subsidiaries of the Borrower;
	

 	
 	

(n)	

"Borrower Subsidiaries' Guarantees" means the limited liability guarantees, in form and content satisfactory to Royal, to be provided by LP Engineered Wood Products Ltd. and Louisiana-Pacific B.C.
Forest Products Limited and any future Material Canadian Subsidiary guaranteeing the present and future, direct or indirect obligations of the Borrower to Royal under this Agreement, as such guarantee may be amended, modified, supplemented, extended,
renewed or replaced from time to time;
	

 	
 	

(o)	

"Borrower Subsidiaries' Security Agreements" means the security agreements and hypothec (Province of Quebec) dated for reference November 30, 2001 to be provided by the Borrower Subsidiaries to
support the Borrower Subsidiaries' Guarantees, in form and content satisfactory to Royal wherein each Borrower Subsidiary grants to and in favour of Royal, subject to no prior financial charges except for Permitted Encumbrances a first mortgage
charge and security interest in and upon the inventory of the Borrower Subsidiary and the Borrower Subsidiary's trade accounts receivable, as amended, modified, supplemented, extended, renewed or replaced from time to time;
	

 	
 	

(p)	

"Borrowing" means a utilization or deemed utilization, as the case may be, by the Borrower of the credit facility established pursuant to §3.1(a) by way of Canadian Advances, U.S. Advances,
Eurocurrency Advances, Bankers' Acceptances or Documentary Credits and of the credit facility established pursuant to §3.1(b) by way of Canadian Advances or U.S. Advances, and "Borrowings" means the
aggregate of such utilizations;
	
 	
 	

 	

 

2

 

	

 	
 	

(q)	

"Borrowing Base" means that amount which the Chief Financial Officer certifies from time to time in a Borrowing Base Report as the aggregate amount of the credit facility to be established pursuant to
§3.1(a) to be available to the Borrower from Royal during the currency of the Borrowing Base Report which amount shall be equal to the Current Asset Value;
	

 	
 	

(r)	

"Borrowing Base Report" means the report in substantially the form of Schedule E provided by the Chief Financial Officer to Royal pursuant to §7.1(y)(1);
	

 	
 	

(s)	

"Borrowing Options" means any of the borrowing options available to the Borrower pursuant to §3.4;
	

 	
 	

(t)	

"Branch of Account" means the branch of Royal located at 1025 West Georgia Street, Vancouver, British Columbia, V6E 3N9 or elsewhere as may be agreed between the Borrower and Royal in
writing;
	

 	
 	

(u)	

"Business Day" means a day, excluding Saturday and Sunday, on which institutions are open for business in Toronto, Ontario, Canada and Vancouver, British Columbia, Canada and, in respect of any payments
hereunder in U.S. Funds, a day on which banking institutions are also open for business in New York, New York, U.S.A.;
	

 	
 	

(v)	

"Business Plan" means the financial forecast to be prepared by the Guarantor for each fiscal year which forecast shall include projections of operating results and cash flow for the relevant fiscal year
with a forecast for the next following year;
	

 	
 	

(w)	

"Canadian Advance" means any advance or conversion under the Credit Facility requested by the Borrower in Canadian Funds and advanced by Royal in Canadian Funds or determined as such pursuant to
§4.1;
	

 	
 	

(x)	

"Canadian Funds" and "Cdn$" and "$" means lawful currency of Canada;
	

 	
 	

(y)	

"Capital Lease" means a lease of which all or a portion of the rents payable thereunder would be included in total liabilities on a balance sheet prepared in accordance with GAAP;
	

 	
 	

(z)	

"CDOR Rate" means the annual rate of interest equal to the average "BA 1 Month" interest rates for Cdn$ Bankers' Acceptances displayed and identified as such on the "Reuters Screen CDOR Page" (as defined
in the International Swap Dealer Association Inc. definitions, as modified and amended from time to time) as of 10:00 a.m. local time at Toronto, Ontario on any particular day and, if such day is not a Business Day, then on the day
immediately preceding the Business Day (as adjusted by Royal after 10:00 a.m. local time at Toronto, Ontario to reflect any error in a posted rate of interest or in the posted average annual rate of interest). If such rates are not available on
the Reuters Screen CDOR Page on any particular day, then the CDOR Rate on that day shall be the 30 day rates applicable to Cdn$ Bankers' Acceptances quoted by Royal as of 10:00 a.m. local time at Toronto, Ontario on such day, or if such day
is not a Business Day, then on the immediately preceding Business Day;
	

 	
 	

(aa)	

"Charter" means the Memorandum and Articles of the Borrower and the Certificate of Incorporation and Bylaws of the Guarantor, as the context requires, and includes in each case every amendment
thereto;
	

 	
 	

(bb)	

"Chief Financial Officer" means that Person responsible for reporting to the board of directors of the Borrower or the Guarantor, as the case may be, on the financial condition and performance of the
Borrower or the Guarantor, as the case may be, or any Person designated as such;
	
 	
 	

 	

 

3

 

	

 	
 	

(cc)	

"Closing Date" means November 28th, 2001 or such earlier or later date as agreed by Royal and the Borrower;
	

 	
 	

(dd)	

"Code" means the Internal Revenue Code of 1986, and regulations promulgated thereunder;
	

 	
 	

(ee)	

"Collateral Coverage Ratio" has the meaning set forth in the Guarantor Credit Agreement as in effect as of November 15, 2001 (that is, for greater certainty, prior to any amendment, restatement,
modification, supplement, extension, renewal or replacement thereof);
	

 	
 	

(ff)	

"Compensation Amount" means an amount equal to any net loss, expense or net cost incurred by Royal as a direct result of prepayment of a Eurocurrency Advance, whether by way of repayment or conversion,
prior to the Eurocurrency Maturity Date including, without duplication, any costs incurred in maintaining or redeploying deposits obtained by Royal to fund a Eurocurrency Advance;
	

 	
 	

(gg)	

"Compliance Certificate" means the certificate defined as such in the Guarantor Credit Agreement;
	

 	
 	

(hh)	

"Composite 3:30 p.m. Quotations for U.S. Government Securities" means the daily statistical release designated as such published by the Federal Reserve Bank of New York (U.S.A.) or in any successor
publication;
	

 	
 	

(ii)	

"Consolidated EBITDA" means, as measured quarterly on the last day of each fiscal quarter for the four quarters then ending, for the Guarantor and its Subsidiaries on a consolidated basis, an amount
equal to the sum of (a) Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of taxes, based on or measured by income, used or included in the determination of such Consolidated Net Income, and (d) the amount
of depreciation, depletion and amortization expense deducted in determining such Consolidated Net Income;
	

 	
 	

(jj)	

"Consolidated Interest Charges" means, for any period, for the Guarantor and its Subsidiaries on a consolidated basis, (a) the sum of (i) all interest and the amortization of all premium
payments, fees, charges and related expenses of the Guarantor and its Subsidiaries, determined on a consolidated basis, in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in
each case to the extent treated as interest in accordance with GAAP, and (ii) the portion of rent expense of the Guarantor and its Subsidiaries, determined on a consolidated basis, with respect to such period under capital leases that is treated
as interest in accordance with GAAP minus (b) interest income on the Timber Notes Receivable, up to the amount, if any, that the interest expense in such period on the senior notes secured by the Timber Notes Receivable is treated as interest in
accordance with GAAP;
	

 	
 	

(kk)	

"Consolidated Net Income" means, for any period, for the Guarantor and its Subsidiaries on a consolidated basis, the net income of the Guarantor and its Subsidiaries from continuing operations for that
period, including gains or losses from Dispositions of assets, but excluding (i) up to US$50,000,000 (in the aggregate) in other non-cash extraordinary items and non-cash gains or losses arising from (A) the pulp mill located in Samoa,
California, (B) the pulp mill located in Chetwynd, British Columbia, (C) the 65% interest in a joint venture in Ireland that has an oriented strand board (OSB) mill, and (D) the Guarantor's industrial panel products segment, and
(ii) up to US$10,000,000 in cash losses associated with the closure of the pulp mill located in Chetwynd, British Columbia;
	
 	
 	

 	

 

4

 

	

 	
 	

(ll)	

"Contaminant" means, but is not limited to meaning, any pollutants, dangerous substances, liquid waste, industrial waste, hauled liquid waste, toxic substances, hazardous wastes, hazardous materials,
hazardous substances or contaminants including any of the foregoing as defined in any Environmental Law;
	

 	
 	

(mm)	

"Contingent Obligations" means any agreement, undertaking or arrangement by which a Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise
becomes or is contingently liable upon the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person,
against loss, including any comfort letter, operating agreement, take-or-pay contract (except for take-or-pay contracts entered into in the ordinary course of business) or application for letter of credit or guarantee (except for Documentary
Credits);
	

 	
 	

(nn)	

"Credit Facility" means the:

	

 	
 	

 	

(1)	

the 364 day committed, revolving operating credit facility in the aggregate principal amount of $25,000,000 or the Equivalent Amount in US$ established by Royal in favour of the Borrower pursuant to §3.1(a), and
	

 	
 	

 	

(2)	

the line of credit of up to $35,000,000 or the Equivalent Amount in US$ to cover Swap Termination Values and liabilities of the Borrower, or with the consent of Royal, any of its Subsidiaries in respect of EFT Transfers and PDS Services including
overdrafts and cash management debts and liabilities established by Royal in favour of the Borrower pursuant to §3.1(b);

	

 	
 	

(oo)	

"Currencies" means Canadian Funds or U.S. Funds;
	

 	
 	

(pp)	

"Current Assets" mean those assets which, on a consolidated basis, are determined to be current assets of the Borrower in accordance with GAAP;
	

 	
 	

(qq)	

"Current Asset Value" means the aggregate of:

	

 	
 	

 	

(1)	

75% of all Good Accounts Receivable (Cdn$),
	

 	
 	

 	

(2)	

75% of the Equivalent Amount in Canadian Funds of all Good Accounts Receivable (US$), and
	

 	
 	

 	

(2)	

50% of the Eligible Inventory,
	

 	
 	

 	

minus (but without duplication) the aggregate amount of Potential Preferred Claims;

	 	 	(rr)	"Current Liabilities" mean those liabilities which, on a consolidated basis, are determined to be current liabilities of the Borrower in accordance with GAAP;
	

 	
 	

(ss)	

"Current Ratio" means the ratio of Current Assets to Current Liabilities;
	

 	
 	

(tt)	

"DBNA" means the Depository Bills and Notes Act S.C. 1998 c. 13 and regulations issued pursuant to that Act, as from time to time amended;
	

 	
 	

(uu)	

"Debt to Capitalization Ratio" has the meaning set forth in the Guarantor Credit Agreement in effect as in effect as of November 15, 2001 (that is, for greater certainty, prior to any amendment,
restatement, modification, supplement, extension, renewal or replacement thereof);
	

 	
 	

(vv)	

"Discount Proceeds" means, with respect to any Bankers' Acceptance required to be accepted by Royal hereunder an amount (rounded up, if necessary, to the nearest whole cent) calculated on the applicable
Drawdown Date by multiplying:

5

 

	

 	
 	

 	

(1)	

the Face Amount of such Bankers' Acceptance divided by one hundred, by
	

 	
 	

 	

(2)	

the price, where the price is determined by dividing one hundred by the sum of one plus the product of:

	

 	
 	

 	
 	

(A)	

the BA Discount Rate (expressed as a decimal), and
	

 	
 	

 	
 	

(B)	

a fraction, the numerator of which is the term of such Bankers' Acceptance expressed in days and the denominator of which is 365;

	

 	
 	

 	

with the price as so determined being rounded up or down to the fifth decimal place and .000005 being rounded up;

	 	 	(ww)	"Disposition" means, with respect to any Person, the sale, transfer, license or other disposition (including any sale and leaseback transaction) of any property (other than
the Stock of such Person) by such Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith;
	

 	
 	

(xx)	

"Documentary Credit Fee" means the fee for Guarantee Letters and Letters of Credit charged by Royal pursuant to §3.31;
	

 	
 	

(yy)	

"Documentary Credits" means Guarantee Letters and Letters of Credit;
	

 	
 	

(zz)	

"Draft" means a commercial draft in Royal's prescribed form made by the Borrower in accordance with the provisions of Section 4 of the Agreement;
	

 	
 	

(aaa)	

"Drawdown Date" means a Banking Day on which a Borrowing is advanced to or converted by the Borrower or renewed by Royal;
	

 	
 	

(bbb)	

"EFT Transfers" means electronic funds transfers by the Borrower or its present and future Subsidiaries;
	

 	
 	

(ccc)	

"EFT Transfer Fees" means the fees charged by Royal in respect of EFT Transfers;
	

 	
 	

(ddd)	

"Eligible Inventory" means the value before deducting any Potential Preferred Claims determined in Cdn$ of all Inventory located in Canada as determined by the Borrower and which is not subject to any
mortgage, charge, security interest, assignment, lien, title retention agreement or other encumbrance (other than Permitted Encumbrances);
	

 	
 	

(eee)	

"Environmental Activity" means any past, present or future activity, event or circumstance in respect of a Contaminant, including its storage, use, holding, collection, purchase, accumulation, assessment,
 generation, manufacture, construction, processing, treatment, stabilization, disposition, handling or transportation, or its Release, escape, leaching, dispersal or migration into the natural environment, including the movement through or in the air,
 soil, surface water or groundwater;
	

 	
 	

(fff)	

"Environmental Law" means any and all applicable federal, provincial, municipal or local laws, statutes, regulations, orders, judgements, decrees, ordinances, official directives and all authorizations,
relating to the environment or any Environmental Activity;
	

 	
 	

(ggg)	

"Equivalent Amount" means at any time on any date, the amount in Canadian Funds or U.S. Funds, as the case may be, which would result from the conversion of U.S. Funds to Canadian Funds or Canadian Funds
to U.S. Funds, as the case may be, determined on the basis of the Spot Buying Rate for U.S. Funds against Canadian Funds or Canadian Funds against U.S. Funds, as the case may be. If the date for determination of an Equivalent Amount is not a Business
Day, the applicable rate shall be the Spot Buying Rate quoted on the immediately preceding Business Day;
	
 	
 	

 	

 

6

 

	

 	
 	

(hhh)	

"ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder;
	

 	
 	

(iii)	

"ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Guarantor within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m)
and (o) of the Code for purposes of provisions relating to Section 412 of the Code) other than the Guarantor and its Subsidiaries;
	

 	
 	

(jjj)	

"ERISA Event" means:

	

 	
 	

 	

(1)	

a Reportable Event with respect to a Pension Plan;
	

 	
 	

 	

(2)	

a withdrawal by the Guarantor or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a) (2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA which could reasonably be expected to give rise to any liability with respect to such withdrawal;
	

 	
 	

 	

(3)	

a complete or partial withdrawal by the Guarantor or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization;
	

 	
 	

 	

(4)	

the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
	

 	
 	

 	

(5)	

an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or
	

 	
 	

 	

(6)	

the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Guarantor or any ERISA Affiliate;

	 	(kkk)	"Eurocurrency Advance" means any advance, renewal or conversion under the Credit Facility requested by the Borrower in or to Eurocurrency Funds and advanced, renewed or made
in Eurocurrency Funds by Royal;
	

 	

(lll)	

"Eurocurrency Funds" means U.S. Funds for which London Interbank Offered Rates are quoted by leading banks in the London, England interbank market;
	

 	

(mmm)	

"Eurocurrency Interest Period" means, with respect to a Eurocurrency Advance, that period selected by the Borrower for the Eurocurrency Advance to be outstanding (if the Borrower fails to select a period
it shall be deemed to be for a period of one month), which period shall be for one, two, three or six months (or such shorter or longer periods as may be agreed to by Royal) but shall not extend to a date later than the Maturity Date, commencing on
the Drawdown Date and ending on the Eurocurrency Maturity Date;
	

 	

(nnn)	

"Eurocurrency Maturity Date" means the last day of a Eurocurrency Interest Period;
	

 	

(ooo)	

"Event of Default" means any event set forth in §8.1 of the Agreement;
	

 	

(ppp)	

"Face Amount" means the amount at maturity for which a Bankers' Acceptance is drawn;
	
 	

 	

 

7

 

	

 	

(qqq)	

"Federal Funds Effective Rate" means on any day, the rate of interest per annum set forth in the H.15(519) for that day opposite the caption "Federal Funds Effective". If on any day such rate is not
yet published in the H.15(519), the rate for such day will be the rate set forth in the Composite 3:30 p.m. Quotations for US Government Securities for such day under the caption "Federal Funds Effective Rate". If on any day such rate is not yet
published in either the H.15(519) or the Composite 3:30 p.m. Quotations for US Government Securities such rate shall be the average of the quotations for such day on overnight Federal Funds (such words to have the meaning generally given to
them by money market brokers of recognised standing doing business in the United States of America) transactions received by Royal from three Federal Funds brokers of recognised standing selected by Royal;
	

 	

(rrr)	

"Financial Ratios" means the following ratios or requirements or any of them: the Debt to Capitalization Ratio, the Collateral Coverage Ratio, the Current Ratio, Shareholders' Equity, and Consolidated
EBITDA;
	

 	

(sss)	

"Forex Indenture" means the Indenture dated as of September 14, 1999 among the Borrower, as successor to Louisiana-Pacific Acquisition Inc., as issuer, the Guarantor, as guarantor and
Laurentian Trust of Canada Inc., as trustee, as amended from time to time;
	

 	

(ttt)	

"GAAP" means generally accepted accounting principles as generally applied by the Guarantor as at September 30, 2001 and thereafter as set forth from time to time in the opinions and pronouncements
of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date of determination, consistently applied;
	

 	

(uuu)	

"Good Accounts Receivable (Cdn$)" means trade accounts receivable of the Borrower and its Material Canadian Subsidiaries payable in Canadian Funds, excepting therefrom:

	

 	
 	

 	

(1)	

all trade accounts receivable from an account debtor any portion of which is outstanding more than 60 days after the due date thereof unless the unpaid portion is being disputed by such account debtor in good faith and relates to specific sales
where the account debtor alleges that the Borrower or a Material Canadian Subsidiary has failed to meet the terms of the disputed sale in which case only the amount in dispute shall be excepted, or
	

 	
 	

 	

(2)	

all trade accounts receivable from account debtors which are Affiliates of the Borrower;
	

 	
 	

 	

(3)	

all trade accounts receivable which are subject to a material claim or written assertion of a right of set-off by an account debtor to the extent of such claims or assertions;
	

 	
 	

 	

(4)	

all trade accounts receivable which are subject to any mortgage, charge, assignment, lien, title retention agreement, security interest or other encumbrance (other than Permitted Encumbrances) that ranks in priority to or pari
passu to the Royal's Security;
	

 	
 	

 	

(5)	

all trade accounts receivable which would be required to be treated as bad or doubtful accounts in accordance with GAAP including receivables from account debtors which are bankrupt, insolvent or have suspended payments; and
	

 	
 	

 	

(6)	

that portion of all trade accounts receivable subject to a contracted right on the part of the account debtor to refuse payment on all or part of such receivables;

8

 

	 	(vvv)	"Good Accounts Receivable (US$)" means the trade accounts receivable of the Borrower and its Material Canadian Subsidiaries payable in U.S. Funds which meet the same criteria
set out in the definition of Good Accounts Receivable (Cdn$), except for the currency denomination qualification;
	

 	

(www)	

"Governmental Approval" means any authorization, permit, approval, grant, licence, consent, right, privilege, registration, filing, order, commitment, judgement, direction, ordinance, decree or like
instrument or affirmation issued or granted by any Governmental Body;
	

 	

(xxx)	

"Governmental Body" means, as the context requires, any government, parliament, legislature, regulatory authority, agency, tribunal, department, commission, board or court or other law, regulation or
rule making entity (including a Minister of the Crown) having or purporting to have jurisdiction on behalf of any country or nation, any province, state, municipality, region, district, any subdivision thereof or any other lawful
authority;
	

 	

(yyy)	

"Guarantee" means the limited liability guarantee of the Guarantor in substantially the form of Schedule B and includes all amendments and substitutions;
	

 	

(zzz)	

"Guarantee Letters" means the letters of guarantee issued by Royal pursuant to §3.31;
	

 	

(aaaa)	

"Guarantor" means Louisiana-Pacific Corporation, its successors and permitted assigns;
	

 	

(bbbb)	

"Guarantor Affiliates" means any Affiliate of the Guarantor;
	

 	

(cccc)	

"Guarantor Credit Agreement" means the credit agreement in respect of the Guarantor Credit Facility, unless otherwise provided, as amended, restated, modified, supplemented, extended, renewed or replaced
from time to time;
	

 	

(dddd)	

"Guarantor Credit Facility" means the credit facility made available to the Guarantor pursuant to the terms of a Credit Agreement entered into as of November 15, 2001 among the Guarantor, as
borrower, Bank of America, N.A., as the Administrative Agent, Wachovia Bank, N.A., as the Syndication Agent, Royal, as Documentation Agent and the other lenders party to the credit agreement;
	

 	

(eeee)	

"H.15(519)" means the weekly statistical release designated as such published by the Board of Governors of the Federal Reserve System of the United States of America or in any successor
publication;
	

 	

(ffff)	

"Indebtedness" means without duplication:

	

 	
 	

 	

(1)	

all obligations for borrowed money (including the present value of capitalized lease obligations) which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a consolidated balance sheet as of
the date at which Indebtedness is to be determined, including deferred purchase price obligations;
	 	 	 	(2)	obligations for borrowed money secured by any lien upon property or assets owned by the Borrower or any of its Subsidiaries;

9

  

	

 	
 	

 	

(3)	

obligations created or arising under any conditional sale, deferred purchase price agreements or other similar agreement; and
	

 	
 	

 	

(4)	

guarantees of Indebtedness and letters of credit to support Indebtedness for borrowed money of others;

	 	(gggg)	"Insurance Coverage" means insurance provided by financially sound and reputable insurers or through a program of self-insurance with reserves in accordance with sound
business practices or a combination of both, insuring the property, assets and business of the Borrower against such liabilities, casualties, risks and contingencies and in such types of insurance as is customary for companies engaged in the same or
similar businesses including:

	

 	
 	

 	

(1)	

fire, earthquake and extended coverage insurance on a replacement cost basis,
	

 	
 	

 	

(2)	

boiler, furnace and machinery insurance,
	

 	
 	

 	

(3)	

course of construction insurance (to the extent necessary to insure any modifications under construction),
	

 	
 	

 	

(4)	

business interruption insurance,
	

 	
 	

 	

(5)	

public liability insurance, and
	

 	
 	

 	

(6)	

inventory insurance insuring the inventory of the Borrower not in transit to purchasers;

	

 	

(hhhh)	

"Interest and Fee Rate Adjustment Date" means that date which is five Business Days following an Announcement Date;
	

 	

(iiii)	

"Interest Determination Date" means a Banking Day which is two Banking Days prior to a Drawdown Date;
	

 	

(jjjj)	

"Inventory" means the consolidated inventory of the Borrower and its Material Canadian Subsidiaries, whether located at the Borrower's premises or at the premises of a Material Canadian Subsidiary, in
transit or otherwise, including finished goods (including lumber and chips), work-in-progress (including logs), raw materials and supplies (but, for greater certainty, excluding standing timber);
	

 	

(kkkk)	

"Judgment Currency" shall have the meaning ascribed thereto in §9.6;
	

 	

(llll)	

"Letters of Credit" means letters of credit issued by Royal pursuant to §3.31;
	

 	

(mmmm)	

"Lien" means any mortgage, lien, charge, pledge, hypothecation, security interest or other encumbrance or title retention agreement and any other agreement or arrangement having substantially the same
economic effect;
	

 	

(nnnn)	

"London Interbank Offered Rate" means with respect to a particular Eurocurrency Advance, the rate of interest (rounded upwards, if necessary, to the nearest whole multiple of one sixteenth of one
percent) at which Royal, in accordance with its normal practice, would be prepared to offer to leading banks in the London interbank market for delivery on the first day of the particular Eurocurrency Interest Period and for a period equal to such
Eurocurrency Interest Period based on the number of days comprised therein, deposits in U.S. Funds of comparable amounts to be outstanding during such Eurocurrency Interest Period, at or about 11:00 a.m. (London, England, local time) on the
second Banking Day prior to a Drawdown Date;
	
 	

 	

 

10

 

	

 	

(oooo)	

"Master Agreement" has the meaning ascribed thereto in the definition "Swap Contract";
	

 	

(pppp)	

"Material Adverse Effect" has the meaning set forth in this Guarantor Credit Agreement in effect as at the reference date of November 15, 2001;
	

 	

(qqqq)	

"Material Canadian Subsidiary" means a subsidiary of the Borrower which is 100% legally and beneficially owned by the Borrower which has all or substantially all of its property and assets located in
Canada;
	

 	

(rrrr)	

"Maturity Date" means that date which is 364 days after Closing Date or that date in any ensuing year which is 364 days after the immediately preceding Maturity Date if Royal accedes to a
request from the Borrower pursuant to §3.3 for an extension of the Maturity Date;
	

 	

(ssss)	

"Multiemployer Plan" means any employee benefit plan of a type described in Section 4001(a) (3) of ERISA, to which the Guarantor or any ERISA Affiliate makes or is obligated to make
contributions or during the preceding three calendar years, has made or been obligated to make contributions;
	

 	

(tttt)	

"PBGC" means the Pension Plan Guaranty Corporation, or any governmental authority succeeding to any of its principal functions under ERISA;
	

 	

(uuuu)	

"PDS Services" means payment distribution services as may be approved from time to time by Royal;
	

 	

(vvvv)	

"PDS Services Fees" means the fees charged by Royal in respect of PDS Services;
	

 	

(wwww)	

"Pension Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or
maintained by the Guarantor or any ERISA Affiliate or to which the Guarantor or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years;
	

 	

(xxxx)	

"Permitted Encumbrances" means:

	

 	
 	

 	

(1)	

Liens for taxes, assessments or governmental charges or levies not at the time due and delinquent or the validity of which is being contested at the time by the Borrower or the relevant Subsidiary, as the case may be, in good faith;
	

 	
 	

 	

(2)	

the Lien of any judgement rendered or claim filed against the Borrower or any of its Subsidiaries which is being contested in good faith;
	

 	
 	

 	

(3)	

undetermined or inchoate Liens and charges, including construction Liens, Liens incidental to current operations of the Borrower or any of its Subsidiaries which have not at such time been filed pursuant to law against the Borrower or any of its
Subsidiaries which relate to obligations neither due nor delinquent;
	

 	
 	

 	

(4)	

restrictions, easements, rights-of-way, servitudes or other similar rights in land granted to or reserved by any Persons or minor defects or irregularities of title, all of which in the aggregate do not, in the opinion of Royal, materially impair the
usefulness of the property subject to any such restriction, easement, right-of-way, servitude or other similar rights in land to the business of the Borrower;
	

 	
 	

 	

(5)	

security given to a public utility or Governmental Body in connection with the operations of the Borrower or any of its Subsidiaries in the ordinary course of their respective businesses;
	
 	
 	

 	

 	

 

11

 

	

 	
 	

 	

(6)	

the reservations, limitations, provisos and conditions, if any, expressed in any original grants from the Crown;
	

 	
 	

 	

(7)	

Purchase Money Obligations, pledges, charges, encumbrances, and security interests reasonably and properly incurred or acquired by the Borrower or any of its Subsidiaries in the ordinary course of their respective businesses;
	

 	
 	

 	

(8)	

security granted to Royal pursuant to Royal's Security or otherwise; and
	

 	
 	

 	

(9)	

security described in Schedule F;

	 	(yyyy)	"Permitted Guarantees" means:

	

 	
 	

 	

(1)	

guarantees by the Borrower in respect of purchases of assets by Subsidiaries not exceeding in the aggregate of $5,000,000;
	

 	
 	

 	

(2)	

guarantees of any Subsidiary not exceeding in the aggregate of $5,000,000;
	

 	
 	

 	

(3)	

guarantees by the Borrower in respect of Purchase Money Obligations;
	

 	
 	

 	

(4)	

guarantees by the Borrower or its Subsidiaries provided in the ordinary course of business and not exceeding in the aggregate $5,000,000; and
	

 	
 	

 	

(5)	

guarantees by the Borrower or its Subsidiaries in favour of Royal;

	 	(zzzz)	"Permitted Securitization" means the securitization of accounts receivable of the Guarantor and its Subsidiaries with Blue Ridge Asset Funding Corporation and the other
parties thereto;
	

 	

(aaaaa)	

"Person" means and includes any individual, a partnership, a corporation, a joint stock company, a trust, business trust, an unincorporated association, a joint venture or other entity or a government or
any agency or political subdivision thereof;
	

 	

(bbbbb)	

"Plan" means an "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by the Guarantor or any ERISA Affiliate;
	

 	

(ccccc)	

"Potential Preferred Claims" means the aggregate of any rights, claims or preferences whether statutory in nature or otherwise and whether secured or unsecured including any right or claim which any
unpaid supplier of inventory may have pursuant to the Bankruptcy and Insolvency Act (Canada), which rights, claims or preferences rank in priority to Royal's Security;
	

 	

(ddddd)	

"Prime Rate" means the rate of interest per annum in effect from time to time that is equal to the greater of:

	

 	
 	

 	

(1)	

Royal's Prime Rate; and
	

 	
 	

 	

(2)	

the CDOR Rate plus 100 basis points per annum;

	 	(eeeee)	"Purchase Money Obligations" means:

	

 	
 	

 	

(1)	

any Lien existing and assumed at the time of acquisition by the Borrower or any of its Subsidiaries on any property acquired in an arm's length transaction;
	

 	
 	

 	

(2)	

any Lien on any property acquired by the Borrower or any of its Subsidiaries in an arm's length transaction to secure the whole or any part of the purchase price of such property or monies borrowed to pay such purchase price;
	
 	
 	

 	

 	

 

12

 

	

 	
 	

 	

(3)	

any extensions, renewals, replacements or substitutions of any Lien or other security interest described in §(1) and §(2) above provided that the principal amount of the indebtedness secured thereby outstanding on the date of the extension,
renewal, replacement or substitution is not increased to an amount greater than the amount outstanding on the date the mortgage, lien, charge or other encumbrance was first granted or assumed on the property,
	

 	
 	

 	

provided that the aggregate amounts due under any Lien referred to above do not exceed the cost of the asset encumbered by any such Lien and any such Liens are secured only by the property so owned or acquired and not by any other assets and may be
discharged or caused to be discharged upon payment in full of the amount permitted to be secured under §(1) to §(3) inclusive above;

	 	(fffff)	"Rating Agencies" means Moody's Investors Services, Inc. and Standard Poor's Rating Services, a division of McGraw-Hill Companies, Inc. and "Rating Agency" means either of them as the context requires;
	

 	

(ggggg)	

"Ratings" means the applicable rating of the Guarantor's long term senior unsecured debt as determined by the Rating Agencies as applied in Schedule A to determine applicable interest and fee
rates;
	

 	

(hhhhh)	

"Release" includes discharge, spray, injection, inoculation, abandonment, deposit, spill, leak, seep, pour, emission, emptying, throwing, dumping, placement and exhaust, and when used as a verb has a
similar meaning;
	

 	

(iiiii)	

"Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC;
	

 	

(jjjjj)	

"Royal" means Royal Bank of Canada its successors and permitted assigns;
	

 	

(kkkkk)	

"Royal's Prime Rate" means the floating annual rate of interest publicly announced from time to time by Royal as its reference rate then in effect for determining interest rates on Cdn$ commercial loans
made by Royal in Canada;
	

 	

(lllll)	

"Royal's Security" means all of the security referred to in §5.1;
	

 	

(mmmmm)	

"Royal's U.S. Base Rate" means the floating annual rate of interest publicly announced from time to time by Royal as its reference rate then in effect for determining interest rates on US$ commercial
loans made by Royal in Canada;
	

 	

(nnnnn)	

"Section 427 Security" means the assignment by the Borrower to Royal pursuant to Section 427 of the Bank Act (Canada) covering all of the
Borrower's Inventory;
	

 	

(ooooo)	

"Security Agreement" means the security agreement and hypothec (Province of Quebec) dated for reference November 30, 2001 to be provided by the Borrower, in form and content satisfactory to Royal,
wherein the Borrower grants to and in favour of Royal, subject to no prior financial charges except for Permitted Encumbrances and, subject only to the Section 427 Security, a first mortgage charge and security interest in and upon the
Borrower's Inventory and the Borrower's trade accounts receivable, as amended, modified, supplemented, extended, renewed or replaced from time to time;
	
 	

 	

 

13

 

	

 	

(ppppp)	

"Shareholders' Equity" means, as of any date of determination for the Guarantor and its Subsidiaries on a consolidated basis, shareholders' equity as of that date determined in accordance with GAAP, but
excluding (a) up to US$10,000,000 in cash losses associated with the closure of the pulp mill located in Chetwynd, British Columbia, and (b) up to US$50,000,000 in non-cash gains or losses arising from (i) the pulp mill located in
Samoa, California, (ii) the pulp mill located in Chetwynd, British Columbia, (iii) the 65% interest in a joint venture in Ireland that has an oriented strand board (OSB) mill, and (iv) the Guarantor's industrial panel products
segment;
	

 	

(qqqqq)	

"Spot Buying Rate" means:

	

 	
 	

 	

(1)	

in respect of conversions from Canadian Funds to U.S. Funds or vice versa the Bank of Canada noon spot rate for Canadian Funds against U.S. Funds or U.S. Funds against Canadian Funds (as quoted or published from time to time by the Bank of Canada),
as the case may be, on the relevant date of determination, and
	

 	
 	

 	

(2)	

in respect of conversions to Canadian Funds or U.S. Funds of currencies other than Canadian Funds or U.S. Funds, Royal's spot buying rate in Canadian Funds or U.S. Funds, as the case may be, for purchasing any such foreign currency on the relevant
date of determination;

	 	(rrrrr)	 	"Standby Fees" means the standby fees payable by the Borrower to Royal pursuant to §3.28;
	

 	

(sssss)	
 	

"Stock" means all shares, options, warrants, general or limited partnership interests, units or other equivalents (regardless of how designated) of or in a corporation, general partnership, limited
partnership, limited liability company, unlimited liability company, joint stock company, or equivalent entity whether voting or nonvoting, including common stock and preferred stock;

	

 	

(ttttt)	

"Subordination Agreement" means the subordination agreement dated for reference November 30, 2001 among the Borrower, the Guarantor, certain Guarantor Affiliates and Royal wherein all Indebtedness
owing by the Borrower to such Guarantor Affiliates and to the Guarantor except for trade accounts payable (including payables for management services) incurred in the ordinary course of business prior to receipt from Royal of a notice of default, in
the case of a default in respect of which Royal is required to give notice before it becomes an Event of Default or, an Event of Default, is expressly made subordinate and subject in right of payment as therein provided to the prior payment in full
of all indebtedness of the Borrower to Royal under this Agreement;
	

 	

(uuuuu)	

"Subsidiary" of a Person means any corporation, association, partnership, joint venture or other business entity of which more than 50% of the Voting Shares or other equity interests (in the case of
Persons other than corporations) is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof;
	

 	

(vvvvv)	

"Sufficient Copies" means three copies or such other reasonable number of copies of reports, financial statements, certificates and other material required to be delivered by the Borrower or the
Guarantor, as the case may be, to Royal pursuant to the Agreement as advised by Royal from time to time in writing;
	
 	

 	

 

14

 

	

 	

(wwwww)	

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

 	

(xxxxx)	

"Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts,
(a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include
Royal);
	

 	

(yyyyy)	

"Timber Notes Receivable" means, collectively, (i) the promissory notes in the principal amount of approximately US$50,000,000 by Sierra Pacific Industries in favor of L-P SPV, Inc., a Delaware
corporation, and (ii) the promissory notes in the principal amount of approximately US$354,000,000 by Simpson Timber Company in favor of L-P SPV2, LLC, a Delaware limited liability company;
	

 	

(zzzzz)	

"Unfunded Pension Liability" means the excess of a Pension Plan's benefit liabilities under Section 4001(a) (16) of ERISA, over the current value of that Pension Plan's assets, determined in
accordance with the assumptions used for funding that Pension Plan pursuant to Section 412 of the Code for the applicable plan year;
	

 	

(aaaaaa)	

"U.S.A." means United States of America;
	

 	

(bbbbbb)	

"U.S. Advance" means any advance or conversion under the Credit Facility requested by the Borrower in U.S. Funds and advanced in U.S. Funds by Royal or determined as such pursuant to
§4.12;
	

 	

(cccccc)	

"U.S. Base Rate" means the rate of interest per annum in effect from time to time that is equal to the greater of:

	

 	
 	

 	

(1)	

Royal's U.S. Base Rate; and
	

 	
 	

 	

(2)	

the Federal Funds Effective Rate plus 50 basis points per annum;

	

 	

(dddddd)	

"U.S. Funds" and "US$" means lawful currency of the U.S.A. in same day immediately available funds, or, if such funds are not available, the form of money
of the U.S.A. that is customarily used in the settlement of international banking transactions on the day payment is due;
	

 	

(eeeeee)	

"Voting Shares" means shares of any class entitled to vote in all circumstances.

15

 

1.2  Applicable Law  

        The Agreement shall be construed in accordance with and governed by the laws of the Province of British Columbia and the laws of Canada applicable in the Province
of British Columbia. 

1.3  Severability  

        If any one or more of the provisions contained in the Agreement is invalid, illegal or unenforceable in any respect in any jurisdiction, the validity, legality
and enforceability of such provision shall not in any way be affected or impaired thereby in any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained
in the Agreement shall not in any way be affected or impaired thereby. 

1.4  Successors and Assigns  

        The Agreement shall enure to the benefit of and be binding on each of the parties to the Agreement and their respective successors and permitted assigns. 

1.5  Included Words  

        Where the singular or the masculine are used in the Agreement, the same shall be deemed to include the plural or the feminine or vice versa and a body politic or
corporate where the context or the parties so require. 

1.6  Headings and Marginal References  

        The division of the Agreement into paragraphs and subparagraphs and the insertion of headings are for convenience of reference only and shall not affect the
construction or interpretation of the Agreement. 

1.7  Cross References  

        Unless otherwise stated, a reference in the Agreement to a numbered or lettered paragraph, subparagraph or schedule refers to the paragraph, subparagraph or
schedule bearing that number or letter in the Agreement. 

1.8  Use of Word "Including" 

        The
word "including", when following any general term or statement, is not to be construed as limiting the general term or statement to the specific terms or matters set forth
immediately following such word or to similar items or matters, but such general term or statement shall be construed as referring to all items or matters that could reasonably fall within the
broadest possible scope thereof. 

1.9  Expiration of Summary of Terms and Conditions  

        On the Closing Date, all of the terms and conditions of the "Draft Summary of Terms and Conditions" dated October 25, 2001 agreed to by the Borrower, the
Guarantor and Royal in connection with the development of the Credit Facility shall be deemed to be merged herein and to expire and shall thereafter have no force and effect. 

1.10 Currency  

        Unless otherwise specified all statements of, or references to, dollar amounts in the Agreement without currency specification shall mean Canadian Funds. 

16

 

1.11 Payment Dates and Interest Calculation  

        If the date for a payment to Royal of any sum owing hereunder or the date of advance, renewal or conversion of any sum by Royal hereunder is not, in the case of
Eurocurrency Funds, a Banking Day, and, in all other cases, a Business Day, such payment, advance, renewal or conversion, as the case may be, shall, except in some circumstances as hereafter provided
in respect of Eurocurrency Funds, be due or made upon the next immediately succeeding Banking Day or Business Day, as the case may be. In the case of Eurocurrency Funds if the immediately succeeding
Banking Day is in the next following month, the date for payment, renewal or conversion shall be the next immediately preceding Banking Day. Interest shall be payable for the day a Canadian Advance,
Eurocurrency Advance or U.S. Advance is made but not for the day of any payment on the amount paid if payment is received by Royal prior to 10:00 a.m. local time at Vancouver, British Columbia. 

1.12 Accounting Terms  

        Accounting terms which are not specifically defined herein shall have the meaning accorded thereto and shall be construed in accordance with GAAP. If at any time
any change in GAAP would affect the computation of any Financial Ratio and there is a request pursuant to §1.03(b) of the Guarantor Agreement or a like request by the Borrower or Royal
pursuant to this Agreement to negotiate in good faith to amend any such ratio to preserve the original intent thereof in light of such change in GAAP, the applicable parties under each agreement shall
enter into such negotiations, provided that, until so amended: 

	(a)
	the
applicable Financial Ratios shall continue to be computed in accordance with GAAP prior to such agreed change therein;

	(b)
	the
Borrower and the Guarantor or either, as the case may be, shall provide to Royal financial statements and other documents required under this Agreement or the Guarantor Agreement
or as may be reasonably requested by Royal setting forth a reconciliation between calculations of the applicable Financial Ratio made before and after giving effect to such change in GAAP; and

	(c)
	no
change to any Financial Ratio agreed to pursuant to §1.03(b) of the Guarantor Agreement shall be effective in respect of its application in this Agreement without the
prior written consent of Royal. 

1.13 Schedules  

        The Schedules to the Agreement shall form an integral part of the Agreement, and are as follows: 

	Schedule A	 	Interest and Fee Rates
	Schedule B	 	Guarantee
	Schedule C	 	Officer's Compliance Certificate
	Schedule D	 	Unfunded Pension Liabilities
	Schedule E	 	Borrowing Base Report
	Schedule F	 	Permitted Encumbrances
	Schedule G	 	Other Permitted Indebtedness

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2.    REPRESENTATIONS AND WARRANTIES  

2.1  Representations and Warranties  

        Each of the Borrower and the Guarantor represents and warrants to Royal as set forth in this Section 2 of the Agreement. All representations and warranties
shall survive all Borrowings and no investigation at any time made by or on behalf of Royal shall diminish in any respect whatsoever its right to rely thereon. 

2.2  Status of the Borrower  

        The Borrower is a corporation, duly incorporated, validly existing, in good standing with respect to the filing of annual returns under the laws of the Province
of British Columbia and is duly qualified, in good standing and authorized to do business in all jurisdictions where the character of the properties owned by it or the nature of the business
transacted by it makes such qualification necessary. 

2.3  Status of Guarantor  

        The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, one of the States of the United
States of America. 

2.4  Power and Authority  

        Each of the Borrower and the Guarantor has all requisite corporate power and authority to own its respective properties, has obtained or will obtain, all material
Governmental Approvals required at the date hereof to carry on its respective business as now conducted and proposed to be conducted and to enter into and perform its obligations under the Agreement
and all instruments and agreements delivered pursuant hereto and thereto. 

2.5  Due Authorization  

        The Agreement, the Guarantee and every instrument or agreement delivered pursuant hereto has been duly and validly authorized by all requisite actions by the
Borrower and the Guarantor and each of such documents has been duly executed by the Borrower and the Guarantor if it is a party thereto and when delivered will be a legal, valid and binding obligation
of the Borrower and the Guarantor, as the case may be, enforceable in accordance with its respective terms save as enforcement may be limited by: 

	(a)
	applicable
bankruptcy, insolvency, moratorium, reorganization and similar laws at the time in effect affecting the rights of creditors generally;

	(b)
	equitable
principles which may limit the availability of certain remedies, including the remedy of specific performance; and

	(c)
	the
inability of the courts of Canada to give judgement for payment in foreign currencies. 

2.6  No Contravention  

        The execution, delivery and performance of the Agreement by the Borrower and the Guarantor and the Guarantee by the Guarantor will not contravene any material
provision of any regulation, order or
permit applicable to the Borrower or the Guarantor, as the case may be, or cause a conflict with or contravention of its respective Charter or cause a breach of or constitute a default under or
require any consent under any agreement or instrument to which the Borrower or the Guarantor, as the case may be, is a party or by which it is bound except such as have been obtained. 

18

 

2.7  No Breach  

        Neither the Borrower nor the Guarantor is in default under any agreement or instrument to which it is a party in any way which materially adversely affects its
ability to perform its respective obligations under the Agreement or the Guarantee, as the case may be, and there are no suits or judicial proceedings or proceedings before any governmental
commission, board or other agency pending or to the knowledge of the Borrower or the Guarantor, as the case may be, threatened against it which could reasonably be expected to give rise to a judgement
or liability which, if satisfied, would have a materially adverse effect on the ability of the Borrower to meet its obligations under the Agreement or the Guarantor to meet its obligations under the
Guarantee. 

2.8  Leases and Licences  

        Each of the Borrower and the Guarantor has all leases, licences, permits and consents as are essential for the due carrying on of its respective business in the
manner in which its business is carried on and all such leases, licences, permits and consents are in full force and effect and no proceedings relating thereto are pending or known to the Borrower or
the Guarantor, as the case may be, to be threatened in any way which would have a material adverse effect on the ability of the Borrower or the Guarantor to meet its respective obligations under the
Agreement or the Guarantor to meet its obligations under the Guarantee. 

2.9  No Financial Default  

        Neither the Borrower nor the Guarantor is in default in any way which materially adversely affects its ability to perform its obligations under the Agreement or
the Guarantee, as the case may be, under any guarantee, bond, debenture, note or other instrument evidencing any indebtedness or under the terms of any instrument pursuant to which any of the
foregoing has been issued or made and delivered and to the knowledge of the Borrower and the Guarantor there exists no state of facts which, after notice or lapse of time or both or otherwise, would
constitute such a default in any way which materially adversely affects its ability to perform its obligations under the Agreement or the Guarantee, as the case may be. 

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   2.10 Disclosure of Material Facts  

        Each of the Borrower and the Guarantor has disclosed to Royal in writing all facts (other than facts which are a matter of public knowledge or record) which
materially adversely affect, or so far as it can now reasonably foresee, will materially adversely affect its ability to perform its obligations under the Agreement and, in the case of the Guarantor,
under the Guarantee. 

2.11 Consents and Approvals  

        All consents, approvals, authorizations, declarations, registrations, filings, notices and other actions whatsoever required as at the date hereof by the Borrower
and the Guarantor in order to execute and deliver the Agreement and the Guarantee, as the case may be, and all agreements or instruments delivered pursuant thereto, and the consummation of the
transactions contemplated hereby, have been obtained, made or taken or will have been obtained, made or taken or waived by Royal on or prior to the Closing Date. 

2.12 Title  

        The Borrower has good and marketable title to or the right to use all of the assets necessary for the operation of its business except for Permitted Encumbrances. 

2.13 Borrower's Financial Statements Furnished  

        The Borrower has furnished Royal with its most recent unaudited financial statements for the fiscal year ended December 31, 2000 and the fiscal quarter
ended September 30, 2001, all such financial statements have been prepared in accordance with GAAP applied on a consistent basis, except as stated therein or in the notes thereto, the balance
sheets as therein contained present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries as at the dates thereof and the consolidated statements of
income present fairly in all material respects the results of the operations of the Borrower and its Subsidiaries for the period indicated. 

2.14 No Change in Borrower's Financial Condition  

        Since September 30, 2001 there has been no material adverse change in the financial condition of the Borrower from that shown on the consolidated financial
statements of the Borrower as at that date, except as disclosed to Royal, and any such change will not materially adversely affect the ability of the Borrower to perform its obligations under the
Agreement. 

2.15 Guarantor's Financial Status  

        The Guarantor has furnished Royal with its most recent annual and quarterly consolidated financial statements, all such financial statements have been prepared in
all material respects in accordance with United States Securities and Exchange Commission requirements except as stated therein or in the notes thereto, each balance sheet as therein contained
presents fairly, in all material respects, the financial position of the Guarantor and its subsidiaries as at the date thereof. 

20

 

2.16 No Change in Guarantor's Financial Condition  

        Since the date of the most recent quarterly financial statements of the Guarantor and its Subsidiaries referred to in the preceding paragraph (a) there has
been no change in the consolidated financial condition of the Guarantor and its Subsidiaries as shown on the Guarantor's balance sheet as at that date sufficient to impair the Guarantor's ability to
perform its obligations under the Agreement or the Guarantee except as disclosed to Royal, and (b) the business, operations and assets of the Guarantor and its Subsidiaries on a consolidated
basis have not been materially adversely affected as a result of any act or event including, without limitation, fire, explosion, casualty, flood, drought, riot, storm, condemnation, act of God,
accident, labour trouble, expropriation or act of any government. 

2.17 Financial Statements Not Misleading  

        The consolidated financial statements referred to above or any other statement or report furnished to Royal by or on behalf of the Borrower or the Guarantor in
connection with the negotiation or confirmation of the transactions contemplated herein do not contain, as at the time such statements or reports were furnished, any untrue statement of a material
fact or any omission of a material fact necessary to make the statements contained therein not materially misleading, it being understood by
Royal that such statements were prepared by the Guarantor and certain of them do not contain explanatory footnotes, and all such statements and reports, taken as a whole together with the Agreement do
not contain any untrue statement of material fact or omit a material fact necessary to make the statements contained therein not materially misleading. 

2.18 Taxes  

        Each of the Borrower and the Guarantor has filed all material income tax returns which were required to be filed, paid or made provisions for payment of all
material taxes (including interest and penalties) which are due and payable, and provided adequate reserves established in accordance with GAAP for the payment of any tax, the payment of which is
being disputed. 

2.19 Environmental Law Compliance  

        The Borrower is in compliance with all Environmental Law in respect of which non-compliance would have a material adverse effect on the ability of the
Borrower to perform its obligations under the Agreement. 

2.20 Insurance  

        Each of the Borrower and the Guarantor: 

	(a)
	has
insured by financially sound and reputable insurers all assets and property of a character customarily insured by Persons engaged in the same or a similar business, similarly
situated, including inventory and business interruption insurance, in such amounts as are customarily insured for by such Persons, or

	(b)
	maintains
a program of self-insurance, with reserves, in accordance with sound business practices. 

21

 

2.21 ERISA Compliance by Guarantor  

	(a)
	each
Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state laws. Each Plan that is intended to qualify under the
Section 401(a) of the Code has received a favourable determination letter from the IRS or an application for such a letter is currently being or will be processed by the IRS with respect
thereto and such application is or will be within a remedial amendment period and, to the Guarantor's knowledge, nothing has occurred which would prevent, or cause the loss of, such qualification
which is not correctable without cost or at a cost that is immaterial. The Guarantor and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

	(b)
	there
are no pending or, to the Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any Governmental Body, with respect to any Plan that could be reasonably
expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could be
reasonably expected to result in a Material Adverse Effect.

	(c)
	

	(1)
	no
ERISA Event has occurred within the past 12 years or is reasonably expected to occur;

	(2)
	except
as specifically disclosed in Schedule D, no Pension Plan has any Unfunded Pension Liability;

	(3)
	neither
the Guarantor nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA, with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA);

	(4)
	neither
the Guarantor nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, could be reasonably expected to result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and

	(5)
	neither
the Guarantor nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 

3.    THE CREDIT FACILITY  

 3.1 Establishment of the Credit Facility  

        Relying on each of the representations and warranties set out in Section 2 and subject to the terms and conditions set forth herein, Royal agrees to make
available to the Borrower: 

	(a)
	a
364 day committed, revolving operating credit facility in the principal amount of $25,000,000 or the Equivalent Amount in U.S. Funds, and

	(b)
	a
line of credit of up to $35,000,000 or the Equivalent Amount in US$ to cover Swap Termination Values and liabilities of the Borrower or, with the consent of Royal, any of its
Subsidiaries in respect of EFT Transfers and PDS Services including overdrafts and cash management debts and liabilities, 

22

 

to
be used by the Borrower (and, in the case of §3.1(b), with the consent of Royal, any Subsidiaries of the Borrower in respect of EFT Transfers and PDS Services) for its general corporate
purposes which shall include the refinancing by the Borrower of its existing credit facility with Royal. 

3.2  Nature of the Credit Facility  

        Unless terminated earlier pursuant to §8.2 the Credit Facility shall be available to the Borrower up to the stated principal amount on a continuing
and revolving basis from the Closing Date until the Maturity Date except for any and all cancellations of the available amount of the Credit Facility made pursuant to §3.27. 

3.3  Extension of Maturity Date  

        Royal in its sole discretion may, at the request of the Borrower, extend the Maturity Date for successive periods of 364 days. If the Borrower is desirous
of extending the Maturity Date it shall so notify Royal not more than 90 days and not less than 60 days prior to the then current Maturity Date and Royal shall, within 30 days of
receipt of such extension notice, advise the Borrower of its determination in response to any such request. If Royal determines that it will extend the Maturity Date for 364 days the current
Maturity Date shall be extended to that date which is 364 days past the current Maturity Date. The Borrower and the Guarantor acknowledge that the rates of interest, Standby Fees, acceptance
fees, EFT Transfer Fees, PDS Service Fees, Documentary Credit Fees and any other fees payable by the Borrower under the Agreement are subject to confirmation by Royal at the time of each request for
an extension of the Maturity Date. 

3.4  Currencies and Other Options Available Under the Credit Facility  

        Subject to the provisions of the Agreement: 

	(a)
	the
Borrower may, at its option utilize the credit facility established pursuant to §3.1(a) by way of Canadian Advances, U.S. Advances, Documentary Credits or, if
available, Eurocurrency Advances or Bankers' Acceptances, and

	(b)
	the
Borrower and, with the consent of Royal, any of its Subsidiaries may, at the discretion of Royal, avail themselves of Royal's facilities in respect of EFT Transfers and PDS
Services and Royal at its discretion, may make Canadian Advances or U.S. Advances available to the Borrower or, on the instructions of the Borrower, to its Subsidiaries to provide for Swap Termination
Values, and cover for liabilities in respect of EFT Transfers and PDS Services. Any liabilities in respect of EFT Transfers and PDS Services including overdrafts and cash management debts and
liabilities, shall be obligations under the credit facility established pursuant to §3.1(b) and shall be secured by the collateral charged under Royal's Security and otherwise be subject
to the applicable provisions hereof. 

3.5  Swap Contracts  

        The Borrower may request that Royal enter into Swap Contracts with the Borrower from time to time. Royal may decline such request or may agree to enter into Swap
Contracts provided: 

	(a)
	the
Borrower agrees to the terms and conditions of the current applicable Master Agreement or such other similar or standard form of agreement appropriate to the type of Swap Contract
requested by the Borrower as may be required by Royal and enters into and delivers such agreement to Royal;

	(b)
	the
Borrower pays all required fees in connection with a Swap Contract and indemnifies Royal against any loss, cost or expense incurred by Royal including any Swap Termination Values; 

23

 

	(c)
	the
Borrower indemnifies Royal against any loss, cost or expense suffered or incurred by Royal as a result of acting upon instructions given or agreements made over the telephone or
by electronic transmission of any type with persons reasonably believed by Royal to have been acting on the Borrower's behalf;

	(d)
	the
Borrower agrees that if there is any inconsistency at any time between the terms of the Agreement and any Master Agreement, the terms of such Master Agreement shall prevail. 

3.6  Interest on Advances Under the Credit Facility  

        The Borrower shall pay to Royal at its Branch of Account interest on Advances from Royal at the rates determined by reference to the pricing formula set forth in
Schedule A. Interest shall be calculated and paid as follows: 

	(a)
	Canadian
Advances shall bear interest in Canadian Funds, which interest shall accrue from day to day while such advances are outstanding and shall be computed on the basis of a year
of 365 days and for actual days elapsed and shall be payable and compounded monthly in arrears on the 20th day of each month or such other date as may be agreed to by the Borrower and Royal;

	(b)
	U.S.
Advances shall bear interest payable in U.S. Funds, which interest shall accrue from day to day while such advances are outstanding and shall be computed on the basis of a year
of 365 days and for actual days elapsed and shall be payable and compounded monthly in arrears on the 20th day of each month or such other date as may be agreed to by the Borrower and Royal;

	(c)
	Eurocurrency
Advances shall bear interest in U.S. Funds, which interest shall accrue from day to day while such advances are outstanding and shall be computed on the basis of a year
of 360 days and for actual days elapsed and shall be payable as set forth in §3.15 hereof. 

3.7  Interest and Fee Rate Adjustments  

        Adjustments to rates of interest and the acceptance fees prescribed in §3.6 and §4.11 respectively and the Standby Fees and Documentary
Credit Fees prescribed in §3.28 and §3.31 respectively resulting from changes, if any, to the Ratings shall be effective and payable from and including the Interest and Fee
Rate Adjustment Date. The Borrower agrees to pay to Royal and Royal agrees to repay to the Borrower the amount resulting from an adjustment of Schedule A rates and fees in respect of Bankers'
Acceptance, Documentary Credits and Eurocurrency Advances resulting from a Rating Change prior to the maturity of such Borrowing Options. The Borrower will pay interest, acceptance fees, Standby Fees,
Documentary Credit Fees and other fees from the Closing Date until the first Interest and Fee Rate Adjustment Date determined by reference to a BB/Ba2 or higher Rating. 

3.8  Interest on Eurocurrency Advances Spanning More Than One Applicable Interest Rate  

        If the Borrower takes a Eurocurrency Advance under the Credit Facility before the date of an increase or decrease in a percentage rate of interest to be added to
the London Interbank Offered Rate to be paid on Eurocurrency Advances under the Credit Facility, which Eurocurrency Advance matures after the date of the said increase or decrease in the rate of
interest, the rates of interest for the Eurocurrency Interest Period of the said Eurocurrency Advance shall be calculated by using the interest rates applicable from time to time for the number of
days the Eurocurrency Advance is outstanding during the respective interest rate periods. 

24

 

3.9  Interest Act of Canada  

        For the purpose of the Interest Act of Canada, the yearly rate of interest to which interest calculated on the
basis of a year of 360 or 365 days is equivalent, is the rate of interest determined as herein provided multiplied by the number of days in such year divided by 360 or 365, as the case may be. 

3.10 Manner of Making Advances  

        Advances under the Credit Facility (other than deemed advances in relation to Bankers' Acceptances and Documentary Credits) shall be disbursed to the Borrower by
Royal crediting the account maintained by the Borrower at its Branch of Account or elsewhere as may be agreed to between the Borrower and Royal. 

3.11 Amounts and Notice for Canadian Advances and U.S. Advances  

        One Business Day's notice to Royal is required from the Borrower of its intention to take a Canadian Advance or a U.S. Advance which advances shall be for minimum
amounts of $100,000 or US$100,000, as the case may be. 

3.12 Notice for Eurocurrency Advances  

        The Borrower shall give the following prior irrevocable notice to Royal before the time stipulated in §3.18 of its intention to take Eurocurrency
Advances: 

	(a)
	for
Eurocurrency Advances for aggregate amounts of less than US$10,000,000 no notice prior to the Interest Determination Date is required;

	(b)
	at
least two Banking Days' notice prior to the Interest Determination Date is required in the case of Eurocurrency Advances for aggregate amounts of US$10,000,000 or more. 

3.13 Eurocurrency Notice Particulars  

        Each notice under §3.12 shall specify: 

	(a)
	the
amount of each Eurocurrency Advance requested by the Borrower, which shall be in minimum amounts of US$1,000,000;

	(b)
	the
Drawdown Date; and

	(c)
	the
Eurocurrency Interest Period for which the London Interbank Offered Rate is to be applied. 

        Unless
Royal is unable to make a Eurocurrency Advance because funds are not available to it or it determines not to make a Eurocurrency Advance pursuant to §3.33, it shall
make the requested Eurocurrency Advance in accordance with the notice requesting such advance and shall advise the Borrower on the Interest Determination Date of the London Interbank Offered Rate. 

25

 

3.14 Conversions of Borrowings under §3.1(a)  

        The Borrower may, upon giving notice to Royal of its intention to effect a conversion, convert all or any portion of its Borrowings under the credit facility
established pursuant to §3.1(a) from one Borrowing Option to another Borrowing Option, provided that: 

	(a)
	Borrowings
in Canadian Funds plus the Equivalent Amount in Canadian Funds of Borrowings in U.S. Funds after a conversion do not exceed the amount available under §3.1(a)
of the credit facility;

	(b)
	a
conversion involving Eurocurrency Funds is in a minimum amount of US$1,000,000 and a conversion involving Bankers' Acceptances is in a minimum amount of $500,000 or any greater
amount in whole multiples of $100,000;

	(c)
	a
Eurocurrency Advance may be converted only on its Eurocurrency Maturity Date (unless Royal has agreed to a conversion prior to such date and the Borrower has paid the Compensation
Amount determined by Royal and advised to the Borrower) and if the Borrower fails to notify Royal as to conversion or renewal of a maturing Eurocurrency Advance as required hereunder it shall be
deemed for all purposes to be a U.S. Advance on its Eurocurrency Maturity Date;

	(d)
	the
Borrower shall not be entitled to convert to Eurocurrency Funds unless such Eurocurrency Funds are available in accordance with §3.22;

	(e)
	any
Bankers' Acceptance may be converted only on the maturity date thereof and provided the Borrower gives Royal the same notice of request for conversion as specified in
§4.3;

	(f)
	the
Borrower shall give Royal notice for conversion of all or a portion of its Borrowings, which notice shall be governed by the same terms established for requests for advances under
§3.11 and §3.12, and shall specify:

	(1)
	the
amount of Borrowings to be converted;

	(2)
	the
Drawdown Date;

	(3)
	the
Borrowing Option sought by the Borrower and, if the Borrowing Option sought is Eurocurrency Advances, the Eurocurrency Interest Period together with the Drawdown Date, and, if the
Borrowing Option sought is Canadian Advances whether the conversion is to Bankers' Acceptances and if so, the number of days to maturity of the Bankers' Acceptances; 

	(g)
	if
the conversion is from one currency to a different currency, the Borrower shall have repaid or shall, at the time of conversion, contemporaneously repay to Royal the full amount
advanced under the Borrowing Option being converted. Any such repayment shall be in the currency of the Advance being repaid;

	(h)
	no
requested conversion would, on the date a conversion is requested, result in Borrowings under the credit facility established pursuant to §3.1(a) exceeding the amount
available under §3.1(a) of the credit facility. 

        Subject
to the foregoing, including the availability of Eurocurrency Funds, if the conversion request referred to in §3.14(f) specifies a conversion into Eurocurrency Funds,
Royal shall make the requested Eurocurrency Advance in accordance with the conversion request. 

26

 

3.15 Payment of Interest on Eurocurrency Advances  

        Interest on a Eurocurrency Advance for a Eurocurrency Interest Period of three months or less shall be paid on the Eurocurrency Maturity Date. If a Eurocurrency
Interest Period exceeds three months, interest shall be paid every three months (not in advance) during the Eurocurrency Interest Period, until the Eurocurrency Maturity Date, upon which date the
balance of interest thereon shall be paid. 

3.16 Default Interest  

        Default interest payable in the currency of the amount which is overdue shall be paid on all interest, fees and other amounts payable hereunder which are overdue.
Default interest with respect to interest, fees and other amounts payable in Canadian Funds shall be at the Prime Rate and with respect to interest, fees and other amounts payable in U.S. Funds shall
be at the U.S. Base Rate, as the case may be. Default interest on overdue interest, fees and other amounts shall be compounded monthly and shall be paid on demand both before and after maturity,
default and judgement. Default interest shall be computed from and including the date interest, fees or any other amounts payable pursuant to the Agreement become due and shall be paid for so long as
such amount or amounts remains unpaid. 

3.17 Indemnity for Out-of-Pocket Expenses  

        The Borrower agrees to indemnify Royal against any out-of-pocket loss or expense which it may sustain or incur as a consequence of the
Borrower's failure to effect, repay or prepay a Borrowing as specified in any notice of Borrowing delivered by the Borrower pursuant to the Agreement. 

3.18 Effective Time for Section 3 Notices  

        For the purposes of Section 3 and §4.3 of the Agreement, notices from the Borrower to Royal must be received by Royal prior to 9:00 a.m.
local time at Vancouver, British Columbia to be effective on the date on which they are given. Notices received after that local time will take effect from the next Banking Day or Business Day, as the
case may be. 

27

 

3.19 Increased Costs  

        Subject to §3.21, if, after the Closing Date, the implementation or introduction of or any change in any applicable law, regulation, treaty, or
official directive or regulatory requirement now or hereafter in effect (whether or not having the force of law), or any change in the interpretation or application thereof by any court or by any
judicial or governmental authority charged with the interpretation or
administration thereof, or if compliance by Royal with any request from any central bank or other fiscal, monetary, or other authority (whether or not having the force of law): 

	(a)
	subjects
Royal to any tax, changes the basis of taxation of payments due to Royal or increases any existing tax, on payments of principal, interest, or other amounts payable by the
Borrower to Royal under the Agreement (except for taxes on the overall net income of Royal imposed by the jurisdiction in which it is incorporated or resident or from which it is acting for the
purposes of the Agreement, and except for taxes on Royal's capital or other similar taxes);

	(b)
	imposes,
modifies, or deems applicable any reserve, special deposit, capital adequacy, regulatory, or similar requirement (including a requirement which affects Royal's allocation of
capital resources) against assets or liabilities held by, or deposits in or for the account of, or loans by, or any other acquisition of funds for loans or commitments to fund loans or obligations
concerning any Bankers' Acceptances accepted by Royal, or

	(c)
	imposes
on Royal any other condition with respect to the Agreement, 

and
the result of (a), (b) or (c) is, in the reasonable determination of Royal acting in good faith, to increase the cost to Royal or to reduce the income receivable by Royal in respect
of a Borrowing or Standby Fees payable, or to reduce the rate of return on the overall capital of Royal, the Borrower shall, upon receipt of a certificate from Royal as described below
("Certificate"), pay to Royal that amount which compensates Royal for such additional cost, reduction in income or rate of return ("Additional Amount") from the date of the Certificate. The Borrower
will pay the Additional Amount on the next following 20th day of the month and on the 20th day of each month thereafter until the earlier of (a) the date on which the Additional Amount has been
paid in full, and (b) the date on which the Borrower has repaid and/or converted all Borrowings with respect to which a Certificate has been delivered. Royal shall deliver a Certificate to the
Borrower which shall set forth the amount of the Additional Amount and the basis for its calculation which will, in the absence of manifest or demonstrable error, be conclusive evidence of the amount
of the Additional Amount. Royal will use its reasonable efforts to reduce the amount of the Additional Amount payable hereunder provided that Royal will have no obligation to expend its own funds, to
suffer any economic hardship or to take any action detrimental to its interest in connection therewith. 

3.20 Borrower's Option on Receipt of an Increased Costs Certificate  

        If Royal delivers the Certificate and the Borrower has paid the Additional Amount required to be paid by the Certificate in accordance with the Certificate, then,
with respect to Canadian Advances or U.S. Advances, at any time thereafter, and, with respect to Eurocurrency Advances or Bankers' Acceptances, on the maturity thereof, and in all cases, with two
Business Days' prior written irrevocable notice to Royal, the Borrower may: 

	(a)
	within
60 days, prepay in full without bonus or penalty all Borrowings, with respect to which a Certificate has been delivered, interest, fees and other amounts payable
hereunder in connection with such Borrowings, or

	(b)
	convert
those Borrowings with respect to which the Certificate has been delivered to another basis of Borrowing in accordance with the Agreement. 

28

 

3.21 Increased Costs Limitation  

        Royal agrees that: 

	(a)
	the
increased costs payable by the Borrower pursuant to §3.19 or §4.14 shall not include:

	(1)
	those
resulting from any law, regulation, treaty, or official directive or regulatory requirement or amendments thereto of which Royal had knowledge prior to the Closing Date,

	(2)
	any
tax, penalty or other charges payable by Royal due to its failure to pay or delay in paying any amount required to be paid by it referred to in §3.19(a) or
§4.14; 

	(b)
	it
will not charge the Borrower for any increased costs payable by it referred to in §3.19 or §4.14 if it is not at the same time passing similar costs on to
substantially all of its customers to whom Royal is, by agreement, entitled to pass on such costs;

	(c)
	it
will use all reasonable efforts to minimize amounts payable by the Borrower hereunder including all reasonable efforts to obtain refunds or credits. 

3.22 Eurocurrency Funds Not Available  

        Eurocurrency Advances shall be made hereunder to the extent that Eurocurrency Funds are readily and lawfully available to Royal on the dates upon which the
Borrower requests Eurocurrency Advances for the Eurocurrency Interest Periods and in the amounts requested. 

3.23 Payment of Compensation Amount  

        If the Borrower prepays, repays or converts a Eurocurrency Advance or if pursuant to §8.2 Royal converts a Eurocurrency Advance on a date earlier than
the Eurocurrency Maturity Date, the Borrower shall forthwith pay to Royal the Compensation Amount. 

3.24 Borrower's Right to Revolve the Credit Facility  

        In addition to the Borrower's right to cancel the available amount of the Credit Facility pursuant to §3.27 the Borrower may from time to time reduce
its Borrowings by making repayments to Royal which the Borrower may re-borrow subject to the terms of the Agreement, provided that: 

	(a)
	repayments
and re-borrowings of Canadian Advances, U.S. Advances or Eurocurrency Advances, as the case may be, shall be in the same minimum amounts and whole multiples as
prescribed for a Borrowing;

	(b)
	repayments
and re-borrowings of Eurocurrency Advances may only be made on the Eurocurrency Maturity Date of the Eurocurrency Advance being repaid unless the Borrower pays
the Compensation Amount as contemplated in §3.23;

	(c)
	the
Borrower gives to Royal the same prior irrevocable notice prior to a proposed repayment date that it is required to give pursuant to §3.11 in relation to a requested
Drawdown Date for taking a Canadian Advance or U.S. Advance, as the case may be. 

29

 

3.25 Repayment of Credit Facility  

        On the Maturity Date the Borrower shall repay to Royal the whole of the outstanding amount of the Credit Facility together with interest, fees and other amounts
due hereunder to such date including the Face Amounts of all Bankers' Acceptances and the amounts of all Guarantee Letters, Letters of Credit or Eurocurrency Advances issued pursuant to the Agreement
which have not matured or expired. 

3.26 Currency of All Payments  

        All repayments made by the Borrower pursuant to the Agreement shall be made in the currency of the advance being repaid. The Borrower may designate whether
repayments are to be applied to Canadian Advances, U.S. Advances, Eurocurrency Advances or Bankers' Acceptances. Repayments may be applied to a Bankers' Acceptance only to the extent that the
repayment is to be made on a date on which a Bankers' Acceptance becomes due and is in an amount equal to the amount of the Bankers' Acceptance then due. Repayments may be applied to Eurocurrency
Advances only: 

	(a)
	if
such repayment is made on the Eurocurrency Maturity Date for the Eurocurrency Advance repaid, or

	(b)
	if
such repayment is made on a date other than the Eurocurrency Maturity Date for the Eurocurrency Advance which is in effect being prepaid, if the Borrower pays the Compensation
Amount as provided in §3.23. 

3.27 Borrower's Right to Cancel Available Amount of Credit Facility  

        If the Borrower delivers to Royal three Business Days' prior irrevocable notice, the Borrower may, without penalty, cancel the available amount of the Credit
Facility or a portion thereof in minimum increments of $1,000,000 or any greater amount in whole multiples of $100,000. Such cancellation shall be effective on the later of the effective Business Day
set out in such notice and the third Business Day after such notice. No cancellation under this §3.27 shall be effective in respect of any portion of the Credit Facility which has been
advanced or utilized until such advance or utilization has been repaid or reduced and all interest and fees accruing thereon have been paid. Any such amount so cancelled shall permanently reduce the
available amount of the Credit Facility thereafter available for Borrowings by a like amount. 

30

   3.28 Standby Fees  

        Subject to §3.29, the Borrower shall pay to Royal a Standby Fee on the amount of the Credit Facility established pursuant to §3.1(a) not
utilized by the Borrower from and including the Closing Date to and including the Maturity Date. In determining the amount of the Credit Facility established pursuant to §3.1(a) not
utilized by the Borrower, advances of U.S. Funds shall be deemed to be the Equivalent Amount thereof in Canadian Funds. The Standby Fee shall be paid in Canadian Funds calculated on a daily basis and
shall be at the rates for Standby Fees set forth in Schedule A (computed on the basis of a year of 365 days), accruing from and including the Closing Date. Standby Fees, adjusted to
reflect any change in the Ratings for the immediately preceding fiscal quarter, shall be paid quarterly, in arrears, commencing on January 1, 2002 and thereafter on the first Business Day of
each ensuing third month until the Maturity Date on which the Credit Facility is repaid by the Borrower at which time the Borrower will pay to Royal all accrued and unpaid Standby Fees. 

3.29 Standby Fees Waived  

        If Royal terminates its obligations to make advances pursuant to §8.2(a) the Borrower shall cease to be obligated to pay Standby Fees from the
Business Day next following the effective date of such termination. 

3.30 Arrangement Fee  

        The Borrower shall pay to Royal an arrangement fee of $93,750 on the Closing Date. 

3.31 Documentary Credits  

        Royal may permit the Borrower to utilize the Credit Facility to obtain from it Letters of Credit and Guarantee Letters in Canadian Funds or U.S. Funds provided
that: 

	(a)
	if
a Letter of Credit or Guarantee Letter is issued by Royal for the account of the Borrower, the amount, determined in Canadian Funds, of the face amount of such Letter of Credit or
Guarantee Letter shall, for the purpose of calculating the available amount of the Credit Facility for use by the Borrower, be deemed to be a utilization by the Borrower of the Credit Facility for the
amount of and for the term of such Letter of Credit or Guarantee Letter; 
	(b)
	the
Borrower will pay to Royal its Documentary Credit Fee determined by reference to the pricing formula for Documentary Credits set forth in Schedule A determined as a
percentage per annum of the face amount determined in Canadian Funds, U.S. Funds, as the case may be, of Documentary Credits issued by Royal. Documentary Credit Fees shall be calculated on the basis
of the number of days a particular Documentary Credit will be outstanding and shall be paid by the Borrower in Canadian Funds on Documentary Credits denominated in Canadian Funds and in U.S. Funds on
Documentary Credits denominated in U.S. Funds. Documentary Credit Fees shall be paid in advance for the first three months or less and thereafter every three months or such lesser period; 
	(c)
	the
Borrower will execute and deliver to Royal or confirm its prior execution and delivery to Royal of Royal's standard form of application and agreement concerning Letters of Credit
and Guarantee Letters and the Borrower agrees to comply therewith and be bound thereby. If any of the terms of Royal's standard form of application and agreement conflict with the Agreement, the terms
of the Agreement shall prevail; 
	(d)
	all
other reasonable out-of-pocket disbursements and costs incurred by Royal in relation to the issuance of or payment pursuant to any Letter of Credit or
Guarantee Letter issued on behalf of the Borrower shall be repaid to Royal by advances under the Credit Facility if such funds are available thereunder and, if not available thereunder, shall be
repaid upon demand to the Borrower from Royal; 

31

 

	(e)
	Documentary
Credits shall be for maximum periods of one year (unless otherwise agreed by Royal) and shall not mature on a date which is beyond the Maturity Date. 

        Royal
shall pay on each Documentary Credit in accordance with its terms, whereupon the amount of such payment shall be deemed for all purposes to be a Canadian Advance or, in the case of
Documentary Credits denominated U.S. Funds, a U.S. Advance, as the case may be. The Borrower acknowledges to Royal that Royal has the sole discretion to refuse to make Documentary Credits available to
the Borrower. 

3.32 Evidence of Indebtedness  

        Royal shall open and maintain on its books at its Branch of Account, accounts and records evidencing Borrowings and other amounts owing by the Borrower to Royal
under the Agreement. Royal shall record therein the amount of each Borrowing made available by way of Canadian Advances, U.S. Advances or Eurocurrency Advances and each payment of principal and
interest on account thereof and shall record Documentary Credits and Bankers' Acceptances issued, accepted, purchased and cancelled by it and all other amounts becoming due to it under the Agreement
including interest, acceptance fees, Documentary Credit Fees, Standby Fees and other fees and amounts and all payments on account thereof. Such accounts and records maintained by Royal shall
constitute, in the absence of manifest or demonstrable error, prima facie evidence of the indebtedness of the Borrower to Royal pursuant to the
Agreement, the date Royal made each Borrowing available to the Borrower and the amounts the Borrower has paid from time to time on account of principal and interest on the Borrowings, acceptance fees,
Documentary Credit Fees, Standby Fees and other fees and amounts payable pursuant to the Agreement and all other amounts owing hereunder. 

3.33 Substitute Basis of Borrowing for Eurocurrency Advances  

        If Royal determines, acting reasonably, (which determination shall be final, conclusive, and binding upon the Borrower) that: 

	(a)
	adequate
and fair means do not exist for ascertaining the rate of interest on a Eurocurrency Advance; 
	(b)
	the
cost to Royal of making, funding, or maintaining Eurocurrency Advances does not accurately reflect the effective cost to it thereof or that the costs to it are increased or the
income receivable by it is reduced in respect of a Eurocurrency Advance; 
	(c)
	the
making or the rollover of any Eurocurrency Advance or a portion of any Eurocurrency Advance by it has become impracticable by reason of circumstances which materially and
adversely affect the London interbank market, or 
	(d)
	deposits
in U.S. dollars are not available to it in the London interbank market in sufficient amounts in the ordinary course of business during the applicable Eurocurrency Interest
Period for it to make, fund, or maintain the Eurocurrency Advance during such Eurocurrency Interest Period, 

then
Royal may promptly notify the Borrower in writing of such determination setting forth the basis of its determination and shall not thereafter be obligated to provide such Eurocurrency Advance.
The Borrower shall, within ten days of receipt of notice of Royal's determination, notify Royal as to the substitute basis of Borrowing available under the Agreement which it has selected for such
Eurocurrency Advance. If the Borrower has not so notified Royal, such Eurocurrency Advance shall
automatically be converted to a U.S. Advance for all purposes under the Agreement at the Eurocurrency Maturity Date or the Drawdown Date, as the case may be. 

32

 

3.34 Illegality for Eurocurrency Advances  

        If the introduction of or any change in applicable law, regulation, treaty, or official directive, or regulatory requirement (whether or not having the force of
law), or the interpretation or application thereof by any court or by any governmental or other authority or entity charged with the administration thereof, or if a judicial decision is rendered,
which now or hereafter makes it unlawful, or prohibited for Royal (as determined by Royal in its sole and absolute discretion, acting reasonably) to make, fund, or maintain any Eurocurrency Advance or
any portion thereof or to perform its obligations with respect to Eurocurrency Advances under the Agreement, Royal may, by written notice to the Borrower, suspend its obligations under the Agreement
with respect to such Eurocurrency Advance affected by such illegality or prohibition for the duration of the period of such illegality or prohibition and the Borrower shall repay such Eurocurrency
Advance forthwith (or at the end of such period as Royal in its sole and absolute discretion, acting reasonably, may determine), together with all accrued but unpaid interest, fees, costs and
Compensation Amount as may be applicable to the date of payment or the Borrower may convert, without novation, such Borrowings or a portion thereof together with accrued interest to the date of
conversion (or without such accrued interest if the Borrower elects to pay the same to Royal) into such other form or forms of Borrowings as the Borrower may request by not more than two Banking Days
notice to Royal. For the period from the date of such notice until the Borrower elects to convert to another form or forms of Borrowing, the Borrowing affected by such illegality or prohibition shall,
if not repaid, be converted into a U.S. Advance and thereafter Royal shall, if such illegality affects then outstanding Eurocurrency Advances, be obligated to extend its Eurocurrency Advances in such
other Borrowing Options as the Borrower may request. 

3.35 Exchange Rate Fluctuations  

        If, due to exchange rate fluctuations or for any other reason, Borrowings calculated by Royal on the first Business Day of each month are in excess of the
available amount of the Credit Facility, the Borrower shall, if so requested by Royal, within three Business Days of such request, provide to Royal full cash collateral in the amount of such excess or
otherwise repay a portion of Borrowings in an amount equal to or greater than such excess. The rate of exchange to determine the amount of such excess shall be the Spot Buying Rate. 

3.36 Determination of Available Amount of the Credit Facility  

        The available amount of the Credit Facility shall always be determined in Canadian Funds with Borrowings by way of U.S. Advances or Eurocurrency Advances
converted to Canadian Funds by determining the Equivalent Amount of any such U.S. Advances or Eurocurrency Advances. 

4.    BANKERS' ACCEPTANCES  

 4.1 Issuing Bankers' Acceptances  

        Subject to §4.3, and provided the Borrower has not been notified by Royal by at least one Business Day preceding the proposed date for issuance of a
Bankers' Acceptance that Royal, because general market conditions have caused it to become impracticable to accept Drafts, is no longer accepting Drafts in the ordinary course of its business, the
Borrower may utilize the Credit Facility by issuing Bankers' Acceptances. Each Bankers' Acceptance accepted by Royal shall be deemed to be a utilization of the Credit Facility for the term of such
Bankers' Acceptance in an amount equal to the Face Amount. 

4.2  Calculation of Borrowings  

        For the purposes of the Agreement, the Face Amount of a Bankers' Acceptance shall be used when calculations are made to determine the amount of Borrowings. 

33

 

4.3  Notice  

        The Borrower shall give Royal the following irrevocable notice prior to presenting its Drafts for acceptance: 

	(a)
	prior
to 9:00 a.m. local time at Vancouver, British Columbia on the Business Day of presentation for Bankers' Acceptances aggregating less than $10,000,000; 
	(b)
	prior
to 9:00 a.m. local time at Vancouver, British Columbia two Business Days immediately preceding the Business Day of presentation for Bankers' Acceptances aggregating
$10,000,000 or more. 

        The
Borrower shall also notify Royal by giving the same amount of prior notice of the method it proposes for payment of Bankers' Acceptances on maturity as set out in §4.9. 

4.4  Form of Undertaking  

        The Borrower shall execute and deliver to Royal its form of undertaking in respect of Bankers' Acceptances and, to the extent any such authorization or
undertaking is not inconsistent with the provisions of the Agreement, agrees to comply therewith. All Drafts presented by the Borrower for acceptance pursuant to §4.1 shall be drawn on
Royal's prescribed forms. 

4.5  Power of Attorney Respecting Bankers' Acceptances  

        In order to facilitate the issuance of Bankers' Acceptances, the Borrower authorizes Royal and for this purpose appoints Royal its lawful attorney, to complete,
sign and endorse Drafts issued in accordance with §4.1 on its behalf in handwritten or by facsimile or mechanical signature or otherwise and, once so completed, signed and endorsed, and
following acceptance of them as Bankers' Acceptances under the Agreement, to purchase, discount or negotiate such Bankers' Acceptances in accordance with the provisions of Part 4 of the
Agreement. Drafts so completed, signed, endorsed and negotiated on behalf of the Borrower by Royal shall bind the Borrower as fully and effectively as if so performed by an authorized officer of the
Borrower. 

4.6  Negotiation and Purchase of Drafts  

        Royal shall negotiate Drafts as prescribed by the DBNA and shall fund or discount Bankers' Acceptances and may purchase the same for its own account, by remitting
the determined amount of Discount Proceeds to the Borrower. The Discount Proceeds shall be remitted in immediately available funds to the Branch of Account on or before 10:00 a.m. local time
Vancouver, British Columbia on the applicable Drawdown Date. 

4.7  Issuance and Maturity  

        Each Bankers' Acceptance shall be issued and shall mature on a Business Day. 

4.8  Failure to Provide Notice  

        If the Borrower fails to provide to Royal the notice required by §4.3 or, having given notice of its intention to present a Draft for acceptance or to
convert from or to Bankers' Acceptances, fails to act in accordance with such notice, then Royal may, in its discretion, decline to accept Bankers' Acceptances presented without notice or not in
accordance with the notice provided. 

34

 

4.9  Payment to Borrower  

        Subject to the notice of method of payment of maturing Bankers' Acceptances referenced by §4.3 the Borrower shall provide payment for each Bankers'
Acceptance issued by it by payment to Royal of the Face Amount thereof by 10:00 a.m. local time at Vancouver, British Columbia on the maturity date of the Bankers' Acceptance at its Branch of
Account. If the Borrower fails to provide payment to Royal of an amount equal to the Face Amount of a Bankers' Acceptance on its maturity, then Royal shall pay the Face Amount of such Bankers'
Acceptance which payment shall be determined for all purposes to be a Canadian Advance. 

4.10 No Days of Grace  

        The Borrower shall not claim from Royal any days of grace for the payment at maturity of any Bankers' Acceptances. 

4.11 Acceptance Fees  

        As an acceptance fee for the acceptance by Royal of the Borrower's Drafts against the Credit Facility the Borrower shall pay in advance to Royal at or prior to
the time of such acceptance an acceptance fee at the applicable rate set forth in Schedule A. Acceptance fees shall be calculated in relation to the Face Amount of each Bankers' Acceptance and
on the basis of the number of days from and including the date of acceptance to and including the day immediately preceding the date of maturity. Acceptance fees payable from the Closing Date until
the first Interest and Fee Rate Adjustment Date shall be determined by reference to the BB/Ba2 or higher Rating. 

4.12 Calculation of Acceptance Fees  

        Acceptance fees shall be computed on the basis of a year of 365 days and shall be adjusted from time to time in accordance with §3.7. 

4.13 Change of Acceptance Fee During Term of Bankers' Acceptance  

        In the event of the acceptance by Royal of a Bankers' Acceptance before the date of a change of the rates for acceptance fees as set forth in Schedule A
which Bankers' Acceptance matures or becomes due and payable after such date, the acceptance fee shall be calculated by using the applicable rates for Bankers' Acceptances for the number of days the
Bankers' Acceptance is outstanding during the fee period. Adjustments and payments, if any, to the rates of acceptance fees resulting from the application of this §4.13 shall be made and
paid, as the case may be, in accordance with §3.7. 

4.14 Increased Costs  

        If at any time any reserve requirement in respect of Bankers' Acceptances is imposed upon Royal by any Canadian governmental regulatory authority which results in
an increase in the net cost to Royal of maintaining the Bankers' Acceptances outstanding and Royal has not claimed an Additional Amount from the Borrower pursuant to §3.19 in relation to
outstanding Bankers' Acceptances it shall have the right, subject to §3.21 to adjust the amount of the acceptance fee as necessary to compensate it for such cost increase, and the Borrower
shall pay to Royal the amount of any such adjustment upon receipt of written notice thereof from Royal, which notice shall include details of Royal's calculations of the effect of such reserve
requirements on its acceptance fees. The Borrower shall have the right to review the accuracy of such calculations. 

35

 

4.15 DBNA  

        The Borrower agrees with Royal that all Drafts will conform with the required characteristics of a "depository bill" as described in §4 of the DBNA.
It is the intention of Royal that the amended Drafts (if requested) shall be deposited with a "clearing house" as defined in the DBNA. Royal, in consultation with the Borrower, shall establish and
notify the Borrower of the procedures, consistent
with the terms of the Agreement and the DBNA as are reasonably necessary to accomplish Royal's said intention including amendments to Drafts, by: 

	(a)
	inserting
a phrase in the Drafts held by Royal to the effect that the Bankers' Acceptance is issued pursuant to the DBNA;

	(b)
	removing
any reference to authorization of a Bankers' Acceptance, and

	(c)
	removing
any reference to bearer. 

4.16 Maturity Date Restriction  

        No Bankers' Acceptance issued under the Credit Facility shall mature on a date which is beyond the current Maturity Date. 

5.    SECURITY FOR BORROWINGS  

 5.1 Security for Borrowings  

        As general and continuing security for the performance of all obligations of the Borrower hereunder and the prompt payment when due by the Borrower of Borrowings
under the Credit Facility and interest thereon and all other money for the time being and from time to time owing by the Borrower hereunder, including Standby Fees, Documentary Credit Fees and other
fees, default interest, fees for Swap Contracts, Swap Termination Values, fees and liabilities in respect of EFT Transfers and PDS Services, the Borrower shall, subject to the provisions of this
Agreement, execute and deliver, or cause to be executed and delivered to Royal the following: 

	(a)
	the
Security Agreement;

	(b)
	the
Section 427 Security;

	(c)
	the
Borrower Subsidiaries' Guarantees;

	(d)
	the
Borrower Subsidiaries' Security Agreements;

	(e)
	the
Subordination Agreement;

	(f)
	the
Borrower Guarantees; and

	(g)
	the
Guarantee. 

36

 

5.2  Conflict Between the Agreement and Royal's Security  

        Except for the choice of law provisions in the Guarantee and those provisions in Royal's Security describing the collateral over which security is taken or which
allow for dispositions of such collateral free from such security, which shall prevail, if there is any discrepancy or inconsistency between the terms of the Agreement and the terms of Royal's
Security the terms of the Agreement shall prevail. Royal acknowledges and agrees that, notwithstanding anything to the contrary herein or in any other document, Royal shall have no security interest
in or other interest in or any rights or remedies with respect to, and waives and releases any such security interest or other interest it might otherwise have in: 

	(a)
	any
of the assets of the Guarantor described in Schedule "B" to the Security Agreement or in Schedule "B" to either of the Borrower Subsidiaries' Security Agreements or in Schedule
"A" to the Assignment under the Section 427 Security ("Receivables Assets"); and

	(b)
	any
inventory (within the meaning of the term "Inventory" as used in such security agreements) or property (within the meaning of such term as used in the Section 427 Security)
and related property and assets the sale or transfer of which gave rise to any Receivables Assets. 

5.3  Restrictions on Demanding Payment  

        Notwithstanding that the Guarantee, the Borrower Subsidiaries' Guarantees and the Borrower Guarantees are expressed to be payable on demand, Royal will not demand
payment thereof except after an Event of Default. 

6.    CREDIT FACILITY CONDITIONS PRECEDENT  

 6.1 Conditions Precedent to Initial Borrowings  

        Royal shall not be obliged to make an initial advance of the Credit Facility or to accept an initial Draft presented by the Borrower pursuant to Section 4
of the Agreement, whichever shall first occur unless, on the Closing Date, all representations and warranties contained in Section 2 are true and correct, no Event of Default has occurred and
is continuing and upon each of the following conditions being satisfied: 

	(a)
	delivery
by the Borrower to Royal of the following:

	(1)
	duly
executed copies of the Agreement together with all documents which the Borrower has covenanted to deliver under the Agreement and any other documents or instruments as in the
opinion of counsel for Royal are reasonably necessary or appropriate to render effective the Agreement;

	(2)
	a
certificate of good standing for the Borrower from the Office of the British Columbia Registrar of Companies;

	(3)
	a
certified copy of a resolution or resolutions of the board of directors of the Borrower or a duly constituted and authorized committee of the board of directors of the Borrower
authorizing the Borrower to execute, deliver and perform its obligations under the Agreement and Royal's Security and the instruments, agreements, certificates, papers and other documents contemplated
herein and therein and the manner in which and by whom the foregoing documents are to be executed and delivered;

	(4)
	an
incumbency certificate of the Borrower setting forth the names of its directors and officers and specimen signatures of the individuals who sign the Agreement and Royal's 

37

 

Security
and the instruments, agreements, certificates, papers and other documents provided for or contemplated therein; 

	(5)
	satisfactory
evidence concerning those policies of insurance of the Borrower insuring Inventory of the Borrower and its Material Canadian Subsidiaries and Royal shall be satisfied as
to the amounts, terms and coverage provided thereby;

	(6)
	a
certificate signed by the Chief Financial Officer or other responsible person certifying:

	(A)
	that
the Guarantor is not in default under the Guarantor Credit Agreement;

	(B)
	there
is no material litigation pending or threatened against the Borrower other than as disclosed in the September 30, 2001 quarterly report;

	(C)
	there
has been no material adverse change in the financial conditions and operations of Guarantor or any of its Subsidiaries since the date of the Guarantor's most recent financial
statements referred to in §2.15 of the Agreement; 

	(7)
	a
favourable opinion of counsel for the Borrower (in form and content satisfactory to the solicitors for Royal) to the effect that:

	(A)
	the
Borrower and each of the Borrower Subsidiaries validly exists as a company under the British Columbia Company Act and is, according
to the records of the office of the Registrar of Companies for the Province of British Columbia, in good standing with respect to the filing of its annual reports;

	(B)
	the
Borrower and each of the Borrower Subsidiaries have the corporate power and capacity to borrow money and grant security therefore in the manner contemplated by the Agreement and
Royal's Security and to enter into, observe and perform the terms and obligations on its part to be observed and performed under the Agreement and Royal's Security;

	(C)
	the
Borrower has duly authorized, executed and delivered the Agreement and that Royal's Security to which it is a party and each of the Borrower Subsidiaries have duly authorized,
executed and delivered that Royal's Security to which it is a party, the Agreement and such Royal's Security constitute valid, binding and enforceable obligations of the Borrower and the Borrower
Subsidiaries (as applicable) in accordance with its terms, save as enforcement may be limited by:

	(i)
	applicable
bankruptcy, insolvency, moratorium or reorganization or other laws affecting creditors' rights generally;

	(ii)
	the
unavailability of equitable remedies such as the remedy of specific performance and injunction in any particular instance;

	(iii)
	the
inability of the Courts of Canada to give judgement for payment in foreign currencies; and

	(iv)
	such
other qualifications and limitations as counsel for Royal may accept acting reasonably; 

	(D)
	so
far as they are aware in their capacity as counsel for the Borrower in respect of this transaction, there are no actions, proceedings or investigations pending or threatened
against the Borrower which question the validity of the Agreement or Royal's Security or the validity of any act to be taken pursuant thereto, 

and,
in addition, dealing with such other matters incidental to the transactions contemplated by the Agreement as Royal may reasonably and properly require; 

38

 

	(8)
	an
opinion of Messrs. Bull, Housser & Tupper, counsel for Royal (in form and content satisfactory to Royal but subject to the usual assumptions and qualifications) to
the effect that the Agreement and Royal's Security have been executed by all parties thereto and delivered to Royal and that such items of Royal's Security which require registration or filing have
been registered or filed in all places and offices in British Columbia and elsewhere (as may be determined by counsel for Royal) where such registration or filing is necessary; 

	(b)
	delivery
by the Guarantor to Royal of the following:

	(1)
	the
duly executed Guarantee and Subordination Agreement;

	(2)
	a
certificate of good standing for the Guarantor;

	(3)
	a
certified copy of a resolution or resolutions of the Guarantor's board of directors or a duly constituted and authorized committee of the Guarantor's board of directors authorizing
the Guarantor to execute, deliver and perform its obligations under the Agreement and the instruments, agreements, certificates, papers and other documents contemplated herein, including the Guarantee
and the Subordination Agreement and the manner in which and by whom the foregoing documents are to be executed and delivered;

	(4)
	an
incumbency certificate of the Guarantor setting forth the names of its directors and officers and specimen signatures of the individuals who sign the Agreement, the Guarantee, the
Subordination Agreement and the other instruments, agreements, certificates, papers and other documents provided for or contemplated therein;

	(5)
	a
favourable opinion of counsel for the Guarantor (in form and content satisfactory to the solicitors for Royal) substantially to the effect that:

	(A)
	the
Guarantor is a corporation duly organized and existing under the laws of the State of Delaware, U.S.A., and is in good standing in that jurisdiction;

	(B)
	the
Guarantor has all requisite corporate power and capacity to guarantee the obligations of the Borrower, to enter into, observe and perform its obligations under the Agreement, the
Guarantee and the Subordination Agreement;

	(C)
	the
Guarantor has taken all necessary corporate action to authorize the execution, delivery and performance of its obligations under the Agreement, the Guarantee and the Subordination
Agreement;

	(D)
	each
of the Agreement, the Guarantee and the Subordination Agreement has been duly authorized, executed and delivered by the Guarantor and constitutes legal, valid and binding
obligations of the
Guarantor, enforceable against the Guarantor in accordance with its respective terms, save as enforceability may be limited by:

	(i)
	applicable
bankruptcy, insolvency, fraudulent transfer, moratorium or reorganization or other similar laws affecting creditors' rights generally, and

	(ii)
	general
principles of equity and the unavailability of the remedies of specific performance and injunction in any particular instance; 

	(E)
	so
far as they are aware in their capacity as counsel to the Guarantor, there is no action, suit, proceeding or investigation pending or threatened against the Guarantor which
questions the validity of the Agreement, the Guarantee or the Subordination Agreement or the validity of any act to be taken pursuant thereto; 

39

 

	(F)
	so
far as they are aware in their capacity as counsel to the Guarantor, neither the execution and delivery of the Agreement, the Guarantee or the Subordination Agreement by the
Guarantor nor the fulfilment or compliance with the terms thereof:

	(i)
	contravenes
or results in a breach of any of the terms, conditions or provisions of the Charter of the Guarantor, or

	(ii)
	contravenes
or results in any breach of or constitutes a default under any material agreement to which the Guarantor is a party or by which it is
bound; 

	(c)
	the
Borrower shall have paid all fees and expenses then due to Royal including the arrangement fee due under §3.30 and any reasonable legal fees invoiced prior to the
Closing Date;

	(d)
	Royal
shall be satisfied with the arrangement to effect the repayment in full of all indebtedness of the Borrower under the 1997 LP Canada Credit Agreement and the termination of that
agreement prior to or concurrently with the closing of the transactions contemplated under the Agreement. 

6.2  Conditions Precedent to Subsequent Borrowings  

        It shall be a condition of each advance, renewal or conversion that the representations and warranties contained in Section 2 hereof shall be true on and
as of the date of each advance, renewal or conversion and that Royal is satisfied that there has been no material adverse change in the financial condition or operation of the Borrower. The Borrower
will, upon request of Royal, deliver to Royal a certificate or certificates of an officer on behalf of the Borrower to that effect. 

40

   7.    COVENANTS OF THE BORROWER AND THE GUARANTOR  

 7.1 Borrower's Covenants  

        The Borrower covenants and agrees with Royal as follows: 

 Positive Covenants of Borrower  

	(a)
	that
it will duly and punctually pay or cause to be paid all amounts required to be paid by it to Royal pursuant to the Agreement, including principal, interest, default interest,
Documentary Credit Fees, fees for Bankers' Acceptances, Swap Termination Values, Standby Fees, fees for Swap Contracts and any other fees and amounts, on the day, at the place, in the Currencies and
in the manner set forth herein;

	(b)
	that
it will duly observe and perform or cause to be observed and performed each and all of the covenants and agreements required by it to be observed and performed as set forth in
the Agreement and Royal's Security;

	(c)
	that
it will maintain Insurance Coverage at all times and will forthwith notify Royal upon the happening of any loss which could reasonably be expected to have a material adverse
effect on the financial condition or operations of the Borrower and if Insurance Coverage is provided by third party insurers, it shall duly and punctually pay all premiums and other sums of money for
maintaining such insurance;

	(d)
	that
it will and it will cause each of its Subsidiaries to file all material tax returns including income tax returns, corporation capital tax returns and other tax filings in all
required jurisdictions;

	(e)
	that
it will and it will cause each of its Subsidiaries to pay all material taxes (except taxes in dispute which are being contested in good faith) including interest and penalties
and will pay or make adequate reserves for the ultimate payment of any tax payment which is being contested;

	(f)
	that
it will and it will cause each of its Subsidiaries to actively and diligently contest or cause to be contested in good faith, by appropriate and timely proceedings, or effect a
timely and provident settlement of any action, suit, litigation or other proceeding the result of which could reasonably be expected to have a material adverse effect on the financial condition or
operations of the Borrower;

	(g)
	that
it will and it will cause each of its Subsidiaries to effect a timely and provident settlement of or bring an application to stay any writ of execution, attachment or similar
process issued or levied against all, or a substantial portion of, its property or the property of any of its Subsidiaries in connection with any judgement against it or any of its Subsidiaries in an
amount which materially adversely affects the financial condition or operations of the Borrower;

	(h)
	that
it will and it will cause each of its Subsidiaries to observe and comply with the provisions of all applicable laws, regulations, bylaws, ordinances and orders of any
Governmental Body dealing in relation to its business or the business of any of its Subsidiaries with pollution of the environment, toxic and hazardous materials and waste and other environmental
hazards, unless the failure to so observe and comply would not, in the judgement of the Borrower, reasonably exercised, materially adversely affect the ability of the Borrower to meet its obligations
under the Agreement; 

41

 

	(i)
	that
it will, as soon as practical after it becomes aware thereof, provide Royal with prompt notice of:

	(1)
	any
spills of Contaminants which are required to be reported to any Governmental Body, and

	(2)
	of
any investigations, control orders, stop orders, injunctions, prosecutions or lawsuits under any federal, provincial, municipal or other laws relating to pollution of the
environment, the handling of toxic or hazardous materials and waste or any other environmental or public health and safety laws, 

and
which, in either such case, would, in the judgement of the Borrower, reasonably exercised, have a material adverse effect on the business or financial condition of the Borrower or any of its
Subsidiaries and which would materially adversely affect the ability of the Borrower to meet its obligations under the Agreement; 

	(j)
	that
it will cause its Chief Financial Officer, such other senior officer as may be appropriate or its auditor, to meet with Royal to discuss and explain, as the case may be, any of
its affairs, finances and accounts and to provide such other information pertaining to its business and operations together with such reports and documents as Royal may reasonably require;

	(k)
	that
it will permit representatives and independent contractors of Royal to visit and inspect any of its or its Subsidiaries' properties, to examine their respective corporate,
financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their corporate affairs, finances and accounts with directors, officers, and independent chartered
accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower
except that, when an Event of Default exists, Royal may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice;

	(l)
	that
it will maintain and it will cause each of its Subsidiaries to maintain in full force and effect all material leases, licences, permits, consents and regulatory approvals
necessary for the due carrying on of their respective businesses;

	(m)
	that
it will maintain and it will cause each of its Subsidiaries to maintain their respective corporate existences as validly subsisting corporations;

	(n)
	that
it will give to Royal prompt notice of any Event of Default or any event that with notice or lapse of time would be an Event of Default;

	(o)
	that
it will use Borrowings solely for the purposes set forth in §3.1 and for no other purpose; 

 Negative Covenants of the Borrower  

	(p)
	that,
without the prior written consent of Royal, it will not, and it will cause each of its Subsidiaries not to grant, create, assume, suffer or permit any Lien on any of its assets
or operations except for Permitted Encumbrances;

	(q)
	that,
without the prior written consent of Royal, it will not, nor will it permit any Subsidiary to merge, amalgamate, enter into any corporate reorganization or otherwise modify its
corporate structure in any way which would materially adversely affect its asset base or consolidated cash flow or impair the ability of the Borrower to observe and perform its obligations under the
Agreement; 

42

 

	(r)
	that,
without the prior written consent of Royal, it will not and it will cause each of its Subsidiaries not to, sell (including sale and lease-back transactions),
alienate, lease or otherwise dispose of or part with possession of any of its property or assets except for:

	(1)
	dispositions
of inventory or current assets in the ordinary course of business and on commercially reasonable terms it being acknowledged that sales and transfers of inventory and
related property and assets to the Guarantor are in the ordinary course of business;

	(2)
	dispositions
of individual items of property or assets in any fiscal year having an aggregate value of $5,000,000 or less based on the greater of net book value or the value
determined by the value of the sale or disposition, or

	(3)
	dispositions
of assets as approved by Royal; 

	(s)
	that,
without the prior written consent of Royal, it will not nor will it permit any Borrower Subsidiary to borrow money or otherwise incur Indebtedness, except for:

	(1)
	normal
day-to-day trade credit agreements;

	(2)
	Indebtedness
between any of the Borrower, the Guarantor and any Canadian Subsidiary of the Guarantor;

	(3)
	borrowings
pursuant to the Agreement;

	(4)
	normal
indebtedness incurred in the ordinary course of business in respect of amounts due or accruing due to Governmental Bodies;

	(5)
	Purchase
Money Obligations;

	(6)
	Capital
Leases;

	(7)
	Indebtedness
under the notes issued under the Forex Indenture;

	(8)
	Indebtedness
owing to Société en Commandite Sodexfor pursuant to an agreement of purchase and sale dated April 14, 1999; and

	(9)
	Indebtedness
referred to in Schedule G; 

	(t)
	that,
without the prior written consent of Royal, it will not and it will not permit any of its Subsidiaries to make or permit the existence of any Contingent Obligation (other than
endorsements in the ordinary course of business of negotiable instruments for deposit or collection) except for Permitted Encumbrances and Permitted Guarantees;

	(u)
	that
it will not allow the aggregate of the principal amount of Borrowings under the credit facility established pursuant to §3.1(a) to exceed at any time the Borrowing
Base set out in the then current Borrowing Base Report; 

 Reporting Covenants of Borrower  

	(v)
	that
it will and it will cause each of its Subsidiaries to at all times keep or cause to be kept proper books of account and that it will furnish to Royal within 90 days after
the close of each fiscal year Sufficient Copies of its annual review engagement consolidated financial statements;

	(w)
	except
for the year end fiscal quarter, it will furnish to Royal within 45 days of the close of each fiscal quarter Sufficient Copies of its quarterly unaudited consolidated
financial statements signed by its Chief Financial Officer;

	(x)
	that
it will provide to Royal on or prior to the date reasonably stipulated by Royal Sufficient Copies of financial and operating statements, budgets, business and capex plans
together with such other information, reports and documents as Royal may reasonably request; 

43

 

	(y)
	that
the Borrower will deliver to Royal as soon as practical and no later than 30 days following each ensuing fiscal quarter-end:

	(1)
	a
Borrowing Base Report in substantially the form of Schedule E and certified as provided therein by its Chief Financial Officer setting out the calculations of Eligible
Inventory, Good Accounts Receivable (Cdn$), Good Accounts Receivable (US$) and Potential Preferred Claims as at the last day of the immediately preceding month-end, and certifying the
accuracy thereof;

	(2)
	a
calculation of the Borrowing Base; and

	(3)
	a
calculation of the Current Ratio; 

	(z)
	that,
except for the year-end fiscal quarter, within 45 days of the close of each fiscal quarter and within 120 days of the close of each fiscal year, it
will deliver to Royal a certificate signed by its Chief Financial Officer in substantially the form of Schedule C setting forth the calculation of the Current Ratio together with particulars of
all Permitted Guarantees and Purchase Money Obligations incurred or acquired during the relevant fiscal quarter and certifying the accuracy of the calculations thereof and that the Borrower and each
of its Subsidiaries is not in default under any financial arrangement in any way which materially adversely affects the financial condition or operations of the Borrower or if the Borrower or any of
its Subsidiaries is in such default, specifying the defaults; 

 Financial Covenants of Borrower  

	(aa)
	the
Borrower will maintain at all times a Current Ratio of not less than 1.15 to 1.0. 

7.2  Guarantor's Covenants  

        The Guarantor covenants with Royal as follows: 

 Positive Covenants of Guarantor  

	(a)
	that
it will duly observe and perform or cause to be observed and performed each and all of the covenants and agreements required by it to be performed and observed as set forth in
the Agreement and the Guarantee;

	(b)
	that
it will at all times maintain such insurance as is usually maintained by others in the business of the same nature as the business of the Guarantor and each Subsidiary, as the
case may be, or maintain a program of self-insurance, with reserves, in accordance with sound business practices;

	(c)
	that
it will, maintain its web site and post in a timely manner copies of all public documents filed with the U.S. Securities and Exchange Commission (with the exception of Forms
S-8);

	(d)
	that
it will give Royal at least 15 days' notice of its intention to transfer, mortgage, pledge, charge or otherwise encumber or grant a security interest in any shares of the
Borrower in which it has a legal or beneficial interest;

	(e)
	it
will provide Royal with copies of all certificates, notices and other information it is required to deliver to the administrative agent pursuant to §6.02 and
§6.03 of the Guarantor Credit Facility; 

44

 

 Negative Covenants of Guarantor  

	(f)
	that,
except for the Permitted Securitization, Liens permitted by the Guarantor Credit Agreement and Liens to finance the normal day-to-day operations of the
Guarantor, it will not, without the consent in writing of Royal, sell, lease, sell and lease back, exchange, transfer or otherwise dispose of:

	(1)
	in
a transaction or a series of transactions, all or substantially all its property and assets and the property and assets of its Subsidiaries on a consolidated basis;

	(2)
	during
any calendar year, any of its fixed or capital assets with a fair market value exceeding on a cumulative basis for such year for the Guarantor and its Subsidiaries 10% of the
total consolidated assets of the Guarantor (determined as of the immediately preceding December 31), or

	(3)
	any
of its material assets except for full, fair and reasonable consideration; 

	(g)
	that
it will not, without the consent in writing of Royal, merge or consolidate with any other Person or liquidate or dissolve except for:

	(1)
	mergers
or consolidations with any other Person if the Guarantor (or the resulting corporation in a consolidation) will be the surviving corporation and the Guarantor (or such
resulting corporation) will not be in default under any of the terms of the Guarantor Credit Agreement immediately after the merger or consolidation, and

	(2)
	the
merger with or dissolution into the Guarantor or with or into any other Subsidiary by any Subsidiary; 

 Reporting Covenants of Guarantor  

	(h)
	that
it will promptly give notice to Royal of:

	(1)
	all
litigation when the aggregate amount of claims pending is US$50,000,000 or more and any litigation which involves a claim of US$15,000,000 or more and the Guarantor or a
Subsidiary is a defendant;

	(2)
	any
dispute which may exist between the Guarantor or any Subsidiary and any governmental regulatory body or any threatened action by any governmental agency to acquire or condemn any
of the properties of the Guarantor or any Subsidiary where, in either case, the amount involved is US$30,000,000 or more;

	(3)
	any
strike involving 1,000 or more employees of the Guarantor or any Subsidiary which has continued for 30 days;

	(4)
	any
proceeding or order before any court or administrative body requiring the Guarantor or any Subsidiary to comply with any statute or regulation regarding protection of the
environment if such compliance would require expenditures in the amount of US$50,000,000 or more or if such violation involves the possibility of the imposition of a fine of US$10,000,000 or more;

	(5)
	the
occurrence of any of the following events affecting the Guarantor or any ERISA Affiliate (but in no event more than 10 days after such event), and deliver to Royal a copy
of any notice with respect to such event that is filed with a governmental authority and any notice delivered by a governmental authority to the Guarantor or any ERISA Affiliate with respect to such
event:

	(A)
	an
ERISA Event, 

45

 

	(B)
	a
material increase in the Unfunded Pension Liability of any Plan,

	(C)
	the
adoption of, or the commencement of contributions to, any Plan subject to Section 412 of the Code by the Guarantor or any ERISA Affiliate, or

	(D)
	the
adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability, and 

	(6)
	any
Default or Event of Default (both as defined in the Guarantor Credit Agreement) known to the Guarantor. 

Each
notice under this Section shall be accompanied by a written statement by the Chief Financial Officer of the Guarantor setting forth details of the occurrence referred to therein and stating what
action the Guarantor or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under §7.2(h)(6) shall describe with particularity any and all clauses
or provisions of the Guarantor Credit Agreement that have been breached or violated; 

	(i)
	that
it will at all times maintain its corporate existence and will carry on and conduct its business in a proper and efficient manner and it will and will cause each of its
Subsidiaries to at all times keep or cause to be kept proper books of account and that it will furnish to Royal at the Branch of Account within 90 days after the close of each fiscal year
Sufficient Copies of its annual consolidated audited financial statements reported on by its auditor and accompanied by their signed report which shall contain no material qualifications as to the
scope of their examination except as to the furnishing of information to them, and, except for the year end fiscal quarter, within 45 days of the close of each fiscal quarter Sufficient Copies
of its quarterly consolidated unaudited financial statements including a consolidated summary balance sheet, a consolidated summary statement of income, a consolidated statement of cash flows and a
consolidated statement of stockholders' equity, signed by its Chief Financial Officer;

	(j)
	that
it will, contemporaneously with delivery to the agent pursuant to the Guarantor Credit Agreement, deliver Sufficient Copies of the Compliance Certificate to Royal;

	(k)
	that
it will promptly after the same are available, provide Sufficient Copies of each annual report, proxy or financial statement or other report or communication sent to the
stockholders of the Guarantor, and copies of all annual, regular, periodic and special reports and registration statements which the Guarantor filed with the Securities and Exchange Commission under
Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to Royal pursuant to this Agreement;

	(l)
	that,
at least 15 days before each fiscal year end, it will provide Sufficient Copies of its Business Plan to Royal;

	(m)
	that,
except for the year-end fiscal quarter, within 45 days of the close of each fiscal quarter and within 90 days of the close of each fiscal year, it will
deliver to Royal a certificate signed by its Chief
Financial Officer in substantially the form attached as Schedule C setting forth the calculations of the amounts and ratios comprised in the financial covenants set out in §7.2(n),
(o), (p) and (q); 

 Financial Covenants of Guarantor  

	(n)
	it
will not permit Shareholders' Equity as of the end of any fiscal quarter of the Guarantor to be less than the sum of (a) US$1,003,850,000, and (b) an amount, not less
than 0, equal to 50% of the cumulative Consolidated Net Income earned in all fiscal quarters after the fiscal 

46

 

quarter
ended June 30, 2001, and (c) an amount equal to 100% of the aggregate increases in Shareholders' Equity after the closing date of the Guarantor Credit Agreement by reason of the
issuance and sale of capital stock of the Guarantor (including upon any conversion of debt securities of the Guarantor into such capital stock); 

	(o)
	it
will not permit the Debt to Capitalization Ratio measured as of the end of each fiscal quarter ending on the dates listed below, to exceed the percentage set forth opposite such
dates: 

	Fiscal Quarter Ending
	 	Maximum Debt to

Capitalization Ratio
	 
	September 30, 2001	 	52.5	%
	December 31, 2001	 	52.5	%
	March 31, 2002	 	52.5	%
	June 30, 2002	 	52.5	%
	September 30, 2002	 	52.5	%
	December 31, 2002	 	50.0	%
	March 31, 2003	 	50.0	%
	June 30, 2003	 	50.0	%
	September 30, 2003	 	50.0	%
	December 31, 2003 and thereafter	 	47.5	%

	(p)
	it
will not permit Consolidated EBITDDA, for any period of four consecutive quarters ending on a date listed below, to be less than the ratio set forth opposite such date: 

	Fiscal Quarters Ending
	 	Minimum EBITDDA

	December 31, 2001	 	$	50,000,000
	March 31, 2002	 	$	60,000,000
	June 30, 2002	 	$	40,000,000
	September 30, 2002	 	$	70,000,000
	December 31, 2002	 	$	120,000,000
	March 31, 2003	 	$	198,200,000
	June 30, 2003	 	$	269,300,000
	September 30, 2003	 	$	302,500,000
	December 31, 2003 and thereafter	 	$	330,000,000

	(q)
	it
will not permit the Collateral Coverage Ratio, as measured as of the last day of any fiscal quarter, to be less than 2.0 to 1.0. 

7.3  Environmental Law  

        Nothing in the Agreement shall abridge or affect the rights of Royal in respect of the Borrower pursuant to any Environmental Law. 

8.    EVENTS OF DEFAULT  

 8.1 Definition of Event of Default  

        The occurrence of any one or more of the following events constitutes an Event of Default hereunder: 

	(a)
	if
the Borrower makes default in any payment of principal, interest, acceptance fees, Documentary Credit Fees, default interest, Standby Fees, Swap Termination Values, fees for Swap
Contracts, any other fees or other like amounts when the same becomes due under the 

47

 

Agreement
and such default shall have continued for a period of five Business Days after notice has been given by Royal to the Borrower; 

	(b)
	if
the Borrower makes default in any payment of a Compensation Amount, Additional Amount or like payment when the same becomes due under the Agreement and such default shall have
continued for a period of ten Business Days after notice has been given by Royal to the Borrower;

	(c)
	if
the Borrower makes, suffers or permits a material default in observing or performing any other covenant or condition of the Agreement, any Swap Contract or any other material
agreement with Royal and such default shall have continued for a period of five Business Days after notice in writing has been given by Royal to the Borrower specifying such default;

	(d)
	if
there is a default by the Borrower (other than a default under the Agreement) which results in the acceleration of payment by the Borrower or any of its Material Canadian
Subsidiaries of obligations for borrowed money in excess of $5,000,000;

	(e)
	if
any representation, warranty or statement made by the Borrower, the Borrower Subsidiaries in the Borrower Subsidiaries' Guarantees and the Borrower Subsidiaries' Security
Agreements or the
Guarantor herein or in the Guarantee or in any certificate pursuant to the Agreement or the Guarantee shall, in Royal's opinion, prove to have been materially incorrect on the date as of which it was
made in any respect materially adverse to Royal and Royal shall have so notified the Borrower;

	(f)
	if
an order be made or an effective resolution be passed for the winding-up of the Borrower or, without the prior written consent of Royal, any of its Material Canadian
Subsidiaries or if the Borrower or any of its Subsidiaries on its own behalf shall make an assignment for the benefit of its creditors or if the Borrower or any of its Subsidiaries shall be declared
bankrupt or make an authorized assignment or if a custodian or receiver be appointed under the Bankruptcy and Insolvency Act or if a compromise or
arrangement (including a compromise, arrangement, reorganization or other like restructuring commenced by the Borrower which adversely affects its creditors under any Federal or Provincial statute
including the Companies' Creditors Arrangement Act or the British Columbia Company Act) is proposed by
the Borrower or any of its Subsidiaries to creditors generally or any significant class of creditors, or if a receiver, receiver-manager or other officer with like powers shall be appointed, or if an
encumbrancer shall take possession of the property of the Borrower or any of its Subsidiaries or any part thereof, which is, in the reasonable opinion of Royal, material to the business of the
Borrower and its ability to perform its obligations under the Agreement or if a distress or execution or any similar process be levied or enforced against a substantial or essential part of such
property and remain unsatisfied for a period of thirty days, unless such distress, execution or similar process is in good faith disputed by the Borrower or any such Subsidiary and, if so required by
Royal, the Borrower or any such Subsidiary provides adequate security to pay in full the amount claimed;

	(g)
	if
the Agreement or any of Royal's Security shall at any time cease to be in full force and effect (other than by expiration or termination in accordance with its terms for reasons
other than the default of the Borrower) or if a Court of competent jurisdiction shall declare the Agreement to be null and void or if the Borrower shall contest the validity or enforceability thereof
or if the Borrower shall deny that it has any further liability or obligation hereunder or if any of Royal's Security for any reason ceases, other than in accordance with its terms, to constitute
valid and subsisting security upon any material part of the property and assets of the Borrower or its Subsidiaries as described therein; 

48

  

	(h)
	if
a writ of execution, attachment or similar process has been issued or levied against all, or a substantial portion of, the property of the Borrower or any of its Subsidiaries in
connection with any judgement against the Borrower or any of its Subsidiaries in any amount in excess of $1,000,000 which materially affects the property of the Borrower or any of its Subsidiaries,
and no application has been brought to stay such writ of execution, attachment or similar process which application has, in the reasonable opinion of Royal, a reasonable chance of success;

	(i)
	if
it shall become illegal or unlawful for the Borrower or any of its Subsidiaries to carry on its business or to perform its obligations under the Agreement;

	(j)
	if
the Borrower or any of its Subsidiaries (except for Louisiana-Pacific Acquisition, Inc.) suspends or ceases or threatens to suspend or cease business;

	(k)
	if
the Borrower or any of its Subsidiaries shall sell or otherwise dispose of or threaten to sell or otherwise dispose of, all or a substantial part of its undertaking, property and
assets, whether in one transaction or in a series of related transactions;

	(l)
	if
there is an Event of Default (as defined in the Guarantor Credit Agreement). 

8.2  Remedies  

        Upon the occurrence of any Event of Default and at any time thereafter, provided the Event of Default has not been waived by Royal or the Borrower has not
theretofore remedied all outstanding Events of Default within the prescribed time period or such longer period of time as Royal may permit, Royal may, by notice to the Borrower: 

	(a)
	terminate
its obligations hereunder to make any further advances under the Credit Facility, accept Drafts of the Borrower, enter into Swap Contracts or issue Documentary Credits;

	(b)
	declare
Borrowings under the Credit Facility, interest, Standby Fees, Documentary Credits, fees, costs including Swap Termination Values and any other moneys owing to Royal by the
Borrower under the Agreement, including amounts owing or liabilities in respect of Documentary Credits, Bankers' Acceptances, EFT Transfers and PDS Services which have not yet matured, to be
immediately due and payable on the date which is fifteen Business Days after Royal delivers such notice to the Borrower, or that earlier date on or after delivery of such notice when Royal determines
in its reasonable discretion that the business or operations of the Borrower may be materially prejudiced, endangered or adversely affected ("Acceleration Date") and such moneys and liabilities shall
forthwith become due and payable on the Acceleration Date without presentment, demand, protest or other notice of any kind to the Borrower, all of which are hereby expressly waived;

	(c)
	enforce
all rights and remedies granted under Royal's Security provided that any enforcement shall not be commenced until after the Acceleration Date;

	(d)
	convert
any portion of the Credit Facility denominated in Eurocurrency Funds together with unpaid interest thereon, into U.S. Funds or Canadian Funds;

	(e)
	convert
U.S. Advances to Canadian Funds;

	(f)
	terminate
any Swap Contract in accordance with its terms. 

        The
Borrower expressly acknowledges and agrees that the date which is fifteen Business Days after Royal delivers such notice to the Borrower affords and will afford a reasonable period
of time to make payment of the outstanding balance advanced under the Credit Facility, interest, Standby Fees, Documentary Credits, Swap Termination Values, outstandings in respect of EFT Transfers
and PDS Services, fees, costs and other moneys owing by the Borrower under the Agreement. Royal acknowledges and agrees that interest, if any, earned or received by it as a result of the redeployment 

49

 

or other application of moneys paid by the Borrower pursuant to a demand made under §8.2(b) in respect of Bankers' Acceptances or Documentary Credits which have not yet matured shall be
credited or otherwise applied for the benefit of the Borrower. 

        If
there are Documentary Credits or Bankers' Acceptances outstanding on the Acceleration Date the Borrower shall at such time deposit (at interest to be credited to the Borrower at
Royal's rate for term deposits appropriate to the currency, amount and terms of any such Documentary Credits or Bankers' Acceptances, as the case may be) in one or more cash collateral account to be
opened and maintained by Royal amounts in Canadian Funds, U.S. Funds or both, as the case may be, equal to the aggregate of the Face Amounts of all such unmatured Bankers' Acceptances and the amount
of the Documentary Credits, as the case may be. Amounts held in such cash collateral accounts shall be applied by Royal to the payment of maturing Bankers' Acceptances and payment obligations, if any,
pursuant to
Documentary Credits, as the case may be, and any balances in such accounts shall be applied to repay other obligations of the Borrower in accordance with §8.5 of the Agreement. 

8.3  Remedies Cumulative  

        No remedy conferred on Royal under the Agreement is intended to be exclusive. Each and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or equity or by statute or otherwise. The exercise or commencement of exercise by Royal of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Royal of any or all other such remedies. 

8.4  Waivers  

        Royal may, by written instrument at any time and from time to time waive any breach by either the Borrower or the Guarantor of any of the covenants or Events of
Default herein. No course of dealing between either the Borrower or the Guarantor and Royal nor any delay in exercising any rights hereunder shall operate as a waiver of any rights of Royal. 

8.5  Application of Payments Following Acceleration  

        After the Acceleration Date, Royal may apply any moneys received by it towards repayment of Borrowings under the Credit Facility as it deems appropriate. Royal
agrees to use reasonable efforts to apply moneys received by it to first repay Borrowings under the Borrowing Options which do not have redeployment costs associated with payment prior to the maturity
dates of such Borrowings. 

8.6  Royal May Perform Covenants  

        If the Borrower shall fail to perform any of its obligations under any covenant contained in the Agreement Royal may, after an Event of Default, upon five
Business Days' prior notice to the Borrower, perform any such covenant capable of being performed by it and, if any such covenant requires the payment or expenditure of money, it may make such payment
or expenditure with its own funds. All amounts so paid by Royal hereunder shall be repaid by the Borrower and shall bear interest at the rates set forth in §3.6 from and including the date
paid by Royal hereunder to but excluding the date such amounts are repaid in full by the Borrower. 

9.    GENERAL  

9.1  Waiver  

        No failure or delay on the part of Royal in exercising any right, power or privilege hereunder shall impair such right, power or privilege or operate as a waiver
thereof nor shall any single or partial 

50

 

exercise of such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege hereunder. 

9.2  Effect of Amendment, Modification or Waiver  

        No amendment, modification or waiver of any condition of the Agreement or consent to any departure by the Borrower therefrom shall, in any event, be effective
unless the same shall be in writing signed by Royal. No notice to or demand on the Borrower shall by reason thereof entitle the Borrower to any other or further notice or demand in similar or other
circumstances unless specifically provided for in the Agreement. 

9.3  Time of the Essence  

        Time shall be of the essence hereof. 

9.4  Further Assurances  

        Each of the Borrower, the Guarantor and Royal will do, execute and deliver, or will cause to be done, executed and delivered, all such further acts, documents
(including certificates, declarations, affidavits, reports and opinions) and things as Royal, the Borrower or the Guarantor may reasonably require for the purpose of giving effect to the Agreement. 

9.5  Set-Off  

        In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, Royal is authorized at any time or from
time to time after the Acceleration Date, without notice to the Borrower or to any other Person, any such notice being expressly waived by the Borrower, to set-off, compensate and to
appropriate and to apply any and all deposits, matured or unmatured, general or special, held for or in the name of the Borrower and any other indebtedness or liability at any time owing or payable by
Royal to or for the credit of or the account of the Borrower against and on account of the obligations and liabilities of the Borrower due and payable to Royal under the Agreement including all claims
of any nature or description arising out of or connected with the Agreement, irrespective of currency and whether or not Royal has made any demand under the Agreement and although these obligations,
liabilities or claims of the Borrower are contingent or unmatured. Royal and the Borrower acknowledge and agree that this paragraph is not intended to create and shall not be construed as creating and
does not create a security interest in any property of the Borrower. 

9.6  Judgement Currency  

        If for the purposes of obtaining judgement in any court in any jurisdiction or for any other purpose hereunder it becomes necessary to convert into the currency
of such jurisdiction ("Judgement Currency") any amount due hereunder in any currency other than the Judgement Currency, then such conversion shall be made at the Spot Buying Rate prevailing on the
Business Day before the day on which judgement is given. In the event that there is a change in the Spot Buying Rate prevailing between the Business Day before the day on which the judgement is given
and the date of payment of the amount due, the Borrower shall, on the date of payment, pay such additional amounts (if any) as may be necessary to ensure that the amount paid on such date is the
amount in the Judgement Currency which, when converted at the Spot Buying Rate prevailing on the date of payment, is the amount then due under the Agreement in such other currency. Any additional
amount due from the Borrower under this §9.6 shall be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under or in respect of the
Agreement. 

51

 

9.7  Account Debit Authorization  

        The Borrower authorizes and directs Royal to automatically debit, by mechanical, electronic or manual means, the bank accounts of the Borrower maintained with
Royal for all amounts payable under the Agreement, including but not limited to the repayment of principal and the payment of interest, fees and all charges for the keeping of such bank accounts. 

9.8  Expenses  

        Except as otherwise provided in the Agreement all statements, certificates, opinions and other documents or information required to be furnished to Royal by the
Borrower under the Agreement shall be supplied by the Borrower without cost to Royal. In addition, the Borrower agrees to pay promptly to Royal on demand, all reasonable legal fees and other
reasonable expenses which are incurred from time to time by Royal in respect of the documentation, preparation, registration, execution and enforcement of the Agreement (including any value added,
goods and services, Provincial Sales Tax, business transfer tax or other similar taxes payable in connection with the execution, delivery or enforcement of the Agreement). 

9.9  Survival of Representations and Warranties  

        The representations and warranties made in Section 2 of the Agreement shall survive the execution and delivery of the Agreement and the Closing Date and
continue in full force and effect until the full payment and satisfaction of all monies due hereunder. 

9.10 Notice  

        Unless otherwise specified, any notice, demand, request, consent or other communication required or permitted to be given to a party under this Agreement or to a
party under any of Royal's Security shall be in writing and may be delivered personally or sent by facsimile, to the address or facsimile number of the party set out beside its name at the foot of
this Agreement to the attention of the Person there indicated or to such other address, facsimile number or other Person's attention as the party may have specified by notice in writing given under
this Section. Any notice, demand, consent, request or other communication shall be deemed to have been given: 

	(a)
	if
delivered personally, when received;

	(b)
	if
sent by facsimile, on the Business Day when the appropriate confirmation of receipt has been received if the confirmation of receipt has been received before 3:00 p.m. on
that Business Day or, if the confirmation of receipt has been received after 3:00 p.m. on that Business Day, on the next succeeding Business Day; and

	(c)
	if
sent by facsimile on a day which is not a Business Day, on the next succeeding Business Day on which confirmation of receipt has been received. 

9.11 General Indemnity  

        The Borrower hereby indemnifies and holds harmless Royal and its directors, officers, employees and agents from and against all losses, damages, expenses
(including reasonable fees, charges and disbursements of counsel) and liabilities (including those arising from any litigation or other proceedings) related to or arising out of any default hereunder
by the Borrower or any misrepresentation in connection with this Agreement provided that no Person shall be indemnified in respect of matters arising from such person's gross negligence or wilful
misconduct. 

52

 

9.12 Counterparts  

        The Agreement and all documents contemplated by or delivered under or in connection with the Agreement may be executed and delivered in any number of counterparts
or facsimile counterparts with the same effect as if all parties had all signed and delivered the same document and all counterparts when executed and delivered (by facsimile or otherwise) will be
construed together to be an original and will constitute one and the same agreement. 

9.13 Reasonable Consent or Approval of the Parties  

        The parties hereto acknowledge and confirm that: 

	(a)
	where
either of them is required to exercise its discretion or grant its approval or consent pursuant to a provision in the Agreement, it shall act reasonably in the exercise of its
discretion and will not unreasonably withhold or delay the granting of its approval or consent, and

	(b)
	the
Borrower may rely on any consent, approval, calculation or determination provided to it by Royal pursuant to the Agreement. 

9.14 Evidence of London Interbank Offered Rate  

        If it is necessary at any time to prove the London Interbank Offered Rate applicable to any particular Eurocurrency Advance, a certificate in writing from any
duly authorized officer of Royal shall be prima facie evidence (absent any manifest error) of such rate. 

9.15 Entire Agreement  

        Save as provided herein and in the instruments and documents contemplated or provided for hereunder, the Agreement contains the whole agreement between the
parties with respect to the Credit Facility and there are no other terms, conditions, representations or warranties with respect thereto except as contained herein. 

9.16 No Deduction for Taxes  

        Provided Royal has not assigned its obligations under the Agreement or its rights to receive payments in respect thereof or changed the booking location of
Borrowings, all payments required to be made by the Borrower pursuant to the Agreement whether for principal, interest, acceptance fees, Standby Fees, Documentary Credit Fees, Swap Termination Values,
fees for Swap Contracts or any other fees or otherwise shall be made free and clear of and without deduction, withholding or reserve for or on account of taxes, imposts, levies or other charges of any
nature or kind whatsoever, unless otherwise agreed by Royal. 

9.17 Participations and Assignments  

        Subject to §9.18, Royal may, with the consent of the Borrower, which consent shall not be unreasonably withheld, subject to the provisions of this
§9.17 at any time grant participations in, sell, assign, transfer or otherwise dispose of all or any portion of the Credit Facility or Borrowings ("Facility Disposition") to any financial
institution carrying on business in, and for the purpose of the Income Tax Act (Canada) residing in, Canada; provided no Facility Disposition may be
made which would result in an increase in the cost of the Credit Facility to the Borrower. In all cases an assignment shall be of at least $5,000,000 with increments of $1,000,000 and a participation
shall be of at least $2,500,000 with increments of $500,000. No Facility Disposition shall be effective until Royal shall have received an instrument (in form and substance satisfactory to Royal) in
which the transferee or assignee, as the case may be, shall agree to be bound by all of the terms of the Agreement as fully as though it were an 

53

 

original party hereto except that any participant shall not be entitled to grant subparticipations. The Borrower hereby agrees that, upon compliance with the foregoing, any purchaser, assignee or
transferee of all or any portion of any amount owed by the Borrower under the Agreement: 

	(a)
	shall
be entitled to the benefits of the provisions of the Agreement as fully as though it were an original party to the Agreement; and

	(b)
	may,
subject to the terms of the Agreement, exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all amounts owed by the Borrower
to such purchaser, assignee or transferee as fully as if such purchaser, assignee or transferee had made advances in the amount of the obligation which is sold, assigned or transferred to it. 

9.18 Assignment After Default  

        Notwithstanding anything to the contrary herein contained, where an Event of Default has occurred and is continuing and has not been waived, nothing in the
Agreement shall limit or otherwise restrict the right of Royal to assign all or any part of its rights and obligations under or with respect to the Agreement. Without limiting the generality of the
foregoing, any such assignment shall not require the consent of the Borrower nor be restricted to financial institutions resident in Canada. 

9.19 Obligations of Borrower Re Facility Disposition  

        The Borrower shall, at the request and at the expense of Royal, execute and deliver to such party or parties as Royal may designate any and all further
instruments, use its reasonable efforts to obtain any and all further authorizations or approvals and make any and all further registrations, filings or notifications, as may be necessary or desirable
to give full force and effect to such Facility Disposition. The term "Royal" as used in the Agreement shall include all purchasers, assignees and transferees permitted hereunder of all or any portion
of any amount owed to Royal under the Agreement. Except as specifically set forth in this §9.19 nothing in the Agreement expressed or implied, is intended to or shall confer on any Person
other than the respective parties hereto and thereto and their permitted successors and assignees any benefit or any legal or equitable right, remedy or other claim under the Agreement. For the
purposes of this §9.19, the Borrower hereby authorizes Royal to provide on a confidential basis to any eligible prospective purchaser, assignee, transferee or participant all financial
information, reports, budgets, projections and documents, including the Agreement made available to Royal from time to time. 

54

 

        IN WITNESS WHEREOF the parties hereto have caused the Agreement to be duly executed on December    , 2001. 

	LOUISIANA-PACIFIC CANADA LTD.	 	)	 	Address for Notice
	 	 	)	 	c/o Louisiana-Pacific Corporation
	 	 	)	 	Suite 1200, 805 S.W. Broadway
	 	 	)	 	Portland, Oregon
	 	 	)	 	U.S.A. 97205
	Per:
 Authorized Signatory	 	)	 	 
	 	 	)	 	Phone: (503) 821-5100
	 	 	)	 	Fax: (503) 821-5322
	 	 	)	 	Attention: Vice-President and C.F.O.
	Per:
 Authorized Signatory	 	)	 	 
	 	 	)	 	With a copy to

Louisiana-Pacific Canada Ltd.
	 	 	)	 	2100—1075 West Georgia Street
	 	 	)	 	Vancouver, British Columbia
	 	 	)	 	V6E 3G2
	 	 	)	 	 
	 	 	)	 	Phone: (604) 631-3131
	 	 	)	 	Fax: (604) 631-3232
	 	 	)	 	 
	 	 	)	 	 
	
LOUISIANA-PACIFIC CORPORATION	
 	

)	
 	
Address for Notice
	 	 	)	 	Suite 1200, 805 S.W. Broadway
	 	 	)	 	Portland, Oregon
	 	 	)	 	U.S.A. 97205
	Per:
 Authorized Signatory	 	)	 	 
	 	 	)	 	Phone: (503) 821-5100

Fax: (503) 821-5322
	Per:
 Authorized Signatory	 	)	 	 
	 	 	)	 	 
	 	 	)	 	 
	ROYAL BANK OF CANADA	 	 	 	 
	 	 	)	 	RBC Capital Markets
	 	 	)	 	Suite 2100, Park Place
	 	 	)	 	666 Burrard Street
	 	 	)	 	Vancouver, British Columbia
	 	 	)	 	V6C 3B1
	 	 	)	 	Attention: Managing Director
	By:
 Gerry Derbyshire

Managing Director	 	)	 	 
	 	 	)	 	 
	 	 	)	 	Phone: (604) 257-7100
	 	 	)	 	Fax: (604) 665-6465

55

 
 

SCHEDULE A    
  

 
 

INTEREST AND FEE RATES    
  

        Pursuant to §3.6, §3.28 and §4.11, the following interest rates and fees (each expressed in basis points per annum) shall be
effective and payable based on the applicable Rating of the Rating Agencies of the Guarantor's long term senior unsecured debt: 

        Canadian
Advances, U.S. Advances and Eurocurrency Advances shall bear interest at the Prime Rate, U.S. Base Rate and London Interbank Offered Rate ("LIBOR") respectively plus the
following applicable margins. 

	Ratings of

Rating Agencies
	 	Acceptance Fee
	 	LIBOR Margin
	 	Prime Rate and U.S.

Base Rate Margins
	 	Documentary

Credit Fees
	 	Standby Fees

	BB/Ba2 or higher	 	300.0	 	300.0	 	200.0	 	200.0	 	50.0
	BB-/Ba3 or lower	 	375.0	 	375.0	 	275.0	 	275.0	 	62.5

        If
the Guarantor's long term senior unsecured debt: 

	(a)
	is
rated differently by one category by one of the Rating Agencies, then the rates of interest and fees chargeable by Royal will be determined by the higher of the two Ratings;

	(b)
	when
there is a difference of more than two categories between the Ratings of the Rating Agencies, then the rates of interest and fees chargeable by Royal will be determined by
reference to the Rating which is immediately above the lowest rating. 

 
 

SCHEDULE B    
  

 
 

GUARANTEE
  (Particular Guarantee)    
  

To:
ROYAL BANK OF CANADA

        FOR VALUE RECEIVED and in order to induce Royal Bank of Canada ("Royal") to extend or continue credit to Louisiana-Pacific
Canada Ltd., a British Columbia corporation which is at the date hereof a wholly owned subsidiary of the undersigned ("Customer"), the undersigned hereby guarantees, absolutely and
unconditionally, the punctual payment when due to Royal of all debts and liabilities at any time owing by the Customer to Royal pursuant to the credit agreement dated for reference November 30,
2001 and all schedules thereto among the Customer, the undersigned and Royal (as amended, restated, modified, supplemented, extended, renewed or replaced from time to time the "Credit Agreement") and
the Borrower Guarantees (as defined in the Credit Agreement) whether now existing or hereafter incurred, whether created directly or acquired by Royal by assignment or otherwise, whether matured or
unmatured, whether absolute or contingent, whether characterized as principal, premium, interest, additional interest, facility fees, fees, expenses or otherwise, whether the Customer be bound alone
or with any others and whether as principal or surety, including, without limitation, all debts and liabilities now or at any time owing by the Customer to Royal relating to Swap Termination Values
with respect to a Swap Contract, EFT Transfers and PDS Services (all such debts and liabilities being hereinafter called the "Liabilities"); the liability of the undersigned hereunder (but not the
Liabilities) being limited to the lesser, in the aggregate, of,: 

	(a)
	the
Liabilities, or

	(b)
	the
sum of $60,000,000 Canadian Funds. In calculating Canadian Funds the Equivalent Amount in Canadian Funds of U.S. Funds outstanding under the Credit Agreement (if any) shall be
determined and included. Interest shall be paid by the undersigned from the date of demand for payment at the rate per annum equal to the Prime Rate on Canadian Funds and the U.S. Base Rate on U.S.
Funds. 

PROVIDED,
however, that, regardless of the amount of the Liabilities of the Customer to the Bank, the liability of the undersigned hereunder is further limited (to the extent permitted by applicable
law) to the greater of (a) the maximum liability that the undersigned can incur hereunder without rendering itself insolvent or (b) the amount in U.S. Funds of the value received by the
undersigned as a result of the financial accommodations made available by Royal to the Customer. The terms "value" and "insolvent", as used in this proviso shall have the same meanings as in 11 U.S.C.
§ § 548(a)(2)(A) and (B), respectively. If for any reason this Guarantee would be otherwise avoidable as a fraudulent transfer (whether under state law or the U.S. federal
Bankruptcy Code), then the terms "value" and "insolvent" as used herein shall be defined and the limitation on the liability of undersigned shall be deemed to operate in such a manner as to prevent
this Guarantee from being avoided as a fraudulent transfer while preserving the liability of undersigned hereunder to the fullest extent legally permissible. Nothing in this proviso shall otherwise
effect the maximum aggregate amount payable hereunder as set forth in subparagraphs (a) and (b) of the immediately preceding paragraph. 

        Words
with an initial capital letter unless otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement. 

 

THE UNDERSIGNED HEREBY FURTHER AGREES WITH ROYAL AS FOLLOWS:  

	1.
	From
time to time, before or after any default by the Customer or any notice of termination of this Guarantee, (a) any collateral security (which term as used herein includes
other guarantees) at any time held by or available to Royal in respect of the Liabilities or in respect of any guarantee of the Liabilities may be sold, exchanged, subordinated, surrendered or
released in whole or in part and in any order, (b) any obligation of the Customer or of any guarantor of the Liabilities may be changed, altered, renewed, extended, continued, accelerated,
surrendered, compromised, subordinated, waived or released in whole or in part, or any default with respect thereto waived, (c) Royal may set off, may refrain from setting off and may release
in whole or in part any balance of any deposit account or credit on its books in favour of the Customer or of any such guarantor, may take or refrain from taking or from perfecting any collateral
security and may exercise or refrain from exercising any rights against the Customer or others, (d) Royal may extend or refrain from extending further credit in any manner whatsoever to, may
accept compositions from and may otherwise generally deal with, the Customer and others and with any collateral security as Royal may see fit and (e) Royal may apply all monies at any time
received from the Customer or others or from any collateral security in such manner, in such
amounts and against such part of the Liabilities as Royal deems best and change any such application in whole or in part as Royal may see fit; the whole without in any way limiting, diminishing or
affecting the liability of the undersigned under this Guarantee and without imposing any obligation or trust upon Royal, and no loss of or in respect of any collateral security, whether caused by the
fault of Royal or otherwise, shall in any way limit, diminish or affect the liability of the undersigned under this Guarantee.

	2.
	This
is a guarantee of payment and not of collection, and Royal shall not be obligated to initiate, pursue or exhaust any form of recourse or obtain any judgment against the Customer
or others (including other guarantors) or to realize upon or exhaust any collateral security held by or available to it or any deposit account or credit on its books before being entitled to payment
from the undersigned hereunder. The liability of the undersigned hereunder shall not be limited, diminished or affected by (a) any failure by Royal to file or enforce any claim against the
estate (in administration, bankruptcy or otherwise) of the Customer or others, (b) the fact that recovery from the Customer or any other person other than the undersigned is barred by any
statute of limitations or for any other reason or (c) any other circumstance which might otherwise constitute a legal or equitable discharge of a guarantor. The undersigned renounces all
benefits of discussion and division and waives diligence, presentment, protest, notice of dishonor or protest or default, demand for payment upon the Customer, notice of acceptance of this Guarantee,
notice of any addition to or increase or decrease in the Liabilities and all other notices and demands whatsoever. The undersigned shall have no right to be subrogated to any rights of Royal until
Royal shall have received payment in full of the Liabilities.

	3.
	This
Guarantee is a continuing guarantee, will not be discharged until payment in full of all of the Liabilities (subject in all instances to the first two full paragraphs of this
Guarantee) and cancellation of this instrument by Royal and will remain in full force and effect notwithstanding any interruption in the business relations between the Customer and Royal or any
increase or decrease from time to time in the amount of the Liabilities. The undersigned may, by notice in writing delivered to Royal, terminate the undersigned's liability under this Guarantee in
respect of any Liabilities thereafter incurred but not in respect of any Liabilities theretofore incurred even though not then matured, provided, however, that notwithstanding receipt of any such
notice, Royal may fulfill and perform any commitments or obligations (express or implied) made prior to the receipt of such notice, including payment of any Bankers' Acceptance or Documentary Credit
(as defined in the Credit Agreement) and any resulting Liabilities shall be covered by this Guarantee. 

2

 
	4.
	The
liability of the undersigned under this Guarantee shall be reinstated and revived with respect to any amount at any time paid to or for the account of Royal in respect of the
Liabilities and which thereafter is restored or returned by Royal to the Customer or any trustee or receiver for the Customer upon the bankruptcy, insolvency or reorganization of the Customer or for
any other reason, all as though such amount had not been paid to Royal.

	5.
	This
Guarantee shall not be affected by a change in the name of the Customer, or by the acquisition of the Customer's business by any person, firm or corporation, or by any change
whatsoever in the
objects, capital structure or constitution of the Customer, or by any merger, amalgamation or consolidation of the Customer with any corporation, or by any dissolution or liquidation of the Customer,
but shall notwithstanding the happening of any such event continue to apply to all the Liabilities whether theretofore or thereafter incurred, and in this instrument the word "Customer" shall include
all successors of the Customer.

	6.
	All
moneys, advances, renewals and credits in fact borrowed or obtained from Royal by the Customer pursuant to the Credit Agreement shall be included in the Liabilities,
notwithstanding (a) any lack or limitation of status or of power, (b) any incapacity, disability or lack of authority of the Customer or of any of the directors, officers, partners or
agents thereof, (c) that the Customer may not be a legal or suable entity or that a Liability may not be enforceable or (d) any invalidity, irregularity, defect or informality in the
borrowing or obtaining of such monies, advances, renewals or credits; the whole whether known to Royal or not. The undersigned shall reimburse Royal for all reasonable expenses (including the
reasonable fees and disbursements of its counsel) incurred by Royal in collecting or compromising any of the Liabilities.

	7.
	This
Guarantee is in addition to and not in substitution for (a) any other guarantee, by whomsoever given, at any time held by Royal and (b) any present or future
obligation to Royal, incurred otherwise than under a guarantee, of the undersigned or of any other obligor, whether bound with or apart from the Customer; excepting any guarantee surrendered for
cancellation upon delivery of this instrument.

	8.
	All
payments hereunder with respect to any Liability shall be made to Royal at the Branch of Account of Royal and shall be in the lawful currency in which such Liability is payable
("Primary Currency"). Without in any manner limiting the obligations of the undersigned contained in the preceding sentence, if any sum is paid to and received by Royal hereunder in a currency other
than the Primary Currency (such other currency being hereinafter referred to as the "Alternative Currency"), whether by judgment (and notwithstanding the rate of exchange actually applied in giving
such judgment) or otherwise, the obligations of the undersigned hereunder shall nevertheless be discharged only to the extent of the net amount of Primary Currency that Royal in accordance with its
normal banking procedures is able to purchase with such amount of Alternative Currency. If Royal is not able to purchase sufficient Primary Currency with such amount of Alternative Currency to
discharge such Liability in full, the obligations of the undersigned to Royal shall not be discharged with respect to such difference, and any such undischarged amount will be due as a separate debt
and shall not be affected by payment of or judgment being obtained for any other sums due hereunder; provided that the foregoing shall, in all instances, be subject to the first two full paragraphs of
this Guarantee.

	9.
	The
undersigned shall be bound by any account settled between Royal and the Customer in good faith, and if no such account has been so settled immediately before demand for payment
under this Guarantee, any account stated by Royal with supporting documentation provided by Royal to the undersigned shall be accepted by the undersigned as conclusive evidence, absent manifest or
demonstrable error, of the amount which at the date of the account so stated is due by the Customer to Royal. 

3

 
	10.
	Possession
of this instrument by Royal shall be conclusive evidence against the undersigned that this instrument was not delivered in escrow or pursuant to any agreement that it
should not be effective until any conditions precedent or subsequent had been complied with, unless at the time of receipt of this instrument by Royal the undersigned obtains from the Manager of the
branch or agency of Royal receiving this instrument a letter setting out the terms and conditions under which this instrument was delivered and the conditions, if any, to be observed before it becomes
effective.

	11.
	This
instrument covers all agreements between the undersigned and Royal relative to this Guarantee, and neither the undersigned nor Royal shall be bound by any representation or
promise made by any person relative hereto which is not embodied herein.

	12.
	This
Guarantee and agreement shall extend to and inure to the benefit of Royal and its successors and permitted assigns and every reference herein to the undersigned is a reference to
and shall be construed as including the undersigned and the successors and assigns of the undersigned to and upon all of whom this Guarantee and agreement shall extend and be binding.

	13.
	The
obligations of the undersigned hereunder shall not in any way be changed, reduced or terminated as a result of (a) any change or reduction in or termination of the
obligations of any other guarantor of the Liabilities, or (b) the failure of any other person to execute this or any other guarantee of the Liabilities.

	14.
	Royal
shall not be obligated to exercise any right, power or privilege hereunder, and no failure to exercise and no delay in exercising, on the part of Royal, any such right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No
notice to or demand on the undersigned shall be deemed to be a waiver of the right of Royal to take further action without notice or demand as provided herein. No waiver shall be applicable except in
the specific instance for which given, nor in any event shall any modification or waiver of any provision of this Guarantee and agreement be effective unless in writing and signed by Royal.

	15.
	This
Guarantee shall be governed by and construed in accordance with the laws of the State of Oregon, United States of America. No defence given or allowed by the laws of any other
State or Country shall be interposed in any action hereon unless such defence is also given or allowed by the laws of the State of Oregon. The undersigned irrevocably submits to the jurisdiction of
all Federal and State courts located in the City of Portland and State of Oregon and consents that any order, process or notice of motion or other application to any of said courts or a judge thereof
may be served upon the undersigned within or without the court's jurisdiction at the undersigned's applicable address for notice in accordance with Section 9.10 of the Credit Agreement entitled
"Notice" provided a reasonable time for appearance is allowed.

	16.
	The
waivers and authorizations of the undersigned contained herein are given in its capacity as a Guarantor hereunder and such waivers and authorizations shall not waive any rights
the undersigned may have solely in its capacity as a party to the Credit Agreement.

	17.
	Waiver
of Jury Trial. EACH PARTY TO THIS GUARANTEE, AND BY ITS ACCEPTANCE OF THIS GUARANTEE, ROYAL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
TO A JURY TRIAL OF ANY DISPUTE RELATING TO THIS GUARANTEE AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

	18.
	This
Guarantee may be executed in any number of counterparts as may be necessary and delivered by facsimile each of which so signed shall be deemed to be an original, and such
counterparts together shall constitute one and the same instrument and all signatures need not appear on any one counterpart. 

4

 
	19.
	This
Guarantee is dated for reference November 30, 2001. 

        Executed
at                        , on the            day of December, 2001.

LOUISIANA-PACIFIC
CORPORATION

By:  

By:  

5

 
 

SCHEDULE C    
  

 
  Officer's Compliance Certificate
  (7.1(z)) and (7.2(m))    
  

        I,                        , of the City of Portland, in the State
of Oregon, hereby certify on behalf of Louisiana-Pacific Corporation and Louisiana-Pacific
Canada Ltd. and without personal liability as follows: 

        1.    That
I am Chief Financial Officer of Louisiana Pacific Corporation and Louisiana-Pacific Canada Ltd. 

        2.    All
capitalized terms used herein and not otherwise defined herein shall have the same meaning as ascribed thereto in the Credit Agreement (as hereinafter defined). 

        3.    That
I am familiar with and have examined the provisions of the 2001 LP Canada Credit Agreement dated for reference November 30, 2001 ("Credit Agreement") as
amended, modified, supplemented, extended, consolidated, restated, renewed or replaced from time to time among Louisiana-Pacific Canada Ltd., as Borrower, Louisiana-Pacific Corporation, as
Guarantor, and Royal Bank of Canada ("Royal") and to best of my knowledge having made reasonable investigations of corporate records and inquiries of other officers and senior personnel of the
Borrower and the Guarantor and relying on the foregoing, as of the date of this Certificate: (a) the representations and warranties of the Borrower and the Guarantor contained in the Credit
Agreement are true and correct, (b) none of the covenants of the Borrower and the Guarantor contained in the Credit Agreement has been breached, and (c) during the next fiscal quarter of
the Borrower and the Guarantor there is no reason to believe that either the Borrower or the Guarantor will be in default of the financial ratios prescribed respectively in 7.1(aa) and 7.2(n), (o),
(p) and (q). 

        4.    That
as of                        , being the date to which this Certificate applies, the financial ratios and information called for
under the Credit Agreement were: 

A.    Covenants of the Borrower  

	(a)
	the
Current Ratio of the Borrower is            to            ;

	(b)
	particulars
of Permitted Guarantees and Purchase Money Obligations: 

B.    Covenants of Guarantor  

	(a)
	Shareholders'
Equity is $                  ;

	(b)
	the
Debt to Capitalization Ratio is            to            ;

	(c)
	Consolidated
EBITDDA is

	(d)
	the
Collateral Coverage Ratio is            to            ; 

and
I further certify without personal liability that: 

        5.    The
foregoing calculations are correct and accurate; 

        6.    [SPECIFY
ANY DEFAULT]; 

        7.    I
am authorized to give this certificate; 

        8.    I
am aware that Royal is entitled to rely upon the accuracy of the information herein contained. 

 

        This
Certificate has been executed at the City of Portland, in the State of Oregon, this            day of            , 2001.

Chief Financial Officer

Louisiana-Pacific Corporation and

Louisiana-Pacific Canada Ltd. 

2

SCHEDULE D  

UNFUNDED PENSION LIABILITIES  

        The Guarantor sponsors the Louisiana-Pacific Corporation Retirement Account Plan. Originally this was a defined benefit pension plan covering certain hourly
employees of the Guarantor. Effective January 1, 2000, this was converted to a cash balance plan covering most non-bargained employees. As of January 1, 2000, on an ongoing
basis, the Plan has an unfunded liability of approximately US$23,000,000. As of January 1, 2000, on a plan termination basis, the Plan has an unfunded liability of approximately US$25,000,000. 

        The
Company sponsors the ABTco, Inc. Retirement Plan. This is a defined benefit plan covering bargained and non-bargained employees of ABTco. As of January 1,
2000, on an ongoing basis, the Plan has an unfunded liability of approximately US$0. As of January 1, 2000, on a plan termination basis, the Plan has an unfunded liability of approximately
US$5,000,000. 

SCHEDULE E

BORROWING BASE REPORT

(§7.1(y))  

	(1)
	The
Borrowing Base of Louisiana-Pacific Canada Ltd. and its Material Canadian Subsidiaries was [$    ] on the last day of the fiscal quarter
ended [    ] calculated as follows (words with initial capital letters have the meaning ascribed to them in the Agreement): 

	 	(a)	 	Good Account Receivable (Cdn$)	 	$	        	 	 	        
	

 	

(b)	
 	

75% of (a)	
 	
 	

 	
 	
$	

 
	

 	

(c)	
 	

The Equivalent Amount in Canadian Funds of Good Accounts Receivables (US$)	
 	
$	

 	
 	
 	

 
	

 	

(d)	
 	

75% of line (c)	
 	
 	

 	
 	
$	

 
	

 	

(e)	
 	

Eligible Inventory—Logs	
 	
$	

 	
 	
 	

 
	

 	

(f)	
 	

Eligible Inventory—Lumber, Engineered Wood Products and other finished products	
 	
$	

 	
 	
 	

 
	

 	

(g)	
 	

Eligible Inventory—Chips	
 	
$	

 	
 	
 	

 
	

 	

(h)	
 	

Eligible Inventory—Raw materials, supplies, spare parts, etc.	
 	
$	

 	
 	
 	

 
	

 	

(i)	
 	

Total of (e), (f), (g) and (h)	
 	
$	

 	
 	
 	

 
	

 	

(j)	
 	

50% of line (i)	
 	
 	

 	
 	
$	

 
	

 	

 	
 	

 	
 	
 	

 	
 	

	

 	

(k)	
 	

Line (b) plus line (d) plus line (j)	
 	
 	

 	
 	
$	

 
	

 	

(l)	
 	

Potential Preferred Claims	
 	
 	

 	
 	
$	

 
	

 	

 	
 	

 	
 	
 	

 	
 	

	

 	

(m)	
 	

Borrowing Base (line (k) minus line (l))	
 	
 	

 	
 	
$	

 
	

 	

 	
 	

 	
 	
 	

 	
 	

	

 	

(n)	
 	

Total Borrowings	
 	
 	

 	
 	
$	

 
	

 	

 	
 	

 	
 	
 	

 	
 	

	

 	

(o)	
 	

Line (m) minus line (n)	
 	
 	

 	
 	
$	

 

	(2)
	I
certify the foregoing to be a true and correct report on the matters disclosed and reported herein as of the stated fiscal quarter-end.

	(3)
	I
further certify as follows:

	(a)
	that
the representations and warranties contained in the Agreement are true and correct as of the date of this Borrowing Base Report;

	(b)
	that
the covenants contained in the Agreement have not been breached as of the date of this Borrowing Base Report and, during the next fiscal quarter of the Borrower, there is no
reason to believe that any of such covenants will be breached;

	(c)
	that,
as of the stated fiscal quarter-end, Inventory locations and values were as follows: 

	Canadian Locations (specify site)
 
	 	Cdn$ Value

	•	 	 
	•	 	 
	•	 	 
	•	 	 
	•	 	 

	(d)
	that
during the stated fiscal quarter total sales of Inventory were $            of which $            was in respect of sales of
Inventory to Louisiana-Pacific Corporation.

	(e)
	that
I will forthwith advise Royal on becoming aware of any inaccuracy in the matters certified in §3(c) and §3(d);

	(f)
	that
as of the stated fiscal quarter end the Current Ratio of the Borrower
is                        to                 
       ;

	(g)
	the
aggregate of Borrowings as at the date of this report was $            . Borrowings in US$ were converted to Cdn$
at                        . 

	

 	
 	

By:	

 	
 	

 
	 	 	 	
	 	 
	 	 	 	Name/Title:	 	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 

DATED this            day of            

SCHEDULE F

PERMITTED ENCUMBRANCES  

	 
	 	Secured Party
	 	Description of Lien

	1.	 	Sodexfor	 	Lien on all the assets of Louisiana-Pacific Canada Ltd. Chambord and Lac Bouchette plants, pursuant to Purchase and Sale Contract, dated April 14, 1999.
	

2.	
 	

IBM	
 	

Lien on Louisiana-Pacific Canada Ltd. AS400 equipment, pursuant to Order for Leased or Financed Articles, dated December, 1999.
	

3.	
 	

Finning Ltd.	
 	

Lien on Louisiana-Pacific Canada Ltd. log loader and three forklifts, pursuant to lease agreements dated October 1, 1998, September 2, 1998 and October 1, 1999.
	

4.	
 	

Marjak Leasing	
 	

Lien on 1998 Bobcat Series 753 pursuant to lease agreement dated December 11, 1997.
	

5.	
 	

Bank of Montreal	
 	

Lien on Instrument described as Bank of Montreal pledge of Instrument and Assignment of Proceeds.

SCHEDULE G

OTHER PERMITTED INDEBTEDNESS  

Credit Facilities  

        1.    Indebtedness
under the Credit Agreement by and among Louisiana-Pacific Canada Ltd., Louisiana-Pacific Corporation and Royal Bank of Canada, dated for reference
January 15, 1997. 

        2.    Indebtedness
under the Agreement dated April 14, 1999 between 9073-3742 Quebec Inc., as purchaser (a predecessor of Acquisition
Louisiana-Pacific Inc.) and Société en Commondite Sodexfor. 

        3.    Indebtedness
under the Lease Agreement dated December 13, 1999 between Louisiana-Pacific Canada Ltd. and International Business Machines. 

        4.    Indebtedness
under the Lease Agreements dated September 2, 1998, October 1, 1998 and October 1, 1999 between Louisiana-Pacific Canada, Ltd.
and Finning Ltd. 

Senior Installment Notes  

        5.    Louisiana
Pacific Canada, Ltd. Senior Installment Notes, variable rate, payable through 2003. 

Other Indebtedness  

        6.    Forward
contracts between Louisiana-Pacific Canada, Ltd. and Bank of America for settlement September 27, 2002 and September 29, 2003. 

        7.    Forward
contracts between Louisiana-Pacific Canada, Ltd. and Goldman Sachs for settlement September 27, 2002 and September 29, 2003. 

        8.    Indebtedness
described by §5 on Schedule F. 

2001 LP CANADA CREDIT AGREEMENT

Dated for Reference November 30, 2001  

AMONG:  

LOUISIANA-PACIFIC CANADA LTD.

AND  

LOUISIANA-PACIFIC CORPORATION

AND  

ROYAL BANK OF CANADA  

 BULL, HOUSSER & TUPPER
  BARRISTERS & SOLICITORS

#3000 - 1055 WEST GEORGIA

VANCOUVER, B.C. V6E 3R3

(604) 687-6575
 Attention: Barry Dryvynsyde 

        File
# 8929978 

QuickLinks

TABLE OF CONTENTS

SCHEDULE A

INTEREST AND FEE RATES

SCHEDULE B

GUARANTEE (Particular Guarantee)

SCHEDULE C

Officer's Compliance Certificate (7.1(z)) and (7.2(m))RECEIVABLES SALE AGREEMENT

 

DATED AS OF NOVEMBER 15, 2001

 

among

 

LOUISIANA-PACIFIC CORPORATION

as Originator

 

LP WOOD POLYMERS, INC.

as Originator

 

and

 

LP RECEIVABLES CORPORATION

as Buyer

 

 

TABLE OF CONTENTS

 

	
  Article I Amounts and Terms of the Purchase

  
	
   

  	
  Section 1.1

  	
  Initial Contribution of Receivables.

  
	
   

  	
  Section 1.2

  	
  Purchase of Receivables.

  
	
   

  	
  Section 1.3

  	
  Payment for the Purchase.

  
	
   

  	
  Section 1.4

  	
  Purchase Price Credit Adjustments.

  
	
   

  	
  Section 1.5

  	
  Payments and Computations, Etc.

  
	
   

  	
  Section 1.6

  	
  Transfer of Records.

  
	
   

  	
  Section 1.7

  	
  Characterization.

  
	
  Article II Representations and Warranties 

  
	
   

  	
  Section 2.1

  	
  Representations and Warranties of
  Originators.

  
	
  Article III Conditions of Purchase

  
	
   

  	
  Section 3.1

  	
  Conditions Precedent to Purchase.

  
	
   

  	
  Section 3.2

  	
  Conditions Precedent to Subsequent
  Payments.

  
	
  Article IV Covenants

  
	
   

  	
  Section 4.1

  	
  Affirmative Covenants of Originators.

  
	
   

  	
  Section 4.2

  	
  Negative Covenants of Originators.

  
	
  Article V Termination Events

  
	
   

  	
  Section 5.1

  	
  Termination Events.

  
	
   

  	
  Section 5.2

  	
  Remedies.

  
	
  Article VI Indemnification

  
	
   

  	
  Section 6.1

  	
  Indemnities by Originators.

  
	
   

  	
  Section 6.2 

  	
  Defense of Claims.

  
	
   

  	
  Section 6.3 

  	
  Other Costs and Expenses.

  
	
  Article VII Miscellaneous

  
	
   

  	
  Section 7.1

  	
  Waivers and Amendments.

  
	
   

  	
  Section 7.2

  	
  Notices.

  
	
   

  	
  Section 7.3

  	
  Protection of Ownership Interests of Buyer.

  
	
   

  	
  Section 7.4

  	
  Confidentiality.

  
	
   

  	
  Section 7.5

  	
  Bankruptcy Petition.

  
	
   

  	
  Section 7.6

  	
  Limitation of Liability.

  
	
   

  	
  Section 7.7

  	
  CHOICE OF LAW.

  
	
   

  	
  Section 7.8

  	
  CONSENT TO JURISDICTION.

  
	
   

  	
  Section 7.9

  	
  WAIVER OF JURY TRIAL.

  
	
   

  	
  Section 7.10

  	
  Integration; Binding Effect; Survival of
  Terms.

  
	
   

  	
  Section 7.11

  	
  Counterparts; Severability; Section
  References.

  
									

 

i

 

Exhibits

 

Exhibit
I                                  Definitions

 

Exhibit
II                              Jurisdiction
of Formation; Principal Place of Business Chief Executive Office; Location(s)
of Records; Federal Employer Identification Number; Other Names

 

Exhibit
III                          Lock-Boxes;
Collection Accounts; Collection Banks

 

Exhibit
IV                          Form of Compliance
Certificate

 

Exhibit
V                              Copy of Credit and
Collection Policy

 

Exhibit
VI                          Form
of Subordinated Note

 

Exhibit
VII                      Form
of Purchase Report

 

Exhibits
VIII            Material
Adverse Effect

 

Schedules

 

Schedule
A               List
of Documents to be Delivered to Buyer on or Prior to Closing Date

 

ii

 

RECEIVABLES SALE AGREEMENT

 

THIS
RECEIVABLES SALE AGREEMENT, dated as of November 15, 2001, is by and among
Louisiana-Pacific Corporation, a Delaware corporation (“Louisiana-Pacific”) and LP Wood
Polymers, Inc., an Oregon corporation (“LP
Wood”) (each an “Originator”
and collectively, the “Originators”),
and LP RECEIVABLES CORPORATION, a Delaware corporation (“Buyer”).  Unless defined elsewhere herein, capitalized
terms used in this Agreement shall have the meanings assigned to such terms in Exhibit
I hereto (or, if not defined in Exhibit I hereto, the meaning
assigned to such term in Exhibit I to the Credit Agreement).

 

PRELIMINARY STATEMENTS

 

The
Originators now own, and from time to time hereafter will own,
Receivables.  The Originators wish to
sell and assign to Buyer, and Buyer wishes to purchase from each Originator,
all of such Originator’s right, title and interest in and to such Receivables,
together with the Related Security and Collections with respect thereto.

 

The
Originators and Buyer intend the transactions contemplated hereby to be true
sales and absolute assignments of the Receivables from each Originator to
Buyer, providing Buyer with the full benefits of ownership of the Receivables,
and neither the Originators nor Buyer intend these transactions to be, or for
any purpose to be characterized as, loans from Buyer to the Originators.

 

Following the
acquisition of Receivables from the Originators, Buyer may request loans
secured by an interest therein and in the associated Related Security and
Collections pursuant to that certain Credit and Security Agreement dated as of
November 15, 2001 (as the same may from time to time hereafter be amended,
supplemented, restated or otherwise modified, the “Credit Agreement”) among Buyer,
Louisiana-Pacific Corporation, as initial Master Servicer, Blue Ridge Asset
Funding Corporation (“Blue Ridge”),
the committed banks named therein and Wachovia Bank, N.A. or any successor
administrative agent appointed pursuant to the terms of the Credit Agreement,
as administrative agent (in such capacity, the “Administrative Agent”).

 

NOW,
THEREFORE, in consideration of the foregoing premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

Article I

 

Amounts and Terms of the Purchase

 

Section 1.1                Initial
Contribution of Receivables.

 

On the date
hereof, Louisiana-Pacific hereby contributes, assigns, transfers, sets-over and
otherwise conveys to Buyer, and Buyer does hereby accept from
Louisiana-Pacific, Receivables originated by Louisiana-Pacific and existing as
of the close of business on the Business Day 

 

 

immediately
prior to the date hereof (the “Initial
Cutoff Date”) having an aggregate Outstanding Balance of
$3,750,000 (the “Initial Contributed
Receivables”), together with all Related Security relating
thereto and all Collections thereof.

 

Section
1.2                Purchase of
Receivables.

 

(a)                                                           Effective
on the date hereof, in consideration for the Purchase Price and upon the terms
and subject to the conditions set forth herein, each Originator does hereby
sell, assign, transfer, set-over and otherwise convey to Buyer, without
recourse (except to the extent expressly provided herein), and Buyer does
hereby purchase from such Originator, all of such Originator’s right, title and
interest in and to all Receivables existing as of the close of business on the
Initial Cutoff Date (other than the Initial Contributed Receivables) and all
Receivables thereafter arising through and including the Termination Date,
together, in each case, with all Related Security relating thereto and all
Collections thereof.  In accordance with
the preceding sentence, on the date hereof Buyer shall acquire all of each
Originator’s right, title and interest in and to all Receivables existing as of
the Initial Cut-Off Date (other than the Initial Contributed Receivables) and
thereafter arising through and including the Termination Date, together with
all Related Security relating thereto and all Collections thereof.  Buyer shall be obligated to pay the Purchase
Price for the Receivables purchased hereunder in accordance with Section
1.3.

 

(b)                                                          On
each Monthly Reporting Date, each Originator shall (or shall require the Master
Servicer to) deliver to Buyer a report in substantially the form of Exhibit
VII (each such report being herein called a “Purchase Report”) with respect to the Receivables sold
by such Originator to Buyer during the Settlement Period then most recently
ended.  In addition to, and not in
limitation of, the foregoing, in connection with the payment of the Purchase
Price for any Receivables purchased hereunder, Buyer may request that the
related Originator deliver, and such Originator shall deliver, such approvals,
opinions, information or documents as Buyer may reasonably request.

 

(c)                                                           It
is the intention of the parties hereto that the Purchase of Receivables made
hereunder shall constitute a sale, which sale is absolute and irrevocable and
provides Buyer with the full benefits of ownership of the Receivables.  Except for the Purchase Price Credits owed pursuant to Section
1.4, the sale of Receivables hereunder is made without recourse to any
Originator; provided, however, that (i) each Originator shall be
liable to Buyer for all representations, warranties, covenants and indemnities
made by such Originator pursuant to the terms of the Transaction Documents to
which such Originator is a party, and (ii) such sale does not constitute and is
not intended to result in an assumption by Buyer or any assignee thereof of any
obligation of any Originator or any other Person arising in connection with the
Receivables, the related Contracts and/or other Related Security or any other
obligations of such Originator.  In view
of the intention of the parties hereto that the Purchase of Receivables made
hereunder shall constitute a sale of such Receivables rather than loans secured
thereby, each Originator agrees that it will, on or prior to the date hereof and in
accordance with Section 4.1(e)(ii), mark its master data processing
records relating to the Receivables with a legend acceptable to Buyer and to
the Administrative Agent (as Buyer’s assignee), evidencing that Buyer has
purchased such Receivables as provided in this Agreement and to note in its
financial statements that its 

 

2

 

Receivables have been sold to Buyer.  Upon the request of Buyer or the
Administrative Agent (as Buyer’s assignee), each Originator will execute and
file such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate to perfect and maintain the perfection of Buyer’s ownership
interest in the Receivables and the Related Security and Collections with respect thereto, or as
Buyer or the Administrative Agent (as Buyer’s assignee) may reasonably request.

 

Section
1.3                Payment for the
Purchase.

 

(a)                                  The
Purchase Price for the Purchase from each Originator of its Receivables in
existence as of the close of business on the Initial Cutoff Date (other than
the Initial Contributed Receivables) shall be payable in full by Buyer to such
Originator on the date hereof, and shall be paid to the Originators in the
following manner:

 

(i)                                     first, to LP Wood with respect
to Receivables sold by LP Wood, by delivery of immediately available
funds to the extent of funds made available to Buyer in connection with
Advances made to Buyer under the Credit Agreement,

 

(ii)                                  second,
to LP Wood, the balance of the Purchase Price with respect to the Receivables
sold by LP Wood, by delivery of the proceeds of a subordinated revolving loan
from LP Wood to Buyer (a “Subordinated
Loan”), evidenced by an entry by the Originator Representative
on the Subordinated Note,  in an amount
not to exceed the least of (A) the remaining unpaid portion of such Purchase
Price, (B) the maximum Subordinated Loan
(aggregated with all Subordinated Loans then outstanding to all Originators)
that could be borrowed without rendering Buyer’s Net Worth less than the
Required Capital Amount, and (C) fifteen percent (15%) of such Purchase
Price.  Louisiana-Pacific, in its
capacity as Originator Representative, is hereby authorized by Buyer to endorse
on the schedule attached to the Subordinated Note an appropriate notation
evidencing the date and amount of each advance by LP Wood thereunder, as well
as the date of each payment with respect thereto, provided that the
failure to make such notation shall not affect any obligation of Buyer
thereunder,

 

(iii)                               third,
to Louisiana-Pacific,  with respect to
Receivables sold by Louisiana-Pacific, by delivery of immediately available
funds to the extent of funds made available to Buyer in connection with
Advances made to Buyer under the Credit Agreement and not otherwise used for
the payment of the Purchase Price with respect to the Receivables of LP Wood in
clause (i) above, and

 

(iv)                              fourth,
to Louisiana-Pacific, the balance of the Purchase Price with respect to the
Receivables sold by Louisiana-Pacific, by delivery of the proceeds of a
Subordinated Loan from Louisiana-Pacific to Buyer, evidenced by an entry by the
Originator Representative on the Subordinated Note; provided that the
making of any such Subordinated Loan shall be subject to the provisions set
forth in Section 1.3(a)(ii).

 

3

 

The Purchase Price for each Receivable coming
into existence after the Initial Cutoff Date shall be due and owing in full by
Buyer to the applicable Originator or its designee on the date each such
Receivable came into existence (except that Buyer may, with respect to any such
Purchase Price, offset against such Purchase Price any amounts owed by such
Originator to Buyer hereunder and which have become due but remain unpaid) and
shall be paid to such Originator in the manner provided in the following paragraphs
(b), (c) and (d):

 

(b)                                 With
respect to any Receivables coming into existence after the Initial Cutoff Date,
not later than the Purchase 

Settlement Date, Buyer shall pay the Purchase
Price therefor in accordance with Section 1.3(d) and in the following
manner,

 

(i)                                     first, to LP Wood with respect to Receivables sold by LP Wood, by
delivery of immediately available funds to the extent of funds made available
to Buyer in connection with Advances made to Buyer under the Credit Agreement
or other  cash on hand,

 

(ii)                                  second,
to LP Wood, the balance of the Purchase Price with respect to the Receivables
sold by LP Wood, by delivery to LP Wood of the proceeds of a Subordinated Loan,
provided that the making of any such Subordinated Loan shall be subject
to the provisions set forth in Section 1.3(a)(ii),

 

(iii)                               third,
to Louisiana-Pacific with respect to Receivables sold by Louisiana-Pacific, by
delivery of immediately available funds to the extent of funds made available
to Buyer in connection with Advances made to Buyer under the Credit Agreement
or other cash on hand and not otherwise used for the payment of the Purchase
Price with respect to the Receivables of LP Wood in clause (i) above,

 

(iv)                              fourth,
to Louisiana-Pacific with respect to Receivables sold by
Louisiana-Pacific, to the extent not paid pursuant to clause (iii)
above, by delivery to Louisiana-Pacific of the proceeds of a Subordinated Loan,
provided that the making of any such Subordinated Loan shall be subject
to the provisions set forth in Section 1.3(a)(ii); and

 

(v)                                 fifth,
to the extent the Purchase Price of Receivables transferred by
Louisiana-Pacific has not been paid in full, unless an Originator or Buyer has
declared the Termination Date to have occurred pursuant to this Agreement, by
accepting a contribution to its capital in an amount equal to the remaining
unpaid balance of such Purchase Price.

 

Subject to the limitations set forth in Section
1.3(a)(ii) and Section 1.3(a)(iv), each Originator irrevocably
agrees to advance each Subordinated Loan requested by Buyer on or prior to the
Termination Date.  The Subordinated
Loans shall be evidenced by, and shall be payable in accordance with the terms
and provisions of the Subordinated Note and shall be payable solely from funds
which Buyer is not required under the Credit Agreement to set aside for the benefit
of, or otherwise pay over to, the Secured Parties.

 

4

 

(c)                                  From
and after the Termination Date, no Originator shall be obligated to (but may,
at its option):  (i) sell Receivables to
Buyer, or (ii) contribute Receivables to Buyer’s capital pursuant to Section
1.3(b)(v).

 

(d)                                 Although
the Purchase Price for each Receivable coming into existence after the Initial
Cutoff Date shall be due and payable in full by Buyer to the applicable
Originator on the date such Receivable came into existence, settlement of the
Purchase Price between Buyer and such Originator shall be effected on Purchase
Settlement Dates with respect to all Receivables coming into existence during
the related Calculation Period and based on the information contained in the
Purchase Report delivered by such Originator for the Calculation Period then
most recently ended.  Although
settlement shall be effected on Purchase Settlement Dates, increases or decreases
in the amount owing under the Subordinated Note made pursuant to this Section
1.3 for interest calculation purposes only and any contribution of capital
by any Originator to Buyer made pursuant to Section 1.3(b)(v) shall be
deemed to have occurred and shall be effective as of the last Business Day of
the related Calculation Period.

 

Section 1.4                                   Purchase
Price Credit Adjustments.

 

If on any day:

 

(a)                                  the
Outstanding Balance of a Receivable sold to Buyer is:

 

(i)                                     reduced
as a result of any defective or rejected goods or services, any cash discount
or any other adjustment by any Originator or any Affiliate thereof, or as a
result of any tariff or other governmental or regulatory action, or

 

(ii)                                  reduced
or canceled as a result of a setoff in respect of any claim by the Obligor
thereof (whether such claim arises out of the same or a related or an unrelated
transaction), or

 

(iii)                               reduced
on account of the obligation of any Originator or any Affiliate thereof to pay
to the related Obligor any rebate or refund, or

 

(iv)                              less
than the amount included in calculating the Outstanding Balance for purposes of
any Purchase Report (for any reason other than such Receivable becoming a
Defaulted Receivable or payment in full of the entire Outstanding Balance being
made on such Receivable), or

 

(b)                                 any
of the representations or warranties of any Originator set forth in Section 2.1(i),
Section 2.1(j), Section 2.1(k), Section 2.1(r), Section
2.1(s), Section 2.1(t) or Section 2.1(u) were not true when
made with respect to any Receivable,

 

then, in such event, Buyer
shall be entitled to a credit (each, a “Purchase
Price Credit”), without duplication, against the Purchase Price
otherwise payable to the applicable Originator hereunder equal, in the case of clause
(a) above, to the amount of such reductions relating to such Receivable,
and, in the case of clause (b) above, to the Outstanding Balance of such
Receivable

 

5

 

 (calculated before giving effect to the applicable reduction or
cancellation).  If such Purchase Price
Credit exceeds the Original Balance of the Receivables coming into existence on
any day, then such Originator shall pay the remaining amount of such Purchase
Price Credit in cash immediately, provided that if the Termination Date has not
occurred, such Originator shall be allowed to deduct the remaining amount of
such Purchase Price Credit from any indebtedness owed to it under the
Subordinated Note.

 

Section
1.5                                   Payments
and Computations, Etc.

 

All amounts to
be paid or deposited by Buyer hereunder shall be paid or deposited in
accordance with the terms hereof on the day when due in immediately available
funds to the account of the applicable Originator designated from time to time
by such Originator or as otherwise directed by such Originator.  In the event that any payment owed by any
Person hereunder becomes due on a day that is not a Business Day, then such
payment shall be made on the next succeeding Business Day.  If any Person fails to pay any amount
hereunder when due, such Person agrees to pay, on demand, the Default Fee in
respect thereof until paid in full; provided, however, that such
Default Fee shall not at any time exceed the maximum rate permitted by
applicable law.  All computations of
interest payable hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first but excluding the last day)
elapsed.

 

Section
1.6                                   Transfer
of Records.

 

(a)                                  In
connection with the Purchase of Receivables hereunder, each Originator hereby
sells, transfers, assigns and otherwise conveys to Buyer all of such
Originator’s right and title to and interest in the Records relating to all
Receivables sold or contributed hereunder, without the need for any further
documentation in connection with the Purchase. 
In connection with such transfer, each Originator hereby grants to each
of Buyer, the Administrative Agent and the Master Servicer an irrevocable,
non-exclusive license to use, without royalty or payment of any kind, all
software used by such Originator to account for the Receivables, to the extent necessary to administer the
Receivables, whether such software is owned by such Originator or is owned by
others and used by such Originator under license agreements with respect
thereto, provided that should the consent of any licensor of such software be
required for the grant of the license described herein, to be effective, each
Originator hereby agrees that upon the request of Buyer (or Buyer’s assignee),
such Originator will use its reasonable efforts to obtain the consent of such
third-party licensor.  The license
granted hereby shall be irrevocable until the indefeasible payment in full of
the Aggregate Unpaids, and shall terminate on the date this Agreement
terminates in accordance with its terms.

 

(b)                                 Each
Originator (i) shall take such action requested by Buyer and/or the
Administrative Agent (as Buyer’s assignee), from time to time hereafter, that
may be necessary or appropriate to ensure that Buyer and its assigns under the
Credit Agreement have an enforceable ownership interest in the Records relating
to the Receivables purchased from such Originator hereunder, and (ii) shall use
its reasonable efforts to ensure that Buyer, the Administrative Agent and the
Master Servicer each has an enforceable right (whether by license 

 

6

 

or sublicense
or otherwise) to use all of the computer software used to account for the
Receivables and/or to recreate such Records.

 

Section
1.7                                   Characterization.

 

If,
notwithstanding the intention of the parties expressed in 0, any sale or
contribution by any Originator to Buyer of Receivables hereunder shall be
characterized as a secured loan and not a sale or such sale shall for any
reason be ineffective or unenforceable, then this Agreement shall be deemed to
constitute a security agreement under the UCC and other applicable law.  For this purpose and without being in
derogation of the parties’ intention that the sale of Receivables hereunder
shall constitute a true sale thereof, each Originator hereby grants to Buyer a
duly perfected security interest in all of such Originator’s right, title and
interest in, to and under all Receivables now existing and hereafter arising,
all Collections and Related Security with respect thereto, each Lock-Box and
Collection Account, all other rights and payments relating to the Receivables
and all proceeds of the foregoing, whether now owned or hereafter acquired, now
existing or hereafter arising and wherever located, including, without
limitation, any of the foregoing constituting accounts, deposit accounts,
chattel paper, electronic chattel paper, instruments, general intangibles,
payment intangibles, to secure the prompt and complete payment of a loan deemed
to have been made in an amount equal to the Purchase Price of the Receivables
together with all other obligations of each Originator hereunder, which
security interest shall be prior to all other Adverse Claims thereto.  Buyer and its assigns shall have, in addition
to the rights and remedies which they may have under this Agreement, all other
rights and remedies provided to a secured creditor under the UCC and other
applicable law, which rights and remedies shall be cumulative.

 

Article II

 

Representations and Warranties

 

Section 2.1                                   Representations
and Warranties of Originators.

 

Each
Originator hereby represents and warrants to Buyer as to itself, as of the date
hereof, as of the date of each Purchase and as of each date that any Receivable
of such Originator comes into existence that:

 

(a)           Such Originator’s jurisdiction of
formation is correctly set forth in Exhibit II to this Agreement.  Such Originator is duly organized under the
laws of such jurisdiction and is a “registered organization” as defined in the
UCC in effect in such jurisdiction. 
Such Originator is validly existing and in good standing under the laws
of its state of organization.  Such
Originator is duly qualified to do business and is in good standing as a
foreign entity, and has and holds all organizational power and all governmental
licenses, authorizations, comments and approvals required to carry on its
business in each jurisdiction in which its business is conducted except where
the failure to do so qualify or so hold could not reasonably be expected to
have a Material Adverse Effect.

 

7

 

(b)           Power and Authority; Due
Authorization, Execution and Delivery.  The execution and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party, and the performance of its obligations hereunder and thereunder and,
such Originator’s use of the proceeds of the Purchase made hereunder, are
within its organizational powers and authority and have been duly authorized by
all necessary organizational action on its part.  This Agreement and each other Transaction Document to which such
Originator is a party has been duly executed and delivered by such Originator.

 

(c)           No
Conflict.  The execution and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party, and the performance of its obligations hereunder and thereunder do not
contravene or violate (i) its Organizational Documents, (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any agreement,
contract or instrument to which it is a party or by which it or any of its
property is bound, or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of such Originator or its
Subsidiaries (except as created hereunder) except, in any case, where such
contravention, violation, creation or imposition could not reasonably be
expected to have a Material Adverse Effect; notwithstanding the foregoing,
neither the execution and delivery by such Originator of each Transaction
Document to which it is a party nor the performance of its obligations
thereunder result in the creation or the imposition of any Adverse Claim on any
portion or all of the Collateral; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law.

 

(d)           Governmental Authorization.  Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party and the performance of its obligations hereunder and thereunder.

 

(e)           Actions, Suits.  There are no actions, suits or proceedings
pending, or to the best of such Originator’s knowledge, threatened, against or
affecting such Originator, or any of its properties, in or before any court,
arbitrator or other body, that could reasonably be expected to have a Material
Adverse Effect.  Such Originator is not
in default with respect to any order of any court, arbitrator or governmental body,
except where such default could not reasonably be expected to have a Material
Adverse Effect.

 

(f)            Binding Effect.  This Agreement and each other Transaction
Document to which any Originator is a party constitute the legal, valid and
binding obligations of such Originator enforceable against such Originator in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

 

(g)           Accuracy of Information.  All information heretofore furnished by such
Originator or any of its Affiliates to Buyer (or its assigns) for purposes of
or in connection with 

 

8

 

this
Agreement, any of the other Transaction Documents or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by such Originator or any of its Affiliates to Buyer (or its assigns) will be,
true and accurate in every material respect as of the date such information is
stated or certified and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which
they were made, not misleading.

 

(h)           Use
of Proceeds.  No portion of any Purchase Price payment
hereunder will be used (i) for a purpose that violates, or would be
inconsistent with, any law, rule or regulation applicable to such Originator or
(ii) to acquire any security in any transaction which is subject to Section 12,
13 or 14 of the Securities Exchange Act of 1934, as amended.

 

(i)            Good
Title.  Immediately prior to the Purchase hereunder
and upon the creation of each Receivable coming into existence after the
Initial Cut-Off Date, such Originator (i) is the legal and beneficial owner of
the Receivables sold or contributed by it hereunder and (ii) is the legal and
beneficial owner of the Related Security with respect thereto or possesses a
valid and perfected security interest therein, in each case, free and clear of
any Adverse Claim, except as created by the Transaction Documents or the
Permitted Adverse Claim.  There have
been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect such Originator’s ownership interest in each
Receivable sold or contributed by it hereunder, its Collections and the Related
Security.

 

(j)            Perfection.  This Agreement, together with the filing of
the financing statements contemplated hereby, is effective to transfer to Buyer
(and Buyer shall acquire from such Originator) (i) legal and equitable title
to, with the right to sell and encumber each Receivable existing and hereafter
arising, together with the Collections with respect thereto, and (ii) all of
such Originator’s right, title and interest in the Related Security associated
with each Receivable, in each case, free and
clear of any Adverse Claim, except as created by the Transactions Documents and
the Permitted Adverse Claim.  There have
been duly filed all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Buyer’s ownership interest in the Receivables, the
Related Security and the Collections. 
Such Originator’s jurisdiction of organization is a jurisdiction whose
law generally requires information concerning the existence of a nonpossessory
security interest to be made generally available in a filing, record or
registration system as a condition or result of such a security interest’s
obtaining priority over the rights of a lien creditor which respect to
collateral.

 

(k)           Places of Business and Locations
of Records.  The jurisdiction of formation, principal
places of business and chief executive office of such Originator and the
offices where it keeps all of its Records are located at the address(es) listed
on Exhibit II or such other locations of which Buyer has been notified
in accordance with Section 4.2(a) in jurisdictions where all action
required by Section 4.2(a) has been taken and completed.  Such Originator’s Federal Employer
Identification Number is correctly set forth on Exhibit II.

 

9

 

(l)            Collections.  The conditions and requirements set forth in
Section 4.1(i) have at all times been satisfied and duly performed.  The names and addresses of all Collection
Banks, together with the account numbers of the Collection Accounts of such
Originator at each Collection Bank and the post office box number of each
Lock-Box, are listed on Exhibit III. 
Such Originator has not granted any Person, other than Buyer (and its
assigns) dominion and control of any Lock-Box or Collection Account, or the
right to take dominion and control of any such Lock-Box or Collection Account
at a future time or upon the occurrence of a future event.

 

(m)          Material Adverse Effect.  Each Originator  represents and warrants that except as described in Exhibit
VIII as delivered on the Closing Date or as amended thereafter with the
prior written consent of the Administrative Agent (which consent may be
withheld in its sole discretion), since June 30, 2001 no event has occurred
that would have a Material Adverse Effect.

 

(n)           Names.  The name in which such Originator has
executed this Agreement is identical to the name of such Originator as indicated
on the public record of its state of organization which shows Originator to
have been organized.  Except as
described in Exhibit II attached hereto, in the past five
(5) years, such Originator has not used any corporate names, trade names or
assumed names other than the name in which it has executed this Agreement.

 

(o)           Ownership of Buyer.  Louisiana-Pacific owns, directly or
indirectly, 100% of the issued and outstanding equity interests of Buyer, free
and clear of any Adverse Claim.  Such
equity interests are validly issued, fully paid and nonassessable, and there
are no options, warrants or other rights to acquire securities of Buyer.

 

(p)           Not a Holding Company or an
Investment Company.  Such Originator is not a “holding company”
or a “subsidiary holding company” of a “holding company” within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or any successor
statute.  Such Originator is not an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, or any successor statute.

 

(q)           Compliance
with Law.  Such Originator has complied in all respects
with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material
Adverse Effect.  Each Receivable,
together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to truth
in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy), and no part of such
Contract is in violation of any such law, rule or regulation, except where such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect.

 

(r)            Compliance
with Credit and Collection Policy.  Such Originator has complied in all material
respects with the Credit and Collection Policy with regard to each Receivable
and the related Contract, except to the extent any such failure to comply could
have a Material Adverse Effect, and has not made any change to such Credit and
Collection Policy, except such change as to which Buyer (or its assigns) has
been notified in accordance with Section 4.1(a)(vii).

 

 

10

 

(s)           Payments
to Originators.  With respect to each Receivable transferred
to Buyer hereunder, the Purchase Price received by such Originator constitutes
reasonably equivalent value in consideration therefor.  No transfer by such Originator of any
Receivable hereunder is or may be voidable under any section of the Bankruptcy
Reform Act of 1978 (11 U.S.C. §§ 101 et seq.),
as amended.

 

(t)            Enforceability
of Contracts.  Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or limiting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

 

(u)           Eligible
Receivables.  Each Receivable
reflected in any Purchase Report as an Eligible Receivable on the date of such
Purchase Report was an Eligible Receivable on the last day of the period to
which such Purchase Report relates.

 

(v)           Accounting.  The manner in which such Originator accounts
for the transactions contemplated by this Agreement does not adversely affect
the status of the transfers of Receivables, Related Security and all proceeds
thereof to Buyer pursuant to this Agreement as true sales for bankruptcy
purposes.

 

Article
III

 

Conditions of Purchase

 

Section 3.1            Conditions
Precedent to Purchase.

 

The initial
Purchase under this Agreement is subject to the conditions precedent that (a)
Buyer shall have been capitalized with the Initial Contributed Receivables, (b)
Buyer shall have received on or before the Closing Date those documents listed
on Schedule A and (c) all of the conditions to effectiveness of the
Credit Agreement shall have been satisfied or waived in accordance with the
terms thereof.

 

Section 3.2            Conditions
Precedent to Subsequent Payments.

 

Buyer’s
obligation to pay for Receivables coming into existence after the Initial Cutoff
Date shall be subject to the further conditions precedent that:  (a) the Facility Termination Date shall not
have occurred under the Credit Agreement; (b) Buyer (or its assigns) shall have
received such other approvals, opinions or documents as it may reasonably
request and (c) on the date such Receivable came into existence, the following
statements shall be true (and acceptance of the proceeds of any payment for
such Receivable shall be deemed a representation and warranty by the applicable
Originator that such statements are then true):

 

11

 

(i)                                     the
representations and warranties set forth in 0 are true and correct on
and as of the date such Receivable came into existence as though made on and as
of such date; and

 

(ii)                                  no
event has occurred and is continuing that will constitute a Termination Event
or an Unmatured Termination Event.

 

Notwithstanding the foregoing
conditions precedent, upon payment of the Purchase Price for any Receivable
(whether by payment of cash, through an increase in the amounts outstanding
under the Subordinated Note, by offset of amounts owed to Buyer and/or by
offset of capital contributions), title to such Receivable and the Related
Security and Collections with respect thereto shall vest in Buyer, whether or
not the conditions precedent to Buyer’s obligation to pay for such Receivable
were in fact satisfied.  The failure of
any Originator to satisfy any of the foregoing conditions precedent, however,
shall give rise to a right of Buyer to rescind the related purchase and direct
the applicable Originator to pay to Buyer an amount equal to the Purchase Price
payment that shall have been made with respect to any Receivables related
thereto.

 

Article
IV

 

Covenants

 

Section 4.1            Affirmative
Covenants of Originators.

 

Until the date
on which this Agreement terminates in accordance with its terms, each
Originator hereby covenants, as to itself, as set forth below:

 

(a)           Financial Reporting.  Such Originator will maintain, for itself
and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to Buyer (or its assigns):

 

(i)                                     Annual
Reporting.  Within 90 days after the close of each of
its respective fiscal years, audited, unqualified financial statements (which
shall include balance sheets, statements of income and retained earnings and a
statement of cash flows) for such Originator for such fiscal year certified in
a manner acceptable to Buyer (or its assigns) by independent public accountants
reasonably acceptable to Buyer (or its assigns).

 

(ii)                                  Quarterly
Reporting.  Within 45 days after the close of the first
three (3) quarterly periods of each of its respective fiscal years, balance
sheets of such Originator as at the close of each such period and statements of
income and retained earnings and a statement of cash flows for such Originator
for the period from the beginning of such fiscal year to the end of such
quarter, all certified by its chief financial officer.

 

(iii)                               Compliance
Certificate.  Together with the financial statements
required hereunder, a compliance certificate in substantially the form of Exhibit
IV signed by such Originator’s Authorized Officer and dated the date of
such annual financial statement or such quarterly financial statement, as the
case may be.

 

12

 

(iv)                              Shareholders
Statements and Reports.  Promptly upon the furnishing thereof to the
shareholders of such Originator, copies of all financial statements, reports
and proxy statements so furnished; provided, however, that to the
extent that copies of any such financial statements, reports or proxy
statements are publicly available on EDGAR, the requirements of this clause
(iv) shall be satisfied.

 

(v)                                 S.E.C.
Filings.  Promptly upon the filing thereof, copies of
all registration statements and annual, quarterly, monthly or other regular
reports which such Originator or any of its Subsidiaries files with the
Securities and Exchange Commission; provided, however, that to
the extent copies of such registration statements and annual, quarterly,
monthly or other regular reports are publicly available on EDGAR, the
requirements of this clause (v) shall be satisfied.

 

(vi)                              Copies
of Notices.  Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or other
communication under or in connection with any
Transaction Document from any Person other than Buyer, the Administrative Agent
or Blue Ridge, copies of the same.

 

(vii)                           Change
in Credit and Collection Policy.  At least seven (7)
days prior to the effectiveness of any change in or amendment to the Credit and
Collection Policy, a copy of the Credit and Collection Policy then in effect
and a notice (A) indicating such proposed change or amendment, and (B) if such
proposed change or amendment would be reasonably likely to adversely affect the
collectibility of the Receivables or decrease the credit quality of any newly
created Receivables, requesting Buyer’s (and the Administrative Agent’s, as
Buyer’s assignee) consent thereto.

 

(viii)                        Other
Information.  Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables or the
condition or operations, financial or otherwise, of such Originator as Buyer
(or its assigns) may from time to time reasonably request in order to protect
the interests of Buyer (and its assigns) under or as contemplated by this
Agreement.

 

(b)           Notices.  Each Originator will notify Buyer (or its
assigns), as to itself,  in writing of
any of the following promptly upon learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken with respect
thereto:

 

(i)                                     Termination
Events or Unmatured Termination Events. 
The occurrence of each Termination Event and each Unmatured Termination
Event, by a statement of an Authorized Officer of such Originator.

 

(ii)                                  Judgment
and Proceedings.  (A) The entry of any judgment or decree
against such Originator or any of its Subsidiaries if the aggregate amount of
all judgments and decrees then outstanding against such Originator and its
Subsidiaries exceeds $25,000,000 after deducting (1) the amount with respect to
which such Originator or any such Subsidiary is insured and with respect to
which the insurer has assumed responsibility in writing, and (2) the amount for
which such Originator or any such 

 

13

 

Subsidiary is otherwise indemnified if the
terms of such indemnification are satisfactory to Buyer (or its assigns),  and (B) the institution of any litigation,
arbitration proceeding or governmental proceeding against such Originator
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

(iii)                               Material
Adverse Effect.  The occurrence of any event or condition
that has had, or could reasonably be expected to have, a Material Adverse
Effect.

 

(iv)                              Defaults
Under Other Agreements.  The occurrence of a default or an event of
default  under any Material Indebtedness
or an event of default under any other financing arrangement pursuant to which
such Originator is a debtor or an obligor.

 

(v)                                 ERISA
Events.  The
occurrence of any ERISA Event.

 

(vi)                              Downgrade
of Originators.  Any downgrade in
the rating of any Indebtedness of such Originator by S&P or by Moody’s,
setting forth the Indebtedness affected and the nature of such change.

 

(c)           Compliance with Laws and
Preservation of Existence.  Such Originator will comply in all respects
with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material
Adverse Effect.  Such Originator will
preserve and maintain its legal existence, rights, franchises and privileges in
the jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign entity in each jurisdiction where its business is
conducted, except where the failure to so qualify or remain in good standing
could not reasonably be expected to have a Material Adverse Effect.

 

(d)           Audits.  Originator will furnish to Buyer (or its
assigns) from time to time such information with respect to it and the
Receivables as Buyer (or its assigns) may reasonably request.  Such Originator will, from time to time
during regular business hours as requested by Buyer (or its assigns), upon
reasonable notice and at the sole cost of such Originator, permit Buyer (or its
assigns) or their respective agents or representatives, (i) to examine and make
copies of and abstracts from all Records in the possession or under the control
of such Originator relating to the Receivables and the Related Security,
including, without limitation, the related Contracts, and (ii) to visit the
offices and properties of such Originator for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating
to such Originator’s financial condition or the Receivables and the Related
Security or any Originator’s performance under any of the Transaction Documents
or any such Originator’s performance under the Contracts and, in each case,
with any of the officers or employees of such Originator having knowledge of
such matters (each of the foregoing examinations and visits a “Review”); provided, however,
that so long as no Amortization Event has occurred, (A) the Originators shall
only be responsible for the cost and expenses of a total of one (1) Review in
any one calendar year hereunder and under Section 7.1(d) of the Credit
Agreement, and (B) Buyer will not request more than a total of four (4) Reviews
in any one calendar year hereunder and under Section 7.1(d) of the Credit
Agreement; provided further that satisfaction of the audit
requirements of Section 7.1(d) of the Credit Agreement shall satisfy the
requirements of this Section 4.1(d).

 

14

 

(e)           Keeping and Marking of Records and
Books.

 

(i)                                     Such
Originator will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof), and keep
and maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including,
without limitation, records adequate to permit the immediate identification of
each new Receivable and all Collections of and adjustments to each existing
Receivable).  Such Originator will give
Buyer (or its assigns) notice of any material change in the administrative and
operating procedures referred to in the previous sentence.

 

(ii)                                  Such
Originator will (A) on or prior to the date hereof, mark its master data
processing records and other books and records relating to the Receivables with
a legend, acceptable to Buyer (or its assigns), describing Buyer’s ownership
interests in the Receivables and further describing the interest therein of the
Administrative Agent (on behalf of the Secured Parties) under the Credit
Agreement and (B) upon the request of Buyer (or its assigns) following the
occurrence of an Amortization Event, deliver to Buyer (or its assigns) all
Contracts (including, without limitation, all multiple originals of any such
Contract) relating to the Receivables.

 

(f)            Compliance with Contracts and
Credit and Collection Policy.  Such Originator will timely and fully (i)
perform and comply with all provisions, covenants and other promises required
to be observed by it under the Contracts related to the Receivables, and (ii)
comply in all material respects with the Credit and Collection Policy in regard
to each Receivable and the related Contract, except to the extent any such
failure to comply could have a Material Adverse Effect.

 

(g)           Ownership.  Such Originator will take all necessary
action to establish and maintain, irrevocably in Buyer, (A) legal and equitable
title to the Receivables and the Collections and (B) all of Originator’s right,
title and interest in the Related Security associated
with the Receivables, in each case, free and clear of any Adverse Claims other
than Adverse Claims in favor of Buyer (and its assigns) (including, without
limitation, promptly (but in no event later than December 15, 2001) obtaining a
release with respect to the Permitted Adverse Claim, the filing of all
financing statements or other similar instruments or documents necessary under
the UCC (or any comparable law) of all appropriate jurisdictions to perfect
Buyer’s interest in such Receivables, Related Security and Collections and such
other action to perfect, protect or more fully evidence the interest of Buyer
as Buyer (or its assigns) may reasonably request).

 

(h)           Reliance.  Such Originator acknowledges that the
Administrative Agent, the Lender and the Committed Banks are entering into the
transactions contemplated by the Credit Agreement in reliance upon Buyer’s
identity as a legal entity that is separate from such Originator and any
Affiliates thereof.  Therefore, from and
after the date of execution and delivery of this Agreement, such Originator
will take all reasonable steps including, without 

 

15

 

limitation,
all steps that Buyer or any assignee of Buyer may from time to time reasonably
request to maintain Buyer’s identity as a separate legal entity and to make it
manifest to third parties that Buyer is an entity with assets and liabilities
distinct from those of such Originator and any Affiliates thereof and not just
a division of such Originator or any such Affiliate.  Without limiting the generality of the foregoing and in addition
to the other covenants set forth herein, such Originator (i) will not hold
itself out to third parties as liable for the debts of Buyer nor purport to own
the Receivables and other assets acquired by Buyer, (ii) will at all times
comply, and take all other actions necessary on its part to ensure that Buyer
is at all times in compliance, with the “separateness covenants” set forth in
Section 7.1(i) of the Credit Agreement, including without limitation, Section
7.1(i)(xviii) thereof and (iii) will cause all tax liabilities arising in
connection with the transactions contemplated herein or otherwise to be
allocated between such Originator and Buyer on an arm’s-length basis and in a
manner consistent with the procedures set forth in U.S. Treasury Regulations §
1.1552-1.

 

(i)            Collections.  Such Originator will cause (i) all proceeds
from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (ii) each Lock-Box and Collection Account to be subject at all
times to a Collection Account Agreement that is in full force and effect.  In the event any payments relating to
Receivables are remitted directly to such Originator or any Affiliate of such
Originator, such Originator will remit (or will cause all such payments to be
remitted) directly to a Collection Bank and deposited into a Collection Account
within two (2) Business Days following receipt thereof and, at all times prior
to such remittance, such Originator will itself hold or, if applicable, will
cause such payments to be held in trust for the exclusive benefit of Buyer and
its assigns.  Such Originator will
transfer exclusive ownership, dominion and control of each Lock-Box and
Collection Account to Buyer and, will not grant the right to take dominion and
control of any Lock-Box or Collection Account at a future time or upon the
occurrence of a future event to any Person, except to Buyer (or its assigns) as
contemplated by this Agreement and the Credit Agreement.

 

(j)            Taxes.  Such Originator will file all tax returns
and reports required by law to be filed by it and promptly pay all taxes and
governmental charges at any time owing, except any such taxes which are not yet
delinquent or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.  Such
Originator will pay when due any taxes payable in connection with the Receivables,
exclusive of taxes on or measured by income or gross receipts of Buyer and its
assigns.

 

Section 4.2            Negative
Covenants of Originators.

 

Until the date
on which this Agreement terminates in accordance with its terms, each
Originator hereby covenants, as to itself, that:

 

(a)           Name Change, Offices and Records.  Such 
Originator will not change its (i) jurisdiction of formation, (ii) name,
(iii) identity or structure (within the meaning of Article 9 of any applicable
enactment of the UCC) or relocate its chief executive office at any time while
the location of its chief executive office is relevant to perfection of Buyer’s
interest in the 

 

16

 

Receivables or
the associated Related Security and Collections, or any office where Records
are kept unless it shall have:  (A)
given Buyer (or its assigns) at least forty-five (45) days’ prior written
notice thereof and (B) delivered to Buyer (or its assigns) all financing statements,
instruments and other documents requested by Buyer (or its assigns) in
connection with such change or relocation.

 

(b)           Change in Payment Instructions to
Obligors.  Without the prior written consents of the
Buyer and the Administrative Agent, such Originator will not add or terminate any
bank as a Collection Bank, or make any change in the instructions to Obligors
regarding payments to be made to any Lock-Box or Collection Account, unless
Buyer (or its assigns) shall have received, at least ten (10) days before the
proposed effective date therefor, (i) written notice of such addition,
termination or change and (ii) with respect to the addition of a Collection
Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or Lock-Box;
provided, however, that such Originator may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Collection Account.

 

(c)           Modifications to Contracts and
Credit and Collection Policy.  Without the prior written consents of the
Buyer and the Administrative Agent, such Originator will not make any change to
the Credit and Collection Policy that could adversely affect the collectibility
of the Receivables or decrease the credit quality of any newly created
Receivables.  Except as otherwise
permitted in its capacity as Subservicer pursuant to the Credit Agreement, such
Originator will not extend, amend or otherwise modify the terms of any
Receivable or any Contract related thereto other than in accordance with the
Credit and Collection Policy.

 

(d)           Sales, Liens.  Such Originator will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, or create or suffer to exist any Adverse Claim other than the
Permitted Adverse Claim, upon (including, without limitation, the filing of any
financing statement) or with respect to, any Receivable, Related Security or
Collections, or upon or with respect to any Contract under which any Receivable
arises, or any Lock-Box or Collection Account, or assign any right to receive
income with respect thereto (other than, in each case, the creation of the
interests therein in favor of Buyer provided for herein), and such Originator will
defend the right, title and interest of Buyer in, to and under any of the
foregoing property, against all claims of third parties claiming through or
under Originator.  Such Originator shall
not create or suffer to exist any mortgage, pledge, security interest,
encumbrance, lien, charge or other similar arrangement on any of the proceeds
of its inventory constituting Receivables or Related
Security.  If such Originator creates or
suffers to exist any lien or encumbrance on any of its inventory, the Originator
shall send each such agreement to the Administrative Agent prior to execution
of any such agreement to enable the Administrative Agent to review any such
security agreements, any financing statements and any other documents or
instruments in connection with the creation of such lien or encumbrance to
determine in its sole discretion that such lien or encumbrance does not relate
to (i) any proceeds of any of such Originator’s inventory constituting
Receivables and Related Security and (ii) any of the Collateral.  In the event that the Administrative Agent
determines any such agreement, financing statement or other document or
instrument relates to any portion or all of the 

 

17

 

Receivables, the Related Security
or the Collateral, the Originator shall not execute such security agreement,
financing statement or other document or instrument.

 

(e)           Accounting for Purchase.  Such Originator will not, and will not
permit any Affiliate to, account for or treat (whether in financial statements
or otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by such Originator to Buyer or
in any other respect account for or treat the transactions contemplated hereby
in any manner other than as a sale of the Receivables and the Related Security
by such Originator to Buyer except to the extent that such transactions are not
recognized on account of consolidated financial reporting in accordance with
generally accepted accounting principles.

 

Article
V

 

Termination Events

 

Section
5.1            Termination Events.

 

The occurrence
of any one or more of the following events shall constitute a Termination
Event:

 

(a)           Any
Originator shall fail (i) to make any payment or deposit required hereunder
when due and such failure shall continue for one (1) Business Day after notice
thereof has been given by the Buyer (or its assigns) to such Originator, or
(ii) to perform or observe any term, covenant or agreement hereunder (other than
as referred to in clause (i).
of this paragraph (a)) or any other Transaction Document to which it is
a party and such failure shall continue for ten (10) consecutive Business Days.

 

(b)           Any representation or warranty made
by any Originator in any Transaction Document to which it is a party or in any
other document delivered pursuant thereto shall prove to have been incorrect
when made or deemed made or any other certification or statement by any
Originator shall prove to have been incorrect in any material respect when made
or deemed made.

 

(c)           Failure of any Originator to pay any
Indebtedness when due in excess of $25,000,000; or the default by any
Originator in the performance of any term, provision or condition contained in
any agreement under which any such Indebtedness was created or is governed that
continues after the expiration of any applicable cure period or grace period or
that is not waived by the holder or holders of such Indebtedness, the effect of
which is to cause, or to permit the holder or holders of such Indebtedness to
cause, such Indebtedness to become due prior to its stated maturity; or any
such Indebtedness of any Originator shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior to
the date of maturity thereof.

 

(d)           An Event of Bankruptcy shall occur
with respect to any Originator or any of their respective Subsidiaries.

 

18

 

(e)           A Change of Control shall occur.

 

(f)            One or more final judgments for the
payment of money in an amount in excess of $25,000,000, individually or in the
aggregate, shall be entered against any Originator on any of its Subsidiaries
on claims not covered by insurance or as to which the insurance carrier has
denied its responsibility, and such judgment shall continue unsatisfied and in
effect for thirty (30) consecutive days without a stay of execution.

 

(g)           The
Internal Revenue Service shall file notice of a lien pursuant to Section
6323 of the Tax Code with regard to any of the Receivables and Related
Security and such lien shall continue until the earlier of (i) seven (7) days
after inception and (ii) knowledge by any Secured Party of such lien, or the
PBGC shall, or shall indicate its intention to, file notice of a lien pursuant
to Section 4068 of ERISA with regard to any of the Receivables and
Related Security.

 

(h)           Any
Plan of any Originator or any of its respective ERISA Affiliates:

 

(i)                                     shall
fail to be funded in accordance with the minimum funding standard resulting
from an accumulated funding deficiency as required by applicable law, the terms
of such Plan, Section 412 of the Tax Code or Section 302 of ERISA
for any plan year or a waiver of such standard is sought or granted with
respect to such Plan under applicable law, the terms of such Plan or Section
412 of the Tax Code or Section 303 of ERISA; or

 

(ii)                                  is
being, or has been, terminated or the subject of termination proceedings under
applicable law or the terms of such Plan; or

 

(iii)                               shall
require such Originator or any of its ERISA Affiliates to provide security
under applicable law, the terms of such Plan, Section 401 or 412
of the Tax Code or Section 306 or 307 of ERISA; or

 

(iv)                              results
in a liability to such Originator or any of its ERISA Affiliates under
applicable law, the terms of such Plan, or Title IV ERISA,

 

and there shall result from any
such failure, waiver, termination or other event a liability to the PBGC or a
Plan that would have a Material Adverse Effect.

 

Section
5.2            Remedies.

 

Upon the
occurrence and during the continuation of a Termination Event, Buyer may take
any of the following actions:  (a)
declare the Termination Date to have occurred, whereupon the Termination Date
shall forthwith occur, without demand, protest or further notice of any kind,
all of which are hereby expressly waived by each Originator; provided,
however, that upon the occurrence of a Termination Event described in Section
5.1(d), or of an actual or deemed entry of an order for relief with respect
to any Originator under the Federal Bankruptcy Code, the Termination Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by each Originator and (b) to the fullest
extent

 

19

 

permitted by applicable law,
declare that the Default Fee shall accrue with respect to any amounts then due
and owing by the applicable Originator to Buyer.  The aforementioned rights and remedies shall be without limitation
and shall be in addition to all other rights and remedies of Buyer and its
assigns otherwise available under any other provision of this Agreement, by
operation of law, at equity or otherwise, all of which are hereby expressly
preserved, including, without limitation, all rights and remedies provided
under the UCC, all of which rights shall be cumulative.

 

Article
VI

 

Indemnification

 

Section
6.1            Indemnities by
Originators.

 

Without
limiting any other rights that Buyer may have hereunder or under applicable
law, each Originator hereby agrees to indemnify (and pay upon demand to) Buyer
and its assigns, officers, directors, agents and employees (each an “Indemnified Party”) from and against
any and all damages, losses, claims, taxes, liabilities, costs, expenses and
for all other amounts payable, including attorneys’ fees (which attorneys may
be employees of Buyer or any such assign) and disbursements (all of the
foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any
of them arising out of or as a result of this Agreement or the acquisition,
either directly or indirectly, by Buyer of an interest in the Receivables,
excluding, however:

 

(a)           Indemnified Amounts to the extent a
final judgment of a court of competent jurisdiction holds that such Indemnified
Amounts resulted from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification;

 

(b)           Indemnified Amounts to the extent the
same includes losses in respect of Receivables that are uncollectible on
account of the insolvency, bankruptcy or lack of creditworthiness of the
related Obligor; or

 

(c)           taxes imposed by any jurisdiction in
which such Indemnified Party’s principal executive office is located, on or
measured by the overall net income of such Indemnified Party to the extent that
the computation of such taxes is consistent with the characterization for
income tax purposes of the acquisition, either directly or indirectly, by the
Lender, any Committed Bank or any Liquidity Bank of an interest in the
Receivables under the Credit Agreement;

 

provided,
however, that nothing contained in this sentence shall limit the
liability of any Originator or limit the recourse of Buyer to such Originator
for amounts otherwise specifically provided to be paid by such Originator under
the terms of this Agreement.  Without
limiting the generality of the foregoing indemnification, but subject in each
case to clauses (a), (b) and (c) above, each Originator
shall indemnify Buyer for Indemnified Amounts in excess of any Purchase Price
Credit received by the Buyer with respect thereto, relating to or resulting
from:

 

20

 

(i)                                     any
representation or warranty made by such Originator (or any officers of such
Originator) under or in connection with any Purchase Report, this Agreement,
any other Transaction Document or any other information or report delivered by
such Originator pursuant hereto or thereto for which Buyer has not received a
Purchase Price Credit that shall have been false or incorrect when made or
deemed made;

 

(ii)                                  the
failure by such Originator, to comply with any applicable law, rule or
regulation with respect to any Receivable or Contract related thereto, or the
nonconformity of any Receivable or Contract related thereto included therein
with any such applicable law, rule or regulation or any failure of such
Originator to keep or perform any of its obligations, express or implied, with
respect to any Contract;

 

(iii)                               any
failure of such Originator to perform its duties, covenants or other
obligations in accordance with the provisions of this Agreement or any other
Transaction Document;

 

(iv)                              any
products liability, personal injury or damage, suit or other similar claim
arising out of or in connection with merchandise, insurance or services that
are the subject of any Contract or any Receivable;

 

(v)                                 any
dispute, claim, offset or defense (other than discharge in bankruptcy of the
Obligor) of the Obligor to the payment of any Receivable (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim resulting from the sale of
the merchandise or service related to such Receivable or the furnishing or
failure to furnish such merchandise or services;

 

(vi)                              the
commingling of Collections of Receivables at any time with other funds;

 

(vii)                           any
investigation, litigation or proceeding related to or arising from this
Agreement or any other Transaction Document, the transactions contemplated
hereby, the use of the proceeds of the Purchase hereunder, the ownership of the
Receivables or any other investigation, litigation or proceeding relating to
such Originator in which any Indemnified Party becomes involved as a result of
any of the transactions contemplated hereby;

 

(viii)                        any
inability to litigate any claim against any Obligor in respect of any
Receivable as a result of such Obligor being immune from civil and commercial
law and suit on the grounds of sovereignty or otherwise from any legal action,
suit or proceeding;

 

(ix)                                any
Termination Event described in Section 5.1(d);

 

(x)                                   any
failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal
and equitable title to, and ownership of, the Receivables and the Collections,
and all

 

21

 

of
Originator’s right, title and interest in the Related Security associated with
the Receivables, in each case, free and clear of any Adverse Claim;

 

(xi)                                the
failure to have filed, or any delay in filing, financing statements or other
similar instruments or documents with respect to such Originator or Borrower
under the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable, the Related Security and Collections with respect
thereto, and the proceeds of any thereof, whether at the time of the Purchase
or at any subsequent time;

 

(xii)                             any
action or omission by such Originator which reduces or impairs the rights of
Buyer with respect to any Receivable or the value of any such Receivable;

 

(xiii)                          any
attempt by any Person to void the Purchase hereunder under statutory provisions
or common law or equitable action; and

 

(xiv)                         the
failure of any Receivable reflected as an Eligible Receivable in any Purchase
Report to be an Eligible Receivable on the date of such Purchase Report.

 

Section 6.2            Defense of Claims.

 

(a)           An Indemnified Party shall, after
obtaining actual knowledge, thereof, promptly notify each Originators in
writing of any Claim as to which indemnification is sought (unless any
Originator theretofore has notified such Indemnified Party of such Claim);
except that the failure to give such notice shall not release any Originator
from any of its obligations under this Agreement, however, such Originator’s
obligations shall be reduced to the extent that failure to promptly give notice
of any action, suit or proceeding against such Indemnified Party (i) impairs
such Originator from defending such Claim or (ii) increases the amount for
which such Originator is liable in accordance with Section 6.1.  Within thirty (30) days after receiving
notice from an Indemnified Party of any Claim as to which indemnification is
sought, each Originator, if it so desires, may elect in writing, subject to the
provisions of the following paragraph, to control, at its sole cost and
expense, and to assume full responsibility for, the defense of such Claim with
counsel acceptable to the Indemnified Parties in their reasonable discretion; provided,
that such Originator has agreed in writing on or prior to the assumption of
such defense to indemnify such Indemnified Party for such Claim.  If any Originator elects to assume the
defense of such Claim, such Originator shall keep the Indemnified Party which
is the subject of such proceeding fully apprised of the status of the
proceeding and shall provide such Indemnified Party with all information with
respect to such proceeding as such Indemnified Party may reasonably
request.  If such Originator does not
elect to assume control, as provided for above, and provided it is not
prevented from assuming such control pursuant to the provisions of clause (b)
below, the applicable Indemnified Party shall, at the expense of such
Originator supply such Originator with all such information and documents
reasonably requested by such Originator.

 

(b)           Notwithstanding any of the foregoing
to the contrary, no Originator shall be entitled to control and assume responsibility
for the defense of such Claim if in the reasonable opinion of such Indemnified
Party (i) there exists an actual or potential conflict of interest, such that
such Indemnified Party determines that it is desirable to retain control of
such proceeding (ii)

 

22

 

such Claim
involves the risk of criminal liability to such Indemnified Party or (iii) the
control of such Claim would involve a conflict of interest.  In the circumstances described above, the Indemnified
Party shall be entitled to control and assume responsibility for the defense of
such claim or liability, subject to Section 6.1, at the expense of such
Originator.

 

(c)           No Indemnified Party shall settle any
Claim without the prior consent of the applicable Originator (which consent
shall not be unreasonably withheld).  No
Originator may settle any Claim without the prior written consent of each
affected Indemnified Party which consent may not be unreasonably withheld or
delayed in the case of a money settlement not involving an admission of
liability of such Indemnified Party, nor may any Originator settle any Claim if
such settlement results, or could reasonably be expected to result, in criminal
liability of such Indemnified Party.

 

Section 6.3            Other
Costs and Expenses.

 

The
Originators shall pay to Buyer on demand all costs and out-of-pocket expenses
in connection with the preparation, execution, delivery and administration of
this Agreement, the transactions contemplated hereby and the other documents to
be delivered hereunder.  Each Originator
shall pay to Buyer on demand any and all costs and expenses of Buyer, if any,
including counsel fees and expenses in connection with the enforcement of this
Agreement and the other documents delivered hereunder and in connection with
any restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following a Termination Event.

 

Article
VII

 

Miscellaneous

 

Section 7.1            Waivers
and Amendments.

 

(a)           No failure or delay on
the part of Buyer (or its assigns) in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy.  The rights and remedies herein provided
shall be cumulative and nonexclusive of any rights or remedies provided by
law.  Any waiver of this Agreement shall
be effective only in the specific instance and for the specific purpose for
which given.

 

(b)           No provision of this Agreement may be
amended, supplemented, modified or waived except in writing signed by each
Originator, Buyer and the Administrative Agent and, to the extent required
under the Credit Agreement, the Liquidity Banks or the Required Liquidity
Banks. 
Any material amendment, supplement, modification of waiver will required
satisfaction of the Rating Agency Condition.

 

23

 

Section 7.2            Notices.

 

All
communications and notices provided for hereunder shall be in writing
(including bank wire, facsimile or electronic facsimile transmission or similar
writing) and shall be given to the other parties hereto at their respective
addresses or facsimile numbers set forth on the signature pages hereof or at
such other address or facsimile number as such Person may hereafter specify for
the purpose of notice to each of the other parties hereto.  Each such notice or other communication
shall be effective (a) if given by facsimile, upon the receipt thereof, (b) if
given by mail, three (3) Business Days after the time such communication is
deposited in the mail with first class postage prepaid or (c) if given by any
other means, when received at the address specified in this Section 7.2.

 

Section 7.3            Protection of Ownership Interests of Buyer.

 

(a)           Each Originator agrees that from time
to time, at its expense, it will promptly execute and deliver all instruments
and documents, and take all actions, that may be necessary or desirable, or
that Buyer (or its assigns) may request, to perfect, protect or more fully
evidence the interest of Buyer hereunder and the Receivable Interests, or to
enable Buyer (or its assigns) to exercise and enforce their rights and remedies
hereunder.  At any time, Buyer (or its
assigns) may, at the applicable Originator’s sole cost and expense, direct such
Originator to notify the Obligors of Receivables of the ownership interests of
Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all
Receivables be made directly to Buyer or its designee.

 

(b)           If any Originator fails to perform
any of its obligations hereunder, Buyer (or its assigns) may (but shall not be
required to) perform, or cause performance of, such obligations, and Buyer’s
(or such assigns’) costs and expenses incurred in connection therewith shall be
payable by such Originator as provided in Section 6.2.  Each Originator irrevocably authorizes Buyer
(and its assigns) at any time and from time to time in the sole discretion of
Buyer (or its assigns), and appoints Buyer (and its assigns) as its
attorney(ies)-in-fact, to act on behalf of such Originator (i) to execute on
behalf of such Originator as debtor and to file financing statements necessary
or desirable in Buyer’s (or its assigns’) sole discretion to perfect and to
maintain the perfection and priority of the interest of Buyer in the
Receivables and associated Related Security and Collections and (ii) to file a
carbon, photographic or other reproduction of this Agreement or any financing
statement with respect to the Receivables as a financing statement in such
offices as Buyer (or its assigns) in their sole discretion deem necessary or
desirable to perfect and to maintain the perfection and priority of Buyer’s
interests in the Receivables.  This
appointment is coupled with an interest and is irrevocable.  (A) Each Originator hereby authorizes Buyer
(or its assigns) to file financing statements and other filing or recording
documents with respect to the Receivables and Related Security (including any
amendments thereto, or continuation or termination statements thereof), without
the signature or other authorization of such Originator, in such form and in
such offices as Buyer (or any of its assigns) reasonably determines appropriate
to perfect or maintain the perfection of the ownership or security interests of
Buyer (or its assigns) hereunder, (B) each Originator acknowledges and agrees
that it is not authorized to, and will not, file financing statements or other
filing or recording documents with respect to the Receivables or Related
Security (including any amendments thereto, or continuation or termination
statements thereof), without the express prior written approval by the
Administrative 

 

24

 

Agent (as Buyer’s assignee),
consenting to the form and substance of such filing or recording document, and
(C) each Originator approves, authorizes and ratifies any filings or recordings
made by or on behalf of the Administrative Agent (as Buyer’s assign) in
connection with the perfection of the ownership or security interests in favor
of Buyer or the Administrative Agent (as Buyer’s assign).

 

Section
7.4            Confidentiality.

 

(a)           Each Originator shall maintain and
shall cause each of its employees and officers to maintain the confidentiality
of this Agreement and the other confidential or proprietary information with
respect to the Administrative Agent, any Committed Bank and Blue Ridge and
their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that such Originator and its officers and employees may disclose such
information to such Originator’s external accountants and attorneys and as
required by any applicable law or order of any judicial or administrative
proceeding.

 

(b)           Anything
herein to the contrary notwithstanding, each Originator hereby consents to the
disclosure of any nonpublic information with respect to it (i) to Buyer, the
Administrative Agent, the Committed Banks, the Liquidity Banks or Blue Ridge by
each other, (ii) by Buyer, the Administrative Agent, the Lender or the
Committed Banks to any prospective or actual assignee or participant of any of
them who executes a confidentiality agreement for the benefit of any Originator
on terms comparable to those required of Buyer hereunder with respect to such
disclosed information, and (iii) by the Administrative Agent to any rating
agency, Commercial Paper dealer or provider of a surety, guaranty or credit or
liquidity enhancement to Blue Ridge or any entity organized for the purpose of
purchasing, or making loans secured by, financial assets for which Wachovia
acts as the administrative agent, and (iv) to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing, provided
that each such Person is informed of the confidential nature of such
information and in the case of any Person referred to in clause (iii),
the Buyer (or its assigns) shall use reasonable efforts to cause each such
Person to agree to keep such information confidential.  In addition, the Committed Banks, Blue Ridge
and the Administrative Agent may disclose any such nonpublic information with
respect to any Originator to the extent required pursuant to any applicable
law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings with competent
jurisdiction (whether or not having the force or effect of law).

 

(c)           Buyer
shall maintain and shall cause each of its employees and officers to maintain
the confidentiality of this Agreement and the other confidential or proprietary
information with respect to each Originator, the Obligors and their respective
businesses obtained by it in connection with the due diligence evaluations,
structuring, negotiating and execution of the Transaction Documents, and the
consummation of the transactions contemplated herein and any other activities
of Buyer arising from or related to the transactions contemplated herein provided,
however, that each of Buyer and its employees and officers shall be
permitted to disclose such confidential or proprietary information: (i) to the
Administrative Agent, the Committed Banks, the Liquidity Banks and Blue Ridge,
(ii) to any prospective or actual assignee 

 

25

 

or participant
of the Administrative Agent, the Lender or the Committed Banks who execute a
confidentiality agreement for the benefit of such Originator and Buyer on terms
comparable to those required of Buyer hereunder with respect to such disclosed
information, (iii) to any rating agency, Commercial Paper dealer or provider of
a surety, guaranty or credit or liquidity enhancement to Blue Ridge or any
entity organized for the purpose of purchasing, or making loans secured by,
financial assets for which Wachovia acts as the administrative agent, and (iv)
to any officers, directors, employees, outside accountants and attorneys of any
of the foregoing, provided that each such Person is informed of the
confidential nature of such information and in the case of any Person referred
to in clause (iii), the Buyer (or its assigns) shall use reasonable
efforts to cause each such Person to agree to keep such information
confidential.  In addition, the
Committed Banks, Blue Ridge and the Administrative Agent may disclose any such
nonpublic information to the extent required pursuant to any applicable law,
rule, regulation, direction, request or order of any judicial, administrative
or regulatory authority or proceedings with competent jurisdiction (whether or
not having the force or effect of law).

 

Section 7.5            Bankruptcy
Petition.

 

(a)           Each Originator and Buyer hereby covenants
and agrees that, prior to the date that is one year and one day after the
payment in full of all outstanding senior indebtedness of Blue Ridge, it will
not institute against, or join any other Person in instituting against, Blue
Ridge any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.

 

(b)           Each Originator covenants and agrees
that, prior to the date that is one year and one day after the payment in full
of all outstanding obligations of Buyer under the Credit Agreement, it will not
institute against, or join any other Person in instituting against, Buyer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.

 

Section
7.6            Limitation of Liability.

 

Except with
respect to any claim arising out of the willful misconduct or gross negligence
of Blue Ridge, the Administrative Agent, any Committed Bank or any Liquidity
Bank, no claim may be made by any Originator, the Buyer or any of their
respective Affiliates, against Blue Ridge, the Administrative Agent or any
Liquidity Bank or their respective Affiliates, directors, officers, employees,
attorneys or agents for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement, or any act, omission or event occurring in connection therewith; and
each Originator hereby waives, releases, and agrees not to sue upon any claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.

 

Section
7.7            CHOICE OF LAW.

 

THIS AGREEMENT
SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT
THE LAW OF CONFLICTS 

 

26

 

OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW) OF THE STATE OF NEW YORK.

 

Section
7.8            CONSENT TO JURISDICTION.

 

EACH
ORIGINATOR HEREBY IRREVOCABLY SUBMITS TO THE NON–EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS AGREEMENT AND
ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.  NOTHING HEREIN
SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST
ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY ORIGINATOR AGAINST BUYER (OR ITS
ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY
DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT
ONLY IN A COURT IN NEW YORK, NEW YORK.

 

Section
7.9            WAIVER OF JURY TRIAL.

 

TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER
OR THEREUNDER.

 

Section 7.10         Integration;
Binding Effect; Survival of Terms.

 

(a)           This Agreement and each other
Transaction Document contain the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof superseding all prior oral or written understandings.

 

(b)           This Agreement shall be binding upon
and inure to the benefit of each Originator, Buyer and their respective
successors and permitted assigns (including any trustee in bankruptcy).  No Originator may assign any of its rights
and obligations hereunder or any interest herein without the prior written
consent of Buyer and the Administrative Agent. 
Buyer may, without the consent of the Originators, assign to the
Administrative Agent, for the benefit of the 

 

27

 

Secured
Parties, its rights, remedies, powers and privileges hereunder and the
Administrative Agent may further assign such rights, remedies, powers and
privileges to the extent permitted in the Credit Agreement.  Each Originator agrees that the
Administrative Agent, as the assignee of Buyer, shall, subject to the terms of
the Credit Agreement, have the right to enforce this Agreement and to exercise
directly all of Buyer’s rights and remedies under this Agreement (including,
without limitation, the right to give or withhold any consents or approvals of
Buyer to be given or withheld hereunder) and such Originator agrees to
cooperate fully with the Administrative Agent in the exercise of such rights
and remedies.  This Agreement shall create
and constitute the continuing obligations of the parties hereto in accordance
with its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and
remedies with respect to (i) any breach of any representation and warranty made by Originator
pursuant to Article II; (ii) the indemnification and payment provisions
of Article VI; and (iii) Section 7.5 shall be continuing and
shall survive any termination of this Agreement.

 

Section 7.11         Counterparts;
Severability; Section References.

 

This Agreement
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same Agreement.  Delivery of an executed
counterpart of a signature page by facsimile shall be effective as delivery of
manually executed counterpart of this Agreement.  Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  Unless otherwise expressly indicated, all
references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean
articles and sections of, and schedules and exhibits to, this Agreement.

 

[remainder of page intentionally left blank]

 

 

28

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed and
delivered by their duly authorized officers as of the date hereof.

 

	
   

  	
  LOUISIANA-PACIFIC
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

	
   

  	
  Address:

  
	
   

  	
  805 S.W. Broadway

  
	
   

  	
  Portland, Oregon
  97205-3033

  
	
   

  	
   

  
	
   

  	
  LP WOOD
  POLYMERS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  c/o Louisiana-Pacific
  Corporation

  
	
   

  	
  805 S.W. Broadway

  
	
   

  	
  Portland, Oregon
  97205-3033

  
					

 

	
   

  	
  LP
  RECEIVABLES CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  c/o Louisiana-Pacific
  Corporation

  
	
   

  	
  805 S.W. Broadway

  
	
   

  	
  Portland, Oregon
  97205-3033

  
	
   

  	
   

  
					

 

 

Exhibit I

 

Definitions

 

This is Exhibit
I to the Agreement (as hereinafter defined).  As used in the Agreement and the Exhibits and Schedules thereto,
capitalized terms have the meanings set forth in this Exhibit I (such
meanings to be equally applicable to the singular and plural forms
thereof).  If a capitalized term is used
in the Agreement, or any Exhibit or Schedule thereto, and is not otherwise
defined therein or in this Exhibit I, such term shall have the meaning
assigned thereto in Exhibit I to the Credit Agreement (hereinafter defined).

 

Administrative
Agent:  As
defined in the Preliminary Statements..

 

Agreement:  The Receivables Sale Agreement, dated as of
November 15, 2001, between Originators and Buyer, as the same may be amended,
restated or otherwise modified.

 

Blue Ridge:  As defined in the Preliminary Statements..

 

Buyer:  As defined in the preamble.

 

Calculation
Period:  Each
Fiscal Month or portion thereof which elapses during the term of the
Agreement.  The first Calculation Period
shall commence on the date of the first Purchase hereunder and the final
Calculation Period shall terminate on the Termination Date.

 

Credit and
Collection Policy: 
Each Originator’s credit and collection policies and practices relating
to Contracts and Receivables existing on the date hereof and delivered to Buyer
and the Administrative Agent, as modified from time to time in accordance with
the Agreement.

 

Credit
Agreement:  The
meaning set forth in the Preliminary Statements to the Agreement.

 

Default Fee:  A per annum rate of interest equal to the
sum of (i) the Prime Rate, plus (ii) 2% per annum.

 

Discount
Factor:  As of
any date, the quotient obtained by dividing (a) one, by (b) one plus
the Discount Rate as of such date.

 

Discount Rate:  As of any date, the product of (i) the
sum of the Weighted Average Interest Rate, the Service Fee Rate and the Profit
Rate as of such date and (ii) the quotient obtained by dividing
(a) the Days Sales Outstanding as of such date, by (b) 360.

 

Eligible
Receivables Finance Percentage:  As of any date, one minus the greater of (i)
the Required Reserve Factor Floor as of such date or (ii) the sum of the Loss
Reserve, the Interest Reserve, the Dilution Reserve, the Cash Discount Reserve,
the Rebate Reserve and the Servicing Reserve, each as of such date.

 

Eligible
Receivables Pool Percentage:  As of any date, the quotient obtained by dividing (i) the
aggregate Outstanding Balance of all Eligible Receivables as of the Cut-Off
Date immediately 

 

I-1

 

preceding such date.by (ii) the
aggregate Outstanding Balance of all Receivables as of the Cut-Off Date
immediately preceding such date.

 

ERISA Event:  (i) a Reportable Event with respect to a
Pension Plan; (ii) a withdrawal by Originator or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001 (a) (2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (iii) a complete or partial withdrawal by Originator or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (iv) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (v) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (vi) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon Originator or any ERISA Affiliate.

 

Initial
Contributed Receivables:  As defined in Section 1.1.

 

Initial Cutoff
Date:  As
defined in Section 1.1.

 

Loss Discount
Factor: As of any date, one minus the quotient
obtained by dividing (i) the losses (i.e., write-offs to the bad
debt reserve or other write-offs consistent with the Credit and Collection
Policy, in each case, net of recoveries) recognized for all Receivables during
the period equal to twelve successive Calculation Periods ending on the Cut-Off
Date immediately preceding such date, by (ii) the Collections on all
Receivables received during such period.

 

Material
Adverse Effect: 
A material adverse effect on (i) the financial condition or operations
of any Originator and any of their respective Subsidiaries taken as a whole,
(ii) the ability of any Originator to perform its obligations under this
Agreement or any other Transaction Document to which it is a party, (iii) the
legality, validity or enforceability of this Agreement or any other Transaction
Document against any Originator, (iv) the Buyer’s (or its assigns’) security
interest in the Receivables generally or in any significant portion of the
Receivables, the Related Security or Collections with respect thereto, or (v)
the collectibility of the Receivables generally or of any material portion of
the Receivables.

 

Multiemployer
Plan:  A
“multiemployer plan”, within the meaning of Section 4001 (a) (3) of ERISA, to
which Originator or any ERISA Affiliate makes, is making, or is obligated to
make contributions or, during the preceding three calendar years, has made, or
been obligated to make, contributions.

 

Net
Receivables Balance: 
With respect to any Purchase from an Originator, an amount equal to the
product of (i) the Outstanding Balance of the Receivables being purchased
as of the date of Purchase and (ii) the Loss Discount Factor.

 

2

 

Net Worth:  As of the last Business Day of each
Calculation Period preceding any date of determination, the excess, if any, of
(i) the aggregate Outstanding Balance of the Receivables at such time, over
(ii) the sum of (1) the Aggregate Principal outstanding at such time, plus (2)
the aggregate outstanding principal balance of the Subordinated Loans (including
any Subordinated Loan proposed to be made on the date of determination).

 

Non-Program
Interest Rate: 
As of any date, the sum of (i) the offered per annum rate (rounded
upwards to the nearest 1/16th of one percent) appearing in The Wall Street
Journal for three month LIBOR loans on the immediately preceding Cut-Off
Date and (ii) 3.00%.

 

Organizational
Documents:  For
any Person, the documents for its formation and organization, which, for
example, (i) for a corporation are its corporate charter and bylaws, (ii) for a
partnership are its certificate of partnership (if applicable) and partnership
agreement, (iii) for a limited liability company are its certificate of
formation or organization and its operating agreement, regulations or the like
and (iv) for a trust is the trust agreement, declaration of trust, indenture or
bylaws under which it is created.

 

Original
Balance:  With
respect to any Receivable coming into existence after the Initial Cutoff Date,
the Outstanding Balance of such Receivable on the date it was created.

 

Originator:  As defined in the preamble.

 

Originator
Representative: 
As defined in the Subordinated Note.

 

Profit Rate:  1.00% per annum.

 

Program
Interest Rate: 
As of any date, the sum of (i) the per annum rate (rounded upwards
to the nearest 1/16 of one percent) appearing in The Wall Street Journal
for 90-day dealer commercial paper on the immediately preceding Cut-Off Date
and (ii) the then applicable per annum Program Fee Rate (as defined in the
Fee Letter) for CP Loans.

 

Purchase:  The purchase, transfer and assignment
(whether by sale, capital contribution or otherwise), pursuant to Section
1.2(a) of the Agreement by Buyer from an Originator of the Receivables and
the Related Security and Collections related thereto, together with all related
rights in connection therewith.

 

Purchase Price:  With respect to any Purchase from an
Originator, the aggregate price to be paid by Buyer to such Originator in
accordance with the terms of Section 1.3 of the Agreement for the
Receivables, the Collections and the Related Security that are the subject of
such Purchase, which price shall equal (i) the product of (A) the Net
Receivables Balance of the Receivables that are the subject of such Purchase
and (B) the then applicable Discount Factor, minus (ii) any outstanding
Purchase Price Credits that have not previously been paid in accordance with Section
1.4.

 

Purchase Price
Credit:  As
defined in Section 1.4

 

3

 

Purchase
Report:  As
defined in Section 1.2(b)

 

Purchase
Settlement Date: 
The second (2nd) Business Day after each Scheduled Monthly Reporting
Date.

 

Receivable:  All indebtedness and other obligations owed
to each Originator (at the times it arises, and before giving effect to any transfer
or conveyance under the Agreement) or Buyer (after giving effect to the
transfers under the Agreement) or in which such Originator or Buyer has a
security interest or other interest, including, without limitation, any
indebtedness, obligation or interest constituting an account, chattel paper,
instrument or general intangible, arising in connection with the sale of
inventory by an Originator to any Obligor which, if a natural person, is a
resident of the United States or, if a corporation or other business
organization, is organized under the laws of the United States or any political
subdivision thereof and has its chief executive office in the United States,
and further includes, without limitation, the obligation to pay any Finance
Charges with respect thereto. 
Indebtedness and other rights and obligations arising from any one
transaction, including, without limitation, indebtedness and other rights and
obligations represented by an individual invoice, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other rights and
obligations arising from any other transaction; provided, further, that any
indebtedness, rights or obligations referred to in the immediately preceding
sentence shall be a Receivable regardless or whether the account debtor such
Originator treats such indebtedness, rights or obligations as a separate
payment obligation.

 

Related
Security:  With
respect to any Receivable:

 

(i)                                     All
of each Originator’s interest in the inventory and goods (including returned or
repossessed inventory or goods), if any, the sale, financing or lease of which
by an Originator gave rise to such Receivable, and all insurance contracts with
respect thereto,

 

(ii)                                  all
other security interests or liens and property subject thereto from time to
time, if any, purporting to secure payment of such Receivable, whether pursuant
to the Contract related to such Receivable or otherwise, together with all
financing statements and security agreements describing any collateral securing
such Receivable,

 

(iii)                               all
guaranties, letters of credit, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise,

 

(iv)                              all
service contracts and other contracts and agreements associated with such
Receivable,

 

(v)                                 all
Records related to such Receivable,

 

4

 

(vi)                              all
of Originator’s right, title and interest in each Lock-Box and each Collection
Account, and

 

(vii)                           all
proceeds of any of the foregoing.

 

Reportable
Event:  Any of
the events set forth in Section 4043(c) of ERISA or the regulations thereunder,
other than any such event for which the 30-day notice requirement under ERISA
has been waived in regulations issued by the PBGC.

 

Required
Capital Amount: 
As of any date of determination, an amount equal to the greater of (i)
3% of the Aggregate Commitment under the Credit Agreement, and (ii) the product
of (A) 1.5 times the product of the Default Ratio times the Default Horizon
Ratio, each as determined from the most recent Monthly Report received from the
Master Servicer under the Credit Agreement, and (B) the Outstanding Balance of
all Receivables as reported on the most recent Monthly Report, as determined
from the most recent Monthly Report received from the Master Servicer under the
Credit Agreement.

 

Subordinated
Loan:  As
defined in Section 1.3(a)(ii) of the Agreement.

 

Subordinated
Note:  A promissory
note in substantially the form of Exhibit VI hereto as more fully
described in Section 1.3 of the Agreement, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

 

Tax Code:  The Internal Revenue Code of 1986, as the
same may be amended from time to time.

 

Termination
Date:  The
earliest to occur of (i) the Facility Termination Date (as defined in the
Credit Agreement), (ii) the Business Day immediately prior to the occurrence of
a Termination Event set forth in Section 5.1(d), (iii) the Business Day
specified in a written notice from Buyer to Originator following the occurrence
of any other Termination Event, and (iv) the date which is one (1) Business Day
after Buyer’s receipt of written notice from an Originator that it wishes to
terminate the facility evidenced by this Agreement.

 

Termination
Event:  As
defined in Section 5.1 of the Agreement.

 

Unmatured
Termination Event: 
An event which, with the passage of time or the giving of notice, or
both, would constitute a Termination Event.

 

Weighted
Average Interest Rate:  As of any date, the sum of (i) the product of (A) the
Program Interest Rate, (B) the Eligible Receivables Pool Percentage, and
(C) the Eligible Receivables Finance Percentage, all as of such date, and
(ii) the product of (A) the Non-Program Interest Rate and
(B) one minus the product of (1) the Eligible Receivables Pool
Percentage and (2) the Eligible Receivables Finance Percentage, all as of
such date.

 

All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.  All terms used in Article 9 of the UCC in
the State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.

 

5

 

Exhibit II

 

Jurisdiction of Formation; Places of Business; Locations of Records;

Federal Employer Identification Number(s);
Other Names

Louisiana-Pacific
Corporation

 

Jurisdiction of Formation:
Delaware

 

Places of Business: 805
S.W Broadway, Portland, Oregon 97205-3033 (Chief Executive Office)

 

Locations of Records:

 

N. 13403 Government Way

Hayden Lake, Idaho  83835

 

340 E. Big Beaver Rd. #105

Troy, Michigan  48083

 

10115 Kincey Ave #150

Huntersville, NC  28078

 

Federal Employer Identification
Number: 93-0609074

 

Legal, Trade and Assumed Names:
Louisiana-Pacific Corporation.

 

 

LP
Wood Polymers, Inc.

 

Jurisdiction of Formation:
Oregon

 

Places of Business: 805
S.W Broadway, Portland, Oregon 97205-3033 (Chief Executive Office)

 

Locations of Records:

 

N. 13403 Government Way

Hayden Lake, Idaho  83835

 

340 E. Big Beaver Rd. #105

Troy, Michigan  48083

 

10115 Kincey Ave #150

Huntersville, NC  28078

 

II-1

 

Federal Employer Identification
Number: 93-1286785

 

Legal, Trade and Assumed Names:
LP Wood Polymers, Inc.

 

Prior Names Used During
Previous Five Years:  ABT Deck, Inc.

 

Exh I-2

 

Exhibit III

 

Lock-boxes; Collection Accounts; Collection Banks

 

	
  Company

  	
   

  	
  Bank Name

  	
   

  	
  Account No.

  	
   

  	
  Acct. Purpose

  	
   

  	
  Bank Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  Zip

  
	
  LP Corp

  	
   

  	
  Bank of America

  	
   

  	
  12330-53134

  	
   

  	
  Lockbox Account

  	
   

  	
  File # 53564

  	
   

  	
  Los Angeles

  	
   

  	
  CA

  	
   

  	
  90074

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LP Corp

  	
   

  	
  Bank of America

  	
   

  	
  4970094285

  	
   

  	
  Depository

  	
   

  	
  2900 W. Davis

  	
   

  	
  Conroe

  	
   

  	
  TX

  	
   

  	
  77304

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LP Corp

  	
   

  	
  Idaho Independent Bank

  	
   

  	
  0200003838

  	
   

  	
  Depository

  	
   

  	
  8882 N. Government Way

  	
   

  	
  Hayden Lake

  	
   

  	
  ID

  	
   

  	
  83835

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LP Corp

  	
   

  	
  Wachovia Atlanta

  	
   

  	
  1864085323

  	
   

  	
  Lockbox Account

  	
   

  	
  PO Box 920022

  	
   

  	
  Atlanta

  	
   

  	
  GA

  	
   

  	
  30392

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LP Corp

  	
   

  	
  Wachovia Dallas

  	
   

  	
  1864085323

  	
   

  	
  Lockbox Account

  	
   

  	
  PO Box 951235

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75395

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LP Corp

  	
   

  	
  Wells Fargo-Regulus West

  	
   

  	
  4159576628

  	
   

  	
  Lockbox Account

  	
   

  	
  PO Box 4000-98

  	
   

  	
  Portland

  	
   

  	
  OR

  	
   

  	
  97208

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LP Corp

  	
   

  	
  Wells Fargo-Regulus West

  	
   

  	
  4159576628

  	
   

  	
  Lockbox Account

  	
   

  	
  PO Box 44479

  	
   

  	
  San Francisco

  	
   

  	
  CA

  	
   

  	
  94144

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LP Corp

  	
   

  	
  First Union National Bank

  	
   

  	
  2000000717265

  	
   

  	
  Lockbox Account

  	
   

  	
  PO Box 60335

  	
   

  	
  Charlotte

  	
   

  	
  NC

  	
   

  	
  28260

  

 

III-1

 

Exhibit IV

 

Form of Compliance
Certificate

 

This
Compliance Certificate is furnished pursuant to that certain Receivables Sale
Agreement dated as of ______________, 2001, between the originators named
therein and LP Receivables Corporation (the “Agreement”). 
Capitalized terms used and not otherwise defined herein are used with
the meanings attributed thereto in the Agreement.

 

THE
UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.             I am the duly elected
______________ of [name of Originator] (“Originator”).

 

2.             I have reviewed the terms of the
Agreement and I have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of Originator and its
Subsidiaries during the accounting period covered by the attached financial
statements.

 

3.             The examinations described in
paragraph 2 did not disclose, and I have no knowledge of, the existence of any
condition or event which constitutes a Termination Event or an Unmatured
Termination Event, as each such term is defined under the Agreement, during or
at the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate[, except as set forth below].

 

[4.           Described
below are the exceptions, if any, to paragraph 3 by listing, in detail, the
nature of the condition or event, the period during which it has existed and
the action which Originator has taken, is taking, or proposes to take with
respect to each such condition or event: 
_______________________________].

 

The foregoing
certifications, together with the computations set forth in Schedule I hereto
and the financial statements delivered with this Certificate in support hereof,
are made and delivered this ____ day of ______________, 200_.

 

	
   

  	
   

  	
   

  
	
   

  	
  [Name]

  	
   

  

 

 

IV-1

 

Exhibit V

 

Credit and
Collection Policy

 

[Previously Provided Under Separate Cover]

 

 

V-1

 

Exhibit VII

 

Form of
Subordinated Note

 

SUBORDINATED NOTE

 

November 15, 2001

 

1.             Note.  FOR VALUE RECEIVED, the undersigned, LP
RECEIVABLES CORPORATION, a Delaware corporation (“SPV”),
hereby unconditionally promises to pay to the order of Louisiana-Pacific
Corporation, a Delaware corporation (the “Originator
Representative”) for the
benefit of Louisiana-Pacific Corporation and LP Wood Polymers, Inc. (each an “Originator” and collectively, the “Originators”), pursuant to that
certain Receivables Sale Agreement, dated as of November 15, 2001, by and among
the Originators and the SPV (as amended, restated, supplemented or otherwise
modified from time to time, the “Sale
Agreement”), in lawful money of the United States of America and
in immediately available funds, on or before the date following the Termination
Date which is one year and one day after the date on which (i) the Outstanding
Balance of all Receivables sold under the Sale Agreement has been reduced to
zero and (ii) each Originator has paid to Buyer all indemnities, adjustments
and other amounts which may be owed thereunder in connection with the Purchase
thereunder (the “Collection Date”),
the aggregate unpaid principal sum outstanding of all “Subordinated Loans” made
from time to time by the Originators to SPV pursuant to and in accordance with
the terms of the Sale Agreement. 
Reference to Section 1.3 of the Sale Agreement is hereby made for
a statement of the terms and conditions under which the loans evidenced hereby
have been and will be made.  All terms
which are capitalized and used herein and which are not otherwise specifically
defined herein shall have the meanings ascribed to such terms in the Sale
Agreement.

 

2.             Interest.  SPV further promises to pay interest on the
outstanding unpaid principal amount hereof from the date hereof until payment
in full hereof at a rate equal to the 1-month LIBOR rate published in The Wall
Street Journal on the first Business Day of each month (or portion thereof)
during the term of this Subordinated Note, computed for actual days elapsed on
the basis of a year consisting of 360 days and changing on the first business
day of each month hereafter (“LIBOR”);
provided, however, that if SPV shall default in the payment of
any principal hereof, SPV promises to pay, on demand, interest at the rate
equal to LIBOR plus 2.00% per annum on any such unpaid amounts,
from the date such payment is due to the date of actual payment.  Interest shall be payable on the first
Business Day of each month in arrears; provided, however, that
SPV may elect on the date any interest payment is due hereunder to defer such
payment and upon such election the amount of interest due but unpaid on such
date shall constitute principal under this Subordinated Note.  The outstanding principal of any loan made
under this Subordinated Note shall be due and payable on the Collection Date
and may be repaid or prepaid at any time without premium or penalty.

 

3.             Principal Payments.  Originator Representative is authorized and
directed by SPV to enter on the grid attached hereto on behalf of each
Originator, or, at its option, cause to be 

 

VI-1

 

entered in the books and
records of each Originator, the date and amount of each loan made by each
Originator which is evidenced by this Subordinated Note and the amount of each
payment of principal made by SPV, and absent manifest error, such entries shall
constitute prima facie evidence of the accuracy of the information so entered; provided
that neither the failure of Originator Representative to make any such entry
nor any error therein shall expand, limit or affect the obligations of SPV
hereunder.

 

4.             Subordination.  Originator Representative shall have the
right to receive, on behalf of each of the Originators, and SPV shall make, any
and all payments and prepayments relating to the loans made under this
Subordinated Note, provided that, after giving effect to any such
payment or prepayment, the aggregate Outstanding Balance of Receivables (as
each such term is defined in the Credit Agreement hereinafter referred to)
owned by SPV at such time exceeds the sum of (i) the Aggregate Unpaids (as
defined in the Credit Agreement) outstanding at such time under the Credit
Agreement, plus (ii) the aggregate outstanding principal balance of all loans
made under this Subordinated Note.  Each
Originator and Originator Representative hereby agrees that at any time during
which the conditions set forth in the proviso of the immediately preceding
sentence shall not be satisfied, each Originator and Originator Representative
shall be subordinate in right of payment to the prior payment of any
indebtedness or obligation of SPV owing to the Administrative Agent, the Lender
or any Committed Bank under the Credit Agreement.  The subordination provisions contained herein are for the direct
benefit of, and may be enforced by, the Administrative Agent, the Lender and
the Committed Banks and/or any of their respective assignees (collectively, the
“Senior Claimants”) under
the Credit Agreement.  Until the date on
which the “Aggregate Principal” outstanding under the Credit Agreement has been
repaid in full and all other obligations of SPV and/or the Master Servicer
thereunder and under the “Fee Letter” referenced therein (all such obligations,
collectively, the “Senior Claim”)
have been indefeasibly paid and satisfied in full, no Originator nor Originator
Representative shall institute against SPV any proceeding of the type described
in Section 5.1(d) of the Sale Agreement unless and until the Collection
Date has occurred.  Should any payment,
distribution or security or proceeds thereof be received by any Originator or
Originator Representative on behalf of the Originators in violation of this Section
4, each such Originator or Originator Representative, as the case may be,
agrees that such payment shall be segregated, received and held in trust for
the benefit of, and deemed to be the property of, and shall be immediately paid
over and delivered to the Administrative Agent for the benefit of the Senior
Claimants.

 

5.             Bankruptcy; Insolvency.  Upon the occurrence of any proceeding of the
type described in Section 5.1(d) of the Sale Agreement involving SPV as
debtor, then and in any such event the Senior Claimants shall receive payment
in full of all amounts due or to become due on or in respect of the Aggregate
Principal and the Senior Claim (including “Interest” as defined and as accruing
under the Credit Agreement after the commencement of any such proceeding,
whether or not any or all of such Interest is an allowable claim in any such
proceeding) before Originator Representative is entitled to receive payment on
behalf of the Originators on account of this Subordinated Note, and to that
end, any payment or distribution of assets of SPV of any kind or character,
whether in cash, securities or other property, in any applicable insolvency
proceeding, which would otherwise be payable to or deliverable upon or with
respect to any or 

 

VI-2

 

all indebtedness under this
Subordinated Note, is hereby assigned to and shall be paid or delivered by the
Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the
Administrative Agent for application to, or as collateral for the payment of,
the Senior Claim until such Senior Claim shall have been paid in full and
satisfied.

 

6.             Amendments.  This Subordinated Note shall not be amended
or modified except in accordance with Section 7.1 of the Sale
Agreement.  The terms of this
Subordinated Note may not be amended or otherwise modified without the prior
written consent of the Administrative Agent for the benefit of the Secured
Parties.

 

7.             GOVERNING LAW.  THIS SUBORDINATED NOTE HAS BEEN MADE AND
DELIVERED AT NEW YORK, NEW YORK, AND SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND
DECISIONS OF THE STATE OF NEW YORK. 
WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE SHALL BE
INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW,
BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL BE PROHIBITED BY OR
INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISION OR THE REMAINING PROVISIONS OF THIS SUBORDINATED NOTE.

 

8.             Waivers.  All parties hereto, whether as makers,
endorsers, or otherwise, severally waive presentment for payment, demand,
protest and notice of dishonor.  Each
Originator and Originator Representative additionally expressly waives all
notice of the acceptance by any Senior Claimant of the subordination and other
provisions of this Subordinated Note and expressly waives reliance by any
Senior Claimant upon the subordination and other provisions herein provided.

 

9.             Assignment.  This Subordinated Note may not be assigned,
pledged or otherwise transferred to any party other than Originator
Representative on behalf of the Originators without the prior written consent
of the Administrative Agent, and any such attempted transfer shall be void.

 

	
   

  	
  LP
  RECEIVABLES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

VI-3

 

Schedule

to

SUBORDINATED NOTE

SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of

  Subordinated

  Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance

  	
   

  	
  Notation made

  by (initials)

  	
   

  	
  Name of

  Originator

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

S-1

 

Exhibit VII

 

[Form
of] Purchase Report

[Name of Originator]

 

For the Calculation Period beginning [date] and ending [date]

 

TO:  BUYER AND THE AGENT (AS BUYER’S ASSIGNEE)

 

	
   

  	
   

  	
   

  	
   

  
	
  Aggregate
  Outstanding Balance of 

  all Receivables sold during the period

  	
  $_____________

  	
   

  	
  A

  
	
  Less:  Purchase Price discount during the 

  Period:

  	
  $(____________)

  	
   

  	
  (B)

  
	
  Equals:  Gross Purchase Price Payable

  during the period (A — B)

  	
   

  	
  $____________

  	
  =C

  
	
  Less:  Total Purchase Price Credits arising 

  during the Period:

  	
  $(____________)

  	
   

  	
  (D)

  
	
  Equals:  Net Purchase Price payable during 

  the Period (C — D):

  	
   

  	
  $____________

  	
  =E

  
	
  Cash
  Purchase Price Paid to Originator

  during the Period:

  	
  $_____________

  	
   

  	
  F

  
	
  Subordinated
  Loans made during the Period:

  	
  $_____________

  	
   

  	
  G

  
	
  Less:  Repayments of Subordinated Loans 

  received during the Period:

  	
  $(____________)

  	
   

  	
  (H)

  
	
  Equals:  Purchase Price paid in Cash or

  Subordinated Loans during the period

  (F + G - H):

  	
   

  	
  $_____________

  	
  =I

  
	
  Aggregate
  Outstanding Balance of

  Receivables contributed during the Period:

  	
  $_____________

  	
   

  	
  J

  

 

 

VII-1

 

Exhibit VIII

 

Material
Adverse Effect

 

Since June 30,
2001, Louisiana-Pacific Corporation has filed the following reports with the
Securities and Exchange Commission:

 

1.                    Quarterly
Report on Form 10-Q filed on August 14, 2001.

2.                    Current
Report on Form 8-K filed on August 13, 2001

3.                    Current
Report on Form 8-K filed on July 20, 2001.

 

In addition, on October 24,
2001, Louisiana-Pacific released a press release regarding its third quarter
2001 financial results.  (A copy of such
release is attached hereto.)

 

Except for facts disclosed or
described in the foregoing reports and press release, since June 30, 2001, no
event has occurred that would a material adverse effect on the financial
condition or operations of Louisiana-Pacific and its Subsidiaries, taken as a
whole, or the ability of Louisiana-Pacific to perform its obligations under
this Agreement.

 

S-2

 

Schedule A

 

LIST OF
DOCUMENTS TO BE DELIVERED

TO BUYER ON OR PRIOR TO CLOSING DATE

 

1.                                       Executed
copies of the Receivables Sale Agreement, duly executed by the parties thereto.

 

2.                                       Copy
of the Credit and Collection Policy.

 

3.                                       A
certificate of each Originator’s Secretary certifying:

 

(a)                                  A
copy of the Resolutions of the Board of Directors of each Originator,
authorizing such Originator’s execution, delivery and performance of the
Receivables Sale Agreement and the other documents to be delivered by it
thereunder.

 

(b)                                 A
copy of the Organizational Documents of each Originator (also certified, to the
extent that such documents are filed with any governmental authority, by the
Secretary of State of the jurisdiction of organization of such Originator on or
within thirty (30) days prior to closing).

 

(c)                                  Good
Standing Certificates for each Originator issued by the Secretary of State of
such Originator’s state of incorporation and each jurisdiction where such
Originator has material operations, each of which is listed below, dated on or
within thirty (30) days prior to closing:

 

a.                                       Louisiana-Pacific
Corporation: Alabama,
California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Louisiana, Maine, Michigan,
Minnesota, Mississippi, Montana, North Carolina, Ohio, Oregon, Texas,
Washington, Wisconsin, Wyoming;

 

b.                                      LP
Wood Polymers, Inc.: Oregon, Idaho.

 

(d)           The names and signatures of the
officers authorized on its behalf to execute the Receivables Sale Agreement and
any other documents to be delivered by it hereunder.

 

4.             Pre-filing state and federal tax
lien, judgment lien and UCC lien searches against each Originator dated on or
within thirty (30) days prior to closing from the following jurisdictions:

 

(a)           Louisiana-Pacific Corporation:
Delaware, Oregon, Multnomah, Oregon;

 

(b)           LP Wood Polymers, Inc.: Delaware,
Oregon, Multnomah, Oregon.

 

5.             Time stamped receipt copies of
proper financing statements, duly filed under the UCC on or before the date of
the initial Purchase (as defined in the Receivables Sale Agreement) in all jurisdictions
as may be necessary or, in the opinion of Buyer (or its assigns), desirable,

 

SA-1

 

under the UCC of all
appropriate jurisdictions or any comparable law in order to perfect the
ownership interests contemplated by the Receivables Sale Agreement.

 

6.             Time stamped receipt copies of
proper UCC termination statements, if any, necessary to release all security
interests and other rights of any Person in the Receivables, Contracts or
Related Security previously granted by any Originator.

 

7.             Executed copies of Collection
Account Agreements for each Lock-Box and Collection Account.

 

8.             A favorable opinion of legal
counsel for the Originators reasonably acceptable to the Administrative Agent
which addresses the following matters and such other matters as the
Administrative Agent may reasonably request:

 

(a)           due authorization, execution,
delivery, enforceability and other corporate matters with respect to each of
the Originators;

 

(b)           the creation of a first priority
perfected security interest in favor of the Buyer (and the Administrative Agent
for the benefit of the Secured Parties as its assignee) in (1) all of the
Receivables and Related Security and (2) all proceeds of any of the foregoing;

 

(c)           the existence of a “true sale” of the
Receivables from each Originator to the Buyer under the Receivables Sale
Agreement;

 

(d)           the inapplicability of the doctrine
of substantive consolidation to Buyer and any Originator or in connection with
any bankruptcy proceeding involving any Buyer or any Originator.

 

9.             A Compliance Certificate of each
Originator’s chief financial officer certifying that, as of the closing date,
no Termination Event or Unmatured Termination Event exists and is continuing.

 

10.           Executed copies of 1. all consents
from and authorizations by any Persons and 2. all waivers and amendments to
existing credit facilities, that are necessary in connection with the
Receivables Sale Agreement.

 

11.           Executed Subordinated Note by Buyer
in favor of each Originator.

 

12.           If applicable, a direction letter
executed by each Originator authorizing Buyer (and the Administrative Agent, as
its assignee) and directing warehousemen to allow Buyer (and the Administrative
Agent, as its assignee) to inspect and make copies from such Originator’s books
and records maintained at off-site data processing or storage facilities.

 

SA-2

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