Document:

Exhibit
10.1

 

EXECUTION VERSION

 

CREDIT AGREEMENT

 

among

 

SMURFIT-STONE CONTAINER
CORPORATION,

a Debtor and Debtor-in-Possession under
Chapter 11 of the Bankruptcy Code,

 

as the Parent and a U.S. Guarantor,

 

SMURFIT-STONE
CONTAINER ENTERPRISES, INC.,

a Debtor and Debtor-in-Possession under
Chapter 11 of the Bankruptcy Code,

 

as U.S. Borrower,

 

SMURFIT-STONE
CONTAINER CANADA INC.,

a company operating pursuant to a proceeding
under the CCAA and a Debtor and Debtor-in-Possession under Chapter 11 of the
Bankruptcy Code,

 

as Canadian Borrower,

 

THE OTHER LOAN PARTIES PARTY
HERETO,

 

THE LENDERS PARTY HERETO,

 

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent and Collateral Agent,

 

and

 

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

 

as Canadian Administrative Agent and Canadian
Collateral Agent,

 

 

J.P. MORGAN SECURITIES INC. and DEUTSCHE BANK
SECURITIES INC.

 

as Co-Lead Arrangers,

 

J.P. MORGAN SECURITIES INC., DEUTSCHE BANK
SECURITIES INC.,

GE CAPITAL MARKETS, INC. and BANC OF AMERICA
SECURITIES LLC

 

as Joint Bookrunners,

 

DEUTSCHE BANK SECURITIES INC.,

 

as Syndication Agent,

 

and

 

GENERAL ELECTRIC CAPITAL CORPORATION and BANK
OF AMERICA, N.A.

 

as Co-Documentation Agents

 

 

Dated as of January 28,
2009

 

 

CREDIT
AGREEMENT

TABLE OF CONTENTS

 

	
  ARTICLE
  1.

  	
  DEFINITIONS

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Defined Terms

  	
  4

  
	
  Section 1.2

  	
  Terms Generally

  	
  45

  
	
  Section 1.3

  	
  Accounting Terms; GAAP

  	
  45

  
	
  Section 1.4

  	
  Exchange Rate Calculations

  	
  45

  
	
  Section 1.5

  	
  Québec Matters

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2.

  	
  AMOUNT
  AND TERMS OF CREDIT

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Commitment of the Lenders

  	
  47

  
	
  Section 2.2

  	
  Availability of U.S. Loans

  	
  48

  
	
  Section 2.3

  	
  Availability of Canadian Loans

  	
  48

  
	
  Section 2.4

  	
  Letters of Credit

  	
  49

  
	
  Section 2.5

  	
  Issuance

  	
  52

  
	
  Section 2.6

  	
  Nature of Letter of Credit Obligations Absolute

  	
  53

  
	
  Section 2.7

  	
  Making of Loans and Disbursements

  	
  53

  
	
  Section 2.8

  	
  Repayment of Loans and Unreimbursed Draws; Evidence of Debt

  	
  58

  
	
  Section 2.9

  	
  Interest on Loans

  	
  59

  
	
  Section 2.10

  	
  Default Interest

  	
  60

  
	
  Section 2.11

  	
  Optional Termination or Reduction of Commitment

  	
  61

  
	
  Section 2.12

  	
  Alternate Rate of Interest

  	
  61

  
	
  Section 2.13

  	
  Refinancing of Loans

  	
  62

  
	
  Section 2.14

  	
  Mandatory Prepayment; Commitment Termination

  	
  64

  
	
  Section 2.15

  	
  Optional Prepayment of Loans; Reimbursement of Lenders

  	
  68

  
	
  Section 2.16

  	
  Reserve Requirements; Change in Circumstances

  	
  71

  
	
  Section 2.17

  	
  Change in Legality

  	
  73

  
	
  Section 2.18

  	
  Pro Rata Treatment, etc.

  	
  73

  
	
  Section 2.19

  	
  Taxes

  	
  74

  
	
  Section 2.20

  	
  Certain Fees

  	
  77

  
	
  Section 2.21

  	
  Commitment Fee

  	
  77

  
	
  Section 2.22

  	
  Letter of Credit Fees

  	
  77

  
	
  Section 2.23

  	
  Nature of Fees

  	
  78

  
	
  Section 2.24

  	
  Priority and Liens

  	
  78

  
	
  Section 2.25

  	
  Use of Cash Collateral

  	
  84

  
	
  Section 2.26

  	
  Right of Set-Off

  	
  84

  
	
  Section 2.27

  	
  Security Interest in Collateral Accounts

  	
  85

  
	
  Section 2.28

  	
  Payment of Obligations

  	
  85

  
	
  Section 2.29

  	
  No Discharge; Survival of Claims

  	
  85

  
	
  Section 2.30

  	
  Fifteen Month Facility Extension Option

  	
  85

  
	
  Section 2.31

  	
  Eighteen Month Facility Extension Option

  	
  86

  
	
  Section 2.32

  	
  Mitigation Obligations; Replacement of Lenders

  	
  87

  
	
  Section 2.33

  	
  Defaulting Lenders

  	
  88

  

 

i

 

	
  ARTICLE
  3.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  90

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Organization and Authority

  	
  90

  
	
  Section 3.2

  	
  Due Execution

  	
  90

  
	
  Section 3.3

  	
  Statements Made

  	
  91

  
	
  Section 3.4

  	
  Financial Statements

  	
  91

  
	
  Section 3.5

  	
  Ownership

  	
  92

  
	
  Section 3.6

  	
  Liens

  	
  92

  
	
  Section 3.7

  	
  Compliance with Law

  	
  92

  
	
  Section 3.8

  	
  Insurance

  	
  92

  
	
  Section 3.9

  	
  The Orders

  	
  93

  
	
  Section 3.10

  	
  Use of Proceeds

  	
  93

  
	
  Section 3.11

  	
  Litigation

  	
  93

  
	
  Section 3.12

  	
  Intellectual Property

  	
  93

  
	
  Section 3.13

  	
  Taxes

  	
  93

  
	
  Section 3.14

  	
  Investment Company Act; Other Regulations

  	
  94

  
	
  Section 3.15

  	
  ERISA; Employee Matters

  	
  94

  
	
  Section 3.16

  	
  Material Subsidiaries

  	
  95

  
	
  Section 3.17

  	
  Receivables Securitization Indebtedness

  	
  95

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4.

  	
  CONDITIONS
  OF LENDING

  	
  95

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Conditions Precedent to Initial Loans

  	
  95

  
	
  Section 4.2

  	
  Conditions Precedent to Each Loan and Each Letter of Credit

  	
  99

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5.

  	
  AFFIRMATIVE
  COVENANTS

  	
  100

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Financial Statements, Reports, etc.

  	
  100

  
	
  Section 5.2

  	
  Existence

  	
  103

  
	
  Section 5.3

  	
  Insurance

  	
  103

  
	
  Section 5.4

  	
  Obligations and Taxes

  	
  104

  
	
  Section 5.5

  	
  Notice of Event of Default, etc.

  	
  104

  
	
  Section 5.6

  	
  Access to Books and Records; Collateral Reviews and Appraisals

  	
  104

  
	
  Section 5.7

  	
  Maintenance of Concentration Account; Cash Dominion

  	
  105

  
	
  Section 5.8

  	
  Borrowing Base Certificate

  	
  106

  
	
  Section 5.9

  	
  Compliance with Laws

  	
  107

  
	
  Section 5.10

  	
  Environmental Laws

  	
  107

  
	
  Section 5.11

  	
  Additional Collateral; Further Assurances

  	
  107

  
	
  Section 5.12

  	
  Material Contracts

  	
  108

  
	
  Section 5.13

  	
  Receivables Securitization Programs

  	
  108

  
	
  Section 5.14

  	
  Restructuring Advisors

  	
  108

  
	
  Section 5.15

  	
  Public Rating

  	
  108

  
	
  Section 5.16

  	
  Use of Proceeds

  	
  108

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6.

  	
  NEGATIVE
  COVENANTS

  	
  109

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Liens

  	
  109

  

 

ii

 

	
  Section 6.2

  	
  Merger, etc.

  	
  109

  
	
  Section 6.3

  	
  Indebtedness

  	
  109

  
	
  Section 6.4

  	
  Capital Expenditures

  	
  110

  
	
  Section 6.5

  	
  EBITDA

  	
  110

  
	
  Section 6.6

  	
  Minimum Liquidity

  	
  111

  
	
  Section 6.7

  	
  Guarantees and Other Liabilities

  	
  111

  
	
  Section 6.8

  	
  Chapter 11/CCAA Claims

  	
  111

  
	
  Section 6.9

  	
  Dividends; Capital Stock

  	
  111

  
	
  Section 6.10

  	
  Transactions with Affiliates

  	
  111

  
	
  Section 6.11

  	
  Investments, Loans and Advances

  	
  112

  
	
  Section 6.12

  	
  Disposition of Assets

  	
  112

  
	
  Section 6.13

  	
  Nature of Business

  	
  113

  
	
  Section 6.14

  	
  Restrictive Agreements among Loan Parties

  	
  113

  
	
  Section 6.15

  	
  Right of Subrogation among Loan Parties

  	
  113

  
	
  Section 6.16

  	
  Derivative Agreements

  	
  113

  
	
  Section 6.17

  	
  Reorganization Plan

  	
  113

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7.

  	
  EVENTS
  OF DEFAULT

  	
  113

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Events of Default

  	
  113

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8.

  	
  THE
  AGENTS

  	
  118

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Administration

  	
  118

  
	
  Section 8.2

  	
  Advances and Payments

  	
  118

  
	
  Section 8.3

  	
  Sharing of Setoffs

  	
  118

  
	
  Section 8.4

  	
  Agreement of Required Lenders

  	
  119

  
	
  Section 8.5

  	
  Liability of Agents

  	
  119

  
	
  Section 8.6

  	
  Reimbursement and Indemnification

  	
  120

  
	
  Section 8.7

  	
  Rights of Agents

  	
  120

  
	
  Section 8.8

  	
  Other Duties, etc.

  	
  121

  
	
  Section 8.9

  	
  Independent Lenders

  	
  121

  
	
  Section 8.10

  	
  Notice of Transfer

  	
  121

  
	
  Section 8.11

  	
  Successor Agents

  	
  121

  
	
  Section 8.12

  	
  Quebec Security

  	
  121

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9.

  	
  MISCELLANEOUS

  	
  122

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Notices

  	
  122

  
	
  Section 9.2

  	
  Survival of Agreement, Representations and Warranties, etc.

  	
  123

  
	
  Section 9.3

  	
  Successors and Assigns

  	
  124

  
	
  Section 9.4

  	
  Confidentiality

  	
  127

  
	
  Section 9.5

  	
  Expenses

  	
  128

  
	
  Section 9.6

  	
  Indemnity

  	
  129

  
	
  Section 9.7

  	
  Choice of Law

  	
  130

  
	
  Section 9.8

  	
  No Waiver

  	
  130

  
	
  Section 9.9

  	
  Extension of Maturity

  	
  130

  

 

iii

 

	
  Section 9.10

  	
  Amendments, etc.

  	
  130

  
	
  Section 9.11

  	
  Severability

  	
  131

  
	
  Section 9.12

  	
  Headings

  	
  132

  
	
  Section 9.13

  	
  Execution in Counterparts

  	
  132

  
	
  Section 9.14

  	
  Prior Agreements; Inconsistencies

  	
  132

  
	
  Section 9.15

  	
  Further Assurances

  	
  132

  
	
  Section 9.16

  	
  Waiver of Jury Trial

  	
  132

  
	
  Section 9.17

  	
  Subordination of Intercompany Indebtedness

  	
  132

  
	
  Section 9.18

  	
  Certain Post Closing Matters

  	
  133

  
	
  Section 9.19

  	
  USA Patriot Act

  	
  136

  
	
  Section 9.20

  	
  Judgment Currency

  	
  136

  
	
  Section 9.21

  	
  Several Obligations; Nonreliance; Violation of Law

  	
  137

  
	
  Section 9.22

  	
  Canadian Anti-Money Laundering Legislation

  	
  137

  
	
  Section 9.23

  	
  Conversion

  	
  137

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10.

  	
  Guaranty

  	
  141

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  U.S. Guaranty

  	
  141

  
	
  Section 10.2

  	
  Canadian Guaranty

  	
  141

  
	
  Section 10.3

  	
  Guaranty of Payment

  	
  142

  
	
  Section 10.4

  	
  No Discharge or Diminishment of Guaranty

  	
  142

  
	
  Section 10.5

  	
  Defenses Waived

  	
  143

  
	
  Section 10.6

  	
  Rights of Subrogation

  	
  143

  
	
  Section 10.7

  	
  Reinstatement; Stay of Acceleration

  	
  143

  
	
  Section 10.8

  	
  Information

  	
  144

  
	
  Section 10.9

  	
  Termination

  	
  144

  
	
  Section 10.10

  	
  Taxes

  	
  144

  
	
  Section 10.11

  	
  Maximum Liability

  	
  144

  
	
  Section 10.12

  	
  Contribution

  	
  144

  
	
  Section 10.13

  	
  Liability Cumulative

  	
  145

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11.

  	
  Collection
  Allocation Mechanism

  	
  145

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Implementation of CAM

  	
  145

  
	
  Section 11.2

  	
  Letters of Credit

  	
  146

  
	
  Section 11.3

  	
  Conversion

  	
  147

  
	
   

  
	
  Annex A-1 — Canadian Revolving Commitment
  Amounts

  
	
  Annex A-2 — U.S. Revolving Commitment
  Amounts

  
	
  Annex A-3 — U.S. Term Loan Commitment
  Amounts

  
	
  Annex A-4 — Canadian Term Loan Commitment
  Amounts

  
	
   

  
	
  Exhibit A-1 — Form of U.S.
  Interim Order

  
	
  Exhibit A-2 — Form of Initial
  Order

  
	
  Exhibit A-3 — Form of Final Order

  
	
  Exhibit B-1 — Form of Security
  and Pledge Agreement

  

 

iv

 

Exhibit B-2 — Form of Canadian Security Agreement

Exhibit C-1 — Form of Daily/Weekly Borrowing Base Certificate

Exhibit C-2 — Form of Monthly Borrowing Base Certificate

Exhibit D — Form of Opinion of Counsel

Exhibit E — Form of Assignment and Acceptance

Exhibit F — Form of Loan Party Joinder Agreement

Exhibit G — Form of Compliance Certificate

 

Schedule 1.1 — Eligible Equipment

Schedule 1.2 — Eligible Real Property

Schedule 2.24 — Non-Primed Liens

Schedule 3.5 — Subsidiaries

Schedule 3.6 — Liens

Schedule 3.7 — Environmental Matters

Schedule 3.12 — Intellectual Property

Schedule 4.1 — Closing Documents

Schedule 6.3 — Indebtedness

Schedule 6.11 — Other Investments

Schedule 6.12 — Permitted Asset Sales

Schedule 6.14 — Loan Party
Transaction Restrictions

 

v

 

CREDIT AGREEMENT
 Dated as of January 28, 2009

 

CREDIT AGREEMENT, dated as of January 28,
2009, among SMURFIT-STONE CONTAINER
ENTERPRISES, INC., a Delaware corporation, a debtor and
debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code
(“U.S. Borrower”), SMURFIT-STONE CONTAINER CANADA INC., a company continued under the Companies Act
(Nova Scotia), a company operating pursuant to a proceeding under the
CCAA, and a debtor and debtor in possession in a case pending under Chapter 11
of the Bankruptcy Code (“Canadian Borrower,” and together with
the U.S. Borrower, the “Borrowers”),
SMURFIT-STONE CONTAINER CORPORATION,
a Delaware corporation, a debtor and debtor-in-possession in a case pending
under Chapter 11 of the Bankruptcy Code (“Parent”),
the other Loan Parties party hereto, the Lenders party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent and
Collateral Agent, and JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian Administrative Agent and Canadian
Collateral Agent.

 

INTRODUCTORY
STATEMENT

 

WHEREAS, on January 26, 2009, the Loan
Parties filed voluntary petitions with the Bankruptcy Court initiating the U.S.
Cases and have continued in the possession of their assets and in the
management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy
Code; and

 

WHEREAS, on January 26, 2009, the
Canadian Loan Parties (other than Smurfit-MBI and SLP Finance General
Partnership) commenced the Canadian Cases in the Canadian Court under the CCAA;
and

 

WHEREAS, on January 26, 2009,
Smurfit-MBI and SLP Finance General Partnership commenced recognition
proceedings under the Bankruptcy and Insolvency Act (Canada); and

 

WHEREAS, the Borrowers have applied to the
Lenders for a credit facility in an aggregate principal amount of
US$750,000,000 (subject to the terms and conditions of this Agreement)
consisting of (i) a US$250,000,000 revolving credit and letter of credit
facility available in Dollars to the U.S. Borrower or the Canadian Borrower; (ii) a
US$400,000,000 term loan facility available in Dollars to the U.S. Borrower; (iii) a
US$65,000,000 revolving credit and letter of credit facility available in
Dollars or Canadian Dollars to the U.S. Borrower or the Canadian Borrower; and (iv) a
US$35,000,000 term loan facility available in Dollars to the Canadian Borrower;
and

 

WHEREAS, the proceeds of the Loans will be
used for (i) working capital, Letters of Credit and Capital Expenditures; (ii) other
general corporate purposes of the Loan Parties (including intercompany loans to
the extent permitted by this Agreement); (iii) for the refinancing in full
of Indebtedness outstanding under the Receivables Securitization Programs; (iv) payment
of any related transaction costs, fees and expenses; and (v) the costs of
administration of the Cases, all as provided for herein; and

 

1

 

WHEREAS, to provide for the repayment of the
Loans, the reimbursement of any drafts drawn under the Letters of Credit and
the payment of the other Secured Obligations of the Loan Parties, the Loan
Parties will provide to the Agents for the benefit of the Secured Parties the
following (each as more fully described herein):

 

(a)                                  With
respect to the Secured Obligations of the U.S. Loan Parties and the Canadian
Borrower:

 

(1)                                  in
the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code,
an allowed Superpriority Claim payable from and having recourse to all
pre-petition and post-petition property of the estates of the U.S. Loan Parties
and the Canadian Borrower and all proceeds thereof (including, upon entry of
the Final Order, any proceeds of Avoidance Actions);

 

(2)                                  in
the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code,
a perfected first priority Lien on all unencumbered property of the U.S. Loan
Parties and the Canadian Borrower (including, upon entry of the Final Order,
any proceeds of Avoidance Actions) and on all cash maintained in any Collateral
Account and any investments of the funds contained therein, provided that
amounts in the Collateral Accounts shall not be subject to the Carve-Out or the
CCAA Charges;

 

(3)                                  in
the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code,
a perfected junior Lien upon all property of the U.S. Loan Parties and the
Canadian Borrower that is subject to valid and perfected Liens in existence on
the Filing Date or that is subject to valid Liens in existence on the Filing
Date that are perfected subsequent to the Filing Date as permitted by Section 546(b) of
the Bankruptcy Code (other than certain property that is subject to the existing
Liens that secure obligations under the Pre-Petition Credit Agreement, which
Liens shall be primed by the Liens granted pursuant to Section 364(d)(1) of
the Bankruptcy Code);

 

(4)                                  in
the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code,
a perfected first priority, senior priming Lien on all of the property of the
U.S. Loan Parties and the Canadian Borrower (including, without limitation,
cash, inventory, receivables, rights under license agreements, property, plant
and equipment and the residual interest of the U.S. Loan Parties and the
Canadian Borrower in any Receivables Securitization Programs) that is subject
to the Primed Liens, which Primed Liens shall be primed by and made subject and
subordinate to the perfected first priority senior priming Liens to be granted
to the Administrative Agent, which senior priming Liens in favor of the
Administrative Agent shall also prime any Liens granted after the commencement
of the Cases to provide adequate protection Liens in respect of any of the
Primed Liens, but shall not prime (1) Non-Primed Liens which secure the
Calpine Debt or (2) other Non-Primed Liens solely to the extent such
Non-Primed Liens secure claims in an aggregate amount less than or equal to
US$60,000,000; and

 

(5)                                  in
the Canadian Cases, pursuant to an order of the Canadian Court, in respect of
the Secured Obligations of the Canadian Borrower, a CCAA DIP Lenders’ Charge
over all of the present and future assets of the Canadian Borrower with
priority over all existing Liens and security, including the Primed Liens; and

 

2

 

(b)                                 With
respect to the Secured Obligations of the Canadian Loan Parties:

 

(1)                                  in
the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code,
an allowed Superpriority Claim payable from and having recourse to all
pre-petition and post-petition property of the estates of the Canadian Loan
Parties and all proceeds thereof (including, upon entry of the Final Order, any
proceeds of Avoidance Actions);

 

(2)                                  in
the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code,
a perfected first priority Lien on all unencumbered property of the Canadian
Loan Parties (including, upon entry of the Final Order, any proceeds of
Avoidance Actions) and on all cash maintained in any Collateral Account and any
investments of the funds contained therein, provided that amounts in the
Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

 

(3)                                  in
the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code,
a perfected junior Lien upon all property of the Canadian Loan Parties that is
subject to valid and perfected Liens in existence on the Filing Date or that is
subject to valid Liens in existence on the Filing Date that are perfected subsequent
to the Filing Date as permitted by Section 546(b) of the Bankruptcy
Code (other than certain property that is subject to the existing Liens that
secure obligations under the Pre-Petition Credit Agreement, which liens shall
be primed by the liens to be granted to the Administrative Agent pursuant to Section 364(d)(1) of
the Bankruptcy Code);

 

(4)                                  in
the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code,
a perfected first priority, senior priming Lien on all of the property of the
Canadian Loan Parties (including, without limitation, cash, inventory,
receivables, rights under license agreements, property, plant and equipment and
the residual interest of the Canadian Loan Parties in any Receivables
Securitization Programs) that is subject to the Primed Liens, which Primed
Liens shall be primed by and made subject and subordinate to the perfected
first priority senior priming Liens to be granted to the Administrative Agent,
which senior priming Liens in favor of the Administrative Agent shall also
prime any Liens granted after the commencement of the Cases to provide adequate
protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed
Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely
to the extent such Non-Primed Liens secure claims in an aggregate amount less
than or equal to US$60,000,000; and

 

(5)                                  in
the Canadian Cases, pursuant to an order of the Canadian Court, the CCAA DIP
Lenders’ Charge over all of the present and future assets of the Canadian Loan
Parties with priority over all existing liens and security, including the
Primed Liens;

 

WHEREAS, all of the claims and Liens granted
hereunder to the Agents for the benefit of the Secured Parties in the U.S.
Cases shall be subject to the Carve-Out to the extent provided in Section 2.24
and in the Canadian Cases shall be subject to the CCAA Charges to the extent
provided in Section 2.24.

 

Accordingly, the parties hereto hereby agree
as follows:

 

3

 

ARTICLE
1.    DEFINITIONS

 

Section 1.1             Defined Terms.  As
used in this Agreement, the following terms shall have the meanings specified
below:

 

“ABR Loan”
shall mean any Loan bearing interest at a rate determined by reference to the
Alternate Base Rate in accordance with the provisions of ARTICLE 2.

 

“Account”
has the meaning specified in Article 9 of the UCC or the PPSA, as
applicable, and shall include, without limitation, any right to payment owed to
any Person arising out of the sale of goods or services by such Person.

 

“Account Debtor” shall mean, with respect to
any Account, the obligor with respect to such Account.

 

“Additional Credit”
shall have the meaning given such term in Section 4.2(d).

 

“Adjusted LIBO Rate”
shall mean, with respect to any Eurodollar Borrowing for any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of
1.0%) equal to the greater of (a) 3.5% and (b) (i) the LIBO Rate
in effect for such Interest Period multiplied by (ii) the Statutory Reserve
Rate.  For purposes hereof, the term “LIBO Rate” shall mean the rate appearing on
Reuters Screen LIBOR01 Page (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing
rate quotations comparable to those currently provided on such page of
such service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period.  In the event that such
rate is not available at such time for any reason, then the “LIBO Rate” with
respect to such Eurodollar Borrowing for such Interest Period shall be the rate
at which dollar deposits of US$5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.

 

“Administration Charge”
shall have the meaning given such term in Section 2.24.

 

“Administrative Agent”
shall mean JPMorgan Chase Bank, N.A., in its capacity as administrative agent
for the Lenders hereunder.

 

“Administrative
Questionnaire” shall mean an administrative questionnaire in a
form supplied by the Administrative Agent.

 

“Affiliate”
shall mean, as to any Person, any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person.  For purposes of this definition,
a Person (a “Controlled Person”)
shall be deemed to be “controlled

 

4

 

by”
another Person (a “Controlling Person”) if
the Controlling Person possesses, directly or indirectly, power to direct or
cause the direction of the management and policies of the Controlled Person
whether by contract or otherwise.

 

“Agents”
shall mean the Administrative Agent, the Canadian Administrative Agent, the
Collateral Agent, and the Canadian Collateral Agent, together, and “Agent” means any one of such Agents
individually.

 

“Aggregate Credit Exposure”
shall mean, at any time, the aggregate Credit Exposure of all the Lenders.

 

“Agreement”
shall mean this Credit Agreement, as the same may from time to time be amended,
restated, modified or supplemented.

 

“Alternate Base Rate”
shall mean, for any day, a rate per annum equal to the greatest of (a) 4.5%,
(b) the Prime Rate in effect on such day, (c) the Federal Funds
Effective Rate in effect on such day plus 1⁄2 of 1% and (d) the Adjusted
LIBO Rate for a one month Interest Period on such day (or if such day is not a
Business Day, the immediately preceding Business Day) plus 1%, provided that,
for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based
on the rate appearing on the Reuters Screen LIBOR01 Page (or on any
successor or substitute page) at approximately 11:00 a.m. London time on
such day (without any rounding).  For
purposes hereof, “Prime Rate” shall mean
the rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New
York City (or, in the case of Loans or Borrowings denominated in Dollars made
by the Canadian Lenders pursuant to the Canadian Commitments, the rate per
annum announced from time to time by the Canadian Administrative Agent as its
U.S. base rate for commercial loans in effect at its office in Toronto); each
change in the Prime Rate shall be effective on the date such change is publicly
announced.  If the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (c) of the first
sentence of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. 
Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective
from and including the effective date of such change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

 

“Applicable Agent”
shall mean (a) with respect to the Canadian Commitments, extensions of
credit thereunder, payments in respect thereof and other matters pertaining
thereto, the Canadian Administrative Agent, (b) with respect to the U.S.
Commitments, extensions of credit thereunder, payments in respect thereof and
other matters pertaining thereto, the Administrative Agent and (c) with
respect to any action or determination under any Collateral Document or
Collateral thereunder, the Agent to which a security interest is granted under
such Collateral Document; provided that the Administrative Agent shall be the
Applicable Agent for all purposes not involving a particular Class of
Commitments, extensions of credit thereunder, 

 

5

 

payments
thereunder or other matters pertaining thereto, or actions or determinations
under a particular Collateral Document.

 

“Applicable
Margin” shall mean, for any day, with respect to any ABR Loan,
Eurodollar Loan, Canadian Prime Rate Loan, Discount Rate Loan, or with respect
to the Letters of Credit issued hereunder, as the case may be, the applicable
rate per annum set forth below under the caption “ABR and Canadian Prime Rate
Spread”, “Eurodollar and Discount Rate Spread”, “Letter of Credit Fees” or “Drafts
Drawn under Letters of Credit”, as the case may be:

 

	
  Pricing Level

  	
   

  	
  ABR and Canadian

  Prime Rate Spread

  	
   

  	
  Eurodollar

  and Discount

  Rate Spread

  	
   

  	
  Letter of

  Credit Fees

  	
   

  	
  Drafts Drawn

  under Letters

  of Credit

  	
   

  
	
  1

  	
   

  	
  5.5

  	
  %

  	
  6.5

  	
  %

  	
  6.5

  	
  %

  	
  5.5

  	
  %

  
	
  2

  	
   

  	
  6.5

  	
  %

  	
  7.5

  	
  %

  	
  7.5

  	
  %

  	
  6.5

  	
  %

  
	
  3

  	
   

  	
  7.5

  	
  %

  	
  8.5

  	
  %

  	
  8.5

  	
  %

  	
  7.5

  	
  %

  

 

The
Applicable Margin shall be determined based on Pricing Level 1; provided,
that from and after January 28, 2010 (assuming the proper exercise of the
Fifteen Month Facility Extension Option), the Applicable Margin shall be
determined based on Pricing Level 2; provided, further, that from
and after April 28, 2010 (assuming the proper exercise of the Eighteen
Month Facility Extension Option), the Applicable Margin shall be determined based
on Pricing Level 3.  Notwithstanding
anything to the contrary contained in this definition, the determination of the
Applicable Margin for any period shall be subject to the provisions of Section 2.10.

 

“Applicable Percentage”
shall mean, with respect to (a) any U.S. Revolving Lender, a percentage
equal to a fraction the numerator of which is such Lender’s U.S. Revolving
Commitment and the denominator of which is the aggregate U.S. Revolving
Commitment of all U.S. Revolving Lenders (if the U.S. Revolving Commitments
have terminated or expired, the Applicable Percentages shall be determined
based upon such Lender’s share of the aggregate U.S. Revolving Credit
Utilization at that time), (b) any Canadian Revolving Lender, a percentage
equal to a fraction the numerator of which is such Lender’s Canadian Revolving
Commitment and the denominator of which is the aggregate Canadian Revolving
Commitment of all Canadian Revolving Lenders (if the Canadian Revolving
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon such Lender’s share of the aggregate Canadian Revolving
Credit Utilization at that time); provided that in the case of Section 2.33
when a Defaulting Lender shall exist, any such Defaulting Lender’s Revolving Commitment
shall be disregarded in any calculation pursuant to the foregoing clauses (a) and
(b), (c) any U.S. Term Loan Lender, a percentage equal to a fraction the
numerator of which is such Lender’s outstanding principal amount of the U.S.
Term Loans and the denominator of which is the aggregate outstanding amount of
the U.S. Term Loans of all U.S. Term Loan Lenders, (d) any Canadian Term
Loan Lender, a percentage equal to a fraction the numerator of which is such
Lender’s outstanding principal amount of the Canadian Term Loans and the
denominator of which is the aggregate outstanding amount of the Canadian Term
Loans of all Canadian Term Loan Lenders and (e) the Aggregate Credit
Exposure of any Lender, a percentage based upon such Lender’s share of the Aggregate
Credit Exposure and the unused Commitments; provided that in the case of Section 2.33
when a Defaulting Lender shall exist, any such Defaulting Lender’s Commitment
shall be disregarded in any calculation pursuant to this clause (e).

 

6

 

“Approved Fund”
shall have the meaning set forth in Section 9.3.

 

“Asset Sale”
shall mean a sale, lease or sub-lease (as lessor or sublessor), sale and
leaseback, assignment, conveyance, transfer or other disposition to, or any
exchange of property with, any Person (other than a Loan Party), in one
transaction or series of transactions, of all or any part of the Loan Parties’
or any of their Subsidiaries’ businesses, assets or properties of any kind,
whether real, personal, or mixed and whether tangible or intangible, whether
now owned or hereafter acquired, including, without limitation, the capital
stock of any of the Loan Parties (other than the Parent) or their Subsidiaries
in each case other than (i) Inventory sold in the ordinary course of
business, and (ii) sales of assets for aggregate consideration of less
than US$1,000,000 with respect to any transaction or series of related
transactions and less than US$10,000,000 in the aggregate on a cumulative basis
with respect to all such transactions during the term of this Agreement.

 

“Assignment and Acceptance”
shall mean an assignment and acceptance entered into by a Lender and an
Eligible Assignee, and accepted by the Administrative Agent, substantially in
the form of Exhibit E.

 

“Available Cash”
shall mean, on any date, (a) the fair market value on such date of
unrestricted cash and cash equivalents held in securities accounts of the Loan
Parties and their Subsidiaries, and (b) the amount of unrestricted
available funds held on such date in bank deposit accounts of the Loan Parties
and their Subsidiaries, in each case subject to no Liens other than (i) Liens
in favor of the Agents on behalf of the Secured Parties, (ii) Liens in
favor of the Pre-Petition Agent on behalf of the Pre-Petition Secured Lenders, (iii) the
CCAA Charges and (iv) an unregistered Lien in respect of Priority Payables
that are not yet due and payable, and in any event excluding amounts held in
any Collateral Account, as evidenced in the applicable Borrowing Base
Certificate delivered by each Borrower to the Administrative Agent pursuant to Section 5.8.

 

“Avoidance Actions”
shall mean claims and causes of action under Sections 502(d), 544, 545, 547,
548, 549 and 550 of the Bankruptcy Code.

 

“Banking Services”
shall mean each and any of the following bank services provided to any Loan
Party by any Lender or any of its Affiliates: (a) commercial credit cards,
(b) stored value cards and (c) treasury management services
(including, without limitation, controlled disbursement, automated
clearinghouse transactions, return items, overdrafts and interstate depository
network services).

 

“Banking Services
Obligations” shall mean any and all obligations of the Loan
Parties, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

 

“Banking Services Reserves”
means all Reserves which the Applicable Agent from time to time establishes in
its Permitted Discretion for Banking Services then provided or outstanding.

 

7

 

“Bankruptcy Code”
shall mean The Bankruptcy Reform Act of 1978, as heretofore and hereafter
amended, and codified as 11 U.S.C. Section 101 et  seq.

 

“Bankruptcy Court”
shall mean the United States Bankruptcy Court for the District of Delaware or
any other court having jurisdiction over the U.S. Cases from time to time.

 

“Board”
shall mean the Board of Governors of the Federal Reserve System of the United
States.

 

“Borrowers”
shall have the meaning set forth in the Introduction.

 

“Borrowing”
shall mean the incurrence of Revolving Loans or the Term Loans, as the case may
be, of a single Type and Class made from all the Lenders in accordance
with their Applicable Percentages on a single date and having, in the case of
Eurodollar Loans or Discount Rate Loans, a single Interest Period or Contract
Period (with any ABR Loan or Canadian Prime Rate Loan made pursuant to Section 2.17
being considered a part of the related Borrowing of Eurodollar Loans or
Discount Rate Loans).

 

“Borrowing Bases”
shall mean the U.S. Borrowing Base and the Canadian Borrowing Base.

 

“Borrowing Base Certificate”
shall mean a certificate substantially in the form of Exhibit C-1
hereto (with respect to the certificate to be delivered by the Loan Parties
weekly or more frequently) and Exhibit C-2 hereto (with respect to
the certificate to be delivered by the Loan Parties monthly) (in each case with
such changes therein as may be required by the Administrative Agent from time
to time to reflect the components of and reserves against the U.S. Borrowing
Base and the Canadian Borrowing Base as provided for hereunder from time to
time), executed and certified as accurate and complete by a Financial Officer
of each of the Loan Parties, which shall include appropriate exhibits,
schedules and supporting documentation, and additional reports as (i) outlined
in Exhibits C-1 and C-2, (ii) requested by the
Administrative Agent, and (iii) provided in Section 5.8.

 

“Budget”
shall have the meaning set forth in Section 4.1(j).

 

“Business Day”
shall mean any day other than a Saturday, Sunday or other day on which banks in
the State of New York are required or permitted to close (and, for a Letter of
Credit, other than a day on which the applicable Fronting Bank issuing such
Letter of Credit is closed); provided, however, that (a) when
used in connection with a Eurodollar Loan, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in dollar deposits on
the London interbank market and (b) when used in connection with a
Borrowing of Canadian Revolving Loans, Canadian Term Loans or a Canadian
Revolving Facility Letter of Credit, the term “Business Day” shall also exclude
any day on which banks are not open for business in Toronto and Montreal.

 

“Calculation Date”
shall mean (a) the last Business Day of each month, (b) the date of
each notice of Borrowing or refinancing of Canadian Revolving Loans or Canadian
Term Loans, or (c) the Business Day preceding the issuance, amendment,
extension or renewal of each Canadian Revolving Facility Letter of Credit.

 

8

 

“Calpine”
shall mean Calpine Corrugated LLC, a California limited liability company.

 

“Calpine Debt”
shall mean Indebtedness of Calpine under (i) that certain Amended and
Restated Credit Agreement dated as of July 28, 2008 between Calpine and
The CIT Group/Equipment Financing, Inc. in respect of a loan in the
principal amount of US$40,350,000 and (ii) that certain Loan and Security
Agreement dated as of March 30, 2006 between Calpine and Union Bank of
California, N.A. as amended prior to and including that certain Sixth Amendment
to Loan and Security Agreement dated as of July 28, 2008 in respect of a
loan in the principal amount of US$12,000,000.

 

“CAM” shall
mean the mechanism for the allocation and exchange of interests in the Credit
Facilities and collections thereunder established under ARTICLE 11.

 

“CAM Exchange”
shall mean the exchange of the Lenders’ interests provided for in Section 11.1.

 

“CAM Percentage”
shall mean, as to each Lender, a fraction, expressed as a decimal, of which (a) the
numerator shall be the aggregate Obligations owed to such Lender, and (b) the
denominator shall be the aggregate Obligations owed to all the Lenders, in each
case immediately prior to the Termination Date. 
For purposes of computing each Lender’s CAM Percentage, all Obligations
which shall be denominated in Canadian Dollars shall be translated into Dollars
at the Exchange Rate in effect on the Termination Date.

 

“Canadian Administrative Agent” shall mean
JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as Canadian
administrative agent for the Lenders hereunder.

 

“Canadian Benefit Plans”
shall mean all employee benefit plans of any nature or kind whatsoever (other
than the Canadian Pension Plans) that are maintained or contributed to by the
Canadian Borrower or any other Canadian Loan Party.

 

“Canadian Borrower”
shall have the meaning set forth in the Introduction.

 

“Canadian Borrowing Base” shall mean, at the time of
any determination, an amount equal to the sum (expressed in Dollars, based on
the Exchange Rate determined in accordance with Section 1.4),
without duplication, of (a) 85% of Eligible Accounts of the Canadian Loan
Parties at such time plus (b) the lesser of (i) 65% of
Eligible Inventory of the Canadian Loan Parties at such time and (ii) 85%
of the Net Orderly Liquidation Value of Eligible Inventory of the Canadian Loan
Parties at such time (in each case with respect to clauses (i) and (ii) with
any Eligible Inventory to be valued at the lower of cost (determined on a
first-in, first-out basis) or market), plus (c) the Canadian
PP&E Component, minus (d) the amount of the Reserves at such
time, minus, without duplication, (e) the then applicable aggregate
amount of obligations secured by the CCAA Charges as calculated pursuant to Section 2.24
at such time, minus (f) to the extent not otherwise included in the
CCAA Charges, the amount of Priority Payables at such time.  The Canadian Borrowing Base at any time shall
be determined by reference to the most recent Borrowing Base Certificate
delivered to the Administrative Agent pursuant to Section 5.8 of
this Agreement.

 

9

 

“Canadian Cases” shall mean the consolidated
proceedings of the CCAA Cases and the Recognition Cases.

 

“Canadian Collateral Agent”
shall mean JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as
Canadian collateral agent for the Lenders hereunder and the other Secured
Parties.

 

“Canadian Commitments”
shall mean the Canadian Revolving Commitment and the Canadian Term Loan
Commitment.

 

“Canadian Concentration
Account” shall mean the blocked concentration account
established by the Canadian Borrower pursuant to Section 5.7 and
designated as the “Smurfit-Stone Canadian Concentration Account” with JPMorgan
Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian
Administrative Agent.

 

“Canadian Conversion Notice”
shall have the meaning given such term in Section 9.23(c).

 

“Canadian Court”
shall mean the Ontario Superior Court of Justice or any other court having
jurisdiction over the Canadian Cases.

 

“Canadian Dollar Equivalent”
shall mean, on any date of determination, with respect to any amount in
Dollars, the equivalent in Canadian Dollars of such amount determined by the
Administrative Agent using the Exchange Rate then in effect.

 

“Canadian Dollars” and “C$”
shall mean lawful currency of Canada.

 

“Canadian Guaranteed
Obligations” shall have the meaning set forth in Section 10.2.

 

“Canadian Guarantor”
and “Canadian Guarantors” shall mean,
individually or collectively, SMBI Inc. and each of the Canadian Subsidiaries
party to this Agreement (other than the Canadian Borrower).  As of the Closing Date, the Canadian
Guarantors are 3083527 Nova Scotia Company, a corporation organized under the
laws of the Province of Nova Scotia, MBI Limited/Limitée, a corporation
organized under the laws of the Province of New Brunswick, Smurfit-MBI, a
limited partnership organized under the laws of the Province of Ontario, Stone
Container Finance Company of Canada II, a corporation organized under the laws
of the Province of Nova Scotia, 639647 British Columbia Ltd., a company with
limited liability organized under the laws of the Province of British Columbia,
B.C. Shipper Supplies Ltd., a corporation organized under the laws of the
Province of British Columbia, Specialty Containers Inc., a corporation
organized under the laws of the Province of Alberta, SLP Finance General
Partnership, a general partnership formed and operated under the Civil Code of
Québec, Francobec Company, a corporation organized under the laws of the
Province of Nova Scotia, 605681 N.B. Inc., a corporation organized under the
laws of the Province of New Brunswick, and SMBI Inc., a Delaware corporation,
and, after the Closing Date, shall include each subsequently organized Canadian
Subsidiary and each direct parent thereof.

 

10

 

“Canadian Investment
Account” shall mean the account established by the Canadian
Borrower pursuant to Section 2.7(d) and designated as the “Smurfit-Stone
Canadian Investment Account” with JPMorgan Chase Bank, N.A., Toronto Branch, or
a bank acceptable to the Canadian Administrative Agent.

 

“Canadian Lender”
shall mean, as of any date of determination, a Person constituting a Canadian
Revolving Lender or Canadian Term Lender.

 

“Canadian Letter of Credit Account” shall
mean the non-interest bearing account established by the Canadian Borrower
under the sole and exclusive control of the Canadian Administrative Agent
maintained at JPMorgan Chase Bank, N.A., Toronto Branch, or a bank acceptable
to the Canadian Administrative Agent, designated as the “JPMorgan Chase Bank NA
(Smurfit-Stone Canadian Letter of Credit) Account” that shall be used solely
for the purposes set forth in Section 2.4(c) and Section 2.14.

 

“Canadian Letter of Credit
Outstandings” shall mean, at any time of determination, the sum
of (a) the aggregate undrawn amount of all outstanding Canadian Revolving
Facility Letters of Credit that are denominated in Dollars, plus the U.S.
Dollar Equivalent at such time of the aggregate undrawn amount of all Canadian
Revolving Facility Letters of Credit that are denominated in Canadian Dollars
and (b) the aggregate amount that has been drawn under any Canadian
Revolving Facility Letter of Credit denominated in Dollars that has not been
reimbursed by the Canadian Borrower or another Loan Party at such time plus the
U.S. Dollar Equivalent of the aggregate amount that has been drawn under any
Canadian Revolving Facility Letter of Credit denominated in Canadian Dollars
that has not been reimbursed by the Canadian Borrower or another Loan Party at
such time.  The Canadian Letter of Credit Outstandings with respect to any
Canadian Revolving Lender at any time shall equal its Applicable Percentage of
the aggregate Canadian Letter of Credit Outstandings at such time.

 

“Canadian Loan Party”
and “Canadian  Loan Parties”
shall mean, individually or collectively, the Canadian Borrower and the
Canadian Guarantors.

 

“Canadian Loans”
shall mean the Canadian Revolving Loans and the Canadian Term Loans.

 

“Canadian Pension Plans”
shall mean all plans that are considered to be pension plans for the purposes
of, and are required to be registered under, the ITA or any applicable pension
benefits standards statute or regulation in Canada and that are established,
maintained or contributed to by the Canadian Borrower or any other Canadian
Loan Party for its current or former employees.

 

“Canadian PP&E
Component” shall mean the lesser of (x) (i) during
the period commencing with the Closing Date until the twelve (12) month
anniversary of the Closing Date, up to US$15,000,000, (ii) during the
period commencing with the twelve (12) month anniversary of the Closing Date
until the fifteen (15) month anniversary of the Closing Date, up to
US$10,000,000, and (iii) on the fifteen (15) month anniversary of the
Closing Date and thereafter, up to US$7,500,000, or, in each case, such lesser
amount as may be specified by the Canadian Borrower on the Canadian Borrower’s
most recent Borrowing Base Certificate, and 

 

11

 

(y) the
greater of (A) (i) 50% of the Net Orderly Liquidation Value of
Eligible Equipment of the Canadian Loan Parties at such time plus (ii) 50%
of the Fair Market Value of Eligible Real Property of the Canadian Loan Parties
at such time (as set forth in the most recent third party real estate appraisal
in form and substance satisfactory to the Administrative Agent), and (B) 20%
of the Net Orderly Liquidation Value In Place of (i) Eligible Equipment of
the Canadian Loan Parties at such time and (ii) Eligible Real Property of
the Canadian Loan Parties at such time. 
Notwithstanding the foregoing sentence, until the earlier of (x) such
time as appraisals satisfactory to the Administrative Agent are completed
pursuant to Section 5.6 and (y) May 28, 2009, or such
later date as the Administrative Agent may approve in its exclusive discretion,
the Canadian PP&E Component shall be US$15,000,000 or such lesser amount as
may be specified by the Canadian Borrower on the Canadian Borrower’s most
recent Borrowing Base Certificate.

 

“Canadian Prime Rate”
shall mean, on any day, the greatest of (a) 4.5%, (b) the annual rate
of interest announced from time to time by the Canadian Administrative Agent as
being its reference rate then in effect for determining interest rates on
Canadian Dollar-denominated commercial loans made by it in Canada and (c) the
CDOR Rate for a one month term in effect from time to time plus 100 basis
points per annum.

 

“Canadian Prime Rate Loan”
shall mean any Loan bearing interest at a rate determined by reference to the
Canadian Prime Rate in accordance with the provisions of ARTICLE 2.

 

“Canadian Receivables
Securitization Program” shall mean the Receivables Purchase
Agreement, dated as of March 30, 2004, among MBI Limited/Limitee, in its
capacity as general partner of Smurfit-MBI, Computershare Trust Company of
Canada, in its capacity as trustee of King Street Funding Trust, and Scotia
Capital Inc., as amended, restated, modified or waived from time to time.

 

“Canadian Revolving
Commitment” shall mean, with respect to each Canadian Revolving
Lender, the commitment of such Lender to make Canadian Revolving Loans
hereunder and to acquire participations in Canadian Revolving Facility Letters
of Credit in the amount set forth opposite its name on Annex A-1 hereto
or as may subsequently be set forth in the Register from time to time, as the
same may be reduced from time to time pursuant to the terms of this
Agreement.  As of the Closing Date, the aggregate amount of the Canadian
Revolving Commitments is US$65,000,000.

 

“Canadian Revolving Credit
Utilization” shall mean, at any time of determination, the sum
of (a) the aggregate principal amount of Canadian Revolving Loans
outstanding at such time and denominated in Dollars, plus (b) the
U.S. Dollar Equivalent of the aggregate principal amount of Canadian Revolving
Loans outstanding at such time and denominated in Canadian Dollars, plus
(c) the Canadian Letter of Credit Outstandings at such time.

 

“Canadian Revolving
Facility Letters of Credit” shall mean any irrevocable letter of
credit issued pursuant to Section 2.4 for the account of the
Canadian Borrower or a Canadian Subsidiary by a Fronting Bank pursuant to the
terms and conditions of ARTICLE 2, which letter of credit shall be (i) a
standby or import documentary letter of credit, (ii) issued for 

 

12

 

purposes
consistent with the ordinary course of business of the Loan Parties, as
determined by the Loan Parties in their reasonable judgment, or for such other
purposes as are acceptable to the Canadian Administrative Agent, (iii) denominated
in Dollars or Canadian Dollars and (iv) otherwise in such form as may be
approved from time to time by the Canadian Administrative Agent and the
applicable Fronting Bank.

 

“Canadian Revolving Lenders”
shall mean the Lenders having Canadian Revolving Commitments or holding
Canadian Revolving Loans.

 

“Canadian Revolving Loan”
shall mean a revolving loan to the U.S. Borrower or the Canadian Borrower made
pursuant to Section 2.1(b)(ii) in Dollars or Canadian Dollars.

 

“Canadian Secured
Obligations” shall mean (a) all Obligations owing by the
Canadian Borrower (other than in respect of its guaranty of Obligations of the
U.S. Borrower), (b) all Obligations owing by any other Canadian Loan
Party, (b) all Banking Services Obligations owing by any Canadian Loan
Party and (c) all Swap Obligations owing by any Canadian Loan Party to one
or more Canadian Lenders or their respective Affiliates; provided that at or
prior to the time that any transaction relating to a Swap Obligation is
executed, the Canadian Lender or an Affiliate thereof party thereto (other than
JPMCB) shall have delivered written notice to the Administrative Agent that
such a transaction has been entered into and that it constitutes a Canadian
Secured Obligation entitled to the benefits of the Collateral Documents.

 

“Canadian Security
Agreement” shall mean the Canadian Security Agreement made by
each of the Canadian Loan Parties in favor of the Canadian Collateral Agent and
the Quebec Security Agreements.

 

“Canadian Subsidiary”
shall mean any Subsidiary of the Parent incorporated, organized or formed under
the laws of Canada or any province or other territory thereof.

 

“Canadian Term Loans”
shall mean the term loans to the Canadian Borrower made pursuant to Section 2.1(a)(ii) (or
made to the Canadian Borrower pursuant to Section 9.23(c))in
Dollars.

 

“Canadian Term Loan
Collateral Account” shall mean the account established by the
Canadian Borrower under the sole and exclusive control of the Canadian Administrative
Agent maintained with JPMorgan Chase Bank, N.A., Toronto Branch, or a bank
acceptable to the Canadian Administrative Agent, designated as the “Smurfit-Stone
Canadian Term Loan Collateral Account” that shall be used solely for the
purposes set forth in Section 2.7(d) and Section 2.14(c).

 

“Canadian Term Loan
Commitment” shall mean, with respect to each Canadian Term Loan
Lender, the commitment of such Lender to make a Canadian Term Loan hereunder in
the amount set forth opposite its name on Annex A-4 hereto, as the same shall
be reduced on the Closing Date pursuant to Section 2.14(j) and
as may be modified pursuant to Section 9.23(c).  As of the
Closing Date and prior to making the Canadian Term Loans, the aggregate amount
of the Canadian Term Loan Commitments of the Canadian Term Loan Lenders is
US$35,000,000.

 

13

 

“Canadian Term Loan
Conversion” shall have the meaning given such term in Section 9.23(c).

 

“Canadian Term Loan Lenders”
shall mean the Lenders having Canadian Term Loan Commitments or holding
Canadian Term Loans.

 

“Canadian Term Outstandings”
shall mean, at any time of determination, an amount equal to (a) the
aggregate principal amount of the Canadian Term Loans outstanding at such time minus
(b) the amount of cash held in the Canadian Term Loan Collateral Account
at such time.

 

“Capital Expenditures”
shall mean, for any period, the aggregate of all expenditures (whether paid in
cash and not accrued prior to such period but after the Closing Date or accrued
as liabilities during such period, and including that portion of Capital Lease
Obligations which is capitalized on the consolidated balance sheet of the Loan
Parties and their Subsidiaries) by the Loan Parties and their Subsidiaries
during such period that, in conformity with GAAP, are required to be included
in or reflected by the property, plant, equipment or intangibles or similar
fixed asset accounts reflected in the consolidated balance sheet of the Loan
Parties and their Subsidiaries, but excluding expenditures made in connection
with the replacement or restoration of assets, to the extent reimbursed or
financed from insurance proceeds paid on account of the loss of or the damage
to the assets being replaced or restored, or from awards of compensation
arising from the taking by condemnation or eminent domain of such assets being
replaced.

 

“Capital Lease Obligations”
of any Person means the obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.

 

“Carve-Out”
shall have the meaning set forth in Section 2.24.

 

“Cases”
shall mean the U.S. Cases and the Canadian Cases, individually and
collectively.

 

“Cash Flow Forecast”
shall have the meaning set forth in Section 4.1(k).

 

“CCAA” shall
mean the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as
heretofore or hereafter amended.

 

“CCAA Cases” shall mean the cases
commenced by the Canadian Loan Parties (other than Surfit-MBI and SLP Finance
General Partnership) pursuant to the CCAA.

 

“CCAA Charges” shall mean the
Administration Charge and the Directors’ Charge.

 

“CCAA DIP Lenders’ Charge”
shall have the meaning set forth in Section 2.24.

 

14

 

“CDOR Rate”
shall mean on any day, with respect to a particular term as specified herein,
the annual rate of discount or interest which is the arithmetic average of the
discount rates for such term applicable to Canadian Dollar bankers’ acceptances
identified as such on the Reuters Screen CDOR Page at approximately 10:00 A.M.
(Toronto, Ontario time) on such day, or if such day is not a Business Day, then
on the immediately preceding Business Day (as adjusted by the Administrative
Agent after 10:00 A.M. (Toronto, Ontario time) to reflect any error in any
posted rate or in the posted average annual rate).  If the rate does not appear on the Reuters
Screen CDOR Page as contemplated above, then the CDOR Rate on any day
shall be calculated as the arithmetic average of the annual discount rates for
such term applicable to Canadian Dollar bankers’ acceptances of, and as quoted
by, the Schedule I Banks, as of 10:00 A.M. (Toronto, Ontario time) on that
day, or if that day is not a Business Day, then on the immediately preceding
Business Day.

 

“Change of Control”
shall mean (x) with respect to the Parent (i) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules of
the Securities and Exchange Commission thereunder as in effect on the Closing
Date), of shares representing more than 35% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Parent; or
(ii) the occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Parent, after the Filing Date, by Persons who
were neither (a) nominated by the board of directors of the Parent nor (b) appointed
by the directors so nominated, (y) the Parent shall cease to own, directly
or indirectly, beneficially and of record, 100% of the issued and outstanding
capital stock of the U.S. Borrower or any other Loan Party (or, in the case of
Calpine, 90%), or (z) the U.S. Borrower shall cease to own, directly or
indirectly, beneficially and of record, 100% of the issued and outstanding
capital stock of the Canadian Borrower.

 

“Class”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are U.S. Revolving Loans, Canadian
Revolving Loans, U.S. Term Loans, or Canadian Term Loans, and, when used in
reference to any Commitment, refers to whether such Commitment is a U.S.
Revolving Commitment, Canadian Revolving Commitment, U.S. Term Loan Commitment,
or Canadian Term Loan Commitment.

 

“Closing Date”
shall mean the date on which this Agreement has been executed and the
conditions precedent to the making of the initial Loans set forth in Section 4.1
have been satisfied or waived, which date shall occur as promptly as is
practicable after the date of this Agreement, but in no event later than five (5) days
following entry of the Interim Order.

 

“Closing Date Lender”
shall have the meaning set forth in Section 9.3.

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

“Co-Lead Arrangers”
shall mean J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc.

 

“Collateral”
shall mean all of the real, personal and mixed property (including equity
interests) in which Liens are purported to be granted pursuant to the Orders or
Collateral Documents.

 

15

 

 “Collateral Accounts” shall mean
collectively, the Canadian Letter of Credit Account, the Letter of Credit
Account, the Canadian Term Loan Collateral Account and the U.S. Term Loan
Collateral Account.

 

“Collateral Agent” shall mean JPMorgan Chase
Bank, N.A., in its capacity as collateral agent for the Lenders hereunder and
the other Secured Parties.

 

“Collateral Documents”
shall mean, collectively, the Security Agreements and any other documents
granting a Lien upon the Collateral as security for payment of any of the
Secured Obligations.

 

“Commercial LC Exposure”
shall mean, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding commercial Letters of Credit at such time plus (b) the
aggregate amount of all disbursements relating to commercial Letters of Credit
that have not yet been reimbursed by or on behalf of the Borrowers at such
time.  The Commercial LC Exposure of any
Revolving Lender at any time shall be its Applicable Percentage of the total
Commercial LC Exposure at such time.

 

“Commitment”
shall mean each of, and “Commitments”
shall mean, collectively, the Canadian Revolving Commitments, the U.S.
Revolving Commitments, the U.S. Term Loan Commitments and the Canadian Term
Loan Commitments, and, with respect to each Canadian Revolving Lender, U.S.
Revolving Lender, U.S. Term Loan Lender or Canadian Term Loan Lender, as
applicable, the Commitment of each such Lender hereunder in the amount set
forth opposite its name on Annex A-1,  Annex A-2,  Annex A-3
or Annex A-4 hereto or as may subsequently be set forth in the Register
from time to time, as the same may be reduced from time to time pursuant to
this Agreement.

 

“Commitment Fee”
shall have the meaning set forth in Section 2.21.

 

“Commitment Fee Percentage” shall mean 1.0% per annum.

 

“Commitment Letter”
shall mean that certain Commitment Letter dated January 6, 2009 among the
Administrative Agent, J.P. Morgan Securities Inc., Deutsche Bank Securities
Inc., Deutsche Bank Trust Company Americas and the Parent on behalf of itself
and the other Loan Parties.

 

“Concentration Account”
shall mean the blocked concentration account established by the U.S. Borrower
pursuant to Section 5.7 and designated as the “Smurfit-Stone
Concentration Account” with JPMCB.

 

“Consenting Lenders”
shall have the meaning set forth in Section 9.10(b).

 

“Consolidated EBITDA”
shall mean, for any period, all as determined in accordance with GAAP, the
Consolidated Net Income of the Loan Parties and their Subsidiaries for such
period, plus, without duplication and to the extent deducted in
determining Consolidated Net Income for such period, (i) all federal,
state, provincial, local and foreign income taxes, (ii) Consolidated
Interest Expense, (iii) depreciation, depletion, amortization of
intangibles and other non-cash charges or non-cash losses deducted in
determining such Consolidated Net 

 

16

 

Income,
(iv) any restructuring charges in an amount not to exceed US$25,000,000 in
the aggregate during any twelve (12) month period (“restructuring charges”), (v) “Chapter
11/CCAA expenses” (or “administrative costs reflecting Chapter 11/CCAA expenses”,
inclusive of professional fees), (vi) non-cash pension expenses, as shown
on the Loan Parties’ consolidated statement of income for such period, and (vii) any
Downtime Credit, minus, without duplication and to the extent included
in determining such Consolidated Net Income for such period, (i) any
non-cash income or non-cash gains, (ii) cash contributions to fund pension
plan liabilities and (iii) cash expenditures pertaining to non-cash
charges or non-cash losses that were added back in the calculation of
Consolidated EBITDA hereunder for a prior period.  The classification of items as “restructuring
charges” or “Chapter 11/CCAA expenses” for purposes of determining Consolidated
EBITDA shall be made by the Loan Parties in a manner consistent with the allocations
in the Budget and the Cash Flow Forecast delivered to the Administrative Agent
on or prior to the Closing Date.

 

“Consolidated Interest
Expense” means, with reference to any period, total interest
expense (including that attributable to Capital Lease Obligations) of the
Parent and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Parent and its Subsidiaries (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing), calculated on a consolidated basis for the
Parent and its Subsidiaries for such period in accordance with GAAP.  For purposes of the foregoing, interest
expense shall be determined after giving effect to any net payments made or
received by the Parent and its Subsidiaries with respect to Swap Agreements,
but excluding any gain or loss recognized under GAAP that results from the
mark-to-market valuation of any Swap Agreement.

 

“Consolidated
Net Income” means, for any period,
the consolidated net income (or loss) of the Parent and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded (a) the income (or deficit) of any Person accrued prior
to the date it becomes a Subsidiary or is merged into or consolidated with the
Parent or any of its Subsidiaries, (b) the income (or deficit) of any
Person (other than a Subsidiary) in which the Parent or any of its Subsidiaries
has an ownership interest, except to the extent that any such income is
actually received by the Parent or such Subsidiary in the form of dividends or
similar distributions, (c) the undistributed earnings of any Subsidiary to
the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary and (d) any gain (or loss) from the
sale or other disposition of any asset occurring outside of the ordinary course
of business of the Loan Parties.

 

“Contract Period”
shall mean the term of a Discount Rate Loan selected by the Canadian Borrower
in accordance with Section 2.7 and Section 2.13
commencing on the date of the Borrowing of such Discount Rate Loan, any
rollover date and the date on which any Canadian Prime Rate Loans are
refinanced with Discount Rate Loans pursuant to Section 2.13, as
applicable, and expiring on a Business Day which shall be either one month,
three months, or, with the consent of all of the applicable Canadian Lenders,
six months later; provided, that no Contract Period shall extend beyond
the Maturity Date.  Notwithstanding the
foregoing, whenever the last day of any Contract Period would otherwise occur on
a day which is not a 

 

17

 

Business
Day, the last day of such Contract Period shall occur on the next succeeding
Business Day.

 

“Converting Lender”
shall mean, each of JPMCB, JPMorgan Chase Bank, N.A., Toronto Branch and Deutsche
Bank Trust Company Americas.

 

“Credit Exposure”
shall mean as to any Lender at any time, the sum of (a) such Lender’s
Revolving Loans at such time, plus (b) such Lender’s LC Exposure plus
(c) an amount equal to the aggregate principal amount of its Term Loans
outstanding at such time.

 

“Credit Facility”
shall mean a Class of Commitments and extensions of credit
thereunder.  For purposes of this Agreement, each of the following
comprises a separate Credit Facility:  (a) the U.S. Term Loans, (b) the
Canadian Term Loans, (c) the U.S. Revolving Commitments, the U.S.
Revolving Loans and the U.S. Revolving Facility Letters of Credit, and (d) the
Canadian Revolving Commitments, the Canadian Revolving Loans and the Canadian
Revolving Facility Letters of Credit.

 

“Default”
shall have the meaning given such term in Section 2.24.

 

“Defaulting Lender”
shall mean any Lender, as determined by the Applicable Agent, that has (a) failed
to fund any portion of its Loans or participations in Letters of Credit within
three (3) Business Days of the date required to be funded by it hereunder,
(b) notified any Borrower, the Applicable Agent, any Fronting Bank or any
Lender in writing that it does not intend to comply with any of its funding
obligations under this Agreement or has made a public statement to the effect
that it does not intend to comply with its funding obligations under this
Agreement or under other agreements in which it commits to extend credit, (c) failed,
within three (3) Business Days after request by the Applicable Agent, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund prospective Loans and participations in then outstanding
Letters of Credit, (d) otherwise failed to pay over to the Applicable
Agent or any other Lender any other amount required to be paid by it hereunder
within three (3) Business Days of the date when due, unless the subject of
a good faith dispute, or (e) (i) become or is insolvent or has a
parent company that has become or is insolvent or (ii) become the subject
of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment or has a parent company that has become the subject
of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.

 

“Dilution Factors”
shall mean, without duplication, with respect to any period, the aggregate
amount of all deductions, credit memos, returns, adjustments, allowances, bad
debt write-offs and other non-cash credits which are recorded to reduce
accounts receivable in a manner consistent with current and historical
accounting practices of the Loan Parties.

 

“Dilution Ratio”
shall mean, at any date, the amount (expressed as a percentage) equal to (a) the
aggregate amount of the applicable Dilution Factors for the twelve (12) most

 

18

 

recently
ended fiscal months divided by (b) total gross sales for the twelve (12)
most recently ended fiscal months.

 

“Dilution Reserve”
shall mean, at any date, (i) the amount by which the Dilution Ratio
exceeds five percent (5%) multiplied by (ii) the Eligible Accounts on such
date.

 

“Directors’ Charge”
shall have the meaning given such term in Section 2.24.

 

“Discount Rate”
shall mean with respect to a Discount Rate Loan: (a) made by a Canadian
Revolving Lender which is a Schedule I Bank, the greater of (x) 3.5% and (y) the
CDOR Rate, and (b) made by a Canadian Revolving Lender which is not a
Schedule I Bank, the greater of (x) 3.5% and (y) the CDOR Rate plus
10 basis points per annum.

 

“Discount Rate Loan”
shall mean any Loan bearing interest at a rate determined by reference to the
Discount Rate in accordance with the provisions of ARTICLE 2.

 

“Dollars”
and “US$” shall mean lawful
money of the United States of America.

 

“Domestic Subsidiary”
shall mean any Subsidiary of the U.S. Borrower organized under the laws of the
United States or any political subdivision thereof.

 

“Downtime Credit”
shall mean a credit for production downtime, if any, in excess of downtime
identified in the Budget delivered on or prior to the Closing Date, in an
amount equal to US$2,500,000 for every 10,000 tons of production downtime in
excess of downtime identified in the Budget taken in any month ending on or
prior to July 31, 2009 (other than, in any event, downtime associated with
maintenance activity in the ordinary course of business), provided that
the cumulative amount of the Downtime Credit during all periods shall not
exceed US$20,000,000.  In the event the
amount of production downtime in excess of downtime identified in the Budget is
more or less than 10,000 tons, the Downtime Credit for such month shall be
prorated based upon the actual number of tons of production downtime in excess
of the downtime identified in the Budget (but in any event not to exceed the
US$20,000,000 cap set forth above).

 

“Effective Date”
shall mean the date identified as the effective date of a Reorganization Plan
of the Loan Parties that is confirmed or sanctioned pursuant to an order of the
Bankruptcy Court or Canadian Court, as the case may be, in the Cases.

 

“Eighteen Month Facility
Extension Option” shall have the meaning given such term in Section 2.31.

 

“Eligible Accounts”
means, at any time, the Accounts of a Loan Party which the Applicable Agent
determines in its Permitted Discretion are eligible as the basis for the
extension of Loans and the issuance of Letters of Credit hereunder.  Without limiting the Applicable Agent’s discretion
provided herein, Eligible Accounts shall not include any Account:

 

(a)           which is not subject to a first
priority perfected Lien in favor of the Applicable Agent for the benefit of the
Secured Parties subject only to (i) the CCAA Charges and (ii) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable;

 

19

 

(b)           which is subject to any Lien other
than (i) a Lien in favor of the Applicable Agent for the benefit of the
Secured Parties, (ii) a Lien (if any) permitted by the Loan Documents
which does not have priority over the Lien in favor of the Applicable Agent for
the benefit of the Secured Parties, (iii) a Lien contemplated by clause (iv) of
the definition of Permitted Liens, and (iv) an unregistered Lien in
respect of Priority Payables that are not yet due and payable;

 

(c)           which (i) is unpaid more than 90
days after the date of the original invoice therefor, or (ii) has been
written off the books of the Loan Party or otherwise designated as
uncollectible (in determining the aggregate amount from the same Account Debtor
that is unpaid hereunder there shall be excluded the amount of any net credit
balances relating to Accounts due from an Account Debtor which are unpaid more
than 90 days from the date of invoice);

 

(d)           which is owing by an Account Debtor
for which more than 50% of the Accounts owing from such Account Debtor and its
Affiliates are ineligible hereunder;

 

(e)           which is owing by an Account Debtor
to the extent the aggregate amount of Accounts owing from such Account Debtor
and its Affiliates to the Loan Parties exceeds 10% of the aggregate amount of
Eligible Accounts of the Loan Parties;

 

(f)            which, for any Account Debtor,
exceeds the applicable credit limit, if any, determined by the Loan Parties, to
the extent of such excess, as determined in a manner mutually acceptable to the
Loan Parties and the Applicable Agent;

 

(g)           with respect to which any covenant,
representation, or warranty contained in this Agreement or in the Collateral
Documents has been breached or is not true in any material respect;

 

(h)           which (i) does not arise from
the sale of goods or performance of services in the ordinary course of
business, (ii) is not evidenced by an invoice or other documentation
satisfactory to the Applicable Agent which has been sent to the Account Debtor,
(iii) represents a progress billing, (iv) is contingent upon any Loan
Party’s completion of any further performance, (v) represents a sale on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment,
cash-on-delivery or any other repurchase or return basis or (vi) relates
to payments of interest, in each case determined in a manner mutually
acceptable to the Loan Parties and the Applicable Agent;

 

(i)            for which the goods giving rise to
such Account have not been shipped to the Account Debtor or for which the
services giving rise to such Account have not been performed by a Loan Party or
if such Account was invoiced more than once, in each case determined in a
manner mutually acceptable to the Loan Parties and the Applicable Agent;

 

(j)            which is owed by an Account Debtor
which has (i) applied for, suffered, or consented to the appointment of
any receiver, custodian, trustee, or liquidator of its assets, (ii) has
had possession of all or a material part of its property taken by any receiver,
custodian, trustee or liquidator, (iii) filed, or had filed against it,
any request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or
involuntary case under any state, provincial or federal bankruptcy laws, (iv) has

 

20

 

admitted in writing its
inability, or is generally unable to, pay its debts as they become due, (v) become
insolvent, or (vi) ceased operation of its business;

 

(k)           which is owed by any Account Debtor
which has sold all or a substantially all of its assets;

 

(l)            which is owed by an Account Debtor
which (i) does not maintain its chief executive office or have material
business operations in the U.S. or Canada or (ii) is not organized and
existing under applicable law of the U.S. or Canada or, in either case any
political subdivision thereof, unless, in either case, such Account is backed
by a Letter of Credit acceptable to the Applicable Agent which is in the
possession of, has been assigned to and is directly drawable by, the Applicable
Agent;

 

(m)          which is owed in any currency other
than Dollars or Canadian Dollars;

 

(n)           (A) with respect to the U.S.
Borrowing Base, which is owed by (i) the government (or any department,
agency, public corporation, or instrumentality thereof) of any country other
than the U.S. unless such Account is backed by a Letter of Credit acceptable to
the Applicable Agent which is in the possession of the Applicable Agent, or (ii) the
government of the U.S., or any department, agency, public corporation, or
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940,
as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any other
steps necessary to perfect the Lien of the Applicable Agent for the benefit of
the Secured Parties in such Account have been complied with to the Applicable
Agent’s satisfaction; and (B) with respect to the Canadian Borrowing Base,
which is owed by (i) the government (or any department, agency, public
corporation, or instrumentality thereof) of any country other than Canada
unless such Account is backed by a Letter of Credit acceptable to the Applicable
Agent which is in the possession of the Applicable Agent, or (ii) the
government of Canada, or any department, agency, public corporation, or
instrumentality thereof, unless the Financial Administration Act (Canada) or
similar provincial or territorial legislation or municipal ordinance of similar
purpose, in each case as amended, and any other steps necessary to perfect the
Lien of the Applicable Agent for the benefit of the Secured Parties in such
Account have been complied with to the Applicable Agent’s satisfaction;

 

(o)           which is owed by any Affiliate,
employee, officer, director, agent, holder of more than 2% of the issued and
outstanding capital stock of the Parent or any stockholder of any other Loan
Party;

 

(p)           which is owed by an Account Debtor or
any Affiliate of such Account Debtor to which any Loan Party is indebted, but
only to the extent of such indebtedness or is subject to any security, deposit,
progress payment, retainage or other similar advance made by or for the benefit
of an Account Debtor, in each case to the extent thereof;

 

(q)           which is subject to any counterclaim,
deduction, defense, setoff or dispute but only to the extent of any such
counterclaim, deduction, defense, setoff or dispute;

 

(r)            which is evidenced by any promissory
note, chattel paper, or instrument or subject to a payment plan;

 

21

 

(s)           with respect to which such Loan Party
has made any agreement with the Account Debtor for any reduction thereof, other
than discounts and adjustments given in the ordinary course of business, or any
Account which was partially paid and such Loan Party created a new receivable
for the unpaid portion of such Account, or any unpaid portion of any partially
paid Account to the extent of such unpaid portion;

 

(t)            which does not comply in all
material respects with the requirements of all applicable laws and regulations,
whether federal, state, provincial or local, including without limitation the
Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and
Regulation Z of the Board;

 

(u)           which is for goods that have been
sold under a purchase order or pursuant to the terms of a contract or other
agreement or understanding (written or oral) that indicates or purports that
any Person other than such Loan Party has or has had an ownership interest in
such goods, or which indicates any party other than such Loan Party as payee or
remittance party, in each case determined in a manner mutually acceptable to
the Loan Parties and the Applicable Agent; or

 

(v)           which was created on cash on delivery
terms.

 

In the event that an Account which was
previously an Eligible Account ceases to be an Eligible Account hereunder, such
Loan Party shall notify the Applicable Agent thereof on and at the time of
submission to the Applicable Agent of the next Borrowing Base Certificate.  Except as otherwise set forth above, the
amount of an Eligible Account shall be determined based on the face amount of
such Account; provided that the face amount of an Account may, in the
Applicable Agent’s Permitted Discretion, be reduced by, without duplication, to
the extent not reflected in such face amount, (i) the amount of all
accrued and actual discounts, claims, credits or credits pending, promotional
program allowances, price adjustments, finance charges or other allowances
(including any amount that such Loan Party may be obligated to rebate to an
Account Debtor pursuant to the terms of any agreement or understanding (written
or oral)) and (ii) the aggregate amount of all cash received in respect of
such Account but not yet applied by such Loan Party to reduce the amount of
such Account.

 

“Eligible Equipment”
means the equipment owned by a Loan Party located at the Loan Parties’
facilities described on Schedule 1.1, as updated from time to time with
the consent of the Administrative Agent, and meeting each of the following
requirements:

 

(a)           such Loan Party has good title to
such equipment;

 

(b)           such Loan Party has the right to
subject such equipment to a Lien in favor of the Applicable Agent for the
benefit of the Secured Parties; such equipment is subject to a first priority
perfected Lien in favor of the Applicable Agent for the benefit of the Secured
Parties and is free and clear of all other Liens of any nature whatsoever
(except for (i) Permitted Liens which do not have priority over the Lien
in favor of the Applicable Agent for the benefit of the Secured Parties, (ii) unregistered
Liens in respect of Priority Payables that are not yet due and payable, (iii) the
CCAA Charges and (iv) Liens permitted by clause (iv) of the
definition of Permitted Liens);

 

22

 

(c)           the full purchase price for such
equipment has been paid by such Loan Party;

 

(d)           such equipment is located on premises
(i) owned by such Loan Party, which premises are subject to a first
priority perfected Lien in favor of the Applicable Agent for the benefit of the
Secured Parties, or (ii) leased by such Loan Party where (x) the
lessor has delivered to the Applicable Agent a Landlord Lien Waiver or (y) a
Reserve for rent, charges, and other amounts due or to become due with respect
to such facility has been established by the Applicable Agent in its Permitted
Discretion;

 

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

 

(f)            such equipment is not subject to any
agreement which restricts the ability of such Loan Party to use, sell,
transport or dispose of such equipment or which restricts the Applicable Agent’s
ability to take possession of, sell or otherwise dispose of such equipment; and

 

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

 

“Eligible Inventory”  means, at any time, the Inventory of a Loan
Party which the Applicable Agent determines in its Permitted Discretion is
eligible as the basis for the extension of Loans and the issuance of Letters of
Credit hereunder.  Without limiting the
Applicable Agent’s discretion provided herein, Eligible Inventory shall not
include any Inventory:

 

(a)           which is not subject to a first
priority perfected Lien in favor of the Applicable Agent for the benefit of the
Secured Parties subject only to (i) the CCAA Charges and (ii) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable;

 

(b)           which is subject to any Lien other
than (i) a Lien in favor of the Applicable Agent for the benefit of the
Secured Parties, (ii) a Lien (if any) permitted by the Loan Documents
which does not have priority over the Lien in favor of the Applicable Agent for
the benefit of the Secured Parties, (iii) a Lien contemplated by clause (iv) of
the definition of Permitted Liens, and (iv) an unregistered Lien in
respect of Priority Payables that are not yet due and payable;

 

(c)           which is, in the Applicable Agent’s
opinion, slow moving, obsolete, unmerchantable, defective, used, unfit for
sale, not salable at prices approximating at least the cost of such Inventory
in the ordinary course of business or unacceptable due to age, type, category
or quantity;

 

(d)           with respect to which any covenant,
representation, or warranty contained in this Agreement or the Collateral
Documents been breached or is not true in any material respect and which does
not conform in any material respect to all standards imposed by any
Governmental Authority;

 

23

 

(e)           in which any Person other than such
Loan Party shall (i) have any direct or indirect ownership, interest or
title to such Inventory or (ii) be indicated on any purchase order or
invoice with respect to such Inventory as having or purporting to have an
interest therein;

 

(f)            which is not Work-in-Process, Raw
Materials or Finished Goods or which constitutes spare or replacement parts,
subassemblies, packaging supplies and shipping material, manufacturing
supplies, samples, prototypes, displays or display items, bill-and-hold goods,
goods that are returned or marked for return, repossessed goods, defective or
damaged goods, goods held on consignment, or goods which are not of a type held
for sale in the ordinary course of business, including, but not limited to,
fuels, chemicals, starches, ink and adhesives;

 

(g)           which is not located in the United
States or Canada or is in transit (other than between locations in the United
States or Canada controlled by Loan Parties, to the extent included in current
perpetual inventory reports of any Loan Party);

 

(h)           which is located in any location
leased by such Loan Party unless (i) the lessor has delivered to the
Applicable Agent a Landlord Lien Waiver or (ii) a Reserve for rent,
charges, and other amounts due or to become due with respect to such facility
has been established by the Applicable Agent in its Permitted Discretion;

 

(i)            which is located in any third party
warehouse or is in the possession of a bailee (other than a third party
processor) and is not evidenced by a document (other than bills of lading
issued with respect to Inventory in transit between locations in the United
States or Canada controlled by Loan Parties), unless (i) such warehouseman
or bailee has delivered to the Applicable Agent a Landlord Lien Waiver and such
other documentation as the Applicable Agent may require or (ii) an
appropriate Reserve has been established by the Applicable Agent in its
Permitted Discretion;

 

(j)            which is being processed offsite at
a third party location or outside processor, or is in-transit to or from said
third party location or outside processor;

 

(k)           which is a discontinued product or
component thereof;

 

(l)            which is the subject of a
consignment by such Loan Party as consignor;

 

(m)          which contains or bears any
intellectual property rights licensed to such Loan Party unless the Applicable
Agent is satisfied that it may sell or otherwise dispose of such Inventory
without (i) infringing the rights of such licensor, (ii) violating
any contract with such licensor, or (iii) incurring any liability with
respect to payment of royalties other than royalties incurred pursuant to sale
of such Inventory under the current licensing agreement;

 

(n)           which is not reflected in a current
inventory report of such Loan Party (unless such Inventory is reflected in a
report to the Applicable Agent as “in transit” Inventory);

 

(o)           for which reclamation rights have
been asserted by the seller; or

 

(p)           any portion of the cost of such
Inventory is attributable to intercompany profit between any Loan Party and any
of its Affiliates (but only to the extent of such portion).

 

24

 

In the event that Inventory
which was previously Eligible Inventory ceases to be Eligible Inventory
hereunder, such Loan Party shall notify the Applicable Agent thereof on and at
the time of submission to the Applicable Agent of the next Borrowing Base Certificate.

 

“Eligible Real Property”
means the real property (including fixtures thereto) listed on Schedule 1.2,
as updated from time to time with the consent of the Administrative Agent (such
consent not to be unreasonably withheld), owned by a Loan Party (i) that
is acceptable in the exclusive discretion of the Applicable Agent for inclusion
in the U.S. Borrowing Base or Canadian Borrowing Base, as the case may be, (ii) in
respect of which an appraisal report has been delivered to the Applicable Agent
in form, scope and substance reasonably satisfactory to the Applicable Agent, (iii) in
respect of which the Applicable Agent is satisfied that all actions necessary
or desirable in order to create perfected first priority Lien (subject only to (i) the
CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables
that are not yet due and payable) on such real property have been taken,
including, the filing and recording of Collateral Documents, (iv) in
respect of which an environmental assessment report has been completed and
delivered to the Applicable Agent in form and substance satisfactory to such
Applicable Agent and which does not indicate any material environmental
liability, or material non-compliance with any Environmental Law (which liability
or non-compliance was not previously disclosed to Lenders), (v) which is
adequately protected by fully-paid valid title insurance with endorsements and
in amounts reasonably acceptable to the Applicable Agent, insuring that the
Applicable Agent, for the benefit of the Secured Parties, shall have a
perfected first priority Lien (subject only to (i) the CCAA Charges and (ii) an
unregistered Lien in respect of Priority Payables that are not yet due and
payable) on such real property, evidence of which shall have been provided in
form and substance reasonably satisfactory to the Applicable Agent, and (vi) if
required by the Applicable Agent: (A) an ALTA survey has been delivered
for which all necessary fees have been paid and which is dated no more than 30 days
prior to the date on which the applicable Collateral Document is recorded,
certified to the Applicable Agent and the issuer of the title insurance policy
in a manner reasonably satisfactory to the Applicable Agent by a land surveyor
duly registered and licensed in the state or province in which such Eligible
Real Property is located and reasonably acceptable to the Applicable Agent, and
shows all buildings and other improvements, any offsite improvements, the
location of any easements, parking spaces, rights of way, building setback
lines and other dimensional regulations and the absence of encroachments,
either by such improvements or on to such property, and other defects, other
than encroachments and other defects reasonably acceptable to the Applicable
Agent; and (B) such Loan Party shall have used its reasonable best efforts
to obtain such consents, agreements and confirmations of lessors and third
parties as the Applicable Agent may deem necessary or desirable, together with
evidence that all other actions that the Applicable Agent may deem necessary or
desirable in order to create perfected first priority Liens (subject only to (i) the
CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables
that are not yet due and payable) on the property described in the Collateral
Document have been taken.

 

“Environmental Laws”
shall mean all local, state, federal, provincial and foreign laws, statutes,
ordinances, orders, rules, regulations, or binding policies or decrees relating
to (i) pollution or protection of the environment, including, without
limitation, those relating to protection or rehabilitation of the land, water
(surface or subsurface water) or air, or fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses, injuries, 

 

25

 

investigations or remedial work resulting from the presence, release or
threatened release of Hazardous Waste or Hazardous Substances, (ii) the
generation, use, storage, transportation or disposal of Hazardous Waste or
Hazardous Substance, or (iii) occupational safety and health, industrial
hygiene or protection of wetlands, in any manner applicable to the Loan Parties
or any of their respective properties, and any analogous future local, state,
federal, provincial and foreign laws, statutes, ordinances, orders, rules,
regulations, or binding policies or decrees, each as in effect as of the date
of determination.

 

“Environmental Lien”
shall mean a Lien in favor of any Governmental Authority for (i) any
liability under federal, provincial or state Environmental Laws, or (ii) damages
arising from or costs incurred by such Governmental Authority in response to a
release or threatened release of a Hazardous Substance or Hazardous Waste.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.

 

“ERISA Affiliate”
shall mean any trade or business (whether or not incorporated) which is a
member of a group of which any of the Loan Parties is a member and which is
under common control within the meaning of Section 414(b) or (c) of
the Code and the regulations promulgated and rulings issued thereunder.

 

“Eurocurrency Liabilities”
shall have the meaning assigned thereto in Regulation D issued by the Board, as
in effect from time to time.

 

“Eurodollar Borrowing”
shall mean a Borrowing comprised of Eurodollar Loans.

 

“Eurodollar Loan”
shall mean any Loan bearing interest at a rate determined by reference to the
Adjusted LIBO Rate in accordance with the provisions of ARTICLE 2.

 

“Event of Default”
shall have the meaning given such term in ARTICLE 7.

 

“Excess Availability”
shall mean, on any date of determination, (x) the lesser of (i) the
sum of (A) the Total Revolving Commitment plus (B) Canadian
Term Outstandings plus U.S. Term Outstandings and (ii) the sum of (A) the
U.S. Borrowing Base plus (B) the Canadian Borrowing Base minus
(y) the Total U.S. Outstandings minus (z) the Total Canadian
Outstandings.

 

“Exchange Rate”
shall mean, on any day, (a) for purposes of determining the U.S. Dollar
Equivalent, the rate at which Canadian Dollars may be exchanged into Dollars
and (b) for purposes of determining the Canadian Dollar Equivalent, the
rate at which Dollars may be exchanged into Canadian Dollars, in each case as
quoted by the Bank of Canada for Canadian Dollars (or, if not so quoted, the
spot rate of exchange quoted for wholesale transactions made by the
Administrative Agent in Toronto, Ontario) at 12:00 Noon, Toronto time, on such
day; provided, that if at the time of any such determination, for any reason,
no such spot rate is being quoted, the Administrative Agent may use any
reasonable method it deems applicable to determine such rate, and such
determination shall be conclusive absent manifest error.

 

26

 

“Facilities”
shall mean any and all real property (including, without limitation, all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by the Loan Parties (but only as to
portions of buildings actually leased or used) or any of their respective
predecessors or any of their respective Affiliates that are directly or indirectly
controlled by the Loan Parties.

 

“Fair Market Value”
shall mean the price at which property would change hands between a willing
buyer and a willing seller, neither being under any compulsion to buy or to
sell and both having reasonable knowledge of relevant facts determined in a
manner acceptable to the Applicable Agent by an appraiser acceptable to the
Applicable Agent.

 

“Federal Funds Effective
Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.

 

“Fees”
shall collectively mean the Commitment Fees, Letter of Credit Fees and other
fees referred to in Section 2.20, Section 2.21,  Section 2.22, Section 2.30
and Section 2.31.

 

“Fifteen Month Facility
Extension Option” shall have the meaning given such term in Section 2.30.

 

“Filing Date”
shall mean January 26, 2009.

 

“Final Order”
shall have the meaning set forth in Section 4.2(d).

 

“Financial Officer”
shall mean the Chief Financial Officer, Chief Accounting Officer, Controller or
Treasurer of a Loan Party.

 

“Finished Goods” shall
mean completed goods which require no additional processing or manufacturing to
be sold to third party customers by the Loan Parties in the ordinary course of
business.

 

“Foreign Subsidiary”
shall mean any Subsidiary of the Parent that is not organized under the laws of
the United States of America.

 

“Fronting Bank”
shall mean JPMCB or such other commercial bank as may agree with JPMCB to act
in such capacity and shall be reasonably satisfactory to the Loan Parties and
the Administrative Agent.

 

“GAAP”
shall mean accounting principles generally accepted in the United States and
applied in accordance with Section 1.3.

 

27

 

“Governmental Authority”
shall mean the government of the United States of America or Canada, any other
nation or any political subdivision thereof, whether state, provincial or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

 

“Guaranteed Obligations”
shall have the meaning set forth in Section 10.2.

 

“Guarantor”
shall mean each of the Borrowers, the U.S. Guarantors and the Canadian
Guarantors; provided that no Foreign Subsidiary (other than the Canadian
Borrower) shall, or shall be deemed to, guarantee any Secured Obligations of
any entity organized under the laws of the United States nor shall it have any
obligations with respect to any such amounts.

 

“Guaranty”
shall mean ARTICLE 10 of this Agreement.

 

“Hazardous Substances”
shall mean, but is not limited to, any pollutant, contaminant, toxic substance,
hazardous material, dangerous good, asbestos, urea formaldehyde, PCB or
non-hazardous petroleum products or any other substance defined in or regulated
by any Environmental Laws as a hazardous substance.

 

“Hazardous Waste”
shall mean any Hazardous Substance that is a waste, by-product, residual
material or recyclable material, or any other substance which, in each case, is
defined in or regulated by any Environmental Laws as a hazardous waste.

 

“Indebtedness”
shall mean, at any time and with respect to any Person:  (i) all indebtedness of such Person for
borrowed money; (ii) all indebtedness of such Person for the deferred
purchase price of property or services (other than property, including
inventory, and services purchased, and trade accounts payable, accrued expenses
and deferred compensation items arising, in the ordinary course of business); (iii) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments; (iv) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (v) all obligations
of such Person under leases which have been or should be, in accordance with
GAAP, recorded as Capital Lease Obligations, to the extent required to be so
recorded; (vi) all reimbursement, payment or similar obligations of such
Person, contingent or otherwise, under acceptance, letter of credit or similar
facilities; (vii) all net obligations of such Person in respect of Swap
Agreements (such net obligations to be equal at any time to the termination
value of such Swap Agreements or other arrangements that would be payable by or
to such Person at such time); (viii) all indebtedness referred to in
clauses (i) through (vii) above guaranteed directly or indirectly by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (a) to pay or purchase such indebtedness or to
advance or supply funds for the payment or purchase of such indebtedness, (b) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such indebtedness or to assure the holder of such indebtedness against loss in
respect of such indebtedness, (c) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is 

 

28

 

received or such services are rendered) or (d) otherwise to assure
a creditor against loss in respect of such indebtedness; and (ix) all
indebtedness referred to in clauses (i) through (viii) above secured
by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such indebtedness.

 

“Indemnified Party”
shall have the meaning given such term in Section 9.6.

 

“Initial Order”
shall mean an order of the Canadian Court in the Canadian Cases in
substantially the form of Exhibit A-2, or such other form as is
satisfactory to the Administrative Agent in its exclusive discretion, entered
in accordance with the terms and conditions of Section 4.1, as such
order may be amended or restated to effect the consolidation of the Recognition
Cases and the CCAA Cases, and as such order may be further amended or restated
with the express written consent of the Administrative Agent.

 

“Insufficiency”
shall mean, with respect to any Plan, the amount, if any, of its unfunded benefit
liabilities within the meaning of Section 4001(a)(18) of ERISA.

 

“Intercompany Indebtedness”
shall mean any claim of an Affiliate of a Loan Party against any other
Affiliate of a Loan Party, any claim of a Loan Party against any of its
Affiliates, and any claim of any Affiliate of a Loan Party against a Loan Party
and shall include the face amount of Letters of Credit issued for the account
of Loan Parties other than the Borrowers.

 

“Interest Payment Date”
shall mean (i) as to any Eurodollar Loan and any Discount Rate Loan, the
last day of each consecutive thirty (30) day period running from the
commencement of the applicable Interest Period or Contract Period, and (ii) as
to all ABR Loans and Canadian Prime Rate Loans, the last calendar day of each
month and the date on which any ABR Loans are refinanced with Eurodollar Loans
or Canadian Prime Rate Loans are refinanced with Discount Rate Loans pursuant
to Section 2.13.

 

“Interest Period”
shall mean, as to any Borrowing of Eurodollar Loans, the period commencing on
the date of such Borrowing (including as a result of a refinancing of ABR
Loans) or on the last day of the preceding Interest Period applicable to such
Borrowing and ending on the numerically corresponding day (or if there is no
corresponding day, the last day) in the calendar month that is one, three or
six months thereafter, as the Borrowers may elect in the related notice
delivered pursuant to Section 2.7(b) or Section 2.13;
provided,
however,
that (i) if any Interest Period would end on a day which shall not be a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (ii) no Interest Period shall end later than
the Maturity Date.

 

“Interim Canadian Revolving
Commitment” shall have the meaning set forth in Section 2.3(a).

 

“Interim U.S. Revolving
Commitment” shall have the meaning set forth in Section 2.2(a).

 

29

 

“Interim Order”
shall mean, individually and collectively, the Initial Order and the U.S.
Interim Order.

 

“Interim Period”
shall have the meaning set forth in Section 2.2(a).

 

“Inventory” shall
mean all Raw Materials, Work-in-Process and Finished Goods owned, held or
generated by the Loan Parties in the normal course of business.

 

“Inventory Reserves”
shall mean reserves against Inventory equal to the sum of the following:

 

(a)           a reserve for shrink,
or discrepancies that arise pertaining to inventory quantities on hand between
the Loan Parties’ perpetual accounting system, and physical counts of the
inventory which will be determined by the Administrative Agent in its Permitted
Discretion with the variance expressed as a percentage of Inventory; and

 

(b)           a reserve for
Inventory which is designated to be returned to vendor or which is recognized
as damaged or off quality or not to customer specifications by a Loan Party;
and

 

(c)           a revaluation reserve
whereby capitalized favorable variances shall be deducted from Eligible
Inventory and unfavorable variances shall not be added to Eligible Inventory;
and

 

(d)           a lower of the cost
or market reserve for any differences between a Loan Party’s actual cost to
produce versus its selling price to third parties, determined on a product line
basis; and

 

(e)           any other reserve
established by the Applicable Agent in its Permitted Discretion, from time to
time.

 

“Investment Accounts”
shall mean, individually or collectively, the Canadian Investment Account and
the U.S. Investment Account.

 

“Investments”
shall have the meaning given such term in Section 6.11.

 

“ITA” shall
mean the Income Tax Act (Canada), as amended, and any successor thereto, and
any regulations promulgated thereunder.

 

“JPMCB”
shall mean JPMorgan Chase Bank, N.A., a national banking association.

 

“Judgment Currency”
and “Judgment Currency Conversion Date”
shall have the meanings set forth in Section 9.20.

 

“Landlord Lien Waiver”
shall mean a written agreement in such form as is reasonably acceptable to the
Administrative Agent, pursuant to which a Person shall waive or subordinate its
rights and claims as landlord in any Collateral of the Loan Parties for unpaid 

 

30

 

rents, grant access to the Administrative Agent for the repossession
and sale of such Collateral and make other agreements relative thereto.

 

“LC Exposure”
shall mean the sum of the Commercial LC Exposure and the Standby LC
Exposure.  The LC Exposure of any
Revolving Lender at any time shall be its Applicable Percentage of the total LC
Exposure at such time.

 

“LC Reserve Account”
shall have the meaning set forth in Section 11.2.

 

“Lenders”
shall mean the Canadian Lenders and the U.S. Lenders.

 

“Lender Affiliate”
shall mean, (i) with respect to any Lender, (a) an Affiliate of such
Lender or (b) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise
investing in loans and similar extensions of credit in the ordinary course of
its business and is administered or managed by such Lender or an Affiliate of
such Lender and (ii) with respect to any Lender that is a fund which
invests in loans and similar extensions of credit, any other fund that invests
in loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

 

“Letters of Credit”
shall mean the Canadian Revolving Facility Letters of Credit and the U.S.
Revolving Facility Letters of Credit.

 

“Letter of Credit Account”
shall mean the non-interest bearing account established by the U.S. Borrower
under the sole and exclusive control of the Administrative Agent maintained at
the office of the Administrative Agent at 270 Park Avenue, New York, New York
10017 designated as the “Smurfit-Stone U.S. Letter of Credit Account” that
shall be used solely for the purposes set forth in Section 2.4(c) and
Section 2.14.

 

“Letter of Credit Fees”
shall mean the fees payable in respect of Letters of Credit pursuant to Section 2.22.

 

“Letter of Credit
Outstandings” shall mean, at any time, the sum of (i) the
U.S. Letter of Credit Outstandings plus (ii) the Canadian Letter of Credit
Outstandings.

 

“Lien”
shall mean (i) any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, assignment for security, hypothecation, prior claim (within
the meaning of the Civil Code of Quebec), encumbrance or charge of any kind
whatsoever (including any conditional sale or other title retention agreement
or any lease in the nature thereof), (ii) in the case of securities, any
purchaser option, call or similar right of a third party with respect to such
securities, and (iii) any other arrangement having the effect of providing
security.

 

“Loan” shall
mean each Canadian Revolving Loan, U.S. Revolving Loan, Canadian Term Loan, and
U.S. Term Loan.

 

“Loan Documents”
shall mean this Agreement, the Letters of Credit, any Letter of Credit
applications, the Collateral Documents and any other instrument or agreement
executed and delivered in connection herewith.

 

31

 

“Loan Party”
and “Loan Parties” shall mean the U.S.
Borrower, the Canadian Borrower, the Parent, the other U.S. Guarantors and the
Canadian Guarantors.

 

“Loan Party Joinder
Agreement” shall have the meaning give such term in Section 5.11.

 

“Material Adverse Effect”
shall mean (i) a material adverse effect upon the business, operations,
assets, properties or financial condition of the Parent and its consolidated
Subsidiaries, taken as a whole, (ii) the material impairment of the
ability of any Loan Party to perform its Obligations or (iii) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Loan Party of a Loan Document to which it is a party.

 

“Maturity Date”
shall mean January 28, 2010; provided, that upon the effectiveness
of the Fifteen Month Facility Extension Option, the Maturity Date shall be
extended to April 28, 2010; provided, further that upon the
effectiveness of the Eighteen Month Facility Extension Option, the Maturity
Date shall be extended to July 28, 2010.

 

“Maximum Liability”
shall have the meaning given such term in Section 10.11.

 

“Minority Lenders”
shall have the meaning given such term in Section 9.10(b).

 

“Moody’s”
shall mean Moody’s Investors Service, Inc. or any successor to the rating
agency business thereof.

 

“Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA to which any Loan Party or any ERISA Affiliate is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.

 

“Multiple Employer Plan”
shall mean a Single Employer Plan, which (i) is maintained for employees
of a Loan Party or an ERISA Affiliate and at least one Person other than such
Loan Party and its ERISA Affiliates or (ii) was so maintained and in
respect of which a Loan Party or an ERISA Affiliate could have liability under Section 4064
or 4069 of ERISA in the event such Plan has been or were to be terminated.

 

“Net Orderly Liquidation
Value” shall mean, with respect to machinery, equipment or
Inventory of any Person, the orderly liquidation value thereof as determined in
a manner acceptable to the Applicable Agent by an appraiser acceptable to the
Applicable Agent, net of all costs of liquidation thereof.

 

“Net Orderly Liquidation
Value In Place” shall mean, with respect to machinery,
equipment, Inventory or real estate of any Person, the orderly liquidation
value thereof when such assets are being purchased in place to remain in
operation in “as is” condition, taking advantage of all leasehold and site
improvements designed to facilitate such assets’ operation, as determined in a
manner acceptable to the Applicable Agent by an appraiser acceptable to the
Applicable Agent, net of all costs of liquidation thereof.

 

32

 

“Net Proceeds”
means, with respect to any event, (a) the cash proceeds received in
respect of such event including (i) any cash received in respect of any
non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a sale,
transfer or other disposition of an asset that is subject to a Non-Primed Lien
(including pursuant to a sale and leaseback transaction or a casualty or a
condemnation or similar proceeding), the amount of all payments required to be
made as a result of such event to repay such Non-Primed Liens and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) and the amount
of any reserves established to fund contingent liabilities reasonably estimated
to be payable, in each case during the year that such event occurred or the
next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by a Financial Officer).

 

“Non-Paying Guarantor”
shall have the meaning set forth in Section 10.12.

 

“Non-Primed Liens”
shall mean those Liens securing: (i) certain pre-petition claims of
warehousemen, shippers, Permitted Liens and other classes of claimants
acceptable to the Administrative Agent against the Loan Parties that in each
case: (x) are senior in priority to the Pre-Petition Credit Agreement
Liens; and (y) are set forth on Schedule 2.24; and (ii) the
Calpine Debt.

 

“Obligation Currency”
shall have the meaning set forth in Section 9.20.

 

“Obligations”
shall mean all unpaid principal of and accrued and unpaid interest on the
Loans, the reimbursement of all amounts drawn on Letters of Credit, all accrued
and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Loan Parties to the Lenders or to any Lender, any Agent, any
Fronting Bank or any indemnified party arising under the Loan Documents.

 

“Obligated Party”
shall have the meaning set forth in Section 10.3.

 

“Orders”
shall mean, collectively, (i) the Interim Order and (ii) the Final
Order.

 

“Organizational Documents”
shall mean (i) with respect to any corporation, its certificate or
articles of incorporation, as amended, and its by-laws, as amended, (ii) with
respect to any limited partnership, its certificate of limited partnership or
formation, as amended, and its partnership agreement, as amended, (iii) with
respect to any general partnership, its partnership agreement, as amended, (iv) with
respect to any limited liability company, its certificate of formation or
articles of organization, as amended, and its operating agreement, as amended,
and (v) with respect to any unlimited liability company, its certificate
of formation, as amended, and its memorandum and articles of association, as
amended.  In the event any term or
condition of this Agreement or any other Loan Document requires any Organizational
Document to be certified by a secretary of state or similar governmental
official, the reference to any such 

 

33

 

“Organizational Document” shall only be to a document of a type
customarily certified by such governmental official.

 

“Other Taxes”
shall have the meaning given such term in Section 2.19(b).

 

“Parent”
shall have the meaning set forth in the Introduction.

 

“Participant”
shall have the meaning set forth in Section 9.3.

 

“Patriot Act”
shall have the meaning given such term in Section 9.19.

 

“Paying Guarantor”
shall have the meaning set forth in Section 10.12.

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation, or any successor agency or
entity performing substantially the same functions.

 

“Pension Plan”
shall mean a defined benefit pension (as defined in Section 414(j) of
the Code and Section 3(35) of ERISA) which meets and is subject to the
requirements of Section 401(a) of the Code.

 

“Permitted Discretion”
shall mean a determination made in good faith and in the exercise of reasonable
(from the perspective of a secured asset-based lender) business judgment,
following either (x) consultation with the Borrowers or (y) two (2) Business
Days’ advance notice to the Borrowers.

 

“Permitted Investments”
shall mean (i) direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of America)
or Canada (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of Canada), in each case maturing within one year
from the date of acquisition thereof, (ii) without limiting
the provisions of paragraph (iv) below, investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s, (iii) investments
in certificates of deposit, banker’s acceptances and time deposits (including
Eurodollar time deposits) maturing within six months from the date of
acquisition thereof issued or guaranteed by or placed with (a) any
domestic office of the Administrative Agent or the bank with whom the Loan
Parties maintain their cash management system, provided, that if such bank is
not a Lender hereunder, such bank shall have entered into an agreement with the
Administrative Agent pursuant to which such bank shall have waived all rights
of setoff and confirmed that such bank does not have, nor shall it claim, a
security interest therein or (b) any domestic office of any other
commercial bank of recognized standing organized under the laws of the United
States of America or any State thereof that has a combined capital and surplus
and undivided profits of not less than US$500,000,000 and is the principal
banking Subsidiary of a bank holding company having a long-term unsecured debt
rating of at least “A” or the equivalent thereof from S&P or at least “A2”
or the equivalent thereof from Moody’s, (iv) investments in commercial
paper maturing within six months from the date of acquisition thereof and
issued by (a) the holding company of the Administrative Agent or (b) the
holding company of any other commercial bank of recognized standing 

 

34

 

organized under the laws of the United States of America or any State
thereof that has (1) a combined capital and surplus in excess of
US$500,000,000 and (2) commercial paper rated at the highest credit rating
obtainable from S&P or from Moody’s, (v) investments in fully
collateralized repurchase agreements with a term of not more than thirty (30)
days for underlying securities of the types described in clause (i) above
entered into with any office of a bank or trust company meeting the
qualifications specified in clause (iii) above, (vi) investments in
money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (v) above,
and (vii) to the extent owned by the Loan Parties on the Filing Date,
investments in joint ventures as disclosed in Schedule 6.11 or in the
capital stock of any direct or indirect Subsidiary of the Loan Parties as
disclosed in Schedule
3.5.

 

“Permitted Liens”
shall mean (i) Liens set forth on Schedule 3.6, (ii) Liens
in favor of the Agents on behalf of the Secured Parties, (iii) the CCAA
Charges, (iv) Liens imposed by law (other than Environmental Liens and any
Lien imposed under ERISA) for taxes, assessments or charges of any Governmental
Authority for claims not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP; (v) Liens
(other than any Lien imposed under ERISA) incurred or deposits made in
connection with workers’ compensation, unemployment insurance and other types
of social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations incurred in the ordinary course of business; (vi) non-material
Liens of landlords and Liens of statutory carriers, warehousemen, mechanics, materialmen
and other Liens (other than Environmental Liens and any Lien imposed under
ERISA) in existence on the Filing Date or thereafter imposed by law and created
in the ordinary course of business; (vii) deposits to secure the
performance of tenders, bids, and other contracts, other than for the payment
of borrowed money, arising in the ordinary course of business; (viii) easements
(including, without limitation, reciprocal easement agreements and utility
agreements), all applicable development, subdivision, use and site plan
agreements, or similar agreements, rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded) and interest of ground
lessors, which do not materially interfere with the ordinary conduct of the
business of any Loan Party, and which do not materially detract from the value
of the property to which they attach or materially impair the use thereof to
any Loan Party; (ix) purchase money Liens (including Capital Lease
Obligations) upon or in any property acquired or held in the ordinary course of
business to secure the purchase price of such property or to secure
Indebtedness permitted by Section 6.3(iii) solely for the purpose of financing
the acquisition of such property; (x) Liens created in connection with
extensions, renewals or replacements, including replacement Liens granted by
the Bankruptcy Court, of any Lien referred to in clauses (i) through (ix) above,
provided that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby; (xi) pre-petition Liens granted
pursuant to the Pre-Petition Credit Agreement or the Security Documents (as
defined therein) by the Loan Parties party to the Pre-Petition Credit Agreement
for the benefit of the Secured Parties (as defined in such Security Documents);
(xii) Liens junior to the senior liens contemplated hereby that are granted by
any of the Orders pursuant to 11 U.S.C. §364(d)(1) as adequate protection
to the Primed Parties, provided that the Orders provide that the holders
of such junior liens shall not be permitted to take any action to enforce their
rights with respect to such junior liens as long as any amounts are 

 

35

 

outstanding under this Agreement or the Lenders have any Commitment
hereunder; (xiii) Liens on assets of Foreign Subsidiaries (other than the
Canadian Loan Parties) securing Indebtedness permitted by Section 6.3(vi);
(xiv) Liens arising from the granting of a license to enter into or use any
asset of a Loan Party in the ordinary course of business of such Loan Party
that does not interfere in any material respect with the use or application by
such Loan Party of the asset subject to such license; (xv) Liens arising by
operation of law on insurance policies and proceeds thereof to secure premiums
thereunder; (xvi) Liens arising out of judgments or awards in respect of which
an appeal or proceeding for review is being diligently prosecuted, provided
that (x) a stay of execution pending such appear or proceeding for review
has been obtained, (y) full provision for the payment of the indebtedness
secured by such Lien has been made on the books of such Person if and to the
extent required by GAAP, and (z) an Event of Default under Section 7.1
shall not have occurred as a result of the incurrence of such Lien; (xvii)
Liens consisting of cash deposits in an amount not to exceed US$10,000,000 with
swap counterparties as may be required pursuant to the terms of Swap Agreements
permitted by Section 6.16; (xviii) Liens granted by Calpine to
secure the Calpine Debt; (xix) rights of collecting banks or other financial
institutions having a right of setoff, revocation, refund or chargeback with
respect to money or instruments on deposit with or in the possession of such
financial institution; (xx) Liens with respect to a court ordered
administration charge in the Canadian Cases, junior to the CCAA DIP Lenders
Charge, in an aggregate amount not in excess of US$4,000,000 for the payment of
(a) allowed and unpaid professional fees and disbursements incurred by
professionals retained by the Canadian Loan Parties and (b) allowed and unpaid
professional fees and disbursements of the monitor in the Canadian Cases
including allowed and unpaid legal fees and expenses of its counsel (and
including any allowed and unpaid professional fees and disbursements incurred
by the parties referred to in (a) and (b), prior to the occurrence of such
Event of Default); and (xxi) other Liens securing Indebtedness in an aggregate
amount outstanding at any time not in excess of US$1,000,000.

 

“Person”
shall mean any natural person, corporation, partnership, trust, joint venture,
association, company, estate, unincorporated organization or government or any
agency or political subdivision thereof.

 

“Plan”
shall mean a Single Employer Plan or a Multiemployer Plan.

 

“Prepayment Event” means (a)
any Asset Sale; or (b) any casualty or other insured damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding of, any
property or asset of any Loan Party.

 

“Pre-Petition Agent” shall have the
meaning set forth in Section 2.24.

 

“Pre-Petition Credit Agreement” shall
mean that certain Credit Agreement dated as of November 1, 2004, as amended,
supplemented or otherwise modified prior to the Filing Date, among the
Borrowers, as borrowers, the Parent and certain of the other Loan Parties, as
guarantors, the banks and other financial institutions from time to time
parties thereto, and Deutsche Bank Trust Company Americas, as administrative
agent.

 

“Pre-Petition Debt” shall have the
meaning set forth in Section 2.24.

 

36

 

“Pre-Petition Payment”
shall mean a payment (by way of adequate protection or otherwise) of principal
or interest or otherwise on account of any pre-petition/pre-filing Indebtedness
or trade payables or other pre-petition/pre-filing claims against the Loan
Parties, including, without limitation, reclamation claims and materialmen’s
liens.

 

“Pre-Petition Secured
Lenders” shall have the meaning set forth in Section 2.24.

 

“Primed Liens” shall
have the meaning set forth in Section 2.24.

 

“Primed Parties”
shall mean the parties who hold Primed Liens.

 

“Priority Payables”
means, with respect to any Person, any amount payable by such Person (i) solely
to the extent that it is owing and is secured by a Lien which ranks or is
capable of ranking prior to or pari passu with the Liens created by the
Collateral Documents, including amounts which are past due and owing for wages,
vacation pay, severance pay, employee deductions, sales tax, excise tax, Tax
payable pursuant to Part IX of the Excise Tax Act (Canada) (net of GST
input credits), income tax, workers compensation, government royalties, pension
fund obligations and overdue Taxes and (ii) is not being contested by such
Person in good faith by appropriate proceedings promptly instituted and
diligently conducted in a manner that stays enforcement of such Lien and with
respect to whom such Person has established a cash reserve on its books for the
full amount thereof.

 

“Quebec Security Agreements”
shall mean any (i) Deed of Hypothec and Issue of Bonds made by any Canadian
Loan Party in favor of the Applicable Agent, as fondé de pouvoir under Article 2692
of the Civil Code of Quebec, to be executed before a notary of the Province of
Quebec, (ii) bond issued by any Canadian Loan Party pursuant to such Deed
of Hypothec and Issue of Bonds, and (iii) pledge agreement to be granted
by any Canadian Loan Party in respect of any bond issued under such Deed of
Hypothec and Issue of Bonds.

 

“Raw Materials” shall
mean any items or materials used or consumed in the manufacture of goods to be
sold by the Loan Parties in the ordinary course of business.

 

“Receivables Securitization
Entities” shall mean Stone Receivables Corporation and SSCE
Funding, LLC.

 

“Receivables Securitization
Programs” shall mean the Canadian Receivables Securitization
Program and the U.S. Receivables Securitization Program.

 

“Receivables Securitization Termination
Date” means the date on which each of the
Receivables Securitization Programs are terminated in accordance with the
requirements of Section 5.13, as determined by the Administrative
Agent in its exclusive discretion.

 

“Recognition Cases”
shall mean the recognition proceedings commenced by the Canadian Loan Parties
pursuant to the Bankruptcy and Insolvency Act (Canada) of the U.S. Cases with
respect to Smurfit-MBI and SLP Finance General Partnership.

 

“Register”
shall have the meaning set forth in Section 9.3.

 

37

 

“Related Parties”
shall mean, with respect to any specified Person, such Person’s Affiliates and
the respective directors, officers, employees, agents and advisors of such
Person and such Person’s Affiliates.

 

“Release”
shall mean the disposing, discharging, injecting, spilling, pumping, leaking,
leaching, dumping, emitting, escaping, emptying, pouring, seeping or migrating
of any Hazardous Substance or Hazardous Waste into or upon any land or water or
air, or otherwise entering into the environment.

 

“Rent Reserve”
with respect to any leased location where any Collateral subject to Liens
arising by operation of law is located, a reserve for rent at such location in
an amount established in the Applicable Agent’s Permitted Discretion.

 

“Reorganization Plan”
shall mean a bankruptcy plan of reorganization or a CCAA plan or arrangement in
any of the Cases.

 

“Required Lenders”
shall mean, at any time, Lenders having aggregate Total Canadian Outstandings,
Total U.S. Outstandings and unused Commitments representing more than 50% of
the aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused
Commitments at such time.

 

“Requirement of Law”
means, as to any Person, the Organizational Documents or other governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

 

“Reserves”
means Dilution Reserves, Inventory Reserves, Rent Reserves and any other
reserves established by the Applicable Agent in its Permitted Discretion
(including, without limitation, reserves for accrued and unpaid interest on the
Secured Obligations, Banking Services Reserves, reserves for consignee’s,
warehousemen’s and bailee’s charges, reserves for Swap Obligations, reserves
for environmental liabilities of any Loan Party, reserves for contingent
liabilities of any Loan Party, reserves for uninsured losses of any Loan Party,
reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities
or potential liabilities with respect to any litigation, reserves for cash held
in deposit accounts of Smurfit-Stone Puerto Rico, Inc. during such times
as cash dominion is in effect under Section 5.7 and reserves for
taxes, fees, assessments, and other governmental charges) with respect to the
Collateral or any Loan Party, with regard to the Canadian Borrowing Base,
reserves for Priority Payables outstanding on or after the Effective Date that
may affect the collectability of such accounts or the saleability of such
inventory and that have not already been taken into account in the calculation
of the applicable Borrowing Base to the extent such Priority Payables do not
constitute amounts otherwise secured by the Directors’ Charge.

 

“Reset Date”
shall have the meaning set forth in Section 1.4.

 

“Revolving Commitment”
shall mean the Canadian Revolving Commitment and the U.S. Revolving Commitment.

 

38

 

“Revolving Loans”
shall mean, individually or collectively, U.S. Revolving Loans and Canadian
Revolving Loans.

 

“S&P”
shall mean Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc., or any successor to the rating agency
business thereof.

 

“Schedule I Banks”
shall mean the banks listed in Schedule I of the Bank Act (Canada) having
equity of more than C$8,000,000,000.

 

“Secured Obligations”
means the Canadian Secured Obligations and the U.S. Secured Obligations.

 

“Secured Parties”
means the Agents, the Lenders, the Fronting Banks and all of the Lenders and
the Affiliates of the Lenders to whom Banking Service Obligations or Swap
Obligations are owed.

 

“Security Agreements”
means, collectively, the Security and Pledge Agreement and the Canadian
Security Agreement, and “Security Agreement”
means any one of them.

 

“Security and Pledge
Agreement” shall have the meaning given such term in Section 4.1(c).

 

“Single Employer Plan”
shall mean a single employer plan, as defined in Section 4001(a)(15) of
ERISA, that (i) is maintained for employees of a Loan Party or an ERISA
Affiliate or (ii) was so maintained and in respect of which a Loan Party
could have liability under Section 4069 of ERISA in the event such Plan
has been or were to be terminated.

 

“Standby LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding standby Letters of Credit at such time plus (b) the aggregate
amount of all disbursements relating to standby Letters of Credit that have not
yet been reimbursed by or on behalf of the Borrowers at such time.  The Standby LC Exposure of any Revolving
Lender at any time shall be its Applicable Percentage of the total Standby LC
Exposure at such time.

 

“Statutory Reserve Rate”
shall mean on any date the percentage (expressed as a decimal) established by
the Board and any other banking authority which is the then stated maximum rate
for all reserves (including but not limited to any emergency, supplemental or
other marginal reserve requirements) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency Liabilities (or any successor
category of liabilities under Regulation D issued by the Board, as in effect
from time to time).  Such reserve
percentages shall include, without limitation, those imposed pursuant to said
Regulation.  The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change
in such percentage.

 

“Subsidiary”
shall mean, with respect to any Person (herein referred to as the “parent”),
any corporation, association or other business entity (whether now existing or
hereafter organized) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power for the election of directors is, at the 

 

39

 

time as of which any determination is being made, owned or controlled
by the parent or one or more subsidiaries of the parent or by the parent and
one or more subsidiaries of the parent.

 

“Super-majority Lenders”
shall mean, at any time, Lenders having aggregate Total Canadian Outstandings,
Total U.S. Outstandings and unused Commitments representing at least 66-2/3% of
the aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused
Commitments at such time.

 

“Superpriority Claim”
shall mean a claim against any U.S. Loan Party in any of the U.S. Cases which
is a superpriority administrative expense claim having priority over any or all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of
the Bankruptcy Code.

 

“Swap Agreement”
means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any
combination of these transactions.

 

“Swap Obligations”
of a Person means any and all obligations of such Person, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor), under (a) any and all Swap Agreements, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any Swap
Agreement transaction, in each case that is permitted by Section 6.16.

 

“Taxes”
shall have the meaning given such term in Section 2.19.

 

“Term Loans”
shall mean, individually or collectively, the U.S. Term Loans and the Canadian
Term Loans.

 

“Term Loan Commitment”
shall mean the U.S. Term Loan Commitment and the Canadian Term Loan Commitment.

 

“Termination Date”
shall mean the earliest to occur of (i) the Maturity Date, (ii) the
Effective Date, (iii) the forty-fifth (45th) day after the entry of the
Interim Order if the Final Order has not been entered prior to such forty-fifth
day, and (iv) the acceleration of the Loans and the termination of the
Revolving Commitment in accordance with the terms hereof.

 

“Termination Event”
shall mean (i) a “reportable event”, as such term is described in Section 4043
of ERISA and the regulations issued thereunder (other than a “reportable event”
not subject to the provision for 30-day notice to the PBGC under Section 4043
of ERISA or such regulations) or an event described in Section 4068 of
ERISA excluding events described in Section 4043(c)(9) of ERISA or 29
CFR §§ 2615.21 or 2615.23, or (ii) the withdrawal of any Loan Party or any
ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a “substantial employer”, as such term is defined in Section 4001(a)(2) of
ERISA, or the incurrence of liability by any Loan Party or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer
Plan, or 

 

40

 

(iii) providing notice of intent to terminate a Plan pursuant to Section 4041(c) of
ERISA or the treatment of a Plan amendment as a termination under Section 4041
of ERISA, or (iv) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA, or (v) any other event or
condition (other than the commencement of the Cases and the failure to have
made any contribution accrued as of the Filing Date but not paid) which would
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Plan, or the imposition of any liability under Title IV of ERISA (other than
for the payment of premiums to the PBGC).

 

“Total Canadian
Outstandings”  shall mean,
at any time of determination, the Canadian Revolving Credit Utilization plus
the Canadian Term Outstandings.

 

“Total Revolving Commitment” shall mean,
collectively, the Canadian Revolving Commitments and the U.S. Revolving
Commitments.

 

“Total U.S. Outstandings”
shall mean, at any time of determination, the U.S. Revolving Credit Utilization
plus the U.S. Term Outstandings.

 

“Transferee”
shall have the meaning given such term in Section 2.19.

 

“Type”
when used in respect of any Loan or Borrowing shall refer to the Rate of
interest by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined.  For purposes
hereof, “Rate” shall mean the Canadian Prime
Rate, the Discount Rate, the Adjusted LIBO Rate and the Alternate Base Rate.

 

“UCC” means
the Uniform Commercial Code as in effect from time to time in the State of New
York or any other state the laws of which are required to be applied in
connection with the issue of perfection of security interests. In addition, “UCC” means with respect to the
Canadian Loan Parties or any Collateral of the Canadian Loan Parties subject
thereto, the Personal Property Security Act (the “PPSA”)
or similar legislation as from time to time in effect in the Province of
Ontario or any other jurisdiction the laws of which are required to be applied
in connection with the issue of perfection of security interests including,
without limitation, the Civil Code of Quebec.

 

“Unfunded Current Liability”
shall mean, with respect to any Pension Plan, the amount, if any, by which the
actuarial present value of the accumulated plan benefits under such Pension
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement
of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by such Pension Plan’s actuary in the most recent annual
valuation of such Pension Plan.

 

“Unused Revolving Commitment”
shall mean, at any time, (i) the Total Revolving Commitment less (ii) the
sum of (a) the Canadian Revolving Credit Utilization and (b) the U.S.
Revolving Credit Utilization.

 

“U.S. Borrower”
shall have the meaning set forth in the Introduction.

 

41

 

“U.S. Borrowing Base”
shall mean, at the time of any determination, an amount equal to the sum,
without duplication, of (a) 85% of Eligible Accounts of the U.S. Loan
Parties at such time plus (b) the lesser of (i) 65% of
Eligible Inventory of the U.S. Loan Parties at such time and (ii) 85% of
the Net Orderly Liquidation Value of Eligible Inventory of the U.S. Loan
Parties at such time (in each case with respect to clauses (i) and (ii) with
any Eligible Inventory to be valued at the lower of cost (determined on a
first-in, first-out basis) or market), plus (c) the U.S. PP&E
Component, minus (d) the Reserves at such time, minus (e) the
Carve-Out.  The U.S. Borrowing Base at
any time shall be determined by reference to the most recent Borrowing Base
Certificate delivered to the Administrative Agent pursuant to Section 5.8
of this Agreement.

 

“U.S. Cases”
shall mean the cases under the Bankruptcy Code of the Loan Parties.

 

“U.S. Conversion Notice”
shall have the meaning given such term in Section 9.23(a).

 

“U.S. Dollar Equivalent”
shall mean, on any date of determination, with respect to any amount in
Canadian Dollars, the equivalent in Dollars of such amount determined by the
Administrative Agent using the Exchange Rate in effect on such date of
determination.

 

“U.S. Guaranteed
Obligations” shall have the meaning set forth in Section 10.1.

 

“U.S. Guarantor”
and “U.S. Guarantors” means,
individually or collectively, the Parent and each of the Domestic Subsidiaries
party to this Agreement.  As of the
Closing Date, the U.S. Guarantors are the Parent, Calpine, Cameo Container
Corporation, an Illinois corporation, Lot 24D Redevelopment Corporation, a
Missouri corporation, Atlanta & Saint Andrews Bay Railway Company, a
Florida corporation, Stone International Services Corporation, a Delaware
corporation, Stone Global, Inc., a Delaware corporation, Stone Connecticut
Paperboard Properties, Inc., a Delaware corporation, Smurfit-Stone Puerto
Rico, Inc., a Puerto Rico corporation, Smurfit Newsprint Corporation, a
Delaware corporation, SLP Finance I, Inc., a Delaware corporation, and SLP
Finance II, Inc., a Delaware corporation, each of which is a debtor and
debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code,
and, after the Closing Date, shall include each subsequently organized Domestic
Subsidiary and each direct parent thereof.

 

“U.S. Interim Order”
shall mean an order of the Bankruptcy Court in the U.S. Cases in substantially
the form of Exhibit A-1, or such other form as is satisfactory to
the Administrative Agent in its exclusive discretion, entered in accordance
with the terms and conditions of Section 4.1, as such order may be
amended, supplemented or restated with the express written consent of the
Administrative Agent in its exclusive discretion.

 

“U.S. Investment Account”
shall mean the account established by the U.S. Borrower pursuant to Section 2.7(c) and
designated as the “Smurfit-Stone Investment Account” with JPMCB.

 

“U.S. Lender”
means, as of any date of determination, a Person constituting a U.S. Term Loan
Lender or U.S. Revolving Lender.

 

42

 

“U.S. Letter of Credit
Outstandings” shall mean, at any time of determination, the sum
of (a) the aggregate undrawn amount of all outstanding U.S. Revolving
Facility Letters of Credit and (b) the aggregate amount that has been
drawn under any U.S. Revolving Facility Letter of Credit and has not been
reimbursed by the U.S. Borrower or another Loan Party at such time.  The
U.S. Letter of Credit Outstandings of any U.S. Revolving Lender at any time
shall equal its Applicable Percentage of the aggregate U.S. Letter of Credit
Outstandings at such time.

 

“U.S. Loan Party”
and “U.S. Loan Parties” shall mean,
individually or collectively, the U.S. Borrower, the Parent and the other U.S.
Guarantors.

 

“U.S. Loans”
shall mean the U.S. Revolving Loans and the U.S. Term Loans.

 

“U.S. PP&E Component”
shall mean the lesser of (x) (i) during the period commencing with the Closing Date until the
twelve (12) month anniversary of the Closing Date, US$150,000,000, (ii) during
the period commencing with the twelve (12) month anniversary of the Closing
Date until the fifteen (15) month anniversary of the Closing Date,
US$100,000,000, and (iii) on the fifteen (15) month anniversary of the
Closing Date and thereafter, US$75,000,000, in each case minus
the Canadian PP&E Component at such time, and (y) the greater of (A) (i) 50%
of the Net Orderly Liquidation Value of Eligible Equipment of the U.S. Loan
Parties at such time plus (ii) 50% of the Fair Market Value of
Eligible Real Property of the U.S. Loan Parties at such time (as set forth in
the most recent third party real estate appraisal in form and substance
satisfactory to the Administrative Agent), and (B) 20% of the Net Orderly
Liquidation Value In Place of (i) Eligible Equipment of the U.S. Loan
Parties at such time and (ii) Eligible Real Property of the U.S. Loan
Parties at such time.  Notwithstanding
the foregoing sentence, until the earlier of (x) such time as appraisals
satisfactory to the Administrative Agent are completed pursuant to Section 5.6
and (y) May 28, 2009, or such later date as the Administrative Agent
may approve in its exclusive discretion, the U.S. PP&E Component shall be
US$150,000,000 minus the Canadian PP&E Component.

 

“U.S. Receivables
Securitization Program” shall mean (a) that certain Master
Indenture, dated as of November 23, 2004, between SSCE Funding, LLC (as
used in this definition, the “Securitization Issuer”)
and Deutsche Bank Trust Company Americas, as Indenture Trustee (as used in this
Section and in such capacity, the “Securitization Trustee”)
and (b) that certain Series 2004-1 Indenture Supplement to Master
Indenture, dated as of November 23, 2004, between the Securitization
Issuer and the Securitization Trustee, in each case, as amended, restated,
modified or waived from time to time.

 

“U.S. Revolving Commitment”
shall mean, with respect to each U.S. Revolving Lender, the commitment of such
Lender to make U.S. Revolving Loans hereunder and to acquire participations in
U.S. Revolving Facility Letters of Credit in the amount set forth opposite its
name on Annex A-2 hereto or as may subsequently be set forth in the
Register from time to time, as the same may be reduced from time to time
pursuant to the terms of this Agreement.  As of the Closing Date, the
aggregate amount of the U.S. Revolving Commitments of the U.S. Revolving Lenders
is US$250,000,000.

 

43

 

“U.S. Revolving Credit
Utilization” shall mean, at any time of determination, the sum
of (a) the aggregate principal amount of U.S. Revolving Loans outstanding
at such time and (b) the U.S. Letter of Credit Outstandings at such time.

 

“U.S. Revolving Facility
Letters of Credit” shall mean any irrevocable letter of credit
issued pursuant to Section 2.4 for the account of the U.S. Borrower
or a Domestic Subsidiary by a Fronting Bank pursuant to the terms and
conditions of ARTICLE 2, which letter of credit shall be (i) a
standby or import documentary letter of credit, (ii) issued for purposes
that are consistent with the ordinary course of business of the Loan Parties or
for such other purposes as are acceptable to the Administrative Agent, (iii) denominated
in Dollars and (iv) otherwise in such form as may be approved from time to
time by the Administrative Agent and the applicable Fronting Bank.

 

“U.S. Revolving Lenders”
shall mean the Lenders having U.S. Revolving Commitments or holding U.S.
Revolving Loans.

 

“U.S. Revolving Loan”
means a revolving loan to the U.S. Borrower or the Canadian Borrower made
pursuant to Section 2.1(b)(i) in Dollars.

 

“U.S. Secured Obligations”
means (a) all Obligations owing by any U.S. Loan Party, (b) all
Banking Services Obligations owing by any U.S. Loan Party, (c) Swap
Obligations owing by any U.S. Loan Party to one or more U.S. Lenders or their
respective Affiliates; provided that at or prior to the time that any
transaction relating to a Swap Obligation is executed, the U.S. Lender or an
Affiliate thereof party thereto (other than JPMCB) shall have delivered written
notice to the Administrative Agent that such a transaction has been entered
into and that it constitutes a U.S. Secured Obligation entitled to the benefits
of the Collateral Documents, and (d) all obligations owing by the Canadian
Borrower in respect of its guaranty of Obligations of the U.S. Borrower.

 

“U.S. Term Loans”
means the term loans to the U.S. Borrower made pursuant to Section 2.1(a)(i) (or
made to the U.S. Borrower pursuant to Section 9.23(a))in Dollars.

 

“U.S. Term Loan Collateral
Account” shall mean the account established by the U.S. Borrower
under the sole and exclusive control of the Administrative Agent maintained at
the office of the Administrative Agent at 270 Park Avenue, New York, New York
10017 designated as the “Smurfit-Stone U.S. Term Loan Collateral Account” that
shall be used solely for the purposes set forth in Section 2.7(c) and
Section 2.14(a) and shall include any separate investment
product linked to such account mutually acceptable to the U.S. Borrower and the
Administrative Agent in accordance with Section 6.11.

 

“U.S. Term Loan Commitment”
shall mean, with respect to each U.S. Term Loan Lender, the commitment of such
Lender to make a U.S. Term Loan hereunder in the amount set forth opposite its
name on Annex A-3 hereto, as the same shall be reduced on the Closing Date
pursuant to Section 2.14(j) and as may be modified pursuant to
Section 9.23(a). 
As of the Closing Date and prior to making the U.S. Term Loans, the aggregate
amount of the U.S. Term Loan Commitments of the U.S. Term Loan Lenders is
US$400,000,000.

 

44

 

 “U.S. Term Loan Conversion” shall
have the meaning given such term in Section 9.23(a).

 

“U.S. Term Loan Lenders”
shall mean the Lenders having U.S. Term Loan Commitments or holding the U.S.
Term Loans.

 

“U.S. Term Outstandings”
shall mean, at any time of determination, an amount equal to (a) the
aggregate principal amount of U.S. Term Loans outstanding at such time minus
(b) the amount of cash held in the U.S. Term Loan Collateral Account at
such time.

 

“Withdrawal Liability”
shall have the meaning given such term under Part I of Subtitle E of Title
IV of ERISA.

 

“Work-in-Process” shall
mean Inventory which consists of work-in-process including, without limitation,
materials other than Raw Materials, Finished Goods or saleable products, title
to which and sole ownership of which is vested in a Loan Party.

 

Section 1.2             Terms Generally.  The definitions in Section 1.1
shall apply equally to both the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless the context requires otherwise (a) any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights.

 

Section 1.3             Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Loan Parties notify the Administrative Agent that the Loan Parties request
an amendment to any provision hereof to eliminate the effect of any change
occurring after the Closing Date in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the Loan
Parties that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

 

Section 1.4             Exchange Rate Calculations.  On each Calculation Date, the Administrative
Agent shall (a) determine the Exchange Rate as of such Calculation Date in

 

45

 

respect of Canadian Dollars (and any other
currency for which an Exchange Rate is required) and (b) give notice
thereof to the applicable Borrower, and with respect to each Lender, to any
Lender that shall have requested such information. The Exchange Rate so
determined shall become effective on the first Business Day immediately
following the relevant Calculation Date (each, a “Reset
Date”) and shall remain effective until the next succeeding
Reset Date, and shall for all purposes of this Agreement (other than Section 2.13,
Section 9.20, Section 11.3 and any other provision
expressly requiring the use of a current Exchange Rate) be the Exchange Rate
employed in converting amounts between Dollars, on the one hand, and any other
applicable currency on the other hand; provided that, for purposes of
determining any Borrowing Base, the relevant Exchange Rate shall be determined
by the applicable Borrower at the time that the relevant Borrowing Base
Certificate is prepared and shall be set forth in such Borrowing Base
Certificate. Notwithstanding the foregoing, for purposes of determining
compliance by the Loan Parties with the limitations on Indebtedness,
Indebtedness secured by Liens, loans, advances, investments, guarantees and
payments contained in ARTICLE 6, compliance will be determined based on
the U.S. Dollar Equivalent amount of the Indebtedness, Liens, Loans, advances,
investments, guarantees and payments denominated in currencies other than
Dollars subject to such provisions on the date of incurrence or payment
thereof, and Borrowers will not be deemed to be in violation of such covenants
solely as a result of subsequent changes in the Exchange Rate which cause the
U.S. Dollar Equivalent amount of such obligations or payments to exceed such limitations.

 

Section 1.5             Québec Matters.  For purposes of any assets, liabilities or
entities located in the Province of Québec and for all other purposes pursuant
to which the interpretation or construction of this Agreement may be subject to
the laws of the Province of Québec or a court or tribunal exercising
jurisdiction in the Province of Québec, (a) “personal property” shall
include “movable property”, (b) “real property” or “real estate” shall
include “immovable property”, (c) “tangible property” shall include “corporeal
property”, (d) “intangible property” shall include “incorporeal property”,
(e) “security interest”, “mortgage” and “lien” shall include a “hypothec”,
“right of retention”, “prior claim” and a resolutory clause, (f) all
references to filing, perfection, priority, registering or recording under the
Uniform Commercial Code or a Personal Property Security Act shall include
publication under the Civil Code of Québec, (g) all
references to “perfection” of or “perfected” liens or security interest shall
include a reference to an “opposable” or “set up” lien or security interest as
against third parties, (h) any “right of offset”, “right of setoff” or
similar expression shall include a “right of compensation”, (i) “goods”
shall include “corporeal movable property” other than chattel paper, documents
of title, instruments, money and securities, (j) an “agent” shall include
a “mandatary”, (k) “construction liens” shall include “legal hypothecs”
contemplated under Article 2724(2) of the Civil Code of
Québec; (l) “joint and several” shall include “solidary”; (m) “gross
negligence or willful misconduct” shall be deemed to be “intentional or gross
fault”; (n) “beneficial ownership” shall include “ownership on behalf of
another as mandatary”; (o) “easement” shall include “servitude”; (p) “priority”
shall include “prior claim”; (q) “survey” shall include “certificate of
location and plan”; (r) “state” shall include “province”; (s) “fee
simple title” shall include “absolute ownership”; (t) “accounts” shall include
“claims”.  The parties hereto confirm
that it is their wish that this Agreement and any other document executed in
connection with the transactions contemplated herein be drawn up in the English
language only and that all other documents contemplated thereunder or relating
thereto, including notices, may also be drawn up 

 

46

 

in the English language only.  Les parties aux présentes
confirment que c’est leur volonté que cette convention et les autres documents
de crédit soient rédigés en langue anglaise seulement et que tous les
documents, y compris tous avis, envisagés par cette convention et les autres
documents peuvent être rédigés en langue anglaise seulement.

 

ARTICLE 2.    AMOUNT AND
TERMS OF CREDIT.

 

Section 2.1             Commitment
of the Lenders.

 

(a)                                  Subject
to the terms and subject to the conditions herein set forth,

 

(i)                                     each
U.S. Term Loan Lender agrees to make to the U.S. Borrower on the Closing Date a
U.S. Term Loan in Dollars in a principal amount equal to its U.S. Term Loan
Commitment; and

 

(ii)                                  each
Canadian Term Loan Lender agrees to make to the Canadian Borrower on the
Closing Date a Canadian Term Loan in Dollars  in
a principal amount equal to its Canadian Term Loan Commitment.

 

Amounts paid or repaid in
respect of Term Loans may not be reborrowed.

 

(b)                                 Subject
to the terms and subject to the conditions herein set forth,

 

(i)                                     each
U.S. Revolving Lender agrees to make to the U.S. Borrower or the Canadian
Borrower at any time and from time to time during the period commencing on the
Closing Date and ending on the Termination Date (or the earlier date of
termination of the U.S. Revolving Commitment) U.S. Revolving Loans in Dollars
in an aggregate principal amount not to exceed, when added to such Lender’s
Applicable Percentage of the then aggregate U.S. Revolving Credit Utilization,
the U.S. Revolving Commitment of such Lender, and

 

(ii)                                  each
Canadian Revolving Lender agrees to make to the U.S. Borrower or the Canadian
Borrower at any time and from time to time during the period commencing on the
Closing Date and ending on the Termination Date (or the earlier date of
termination of the Canadian Revolving Commitment) Canadian Revolving Loans in
Dollars or Canadian Dollars  in an
aggregate principal amount not to exceed, when added to such Lender’s
Applicable Percentage of the then aggregate Canadian Revolving Credit
Utilization, the Canadian Revolving Commitment of such Lender.

 

Subject to the
terms and conditions set forth herein, Revolving Loans may be repaid and
reborrowed.

 

47

 

(c)           Each Borrowing shall
be made by the Lenders pro rata in accordance with their respective applicable
Commitments; provided, however,
that the failure of any Lender to make any Loan shall not in itself relieve the
other Lenders of their obligations to lend.

 

Section 2.2             Availability
of U.S. Loans.

 

(a)           During the period
commencing on the Closing Date and ending on the date the Bankruptcy Court and
Canadian Court (if applicable), as the case may be, enters the Final Order
(such period being referred to as the “Interim
Period”), US$100,000,000 of the U.S. Revolving Commitment (the “Interim U.S. Revolving Commitment”)
shall be available to the U.S. Borrower and the Canadian Borrower (subject to
compliance with the U.S. Borrowing Base and the terms, conditions and covenants
described in this Agreement).

 

(b)           On the first Business
Day after the expiration of the Interim Period, the entire U.S. Revolving
Commitment shall be available to the U.S. Borrower and the Canadian Borrower
(subject to compliance with the U.S. Borrowing Base and the terms, conditions
and covenants in this Agreement).

 

(c)           Notwithstanding any
other provision of this Agreement to the contrary, (i) Total U.S.
Outstandings shall not at any time exceed the U.S. Borrowing Base and (ii) U.S.
Revolving Credit Utilization shall not at any time exceed (x) prior to the
expiration of the Interim Period, the Interim U.S. Revolving Commitment, and (y) from
and after the expiration of the Interim Period, the U.S. Revolving Commitment
(as such U.S. Revolving Commitment may be reduced from time to time pursuant to
the terms of this Agreement), and no Loan shall be made or Letter of Credit
issued in violation of the foregoing.

 

Section 2.3             Availability
of Canadian Loans.

 

(a)           During the Interim
Period, US$15,000,000 (or the Canadian Dollar Equivalent thereof) of the
Canadian Revolving Commitment (the “Interim
Canadian Revolving Commitment”) shall be available to the
Canadian Borrower and the U.S. Borrower (subject to compliance with the
Canadian Borrowing Base and the terms, conditions and covenants described in
this Agreement).

 

(b)           On the first Business
Day after the expiration of the Interim Period, the entire Canadian Revolving
Commitment shall be available to the Canadian Borrower and the U.S. Borrower
(subject to compliance with the Canadian Borrowing Base and the terms,
conditions and covenants in this Agreement).

 

(c)           Notwithstanding any
other provision of this Agreement to the contrary, (i) Total Canadian
Outstandings shall not at any time exceed the Canadian Borrowing Base and (ii) Canadian
Revolving Credit Utilization shall not at any time exceed (x) prior to the
expiration of the Interim Period, the Interim Canadian Revolving Commitment,
and (y) from and after the expiration of the Interim Period, the Canadian
Revolving Commitment (as such Canadian Revolving Commitment may be reduced from
time to time pursuant to the terms of this Agreement), and no Loan shall be
made or Letter of Credit issued in violation of the foregoing.

 

48

 

Section 2.4             Letters
of Credit.

 

(a)           Upon the terms and
subject to the conditions herein set forth, the U.S. Borrower may request a
Fronting Bank, at any time and from time to time after the Closing Date and
prior to the Termination Date, to issue, and, subject to the terms and
conditions contained herein, such Fronting Bank shall issue, for the account of
the U.S. Borrower or a Domestic Subsidiary, as the case may be, one or more
U.S. Revolving Facility Letters of Credit in a form reasonably acceptable to
the Administrative Agent and such Fronting Bank in support of obligations of
the U.S. Borrower or a Domestic Subsidiary of the U.S. Borrower, as the case
may be, provided
that no Letter of Credit shall be issued if after giving effect to such
issuance (i) the aggregate U.S. Letter of Credit Outstandings would
exceed US$35,000,000, (ii) the Total U.S. Outstandings would exceed the
U.S. Borrowing Base or (iii) the U.S. Revolving Credit Utilization would
exceed (x) prior to the expiration of the Interim Period, the Interim U.S.
Revolving Commitment and (y) from and after the expiration of the Interim
Period, the U.S. Revolving Commitment (as such U.S. Revolving Commitment may be
reduced from time to time pursuant to the terms of this Agreement).  In connection with a request for a U.S.
Revolving Facility Letter of Credit, the U.S. Borrower shall execute and
deliver a form of letter of credit application or other agreement to such
Fronting Bank in a form reasonably acceptable to the Administrative Agent and
such Fronting Bank.  In the event of any
inconsistency between the terms and conditions set forth herein and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the U.S. Borrower to, or entered into by the U.S. Borrower with,
any Fronting Bank relating to any U.S. Revolving Facility Letter of Credit, the
terms and conditions of this Agreement shall control.

 

(b)           Upon the terms and
subject to the conditions herein set forth, the Canadian Borrower may request a
Fronting Bank, at any time and from time to time after the Closing Date and
prior to the Termination Date, to issue, and, subject to the terms and
conditions contained herein, such Fronting Bank shall issue, in Dollars or
Canadian Dollars, for the account of the Canadian Borrower or a Canadian
Subsidiary one or more Canadian Revolving Facility Letters of Credit in a form
reasonably acceptable to the Applicable Agent and such Fronting Bank in support
of obligations of the Canadian Borrower or a Canadian Subsidiary, provided
that no Letter of Credit shall be issued if after giving effect to such
issuance (i) the aggregate Canadian Letter of Credit Outstandings
would exceed US$10,000,000 (or the Canadian Dollar Equivalent thereof), (ii) the
Total Canadian Outstandings would exceed the Canadian Borrowing Base or (iii) the
Canadian Revolving Credit Utilization would exceed (x) prior to the
expiration of the Interim Period, the Interim Canadian Revolving Commitment and
(y) from and after the expiration of the Interim Period, the Canadian
Revolving Commitment (as such Canadian Revolving Commitment may be reduced from
time to time pursuant to the terms of this Agreement).   In connection with a request for a Canadian
Revolving Facility Letter of Credit, the Canadian Borrower shall execute and
deliver a form of letter of credit application or other agreement to such
Fronting Bank in a form reasonably acceptable to the Applicable Agent and such
Fronting Bank.  In the event of any
inconsistency between the terms and conditions set forth herein and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Canadian Borrower to, or entered into by the Canadian Borrower
with, any Fronting Bank relating to any Canadian Revolving Facility Letter of
Credit, the terms and conditions of this Agreement shall control.

 

49

 

(c)           No Letter of Credit
shall expire later than twelve (12) months after the issuance thereof, provided
that if the Termination Date shall occur prior to the expiration of any Letter
of Credit, the Borrowers shall, at or prior to the Termination Date, except as
the Applicable Agent may otherwise agree in writing, (i) cause all Letters
of Credit which expire after the Termination Date to be returned to the
applicable Fronting Bank undrawn and marked “canceled” and each such Letter of
Credit accompanied by written consent of the beneficiary on its letterhead
signed by an authorized signatory consenting to such cancellation or (ii) if
the Borrowers are unable to do so in whole or in part, either (x) provide
a “back-to-back” letter of credit to one or more Fronting Banks in a form
satisfactory to such Fronting Bank and the Applicable Agent (in their exclusive
discretion), issued by a bank satisfactory to such Fronting Bank and the
Applicable Agent (in their exclusive discretion), in an amount equal to the
greater of (A) an amount, as determined by such Fronting Bank and the
Applicable Agent, equal to the face amount of all outstanding Letters of Credit
issued by such Fronting Bank plus the sum of all projected contractual
obligations to the Applicable Agent, such Fronting Bank and the Lenders of the
Borrowers thereunder through the expiration date(s) of such Letters of
Credit, and (B) 105% of the then Letter of Credit Outstandings with
respect to Letters of Credit issued by such Fronting Bank or (y) solely
with respect to Letters of Credit scheduled to expire on or before the date
that is ninety (90) days after the Termination Date, deposit cash in the Letter
of Credit Account or Canadian Letter of Credit Account, as the case may be, in
an amount which, together with any amounts then held in the Letter of Credit
Account or the Canadian Letter of Credit Account, as the case may be, is equal
to the greater of (A) an amount, as determined by the Fronting Banks and
the Applicable Agent, equal to the face amount of all outstanding Letters of
Credit plus the sum of all projected contractual obligations to the Applicable
Agent, the Fronting Banks and the Lenders of the Borrowers thereunder through
the expiration date(s) of such Letters of Credit, and (B) 105% of the
then Letter of Credit Outstandings as collateral security for the Borrowers’
reimbursement obligations in connection therewith, such cash to be remitted to
the Borrowers upon the expiration, cancellation or other termination or
satisfaction of such reimbursement obligations.

 

(d)           The Borrowers shall pay
to each Fronting Bank, in addition to such other fees and charges as are
specifically provided for in Section 2.22 hereof, such fees and
charges in connection with the issuance and processing of the Letters of Credit
issued by such Fronting Bank as are customarily imposed by such Fronting Bank
from time to time in connection with letter of credit transactions.

 

(e)           Drafts drawn under each
Letter of Credit (i) shall be reimbursed by the applicable Borrower in the
same currency as which such draw was paid on the Business Day immediately
following the day such Borrower received notice from the applicable Fronting
Bank that payment of such draft will be made, provided, that if such Borrower
shall have received such notice thereof prior to 10:00 a.m., New York
time, on the date such draft was drawn, such Borrower shall effect
reimbursement on the same Business Day as such Borrower received notice
thereof, and, (ii)(A) with respect to Letters of Credit denominated in
Dollars, shall bear interest from the date of draw until the first Business Day
following the date of draw at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin and thereafter until reimbursed in full at a
rate per annum equal to the Alternate Base Rate plus the Applicable
Margin plus 2.0%,  and (B) with
respect to Letters of Credit denominated in Canadian Dollars, shall bear
interest from the date of draw until the first Business Day following the date
of draw at 

 

50

 

a rate per
annum equal to the Canadian Prime Rate plus the Applicable Margin and
thereafter until reimbursed in full at a rate per annum equal to the Canadian
Prime Rate plus the Applicable Margin plus 2.0%  (computed on the basis of the actual
number of days elapsed over a year of 360 days).  In the case of drafts drawn on any U.S.
Revolving Facility Letter of Credit, the U.S. Borrower shall effect such
reimbursement (x) if such draw occurs prior to the Termination Date (or
the earlier date of termination of the U.S. Revolving Commitment), in cash or
through a Borrowing of U.S. Revolving Loans without the satisfaction of the
conditions precedent set forth in Section 4.2 or (y) if such
draw occurs on or after the Termination Date (or the earlier date of
termination of the U.S. Revolving Commitment), in cash.  Each U.S. Revolving Lender agrees to make the
U.S. Revolving Loans described in clause (x) of the preceding sentence
notwithstanding a failure to satisfy the applicable lending conditions thereto
or the provisions of Section 2.33. 
In the case of drafts drawn on any Canadian Revolving Facility Letter of
Credit, the Canadian Borrower shall effect such reimbursement (x) if such
draw occurs prior to the Termination Date (or the earlier date of termination
of the Canadian Revolving Commitment), in cash or through a Borrowing of
Canadian Revolving Loans without the satisfaction of the conditions precedent
set forth in Section 4.2 or (y) if such draw occurs on or
after the Termination Date (or the earlier date of termination of the Canadian
Revolving Commitment), in cash.  Each Canadian
Revolving Lender agrees to make the Canadian Revolving Loans described in
clause (x) of the preceding sentence notwithstanding a failure to satisfy
the applicable lending conditions thereto or the provisions of Section 2.33.

 

(f)            Immediately upon the
issuance of any Letter of Credit by any Fronting Bank, such Fronting Bank shall
be deemed to have sold to each Canadian Revolving Lender or U.S. Revolving
Lender, as the case may be, other than such Fronting Bank, and each such other
Lender shall be deemed unconditionally and irrevocably to have purchased from
such Fronting Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender’s Applicable Percentage, in such
Letter of Credit, each drawing thereunder and the obligations of the Borrowers
under this Agreement with respect thereto. 
Upon any change in the Commitments pursuant to Section 2.11, Section 2.14, Section 2.15,  Section 9.3 or ARTICLE
11, it is hereby agreed that with respect to all Letter of Credit
Outstandings, there shall be an automatic adjustment to the participations
hereby created to reflect the new Applicable Percentages of the assigning and
assignee Lenders.  Any action taken or
omitted by a Fronting Bank under or in connection with a Letter of Credit, if
taken or omitted in the absence of gross negligence or willful misconduct,
shall not create for such Fronting Bank any resulting liability to any other
Lender.

 

(g)           In the event that a
Fronting Bank makes any payment under any U.S. Revolving Facility Letter of
Credit and the U.S. Borrower shall not have reimbursed such amount in full to
such Fronting Bank pursuant to this Section, the applicable Fronting Bank shall
promptly notify the Administrative Agent, which shall promptly notify each U.S.
Revolving Lender of such failure, and each U.S. Revolving Lender shall promptly
and unconditionally pay to the Administrative Agent for the account of the
applicable Fronting Bank the amount of such Lender’s Applicable Percentage of
such unreimbursed payment in Dollars and in same day funds.  In the event that a Fronting Bank makes any
payment under any Canadian Revolving Facility Letter of Credit and the Canadian
Borrower shall not have reimbursed such amount in full to such Fronting Bank
pursuant to this Section, the applicable Fronting Bank shall promptly notify
the Canadian Administrative Agent, which shall promptly notify each Canadian
Revolving 

 

51

 

Lender of such
failure, and each Canadian Revolving Lender shall promptly and unconditionally
pay to the Canadian Administrative Agent for the account of the applicable
Fronting Bank the amount of such Lender’s Applicable Percentage of such
unreimbursed payment in Dollars (or in respect of a Canadian Revolving Facility
Letter of Credit denominated in Canadian Dollars, in Canadian Dollars) and in
same day funds.  If the applicable
Fronting Bank so notifies the Applicable Agent, and the Applicable Agent so
notifies the U.S. Revolving Lenders or the Canadian Revolving Lenders, as the
case may be, prior to 11:00 a.m. (New York City time) on any Business Day,
such Lenders shall make available to the applicable Fronting Bank such Lender’s
Applicable Percentage of the amount of such payment on such Business Day in same
day funds.  If and to the extent such
Lender shall not have so made its Applicable Percentage of the amount of such
payment available to the applicable Fronting Bank, such Lender agrees to pay to
such Fronting Bank, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Applicable Agent for the account of such Fronting Bank at the Federal Funds
Effective Rate.  The failure of any Lender
to make available to the applicable Fronting Bank its Applicable Percentage of
any payment under any Letter of Credit shall not relieve any other Lender of
its obligation hereunder to make available to the applicable Fronting Bank its
Applicable Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Lender shall be responsible for the
failure of any other Lender to make available to such Fronting Bank such other
Lender’s Applicable Percentage of any such payment.  Whenever a Fronting Bank receives a payment
of a reimbursement obligation as to which it has received any payments from the
Lenders pursuant to this paragraph, such Fronting Bank shall pay to each Lender
which has paid its Applicable Percentage thereof, in Dollars or Canadian
Dollars, as applicable, and in same day funds, an amount equal to such Lender’s
Applicable Percentage thereof.

 

(h)           Unless otherwise
requested by the Applicable Agent, each Fronting Bank shall report in writing
to the Applicable Agent (i) on the first Business Day of each week, the
daily activity (set forth by day) in respect of Letters of Credit during the
immediately preceding week, including all issuances, extensions, amendments and
renewals, all expirations and cancellations and all disbursements and
reimbursements, (ii) on or prior to each Business Day on which such
Fronting Bank expects to issue, amend, renew or extend any Letter of Credit,
the date of such issuance, amendment, renewal or extension and the aggregate
face amount of the Letters of Credit to be issued, amended, renewed or extended
by it and outstanding after giving effect to such issuance, amendment, renewal
or extension (and whether the amount thereof changed), it being understood that
such Fronting Bank shall not permit any issuance, renewal, extension or
amendment resulting in an increase in the amount of a Letter of Credit to occur
without first obtaining written confirmation from the Applicable Agent that it
is then permitted under this Agreement, (iii) on each Business Day on
which such Fronting Bank makes any payment under any Letter of Credit, the date
of such payment and the amount and currency of such payment, (iv) on any
Business Day on which a Borrower fails to reimburse a payment under a Letter of
Credit required to be reimbursed to such Fronting Bank on such day, the date of
such failure, the applicable Borrower and the amount and currency of such
Letter of Credit payment and (v) on any other Business Day, such other
information as the Applicable Agent shall reasonably request.

 

Section 2.5             Issuance.  Whenever a Borrower desires a Fronting Bank
to issue a Letter of Credit, it shall give to such Fronting Bank and the
Applicable Agent at least three (3) Business 

 

52

 

Days’ prior written (including facsimile
communication) notice (or such shorter period as may be agreed upon by the
Applicable Agent, the Borrowers and such Fronting Bank) specifying the date on
which the proposed Letter of Credit is to be issued (which shall be a Business
Day), the stated amount and currency of the Letter of Credit so requested, the
expiration date of such Letter of Credit and the name and address of the
beneficiary thereof.

 

Section 2.6             Nature
of Letter of Credit Obligations Absolute. 
The obligations of the Borrowers to reimburse the Lenders and Fronting
Banks for drawings made under any Letter of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation:  (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim,
setoff, defense or other right which any Borrower may have at any time against
a beneficiary of any Letter of Credit or against any of the Lenders or Fronting
Banks, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction; (iii) any draft, demand, certificate
or other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (iv) payment by a Fronting Bank
of any Letter of Credit against presentation of a demand, draft or certificate
or other document which does not comply with the terms of such Letter of
Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that any Event of
Default shall have occurred and be continuing; provided, that such circumstance
or event shall not have been the result of the gross negligence or willful
misconduct of the applicable Fronting Bank.

 

Section 2.7             Making
of Loans and Disbursements.

 

(a)           Except as contemplated
by Section 2.12, Loans denominated in Dollars shall be either ABR
Loans or Eurodollar Loans and Loans denominated in Canadian Dollars shall be
either Canadian Prime Rate Loans or Discount Rate Loans, in each case as the
Borrowers may request subject to and in accordance with this Section, provided
that all Loans made pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, be Loans of the same Type and in the same
currency.  Each Lender may fulfill its
Commitment with respect to any Eurodollar Loan or ABR Loan by causing any
lending office of such Lender to make such Loan; provided that any such use
of a lending office shall not affect the obligation of the applicable Borrower
to repay such Loan in accordance with the terms of this Agreement.  Each Lender shall, subject to its overall
policy considerations, use reasonable efforts (but shall not be obligated) to
select a lending office which will not result in the payment of increased costs
by the Borrowers pursuant to Section 2.16 or Section 2.19,
provided that a Lender’s selection of a lending office shall have no
effect on the obligations of any Loan Party pursuant to Section 2.16
or Section 2.19.  Subject to
the other provisions of this Section and the provisions of Section 2.13,
Borrowings of Loans of more than one Type may be incurred at the same time,
provided that no more than ten (10) Borrowings of Eurodollar Loans and
Discount Rate Loans may be outstanding at any time.

 

(b)           The applicable Borrower
shall give the Applicable Agent (with a simultaneous copy to the Administrative
Agent if the Administrative Agent is not the Applicable Agent) prior written,
facsimile or telephonic (confirmed promptly in writing) notice of each
Borrowing of Revolving Loans hereunder of at least three (3) Business Days
prior to a 

 

53

 

Borrowing of
Eurodollar Loans and Discount Rate Loans and, to the extent practical, one (1) Business
Day for ABR Loans and Canadian Prime Rate Loans, otherwise such ABR Loans and
Canadian Prime Rate Loans may be borrowed on the Business Day on which such
Borrower gives such notice; such notice shall be irrevocable and shall specify
the following information:

 

(i)                                     the
Borrower requesting such Borrowing;

 

(ii)                                  the
Type (e.g., Discount Rate, Canadian Prime Rate, Eurodollar or ABR) of such Borrowing;

 

(iii)                               the
Class (e.g., Canadian Revolving Loan or U.S. Revolving Loan) of such
Borrowing;

 

(iv)                              the
amount and currency of such Borrowing (which shall not (A) in the case of
Dollar-denominated Revolving Loans, be less than US$1,000,000 or any integral
multiple of US$1,000,000 in excess of such minimum amount, or (B) in the
case of Canadian Dollar-denominated Revolving Loans, be less than C$1,000,000
or any integral multiple of C$1,000,000 in excess of such minimum amount);

 

(v)                                 the
date of such Borrowing (which shall be a Business Day);

 

(vi)                              in
the case of a Eurodollar Loan, the Interest Period with respect thereto;

 

(vii)                           in
the case of a Discount Rate Loan, the Contract Period with respect thereto; and

 

(viii)                        the
number and location of the account to which funds are to be disbursed.

 

Such notice, to be effective,
must be received by the Applicable Agent (and the Administrative Agent if the
Administrative Agent is not the Applicable Agent) not later than 10:00 a.m.,
New York City time, on the third (3rd) Business Day preceding the date on
which such Borrowing is to be made in the case of Eurodollar Loans or Discount
Rate Loans and not later than 12:00 Noon, New York City time, on the same
Business Day as the date of such Borrowing in the case of ABR Loans and
Canadian Prime Rate Loans.  If no
election is made as to the Type of a U.S. Revolving Loan or Canadian Revolving
Loan denominated in Dollars, such notice shall be deemed a request for
Borrowing of ABR Loans.  If no election
is made as to the Type of a Canadian Revolving Loan denominated in Canadian
Dollars, such notice shall be deemed a request for Borrowing of Canadian Prime
Rate Loans.  If the Borrowing is a
request for a Eurodollar Loan and no election is made as to the Interest
Period, such notice shall be deemed to have requested an Interest Period of one
month’s duration.  If the Borrowing is a
request for a Discount Rate Loan and no election is made as to the Contract
Period, such notice shall be deemed to have requested a Contract Period of one
month’s duration.  If no election is made
as to the currency of a Loan, such notice shall be deemed a request for
Borrowing of Dollars.  The Applicable
Agent shall promptly notify each Revolving Lender of its Applicable Percentage
of 

 

54

 

such Borrowing, the date of
such Borrowing, the Type and Class of Borrowing or Loans being requested,
the Interest Period or Interest Periods applicable thereto and the Contract
Period or Contract Periods applicable thereto, as appropriate.  On the Borrowing date specified in such
notice, each Revolving Lender shall make its share of Borrowings of ABR Rate
Loans or Canadian Prime Rate Loans available to the Applicable Agent at its
office most recently designated for such purpose in a notice to the Lenders, no
later than 3:00 p.m., New York City time, and its share of Borrowings of
Eurodollar Loans or Discount Rate Loans available at the office of the
Applicable Agent at its office most recently designated for such purpose in a
notice to the Lenders, no later than no later than 1:00 p.m., New York
City time, in each case in immediately available funds.  Upon receipt of the funds made available by
the Lenders to fund any Borrowing hereunder, the Applicable Agent shall disburse
such funds in the manner specified in the notice of Borrowing delivered by the
Borrowers.

 

(c)           The U.S. Borrower
shall borrow the entire principal amount of the U.S. Term Loans on the Closing
Date and the proceeds of such Borrowing shall be disbursed as follows: (x) an
amount equal to the excess of the U.S. Term Loans over the then current U.S.
Borrowing Base shall be deposited in the U.S. Term Loan Collateral Account, (y) the
amount requested by the U.S. Borrower to be used in amounts and for purposes consistent
with the Budget delivered to the Administrative Agent on or prior to the
Closing Date shall be disbursed to the U.S. Borrower and (z) the remainder
of such Borrowing shall be deposited in the U.S. Investment Account.  The U.S. Borrower shall give the
Administrative Agent at least three (3) Business Days’ prior written,
facsimile or telephonic (confirmed promptly in writing) notice that it is
borrowing the U.S. Term Loans on the Closing Date; such notice shall specify
the following information:

 

(i)                                     the
Type (e.g., Eurodollar or ABR ) of such Borrowing;

 

(ii)                                  in
the case of a Eurodollar Loan, the Interest Period with respect thereto;

 

(iii)                               the
amount of such Borrowing to be deposited in the U.S. Term Loan Collateral
Account pursuant to clause (x) of the first sentence of this Section 2.7(c);

 

(iv)                              the
amount of such Borrowing to be disbursed to the U.S. Borrower pursuant to
clause (y) of the first sentence of this Section 2.7(c);

 

(v)                                 the
amount of such Borrowing to be deposited in the U.S. Investment Account
pursuant to clause (z) of the first sentence of this Section 2.7(c);
and

 

(vi)                              such
other instructions as the Administrative Agent may require.

 

If no election is made as to
the Type of Loan, such notice shall be deemed a request for Borrowing of ABR
Loans.  If the Borrowing is a request for
a Eurodollar Loan and no election is made as to the Interest Period, such
notice shall be deemed to have requested an Interest Period of one month’s
duration.  The Administrative Agent shall
promptly notify each U.S. Term Loan 

 

55

 

Lender of its Applicable
Percentage of such Borrowing, the Type of Borrowing being requested and the
Interest Period or Interest Periods applicable thereto, as appropriate.  On the Closing Date, each U.S. Term Loan
Lender shall make its share of the U.S. Term Loans available to the
Administrative Agent at its office most recently designated for such purpose in
a notice to the Lenders, no later than 12:00 Noon, New York City time, in immediately
available funds.  Upon receipt of the
funds made available by the U.S. Term Loan Lenders to fund the U.S. Term Loans
hereunder, the Administrative Agent shall disburse such funds in the manner
specified in the notice of Borrowing delivered by the U.S. Borrower.  After the Closing Date, one (1) Business
Day after the Administrative Agent’s receipt of (i) a Borrowing Base
Certificate demonstrating to the Administrative Agent’s satisfaction that the
then U.S. Borrowing Base exceeds the amount of the Total U.S. Outstandings, (ii) such
written disbursement instructions as the Administrative Agent may require and (iii) a
certification from a Financial Officer of the U.S. Borrower that no Default or
Event of Default has occurred and is continuing, the Administrative Agent shall
disburse an amount not to exceed the amount by which the U.S. Borrowing Base
exceeds the Total U.S. Outstandings from the U.S. Term Loan Collateral Account
(including amounts deposited therein pursuant to this paragraph (c) or Section 2.14(a))
to the U.S. Investment Account.  Upon the
Administrative Agent’s receipt from the U.S. Borrower of such written
disbursement instructions as the Administrative Agent may require, the
Administrative Agent shall permit the U.S. Borrower to withdraw from the U.S.
Investment Account such amount as the U.S. Borrower shall request.  If, as of the end of the third (3rd) Business
Day following any such withdrawal, the Available Cash (excluding amounts on
deposit in the Investment Accounts) shall exceed US$50,000,000, the U.S.
Borrower shall make a deposit to the U.S. Investment Account on the following
Business Day in an amount which, when aggregated with the amount deposited in
the Canadian Investment Account on such day, shall be equal to such excess. The
U.S. Investment Account shall be closed and the cash deposited therein shall be
disbursed to the U.S. Borrower on the earlier of (x) the Receivables
Securitization Termination Date and (y) sixty (60) days after the Closing
Date.

 

(d)           The Canadian Borrower
shall borrow the entire principal amount of the Canadian Term Loans on the
Closing Date and the proceeds of such Borrowing shall be disbursed as follows: (x) an
amount equal to the excess of the Canadian Term Loans over the then current
Canadian Borrowing Base shall be deposited in the Canadian Term Loan Collateral
Account, (y) the amount requested by the Canadian Borrower to be used in
amounts and for purposes consistent with the Budget delivered to the
Administrative Agent on or prior to the Closing Date shall be disbursed to the
Canadian Borrower and (z) the remainder of such Borrowing shall be
deposited in the Canadian Investment Account. 
The Canadian Borrower shall give the Canadian Administrative Agent at
least three (3) Business Days’ prior written, facsimile or telephonic
(confirmed promptly in writing) notice that it is borrowing the Canadian Term
Loans on the Closing Date; such notice shall specify the following information:

 

(i)                                     the
Type (e.g., Eurodollar or ABR ) of such Borrowing;

 

(ii)                                  in
the case of a Eurodollar Loan, the Interest Period with respect thereto;

 

56

 

(iii)                               the
amount of such Borrowing to be deposited in the Canadian Term Loan Collateral
Account pursuant to clause (x) of the first sentence of this Section 2.7(d);

 

(iv)                              the
amount of such Borrowing to be disbursed to the Canadian Borrower pursuant to
clause (y) of the first sentence of this Section 2.7(d);

 

(v)                                 the
amount of such Borrowing to be deposited in the Canadian Investment Account
pursuant to clause (z) of the first sentence of this Section 2.7(d);
and

 

(vi)                              such
other instructions as the Canadian Administrative Agent may require.

 

If no election is made as to
the Type of Loan, such notice shall be deemed a request for Borrowing of ABR
Loans.  If the Borrowing is a request for
a Eurodollar Loan and no election is made as to the Interest Period, such
notice shall be deemed to have requested an Interest Period of one month’s
duration.  The Canadian Administrative
Agent shall promptly notify each Canadian Term Loan Lender of its Applicable
Percentage of such Borrowing, the Type of Borrowing being requested and the
Interest Period or Interest Periods applicable thereto, as appropriate.  On the Closing Date, each Canadian Term Loan
Lender shall make its share of the Canadian Term Loans available to the
Canadian Administrative Agent at its office most recently designated for such
purpose in a notice to the Lenders, no later than 12:00 Noon, New York City
time, in immediately available funds. 
Upon receipt of the funds made available by the Canadian Term Loan
Lenders to fund the Canadian Term Loans hereunder, the Canadian Administrative
Agent shall disburse such funds in the manner specified in the notice of
Borrowing delivered by the Canadian Borrower. 
After the Closing Date, one (1) Business Day after the Canadian
Administrative Agent’s receipt of (i) a Borrowing Base Certificate
demonstrating to the Canadian Administrative Agent’s satisfaction that the then
Canadian Borrowing Base exceeds the amount of the Total Canadian Outstandings, (ii) such
written disbursement instructions as the Canadian Administrative Agent may
require and (iii) a certification from a Financial Officer of the Canadian
Borrower that no Default or Event of Default has occurred and is continuing,
the Canadian Administrative Agent shall disburse an amount not to exceed the
amount by which the Canadian Borrowing Base exceeds the Total Canadian
Outstandings from the Canadian Term Loan Collateral Account (including amounts
deposited therein pursuant to this paragraph (d) or Section 2.14(c))
to the Canadian Investment Account.  Upon
the Canadian Administrative Agent’s receipt from the Canadian Borrower of such
written disbursement instructions as the Canadian Administrative Agent may
require, the Canadian Administrative Agent shall permit the Canadian Borrower
to withdraw from the Canadian Investment Account such amount as the Canadian
Borrower shall request.  If, as of the
end of the third (3rd) Business Day following any such withdrawal, the
Available Cash (excluding amounts on deposit in the Investment Accounts) shall
exceed US$50,000,000, the Canadian Borrower shall make a deposit to the
Canadian Investment Account on the following Business Day in an amount which, when
aggregated with the amount deposited in the U.S. Investment Account on such
day, shall be equal to such excess.  The
Canadian Investment Account shall be closed and the cash deposited therein
shall be 

 

57

 

disbursed to the Canadian
Borrower on the earlier of (x) the Receivables Securitization Termination
Date and (y) sixty (60) days after the Closing Date.

 

(e)           Unless the Applicable
Agent shall have received notice from a Lender prior to the proposed date of
any Borrowing that such Lender will not make available to the Applicable Agent
such Lender’s share of such Borrowing, the Applicable Agent may assume that
such Lender has made such share available on such date in accordance with this Section and
may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount.  In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Applicable Agent, then the applicable Lender and the applicable
Borrower severally agree to pay to the Applicable Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the applicable Borrower to
but excluding the date of payment to the Applicable Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Applicable Agent in accordance with banking industry rules on
interbank compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans or Canadian Prime Rate Loans, as the case may
be.  If such Lender pays such amount to
the Applicable Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

 

Section 2.8             Repayment
of Loans and Unreimbursed Draws; Evidence of Debt

 

(a)           The U.S. Borrower
hereby unconditionally promises to pay to (i) the Administrative Agent for
the account of each U.S. Revolving Lender the then unpaid principal amount of
each U.S. Revolving Loan obtained by the U.S. Borrower and each unreimbursed
draw under all U.S. Revolving Facility Letters of Credit as set forth herein; (ii) the
Administrative Agent for the account of each U.S. Term Loan Lender the then
unpaid principal amount of each U.S. Term Loan as set forth herein; and (iii) the
Canadian Administrative Agent for the account of each Canadian Revolving Lender
the then unpaid principal amount of each Canadian Revolving Loan obtained by
the U.S. Borrower.

 

(b)           The Canadian Borrower
hereby unconditionally promises to pay to (i) the Administrative Agent for
the account of each U.S. Revolving Lender the then unpaid principal amount of
each U.S. Revolving Loan obtained by the Canadian Borrower; (ii) the
Canadian Administrative Agent for the account of each Canadian Revolving Lender
the then unpaid principal amount of each Canadian Revolving Loan obtained by
the Canadian Borrower and each unreimbursed draw under all Canadian Revolving
Facility Letters of Credit as set forth herein; and (iii) the Canadian
Administrative Agent for the account of each Canadian Term Loan Lender the
unpaid principal amount of each Canadian Term Loan.

 

(c)           Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing the Obligations of the Borrowers to such Lender resulting from each
Loan made by such Lender or participation in each Letter of Credit in which
such Lender is participating, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.

 

58

 

(d)           The Applicable Agent
shall maintain accounts in which it shall record (i) the amount of each
Loan made hereunder, the Type and Class thereof and the Interest Period or
Contract Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the U.S. Borrower or
the Canadian Borrower, as the case may be, to each Lender hereunder, (iii) the
amount of Term Loans on deposit in the respective Collateral Accounts and all
disbursements from deposits to such accounts and (iv) the amount of any
sum received by the Applicable Agent hereunder for the account of the Lenders
and each Lender’s share thereof.

 

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

 

(f)            Any Lender may request
that Loans made by it be evidenced by a promissory note.  In such event, the Borrowers shall execute
and deliver to such Lender a promissory note or notes payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) in a form furnished by the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.3) be represented by one or more
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).

 

Section 2.9             Interest on Loans

 

(a)           Subject to the
provisions of Section 2.10, each ABR Loan shall bear interest
(computed, for ABR Loans wherein the Alternate Base Rate is determined by
reference to the Adjusted LIBO Rate or the Federal Funds Effective Rate, on the
basis of the actual number of days elapsed over a year of 360 days, and
otherwise computed on the basis of the actual number of days elapsed over a
year of 365 days) at a rate per annum equal to the Applicable Margin plus
the Alternate Base Rate.

 

(b)           Subject to the
provisions of Section 2.10, each Eurodollar Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal, during each Interest Period
applicable thereto, to the Applicable Margin plus the Adjusted LIBO Rate
for such Interest Period in effect for such Borrowing.

 

(c)           Subject to the
provisions of Section 2.10, each Canadian Prime Rate Loan shall
bear interest (computed on the basis of the actual number of days elapsed over
a year of 365 days) at a rate per annum equal to the Applicable Margin plus
the Canadian Prime Rate.

 

(d)           Subject to the
provisions of Section 2.10, each Discount Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 365 days) at a rate per annum equal, during each Contract Period
applicable thereto, to the Applicable Margin plus the Discount Rate for
such Contract Period in effect for such Borrowing.

 

59

 

(e)           Accrued interest on all
Loans shall be payable in arrears on each Interest Payment Date applicable
thereto, at maturity (whether by acceleration or otherwise), after such
maturity on demand and (with respect to Eurodollar Loans and Discount Rate
Loans) upon any repayment or prepayment thereof (on the amount prepaid).

 

(f)            For the purposes of
the Interest Act (Canada) and disclosure
thereunder, whenever any interest or any fee to be paid hereunder or in
connection herewith is to be calculated on the basis of a 360-day or 365-day
year, the yearly rate of interest to which the rate used in such calculation is
equivalent is the rate so used multiplied by the actual number of days in the
calendar year in which the same is to be ascertained and divided by 360 or 365,
as applicable.  The rates of interest
under this Agreement are nominal rates, and not effective rates or yields.  The principle of deemed reinvestment of
interest does not apply to any interest calculation under this Agreement.

 

(g)           Any provision of this
Agreement that would oblige a Canadian Loan Party to pay any fine, penalty or
rate of interest on any arrears of principal or interest secured by a mortgage
on real property or hypothec on immovables that has the effect of increasing
the charge on arrears beyond the rate of interest payable on principal money
not in arrears shall not apply to such Canadian Loan Party, which shall be
required to pay interest on money in arrears at the same rate of interest
payable on principal money not in arrears.

 

(h)           If any provision of
this Agreement would oblige a Canadian Loan Party to make any payment of
interest or other amount payable to any Secured Party in an amount or
calculated at a rate which would be prohibited by law or would result in a
receipt by that Secured Party of “interest” at a “criminal rate” (as such terms
are construed under the Criminal Code (Canada)),
then, notwithstanding such provision, such amount or rate shall be deemed to
have been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by applicable law
or so result in a receipt by that Secured Party of “interest” at a “criminal
rate”, such adjustment to be effected, to the extent necessary (but only to the
extent necessary), as follows:

 

(i)                                     first,
by reducing the amount or rate of interest; and

 

(ii)                                  thereafter,
by reducing any fees, commissions, costs, expenses, premiums and other amounts
required to be paid which would constitute interest for purposes of
section 347 of the Criminal Code (Canada).

 

Section 2.10           Default
Interest.  Upon the occurrence and
during the continuance of an Event of Default, the principal amount of all
Loans outstanding and, to the extent permitted by applicable law, any interest
payments on the Loans or any fees or other amounts owed hereunder, shall
thereafter bear interest payable on demand at a rate that is 2% per annum in
excess of the interest rate otherwise payable hereunder with respect to the
applicable Loans (or, (x) in the case of any such fees and other amounts
owed by the U.S. Loan Parties, at a rate which is 2% per annum in excess of the
interest rate otherwise payable hereunder for ABR Loans that are U.S. Revolving
Loans and (y) in the case of any such fees and other amounts owed by the
Canadian Loan Parties, at a rate which is 2% per annum in excess of the
interest rate otherwise 

 

60

 

payable hereunder for Canadian Prime Rate Loans
that are Canadian Revolving Loans); provided, in the case of Eurodollar Loans
and Discount Rate Loans, upon the expiration of the Interest Period or Contract
Period, as the case may be, in effect at the time any such increase in interest
rate is effective, if an Event of Default shall then be continuing, such
Eurodollar Loans and Discount Rate Loans shall thereupon become ABR Loans and
Canadian Prime Rate Loans, respectively, and shall thereafter bear interest
payable upon demand at a rate which is 2% per annum in excess of the interest
rate otherwise payable hereunder for ABR Loans and Canadian Prime Rate Loans,
as the case may be.  Payment or
acceptance of the increase rates of interest provided in this Section 2.10
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of the Agents or any Lender.

 

Section 2.11           Optional
Termination or Reduction of Commitment. 
Upon at least three (3) Business Days’ prior written notice to the
Applicable Agent (and the Administrative Agent if the Administrative Agent is
not the Applicable Agent), (i) the U.S. Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
U.S. Revolving Commitment and (ii) the Canadian Borrower may at any time
in whole permanently terminate, or from time to time in part permanently
reduce, the Canadian Revolving Commitment. 
Each such reduction or termination, as applicable, of such Commitment
shall be in the principal amount of US$1,000,000 or any integral multiple of
US$1,000,000 in excess thereof.  The U.S.
Borrower shall not be permitted to terminate or reduce the U.S. Revolving
Commitment if, as a result of such termination or reduction, the U.S. Revolving
Credit Utilization would exceed the aggregate U.S. Revolving Commitment.  The Canadian Borrower shall not be permitted
to terminate or reduce the Canadian Revolving Commitment if, as a result of
such termination or reduction, the Canadian Revolving Credit Utilization would
exceed the aggregate Canadian Revolving Commitment.  Any reduction or termination, as applicable,
pursuant to this Section shall be applied pro rata to reduce the
applicable Revolving Commitment of each applicable Lender until such Revolving
Commitment is zero.  Simultaneously with
each reduction or termination, as applicable, of any Revolving Commitment, the
applicable Borrower shall pay to the Applicable Agent for the account of each
applicable Lender the Commitment Fee accrued on the amount of the Revolving
Commitment of such Lender so terminated or reduced to but excluding the date of
such termination or reduction.

 

Section 2.12           Alternate
Rate of Interest.

 

(a)           If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

 

(i)                                     the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period; or

 

(ii)                                  the
Administrative Agent is advised by the Required Lenders of the applicable Class that
the Eurodollar Rate for such Interest Period will not adequately and fairly
reflect the cost to such 

 

61

 

Lenders (or Lender) of making
or maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;

 

then the Administrative Agent
shall give notice thereof to the Borrowers and the Lenders by telephone or
facsimile as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrowers and the Lenders that the circumstances giving rise
to such notice no longer exist, any request by the Borrowers for a Borrowing of
Eurodollar Loans (including pursuant to a refinancing with Eurodollar Loans)
pursuant to Section 2.7 or Section 2.13 shall be deemed
a request for a Borrowing of ABR Loans.

 

(b)           If prior to the
commencement of any Contract Period for a Borrowing comprised of a Discount
Rate Loan:

 

(i)                                     the
Canadian Administrative Agent determines (which determination shall be
conclusive manifest error) that adequate and reasonable means do not exist for
ascertaining the Discount Rate for such Contract Period, or

 

(ii)                                  the
Canadian Administrative Agent is advised by the Required Lenders of the
applicable Class that the Discount Rate for such Contract Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Contract Period,

 

then the Canadian
Administrative Agent shall give notice thereof to the Borrowers and the Lenders
by telephone or facsimile as promptly as practical thereafter and, until the
Canadian Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exists, any request by the
Borrowers for a Borrowing of Discount Rate Loans (including pursuant to a
refinancing with Discount Rate Loans) pursuant to Section 2.7 or Section 2.13
shall be deemed a request for a Borrowing of Canadian Prime Rate Loans.

 

Section 2.13           Refinancing
of Loans.  The Borrowers shall have
the right, at any time, on three (3) Business Days’ prior irrevocable
notice to the Applicable Agent (and the Administrative Agent if the
Administrative Agent is not the Applicable Agent) (which notice, to be
effective, must be received by the Applicable Agent not later than 1:00 p.m.,
New York City time, on the third Business Day preceding the date of any
refinancing), (x) to refinance any outstanding Borrowing or Borrowings of
Loans of one Type (or a portion thereof) with a Borrowing of Loans of the other
Type or (y) to continue an outstanding Borrowing of Eurodollar Loans for
an additional Interest Period or to continue an outstanding Borrowing of Discount
Rate Loans for an additional Contract Period, subject to the following:

 

(a)           as a condition to the
refinancing of ABR Loans with Eurodollar Loans and to the continuation of
Eurodollar Loans for an additional Interest Period, no Event of Default shall have
occurred and be continuing at the time of such refinancing;

 

(b)           as a condition to the
refinancing of Canadian Prime Rate Loans with Discount Rate Loans and to the
continuation of Discount Rate Loans for an additional Contract 

 

62

 

Period, no
Event of Default shall have occurred and be continuing at the time of such
refinancing;

 

(c)           if less than a full
Borrowing of Loans shall be refinanced, such refinancing shall be made pro rata
among the applicable Lenders in accordance with the respective principal
amounts of the Loans comprising such Borrowing held by such Lenders immediately
prior to such refinancing;

 

(d)           the aggregate principal
amount of Loans being refinanced shall be at least (i) in the case of Dollar-denominated
Loans, US$1,000,000 or any integral multiple of US$1,000,000 in excess thereof,
or (ii) in the case of Canadian Dollar-denominated Loans, C$1,000,000 or
any integral multiple of C$1,000,000 in excess thereof, provided that no partial
refinancing of a Borrowing of Eurodollar Loans or Discount Rate Loans as the
case may be, shall result in the Eurodollar Loans or Discount Rate Loans as the
case may be, remaining outstanding pursuant to such Borrowing being less than
US$1,000,000 or C$1,000,000, respectively, in aggregate principal amount;

 

(e)           each Lender shall
effect each refinancing by applying the proceeds of its new Canadian Prime Rate
Loan, Discount Rate Loan, Eurodollar Loan or ABR Loan, as the case may be, to
its Loan being refinanced;

 

(f)            the Interest Period
with respect to a Borrowing of Eurodollar Loans effected by a refinancing or in
respect to the Borrowing of Eurodollar Loans being continued as Eurodollar
Loans shall commence on the date of refinancing or the expiration of the current
Interest Period applicable to such continuing Borrowing, as the case may be;

 

(g)           a Borrowing of
Eurodollar Loans may be refinanced only on the last day of an Interest Period
applicable thereto;

 

(h)           each request for a
refinancing with a Borrowing of Eurodollar Loans which fails to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month;

 

(i)            the Contract Period
with respect to a Borrowing of Discount Rate Loans effected by a refinancing or
in respect to the Borrowing of Discount Rate Loans being continued as Discount
Rate Loans shall commence on the date of refinancing or the expiration of the
current Contract Period applicable to such continuing Borrowing, as the case
may be;

 

(j)            a Borrowing of Discount
Rate Loans may be refinanced only on the last day of a Contract Period
applicable thereto; and

 

(k)           each request for a
refinancing with a Borrowing of Discount Rate Loans which fails to state an
applicable Contract Period shall be deemed to be a request for a Contract
Period of one month.

 

In the event that the U.S. Borrower or Canadian Borrower, as
applicable, shall not give notice to refinance any Borrowing of Eurodollar
Loans, or to continue such Borrowing as Eurodollar Loans, or shall not be
entitled to refinance or continue such Borrowing as Eurodollar Loans, in 

 

63

 

each case as provided above, such Borrowing shall automatically be
refinanced with a Borrowing of ABR Loans at the expiration of the then-current
Interest Period.  In the event that the
Canadian Borrower shall not give notice to refinance any Borrowing of Discount
Rate Loans, or to continue such Borrowing as Discount Rate Loans, or shall not
be entitled to refinance or continue such Borrowing as Discount Rate Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of Canadian Prime Rate Loans at the expiration of the
then-current Contract Period.  The Applicable
Agent shall, after it receives notice from the U.S. Borrower or Canadian
Borrower, as applicable, promptly give each Lender notice of any refinancing,
in whole or part, of any Loan made by such Lender.

 

(l)            Notwithstanding
anything to the contrary contained herein:

 

(i)                                     all
Loans denominated in Dollars shall be repaid in Dollars;

 

(ii)                                  all
Loans denominated in Canadian Dollars shall be repaid in Canadian Dollars;

 

(iii)                               Loans
denominated in Dollars may only be ABR Loans or Eurodollar Loans; and

 

(iv)                              Loans
denominated in Canadian Dollars may only be Canadian Prime Rate Loans or
Discount Rate Loans.

 

All Borrowings, refinancings,
continuations and conversions, as applicable, of Loans shall be consistent with
the foregoing.

 

Section 2.14           Mandatory
Prepayment; Commitment Termination

 

(a)           If at any time the
Total U.S. Outstandings exceeds the U.S. Borrowing Base, within one (1) Business
Day (i) the Borrowers will prepay the U.S. Revolving Loans in an amount
necessary to cause the Total U.S. Outstandings to be equal to or less than the
U.S. Borrowing Base, (ii) after giving effect to the prepayment in full of
the U.S. Revolving Loans, the U.S. Borrower will deposit into the Letter of
Credit Account an amount equal to 105% of the amount by which the aggregate
U.S. Letter of Credit Outstandings (net of the amount of cash held in the
Letter of Credit Account) so exceeds the U.S. Borrowing Base, and (iii) after
giving effect to the prepayment in full of the U.S. Revolving Loans and the
cash collateralization of the U.S. Letter of Credit Outstandings, the U.S.
Borrower will (x) deposit into the U.S. Term Loan Collateral Account an
amount equal to the amount by which the U.S. Term Outstandings exceeds the U.S.
Borrowing Base or (y) prepay the U.S. Term Loans in an amount equal to the
amount by which the U.S. Term Outstandings exceeds the U.S. Borrowing Base.

 

(b)           If at any time the U.S.
Revolving Credit Utilization exceeds (A) prior to the expiration of the
Interim Period, the Interim U.S. Revolving Commitment, or (B) from and
after the expiration of the Interim Period, the U.S. Revolving Commitment,
within one (1) Business Day (i) the Borrowers will prepay the U.S.
Revolving Loans in an amount necessary to cause the aggregate principal amount
of the U.S. Revolving Credit Utilization, including unreimbursed draws, to be
equal to or less than (A) prior to the expiration of the Interim Period,
the Interim U.S. Revolving Commitment, or (B) from and after the
expiration of the Interim 

 

64

 

Period, the
U.S. Revolving Commitment and (ii) if, after giving effect to the
prepayment in full of the U.S. Revolving Loans, the aggregate U.S. Letter of
Credit Outstandings exceeds (A) prior to the expiration of the Interim
Period, the Interim U.S. Revolving Commitment, or (B) from and after the
expiration of the Interim Period, the U.S. Revolving Commitment, the U.S.
Borrower will deposit into the Letter of Credit Account an amount equal to 105%
of the amount by which the aggregate U.S. Letter of Credit Outstandings (net of
the amount of cash held in the Letter of Credit Account) so exceeds (A) prior
to the expiration of the Interim Period, the Interim U.S. Revolving Commitment,
or (B) from and after the expiration of the Interim Period, the U.S.
Revolving Commitment.

 

(c)           If at any time the
Total Canadian Outstandings exceeds the Canadian Borrowing Base, within one (1) Business
Day (i) the Borrowers will prepay the Canadian Revolving Loans in an
amount necessary to cause the Total Canadian Outstandings to be equal to or
less than the Canadian Borrowing Base, (ii) after giving effect to the
prepayment in full of the Canadian Revolving Loans, the Canadian Borrower will
deposit into the Canadian Letter of Credit Account an amount equal to 105% of
the amount by which the aggregate Canadian Letter of Credit Outstandings (net
of the amount of cash held in the Canadian Letter of Credit Account) so exceeds
the Canadian Borrowing Base, and (iii) after giving effect to the
prepayment in full of the Canadian Revolving Loans and the cash collateralization
of the Canadian Letter of Credit Outstandings, the Canadian Borrower will (x) deposit
into the Canadian Term Loan Collateral Account an amount equal to the amount by
which the Canadian Term Outstandings exceeds the Canadian Borrowing Base or (y) prepay
the Canadian Term Loans in an amount equal to or the amount by which the
Canadian Term Outstandings exceeds the Canadian Borrowing Base.

 

(d)           If at any time the
Canadian Revolving Credit Utilization exceeds (A) prior to the expiration
of the Interim Period, the Interim Canadian Revolving Commitment, or (B) from
and after the expiration of the Interim Period, the Canadian Revolving
Commitment, within one (1) Business Day (i) the Borrowers will prepay
the Canadian Revolving Loans in an amount necessary to cause the aggregate
principal amount of the Canadian Revolving Credit Utilization, including
unreimbursed draws, to be equal to or less than (A) prior to the
expiration of the Interim Period, the Interim Canadian Revolving Commitment, or
(B) from and after the expiration of the Interim Period, the Canadian
Revolving Commitment and (ii) if, after giving effect to the prepayment in
full of the Canadian Revolving Loans, the aggregate Canadian Letter of Credit
Outstandings exceeds (A) prior to the expiration of the Interim Period,
the Interim Canadian Revolving Commitment, or (B) from and after the
expiration of the Interim Period, the Canadian Revolving Commitment, the
Canadian Borrower will deposit into the Canadian Letter of Credit Account an
amount equal to 105% of the amount by which the aggregate Canadian Letter of
Credit Outstandings (net of the amount of cash held in the Canadian Letter of
Credit Account) so exceeds (A) prior to the expiration of the Interim
Period, the Interim Canadian Revolving Commitment, or (B) from and after
the expiration of the Interim Period, the Canadian Revolving Commitment.

 

(e)           Upon the receipt of the
Net Proceeds by any of the U.S. Loan Parties from any Prepayment Event
(including amounts received by a U.S. Loan Party from a Canadian Guarantor
pursuant to Section 2.14(g)), the U.S. Loan Parties shall, jointly
and severally, apply such Net Proceeds as follows:  first, to repay the then outstanding
U.S. Term Loans; second, to repay the then outstanding U.S. Revolving Loans
(without a permanent reduction of the U.S. 

 

65

 

Revolving
Commitment); third, to repay the then outstanding Canadian Term Loans; fourth,
to repay the then outstanding Canadian Revolving Loans (without a permanent
reduction of the Canadian Revolving Commitment); fifth, to deposit into
the Letter of Credit Account an amount equal to the greater of (i) an
amount, as determined by the Fronting Banks and the Administrative Agent, equal
to the face amount of all outstanding U.S. Revolving Facility Letters of Credit
plus the sum of all projected contractual obligations of the Agents, the
Fronting Banks and the Lenders of the U.S. Borrower thereunder through the
expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in
the Letter of Credit Account); and sixth, to deposit into the Canadian
Letter of Credit Account an amount equal to the greater of (i) an amount,
as determined by the Fronting Banks and the Canadian Administrative Agent,
equal to the face amount of all outstanding Canadian Revolving Facility Letters
of Credit plus the sum of all projected contractual obligations of the Agents,
the Fronting Banks and the Lenders of the Canadian Borrower thereunder through
the expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account); provided, however,
that if the U.S. Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer to the effect that the U.S. Loan Parties
intend to apply the Net Proceeds from a Prepayment Event described in clause (b) of
the definition thereof within 180 days after receipt of such Net Proceeds to
acquire (or replace or rebuild) real property, equipment or other tangible
assets (excluding inventory) to be used in the business of the U.S. Loan
Parties, and certifying that no Default or Event of Default has occurred and is
continuing, then no prepayment shall be required by this Section (to the
extent the U.S. Loan Parties effect such reinvestment within the foregoing
180-day period) so long as such Net Proceeds shall remain deposited in an
account with the Applicable Agent until requested by a U.S. Loan Party for use
in accordance with such notice.

 

(f)            Upon the receipt of
the Net Proceeds by the Canadian Borrower from any Prepayment Event (including
amounts received by the Canadian Borrower from a Canadian Guarantor pursuant to
Section 2.14(g), with the understanding that no such amount
received from a Canadian Guarantor shall be applied in respect of the Canadian
Borrower’s guaranty of the U.S. Secured Obligations), the Canadian Borrower
shall apply such Net Proceeds as follows: 
first, to repay the then outstanding Canadian Term Loans; second,
to repay the then outstanding Canadian Revolving Loans made to the Canadian
Borrower (without a permanent reduction of the Canadian Revolving Commitment); third,
to the extent permitted by applicable law and not otherwise prohibited by an
order of the Canadian Court, to repay the then outstanding U.S. Term Loans; fourth,
to the extent permitted by applicable law and not otherwise prohibited by an
order of the Canadian Court, to repay the then outstanding U.S. Revolving Loans
(without a permanent reduction of the U.S. Revolving Commitment); fifth,
to the extent permitted by applicable law and not otherwise prohibited by an
order of the Canadian Court, to repay the then outstanding Canadian Revolving
Loans made to the U.S. Borrower (without a permanent reduction of the Canadian
Revolving Commitment); sixth, to deposit into the Canadian Letter of
Credit Account an amount equal to the greater of (i) an amount, as
determined by the Fronting Banks and the Canadian Administrative Agent, equal
to the face amount of all outstanding Canadian Revolving Facility Letters of
Credit plus the sum of all projected contractual obligations of the Agents, the
Fronting Banks and the Lenders of the Canadian Borrower thereunder through the
expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account); and 

 

66

 

seventh,
to the extent permitted by applicable law and not otherwise prohibited by an
order of the Canadian Court, to deposit into the Letter of Credit Account an
amount equal to the greater of (i) an amount, as determined by the
Fronting Banks and the Administrative Agent, equal to the face amount of all
outstanding U.S. Revolving Facility Letters of Credit plus the sum of all
projected contractual obligations of the Agents, the Fronting Banks and the
Lenders of the U.S. Borrower thereunder through the expiration date(s) of
such Letters of Credit and (ii) 105% of the aggregate U.S. Letter of
Credit Outstandings (net of the amount of cash held in the Letter of Credit
Account); provided, however, that if the Canadian Borrower shall
deliver to the Canadian Administrative Agent a certificate of a Financial
Officer to the effect that the Canadian Loan Parties intend to apply the Net
Proceeds from a Prepayment Event described in clause (b) of the definition
thereof within 180 days after receipt of such Net Proceeds to acquire (or
replace or rebuild) real property, equipment or other tangible assets
(excluding inventory) to be used in the business of the Canadian Loan Parties,
and certifying that no Default or Event of Default has occurred and is
continuing, then no prepayment shall be required by this Section (to the
extent the Canadian Loan Parties effect such reinvestment within the foregoing
180-day period) so long as such Net Proceeds shall remain deposited in an
account with the Applicable Agent until requested by a Canadian Loan Party for
use in accordance with such notice.

 

(g)           Upon the receipt of the
Net Proceeds by any Canadian Guarantor from any Prepayment Event, such Canadian
Guarantor shall apply such Net Proceeds as follows:  first, to repay the then outstanding
Canadian Term Loans; second, to repay the then outstanding Canadian
Revolving Loans made to the Canadian Borrower (without a permanent reduction of
the Canadian Revolving Commitment); third, to deposit into the Canadian
Letter of Credit Account an amount equal to the greater of (i) an amount,
as determined by the Fronting Banks and the Canadian Administrative Agent,
equal to the face amount of all outstanding Canadian Revolving Facility Letters
of Credit plus the sum of all projected contractual obligations of the Agents,
the Fronting Banks and the Lenders of the Canadian Borrower thereunder through
the expiration date(s) of such Letters of Credit and (ii) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account); fourth, to repay any
outstanding post-petition/post-filing Indebtedness owed by such Canadian
Guarantor to a U.S. Loan Party or the Canadian Borrower; and fifth to
the extent permitted by applicable law and not otherwise prohibited by any
applicable court order to repay any outstanding pre-petition Indebtedness owed
by such Canadian Guarantor to a U.S. Loan Party or the Canadian Borrower; provided,
however, that if the Canadian Borrower shall deliver to the Canadian
Administrative Agent a certificate of a Financial Officer to the effect that
the Canadian Guarantors intend to apply the Net Proceeds from a Prepayment
Event described in clause (b) of the definition thereof within 180 days
after receipt of such Net Proceeds to acquire (or replace or rebuild) real
property, equipment or other tangible assets (excluding inventory) to be used
in the business of the Canadian Guarantors, and certifying that no Default or
Event of Default has occurred and is continuing, then no prepayment shall be
required by this Section (to the extent the Canadian Guarantors effect
such reinvestment within the foregoing 180-day period) so long as such Net
Proceeds shall remain deposited in an account with the Applicable Agent until
requested by a Canadian Loan Party for use in accordance with such notice.

 

(h)           If on any date, as a
result of fluctuations in the Exchange Rate, the Administrative Agent
determines that the aggregate Canadian Revolving Credit Utilization shall have
exceeded for more than three (3) consecutive Business Days (x) an
amount equal to 105% 

 

67

 

of the total
Canadian Revolving Commitments or (y) an amount equal to the Canadian
Borrowing Base minus the Canadian Term Loans, the Administrative Agent
shall notify the Borrowers of such occurrence and the Borrowers shall on the
next succeeding Business Day prepay Canadian Revolving Loans in an amount
sufficient to eliminate such excess.

 

(i)            Upon the Termination
Date, the Canadian Revolving Commitment and the U.S. Revolving Commitment shall
each be terminated in full and the Loan Parties shall pay the Loans in full in
cash and, if any Letter of Credit remains outstanding, comply with Section 2.4(c).

 

(j)            The U.S. Term Loan
Commitments and the Canadian Term Loan Commitments shall terminate at 5:00 p.m.,
New York City time, on the Closing Date.

 

Section 2.15           Optional
Prepayment of Loans; Reimbursement of Lenders

 

(a)           The Borrowers shall
have the right at any time and from time to time to prepay any Borrowings
without penalty (except for any breakage costs associated with Eurodollar Loans
and Discount Rate Loans), in whole or in part, (x) with respect to a
Borrowing of Eurodollar Loans or Discount Rate Loans, upon at least three (3) Business
Days’ prior written, facsimile or telephonic (confirmed promptly in writing)
notice to the Applicable Agent (and the Administrative Agent if the
Administrative Agent is not the Applicable Agent) and (y) with respect to
a Borrowing of ABR Loans or Canadian Prime Rate Loans, upon prior written,
facsimile or telephonic (confirmed promptly in writing) notice to the
Applicable Agent (and the Administrative Agent if the Administrative Agent is
not the Applicable Agent) received no later than 12:00 Noon, New York City time
on the date of such prepayment; provided, however,
that (i) each such partial prepayment shall be in integral multiples of
US$1,000,000 or C$1,000,000, as applicable, or the entire amount of such Borrowing,
(ii) no prepayment of a Borrowing of Eurodollar Loans or Discount Rate
Loans shall be permitted pursuant to this Section 2.15(a) other
than on the last day of an Interest Period or Contract Period applicable
thereto unless such prepayment is accompanied by the payment of the amounts
described in clause (i) of the first sentence of Section 2.15(b),
and (iii) no partial prepayment of a Borrowing of Eurodollar Loans or
Discount Rate Loans shall result in the aggregate principal amount of the
Eurodollar Loans or Discount Rate Loans remaining outstanding pursuant to such
Borrowing being less than US$1,000,000 or C$1,000,000, as applicable.  Each notice of prepayment shall specify the
prepayment date, the principal amount of the Borrowing to be prepaid and in the
case of a Borrowing of Eurodollar Loans, the Borrowing or Borrowings pursuant
to which made, shall be irrevocable and shall commit the U.S. Borrower or
Canadian Borrower, as the case may be, to prepay such Loan by the amount and on
the date stated therein.  The Applicable
Agent shall, promptly after receiving notice from the U.S. Borrower or Canadian
Borrower, as the case may be, hereunder, notify each applicable Lender of the
principal amount of the Loans held by such Lender which are to be prepaid, the
prepayment date and the manner of application of the prepayment.  Subject to Section 2.15(d), such
prepayments shall be applied ratably to the Loans included in the prepaid
Borrowing.

 

(b)           The Borrowers shall
reimburse each Lender on demand for any loss incurred or to be incurred by it
in the reemployment of the funds released (i) resulting from any
prepayment (for any reason whatsoever, including, without limitation,
refinancing with ABR

 

68

 

Loans or
Canadian Prime Rate Loans, as applicable) of any Eurodollar Loan or Discount
Rate Loan required or permitted under this Agreement, if such Loan is prepaid
other than on the last day of the Interest Period or Contract Period for such
Loan or (ii) in the event that after the Borrowers deliver a notice of
Borrowing under Section 2.7 in respect of Eurodollar Loans or
Discount Rate Loans, such Loans are not made on the first day of the Interest
Period or Contract Period specified in such notice of Borrowing for any reason
other than a breach by such Lender of its obligations hereunder.  In the case of a Eurodollar Loan, such loss
shall be the amount as reasonably determined by such Lender as the excess, if
any, of (A) the amount of interest which would have accrued to such Lender
on the amount so paid or not borrowed at a rate of interest equal to the
Adjusted LIBO Rate for such Loan, for the period from the date of such payment
or failure to borrow to the last day (x) in the case of a payment or
refinancing with ABR Loans other than on the last day of the Interest Period
for such Loan, of the then current Interest Period for such Loan, or (y) in
the case of such failure to borrow, of the Interest Period for such Loan which
would have commenced on the date of such failure to borrow, over (B) the
amount of interest which would have accrued to such Lender on such amount by
placing such amount on deposit for a comparable period with leading banks in
the London interbank market.  Each Lender
shall deliver to the U.S. Borrower or Canadian Borrower, as the case may be,
from time to time one or more certificates setting forth the amount of such
loss as determined by such Lender.

 

(c)           In the event the
U.S. Borrower or Canadian Borrower, as the case may be, fails to prepay any
Borrowing on the date specified in any prepayment notice delivered pursuant to Section 2.15(a),
the U.S. Borrower or Canadian Borrower, as the case may be, on demand by any
Lender shall pay to the Applicable Agent for the account of such Lender any
amounts required to compensate such Lender for any loss incurred by such Lender
as a result of such failure to prepay, including, without limitation, any loss,
cost or expenses incurred by reason of the acquisition of deposits or other
funds by such Lender to fulfill deposit obligations incurred in anticipation of
such prepayment, but without duplication of any amounts paid under Section 2.15(b).  Each Lender shall deliver to the U.S.
Borrower or Canadian Borrower, as the case may be, from time to time one or
more certificates setting forth the amount of such loss as determined by such
Lender.

 

(d)           Any proceeds of
Collateral (other than Collateral of the Canadian Loan Parties) received by any
Agent (i) not constituting either (A) a specific payment of principal,
interest, fees or other sum payable under the Loan Documents (which shall be
applied as specified by the applicable Borrower), (B) a mandatory
prepayment (which shall be applied in accordance with Section 2.14),
(C) amounts to be applied from weekly sweeps of Available Cash (which
shall be applied in accordance with Section 5.7) or (D) amounts
to be applied from the Concentration Account when full cash dominion is in
effect (which shall be applied in accordance with Section 2.15(g) and
Section 5.7) or (ii) after an Event of Default has occurred
and is continuing and the Applicable Agent so elects or the Required Lenders so
direct, such funds shall be applied ratably as follows: first, to pay
any fees, indemnities, or expense reimbursements then due to the Agents and the
Fronting Banks from the U.S. Loan Parties (other than in connection with
Banking Services Obligations or Swap Obligations); second, to pay any
fees or expense reimbursements then due to the Lenders from the U.S. Loan
Parties (other than in connection with Banking Services Obligations or Swap
Obligations); third, to pay interest then due and payable on the U.S.
Loans ratably; fourth, to prepay principal on the U.S. Loans and 

 

69

 

unreimbursed
drafts drawn under U.S. Revolving Facility Letters of Credit ratably, fifth,
to pay an amount to the Administrative Agent equal to the greater of (x) an
amount, as determined by the Fronting Banks and the Administrative Agent, equal
to the face amount of all outstanding U.S. Revolving Facility Letters of Credit
plus the sum of all projected contractual obligations to the Agents, the
Fronting Banks and the Lenders of the U.S. Borrower thereunder through the
expiration date(s) of such Letters of Credit, and (y) 105% of the
aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in
the Letter of Credit Account), to be held in the Letter of Credit Account as
cash collateral for such Obligations; sixth, to payment of any amounts
owing by the U.S. Loan Parties with respect to Banking Services Obligations and
Swap Obligations; seventh, to the payment of any other U.S. Secured
Obligation due to the Agents or any Lender by the U.S. Loan Parties; eighth,
to pay any fees, indemnities, or expense reimbursements then due to the Agents
and the Fronting Banks from the Canadian Loan Parties (other than in connection
with Banking Services Obligations or Swap Obligations); ninth, to pay
any fees or expense reimbursements then due to the Lenders from the Canadian
Loan Parties (other than in connection with Banking Services Obligations or
Swap Obligations); tenth, to pay interest then due and payable on the
Canadian Loans ratably; eleventh, to prepay principal on the Canadian
Loans and unreimbursed drafts drawn under Canadian Revolving Facility Letters
of Credit ratably, twelfth, to pay an amount to the Canadian
Administrative Agent equal to the greater of (x) an amount, as determined
by the Fronting Banks and the Canadian Administrative Agent, equal to the face
amount of all outstanding Canadian Revolving Facility Letters of Credit plus
the sum of all projected contractual obligations to the Agents, the Fronting
Banks and the Lenders of the Canadian Borrower thereunder through the
expiration date(s) of such Letters of Credit, and (y) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account), to be held in the Canadian
Letter of Credit Account as cash collateral for such Obligations; thirteenth,
to payment of any amounts owing by the Canadian Loan Parties with respect to
Banking Services Obligations and Swap Obligations; and fourteenth, to
the payment of any other Canadian Secured Obligation due to the Agents or any
Lender by the Canadian Loan Parties.

 

(e)           Any proceeds of
Collateral of the Canadian Loan Parties received by any Agent (i) not
constituting either (A) a specific payment of principal, interest, fees or
other sum payable under the Loan Documents (which shall be applied as specified
by the applicable Borrower), (B) a mandatory prepayment (which shall be
applied in accordance with Section 2.14), or (C) amounts to be
applied from the Canadian Concentration Account when full cash dominion is in
effect (which shall be applied in accordance with Section 2.15(g) and
Section 5.7) or (ii) after an Event of Default has occurred
and is continuing and the Applicable Agent so elects or the Required Lenders so
direct, such funds shall be applied ratably as follows: first, to pay
any fees, indemnities, or expense reimbursements then due to the Agents and the
Fronting Banks from the Canadian Loan Parties (other than in connection with
Banking Services Obligations or Swap Obligations); second, to pay any
fees or expense reimbursements then due to the Lenders from the Canadian Loan
Parties (other than in connection with Banking Services Obligations or Swap
Obligations); third, to pay interest then due and payable on the Loans
to the Canadian Borrower ratably; fourth, to prepay principal on the
Canadian Loans made to the Canadian Borrower and unreimbursed drafts drawn
under Canadian Revolving Facility Letters of Credit ratably, fifth, to
pay an amount to the Canadian Administrative Agent equal to the greater of (x) an
amount, as determined by the Fronting Banks and the Canadian Administrative
Agent, equal to the face amount of all outstanding Canadian Revolving Facility
Letters of Credit plus 

 

70

 

the sum of all
projected contractual obligations to the Canadian Administrative Agent, the
Fronting Banks and the Lenders of the Canadian Borrower thereunder through the
expiration date(s) of such Letters of Credit, and (y) 105% of the
aggregate Canadian Letter of Credit Outstandings (net of the amount of cash
held in the Canadian Letter of Credit Account), to be held in the Canadian
Letter of Credit Account as cash collateral for such Obligations; sixth,
to payment of any amounts owing with respect to Banking Services Obligations
and Swap Obligations owed by any Canadian Loan Party; seventh, to the
payment of any other Canadian Secured Obligation due to the Agents or any
Lender by the Loan Parties; and eighth, solely with respect to any
remaining proceeds of Collateral of the Canadian Borrower, to the extent
permitted by applicable law and not otherwise prohibited by any court order, to
the payment of any other Secured Obligations in the amounts and in the
priorities set forth in Section 2.15(d).

 

(f)            Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by a
Borrower, or unless a Default or Event of Default is in existence, neither the
Applicable Agent nor any Lender shall apply any payment which it receives to
any Eurodollar Loan or Discount Rate Loan of a Class, except (a) on the
expiration date of the Interest Period applicable to any such Eurodollar Loan
or Contract Period applicable to any such Discount Rate Loan or (b) in the
event, and only to the extent, that there are no outstanding ABR Loans or
Canadian Prime Rate Loans of the same Class and, in any such event, the
Loan Parties shall pay the break funding payment required in accordance with Section 2.15(b).
The Agents and the Lenders shall have the continuing and exclusive right to
apply and reverse and reapply any and all such proceeds and payments to any
portion of the Secured Obligations.

 

(g)           At all times when
full cash dominion is in effect pursuant to Section 5.7, on each
Business Day, (i) the Administrative Agent shall apply all funds credited
to the Concentration Account the previous Business Day to prepay the U.S.
Revolving Loans and (ii) the Canadian Administrative Agent shall apply all
funds credited to the Canadian Concentration Account the previous Business Day
to prepay the Canadian Revolving Loans.

 

Section 2.16           Reserve
Requirements; Change in Circumstances.

 

(a)           Notwithstanding any
other provision herein, if after the date of this Agreement any change in
applicable law or regulation or in the interpretation or administration thereof
by any Governmental Authority charged with the interpretation or administration
thereof (whether or not having the force of law) shall change the basis of
taxation of payments to any Lender of the principal of or interest on any
Eurodollar Loan or Discount Rate Loan made by such Lender or any fees or other
amounts payable hereunder (other than changes in respect of Taxes, Other Taxes
and taxes imposed on, or measured by, the net income or net profits or
franchise taxes of such Lender in each case imposed by the jurisdiction in
which such Lender is organized, has its principal office, or in which the
applicable lending office for such Loan is located or by any political
subdivision or taxing authority therein, or by any other jurisdiction or by any
political subdivision or taxing authority therein other than a jurisdiction in
which such Lender would not be subject to tax but for the execution and
performance of, or receipt of payment and enforcement of rights under, this
Agreement or any other Loan Document), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by such Lender
(except any such reserve requirement which is reflected in the Adjusted LIBO
Rate) or shall impose on such 

 

71

 

Lender or the
applicable interbank market any other condition affecting this Agreement or the
Eurodollar Loans or Discount Rate Loans made by such Lender, and the result of
any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender to be material, then the Borrowers will pay to
such Lender in accordance with paragraph (c) below such additional amount
or amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.

 

(b)           If any Lender shall
have determined that the adoption or effectiveness after the Closing Date of
any law, rule, regulation or guideline regarding capital adequacy, or any
change in any of the foregoing or in the interpretation or administration of
any of the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or any lending office of such Lender) or any Lender’s holding
company with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender’s capital or on the capital of such Lender’s holding company, if any, as
a consequence of this Agreement, the Loans made by such Lender pursuant hereto,
such Lender’s Commitment hereunder or the issuance of, or participation in, any
Letter of Credit by such Lender to a level below that which such Lender or such
Lender’s holding company could have achieved but for such adoption, change or
compliance (taking into account Lender’s policies and the policies of such
Lender’s holding company with respect to capital adequacy) by an amount deemed
by such Lender to be material, then from time to time the Borrowers shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such Lender’s holding company for any such reduction suffered.

 

(c)           A certificate of
each Lender setting forth such amount or amounts as shall be necessary to
compensate such Lender or its holding company as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the Borrowers and
shall be conclusive absent manifest error. 
The Borrowers shall pay each Lender the amount shown as due on any such
certificate delivered to it within ten (10) days after its receipt of the
same.  Any Lender receiving any such
payment shall promptly make a refund thereof to the Borrowers if the law,
regulation, guideline or change in circumstances giving rise to such payment is
subsequently deemed or held to be invalid or inapplicable.

 

(d)           Except as provided
in the next sentence, failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute
a waiver of such Lender’s right to demand compensation with respect to such
period or any other period. Notwithstanding anything to the contrary set forth
herein, unless a Lender gives notice to a Borrower that it is obligated to pay
an amount under this Section 2.16 within 270 days after the
increased cost or reduced return giving rise to such a claim is incurred or
suffered, then such Lender shall only be entitled to be compensated to the
extent that such increased cost or reduced return is incurred or suffered
within the 270-day period before such Lender gives such notice to the Borrower;
provided that if the circumstances giving rise to such a claim have a retroactive
effect, then such 270-day period shall be extended to include the period of
such retroactive 

 

72

 

effect.  The protection of this Section shall be
available to each Lender regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed.

 

Section 2.17           Change in Legality

 

(a)           Notwithstanding
anything to the contrary contained elsewhere in this Agreement, if (x) any
change after the date of this Agreement in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration thereof shall make it unlawful for a Lender to make or maintain
a Eurodollar Loan or Discount Rate Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or Discount Rate Loan or (y) at
any time any Lender determines that the making or continuance of any of its
Eurodollar Loans or Discount Rate Loans has become impracticable as a result of
a contingency occurring after the Closing Date which adversely affects the
applicable interbank market or the position of such Lender in such market,
then, by written notice to the Borrowers, such Lender may (i) declare that
Eurodollar Loans or Discount Rate Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrowers for a (A) Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR Loan
unless such declaration shall be subsequently withdrawn and, (B) a
Borrowing comprised of Discount Rate Loans shall, as to such Lenders only, be
deemed a request for a Canadian Prime Rate Loan unless such declaration shall
be subsequently withdrawn; and (ii) require that all outstanding (A) Eurodollar
Loans made by it be converted to ABR Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans as of the effective date of
such notice as provided in paragraph (b) below, and (B) Discount Rate
Loans made by it be converted to Canadian Prime Rate Loans, in which event all
such Discount Rate Loans shall be automatically converted to Canadian Prime
Rate Loans as of the effective date of such notice as provided in paragraph (b) below.  In the event any Lender shall exercise its
rights under clause (i) or (ii) of this paragraph (a), all payments
and prepayments of principal which would otherwise have been applied to repay
the Eurodollar Loans or Discount Rate Loans, as the case may be, that would
have been made by such Lender or the converted Eurodollar Loans or Discount
Rate Loans, as the case may be, of such Lender shall instead be applied to
repay the ABR Loans or Canadian Prime Rate Loans, as the case may be, made by
such Lender in lieu of, or resulting from the conversion of, such Eurodollar
Loans or Discount Rate Loans, as the case may be.

 

(b)           For purposes of this
Section 2.17, a notice to the Borrowers by any Lender pursuant to
paragraph (a) above shall be effective, if lawful, and if any Eurodollar
Loans or Discount Rate Loans, as the case may be, shall then be outstanding, on
the last day of the then-current Interest Period or Contract Period, otherwise,
such notice shall be effective on the date of receipt by the Borrowers.

 

Section 2.18           Pro Rata
Treatment, etc.

 

(a)           All payments and
repayments of principal and interest in respect of the Loans (except as
expressly provided in Section 2.14, Section 2.15, Section 2.16,
Section 2.17 and ARTICLE 11) and all payments of Letter of
Credit Fees (other than those payable to a Fronting Bank) for Letters of Credit
shall be made pro rata among the applicable Lenders in accordance with their
respective applicable Commitments (provided that in the case of Term 

 

73

 

Loans or in
the event that such Commitments shall have expired or been terminated, such pro
rata allocation shall be based on the respective principal amounts of the
outstanding Loans or participations in Letters of Credit).  All payments of Commitment Fees shall be made
pro rata among the Lenders in accordance with their Commitments.  All payments by the Borrowers hereunder shall
be (i) except as otherwise provided in Section 2.19, net of
any tax applicable to the Borrowers and (ii) made in Dollars or Canadian
Dollars (as applicable) in immediately available funds, without defense, setoff
or counterclaim and free of any restriction or condition, at the office of the
Applicable Agent by 12:00 Noon, New York City time, on the date on which such
payment shall be due.  Interest in
respect of any Loan hereunder shall accrue from and including the date of such
Loan to but excluding the date on which such Loan is paid in full or converted
to a Loan of a different Type.

 

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

 

(c)           If any Lender shall
fail to make any payment required to be made by it pursuant to Section 2.4(e) or
2.4(g), Section 2.7(b), 2.7(c), 2.7(d) or
2.7(e), Section 2.18(b) or Section 9.6(b),
then the Applicable Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Applicable
Agent for the account of such Lender to satisfy such Lender’s obligations under
such Sections until all such unsatisfied obligations are fully paid.

 

Section 2.19           Taxes

 

(a)           Except as otherwise
provided in this Section 2.19, any and all payments by the Loan
Parties hereunder and under any other Loan Document shall be made free and
clear of and without deduction for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income or net profit
of an Agent, a Fronting Bank or any Lender (or any transferee or assignee
thereof, including a participation holder (any such entity being called a “Transferee”)) and franchise taxes, in
each case imposed on an Agent, a Fronting Bank or any Lender (or Transferee) by
the jurisdiction under the laws of which such Agent, such Fronting Bank or any
such Lender (or Transferee) is organized or in which the applicable lending
office of any such Lender (or Transferee) or applicable office of such Agent or
such Fronting Bank, is located or any political subdivision thereof or by any
other jurisdiction or by any political subdivision or taxing authority therein
other than a jurisdiction in which such Agent, such Fronting Bank or such
Lender (or Transferee) would not be subject to tax but for the execution and
performance 

 

74

 

of, the
receipt of payment and the enforcement of rights under this Agreement or any
other Loan Document (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as “Taxes”).  If the Loan Parties shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to the
Lenders (or any Transferee), a Fronting Bank or the Agents, (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) such Lender (or Transferee), such Fronting Bank or such
Agent (as the case may be) shall receive an amount equal to the sum it would
have received had no such deductions been made, (ii) the Loan Parties
shall make such deductions and (iii) the Loan Parties shall pay the full
amount deducted to the relevant taxing authority or other Governmental
Authority in accordance with applicable law.

 

(b)           In addition, the
Loan Parties agree to pay any current or future stamp or documentary taxes or
any other excise or property taxes, charges, assessments or similar levies that
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Document (hereinafter referred to as “Other Taxes”).

 

(c)           The Borrowers will
indemnify each Lender (or Transferee), each Fronting Bank and each Agent for
the full amount of Taxes and Other Taxes paid by such Lender (or Transferee),
such Fronting Bank or such Agent, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority.  Such indemnification shall be made within
thirty (30) days after the date any Lender (or Transferee), any Fronting Bank
or any Agent, as the case may be, makes written demand therefor.  If any Lender (or Transferee), Fronting Bank
or Agent receives a refund in respect of any Taxes or Other Taxes as to which
it has been indemnified by the Loan Parties pursuant to this Section, and in
such Lender’s (or Transferee’s), Fronting Bank’s or Agent’s opinion, such
refund amount is both reasonably identifiable and quantifiable by it without
unacceptable administrative burden, it shall promptly notify the Loan Parties
of such refund and shall, within thirty (30) days after receipt of a request by
the Loan Parties (or promptly upon receipt, if the Loan Parties have requested
application for such refund pursuant hereto), repay such refund to the Loan
Parties (to the extent of amounts that have been paid by the Loan Parties under
this Section with respect to such refund) plus interest that is received
by the Lender (or Transferee), Fronting Bank or such Agent as part of the
refund, net of all taxes and out-of-pocket expenses of such Lender (or
Transferee), Fronting Bank or such Agent and without additional interest
thereon; provided that the Loan Parties, upon the request of such Lender
(or Transferee), such Fronting Bank, or such Agent, agree to return such refund
(plus penalties, interest or other charges) to such Lender (or Transferee),
Fronting Bank or the Administrative Agent in the event such Lender (or
Transferee), such Fronting Bank, or such Agent is required to repay such
refund.  Nothing contained in this sub-Section (c) shall
interfere with the right of any Lender (or Transferee), Fronting Bank or any
Agent to arrange its affairs in any manner it thinks fit and, in particular, no
Lender (or Transferee), Fronting Bank or Agent shall be under any obligation to
claim relief for tax purposes on its corporate profits or otherwise, or to
claim such relief in priority to any other claims, reliefs, credits or
deductions available to it, or to require any Lender (or Transferee), any
Fronting Bank or any Agent to make available any 

 

75

 

of its tax
returns (or any other information relating to its taxes that it deems to be
confidential) to any Loan Party or any other Person.

 

(d)           Within thirty (30)
days after the date of any payment of Taxes or Other Taxes withheld by the Loan
Parties in respect of any payment to any Lender (or Transferee), any Fronting
Bank or any Agent, the Loan Parties will furnish to the Administrative Agent,
at its address referred to on the signature pages hereof, the original or
a certified copy of a receipt evidencing payment thereof or such other evidence
of payment as shall be satisfactory to the Agent or the Lender (or Transferee).

 

(e)           Without prejudice to
the survival of any other agreement contained herein, the agreements and
obligations contained in this Section shall survive the payment in full of
the principal of and interest on all Loans made hereunder.

 

(f)            Each Lender (and
Transferee), each Fronting Bank and each Agent shall on or prior to the Closing
Date (in the case of each Lender and Agent listed on the signature pages hereof
on the Closing Date) or on or prior to the date of the Assignment and
Acceptance pursuant to which it becomes a Lender (in the case of each other
Lender), deliver to the Loan Parties and the Administrative Agent such
certificates, documents and other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including, if a United States Person (as
such term is defined in Section 7701(a)(30) of the Code), two original copies
of (A) Internal Revenue Service Form W-9 (unless such Lender (or
Transferee), Fronting Bank or Agent is an “exempt recipient” as defined in
Treasury Regulations Section 1.6049-4(c) for which no withholding is
required) and, if not a United States Person (as such term is defined in Section 7701(a)(30)
of the Code), two original copies of (B) Internal Revenue Service Forms
W-8BEN, W-8IMY, or W-8ECI and any other certificate or statement of exemption
required by the applicable Treasury Regulations, properly completed and duly
executed by such Lender (or Transferee), Fronting Bank or such Agent to
establish that such payment is not subject to United States Federal withholding
tax under the Code.  In addition, each Lender
(and Transferee), each Fronting Bank, and each Agent agrees that from time to
time after the Closing Date or the date of the Assignment and Acceptance
pursuant to which it becomes a Lender, whenever a lapse in time or change in
circumstances renders such forms or other documents obsolete or inaccurate in
any material respect, such Lender (and Transferee), such Fronting Bank, or such
Agent shall, to the extent permitted under applicable law, promptly deliver to
the Loan Parties such replacement forms or other documents or notify the Loan Parties
of its inability to deliver any such forms or other documents.  Unless the Loan Parties and the
Administrative Agent have received forms or other documents satisfactory to
them indicating that such payments hereunder are not subject to United States Federal
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Loan Parties or the Administrative Agent shall withhold taxes
from such payments at the applicable statutory rate.

 

(g)           The Loan Parties
shall not be required to pay any additional amounts to any Lender (or
Transferee), any Fronting Bank or any Agent in respect of United States Federal
withholding tax pursuant to sub-Section(a) above if the obligation to pay
such additional amounts would not have arisen but for a failure by such Lender
(or Transferee), such Fronting Bank or such Agent to comply with the provisions
of sub-Section (f) above.

 

76

 

(h)           Any Lender (or
Transferee), Fronting Bank or Agent claiming any additional amounts payable
pursuant to this Section 2.19 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file or deliver to the
applicable Loan Party with a copy to the Administrative Agent any certificate
or document reasonably requested by the Loan Parties if the making of such
delivery or such a filing would avoid the need for or reduce the amount of any
such additional amounts that may thereafter accrue and would not, in the sole
determination of such Lender (or Transferee), such Fronting Bank or such Agent,
be otherwise materially disadvantageous to such Lender (or Transferee),
Fronting Bank or such Agent.

 

(i)            For greater
certainty, no failure to provide such information, make such filing or change
such lending office shall relieve any Loan Party of any of its obligations
hereunder.

 

Section 2.20           Certain
Fees.  The Borrowers shall pay to the
Administrative Agent, for the respective accounts of the Administrative Agent
and the Lenders, the fees set forth in (i) that certain fee letter dated January 6,
2009 among the Administrative Agent, J.P. Morgan Securities Inc. and the
Parent, (ii) that certain fee letter dated January 6, 2009 among the
Administrative Agent, the Co-Lead Arrangers, Deutsche Bank Trust Company
Americas and the Parent, and (iii) that certain participation fee letter
dated January 23, 2009 among the Administrative Agent, the Co-Lead
Arrangers, Deutsche Bank Trust Company Americas and the Parent, in each case at
the times set forth therein; provided, that if the Canadian Borrower
would otherwise pay any of the fees described in this Section 2.20
to the Administrative Agent with respect to any services provided in Canada by
the Canadian Administrative Agent or the Canadian Collateral Agent, it shall
pay such portion of the fee directly to the Canadian Administrative Agent or
the Canadian Collateral Agent, as the case may be.

 

Section 2.21           Commitment Fee.  The
applicable Borrower shall pay to the Applicable Agent on behalf of the U.S.
Revolving Lenders and the Canadian Revolving Lenders a commitment fee (the “Commitment Fee”) for the period commencing on the
Closing Date and ending on the Termination Date or the earlier date of
termination of the Commitments calculated (on the basis of the actual number of
days elapsed over a year of 360 days) at a rate equal to the Commitment Fee
Percentage on the average daily Unused Revolving Commitment during the
preceding quarter.  For the avoidance of
doubt, the Commitment Fee shall cease to accrue on any portion of the Unused
Revolving Commitment on the date such portion is converted to a U.S. Term Loan
pursuant to Section 9.23(a) or to a Canadian Term Loan
pursuant to Section 9.23(c). 
Such Commitment Fee, to the extent then accrued, shall be payable (x) monthly,
in arrears, on the last calendar day of each month, (y) on the Termination
Date and (z) as provided in Section 2.11 hereof, upon any
reduction or termination in whole or in part of the Total Revolving Commitment.

 

Section 2.22           Letter
of Credit Fees.  The applicable
Borrower shall pay with respect to each Letter of Credit (i) to the
Applicable Agent on behalf of the U.S. Revolving Lenders and the Canadian
Revolving Lenders, as applicable, a fee calculated (from the date issued on the
basis of the actual number of days elapsed over a year of 360 days) at a rate
equal to the Applicable Margin on the undrawn stated amount thereof, and (ii) to
the applicable Fronting Bank such Fronting Bank’s customary fees for issuance,
amendments and processing referred to in Section 2.4.  In addition, the applicable Borrower shall
pay each Fronting Bank for its account a fronting 

 

77

 

fee in respect of each Letter of
Credit issued by such Fronting Bank, for the period from the date issued to and
including the date of termination of such Letter of Credit, computed at a rate
per annum equal to 0.25%, or, if such Fronting Bank is a bank other than JPMCB,
as separately agreed by the Borrowers and such Fronting Bank.  Accrued fees described in clause (i) of
the first sentence of this paragraph in respect of each Letter of Credit shall
be due and payable monthly in arrears on the last calendar day of each month
and on the Termination Date, or such earlier date as the Total Revolving
Commitment is terminated.  Accrued fees
described in clause (ii) of the first sentence of this paragraph in
respect of each Letter of Credit shall be payable at times to be determined by
the Fronting Banks, the Borrowers and the Administrative Agent.

 

Section 2.23           Nature of
Fees. All Fees shall be paid on the dates due, in immediately available
funds, to the Applicable Agent for the respective accounts of the Applicable
Agent and the Lenders, as provided herein and in the letters described in Section 2.20.  Once paid, none of the Fees shall be
refundable under any circumstances.

 

Section 2.24           Priority
and Liens

 

(a)           Each of the Loan
Parties hereby covenants and agrees that the Secured Obligations of the Loan
Parties hereunder and under the Loan Documents, the U.S. Guaranteed Obligations
and the Canadian Guaranteed Obligations of each of the Loan Parties as follows:

 

(i)            With
respect to the Secured Obligations of the U.S. Loan Parties and the Canadian
Borrower:

 

(A)                              in
the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code,
such Secured Obligations shall at all times constitute an allowed Superpriority
Claim and be payable from and have recourse to all pre-petition and
post-petition property of the estates of the U.S. Loan Parties and the Canadian
Borrower and all proceeds thereof (including, upon entry of the Final Order,
any proceeds of Avoidance Actions), and which Superpriority Claim shall be
senior to the Superpriority Claim granted to the Pre-Petition Agent and the
Pre-Petition Secured Lenders pursuant to Section 2.24(d) below;

 

(B)                                in
the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code,
such Secured Obligations shall at all times be secured by a perfected first
priority Lien on all unencumbered property of the U.S. Loan Parties and the
Canadian Borrower (including, upon entry of the Final Order, any proceeds of
Avoidance Actions) and on all cash maintained in any Collateral Account and any
investments of the funds contained therein, provided that amounts in the
Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

 

78

 

(C)                                in
the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code,
such Secured Obligations shall be secured by a perfected junior Lien upon all
property of the U.S. Loan Parties and the Canadian Borrower that is subject to
valid and perfected Liens in existence on the Filing Date or that is subject to
valid Liens in existence on the Filing Date that are perfected subsequent to
the Filing Date as permitted by Section 546(b) of the Bankruptcy Code
(other than certain property that is subject to the existing Liens that secure
obligations under the Pre-Petition Credit Agreement, which liens shall be
primed by the liens to be granted to the Administrative Agent described in the
following clause (D));

 

(D)                               in
the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code,
such Secured Obligations shall be secured by a perfected first priority, senior
priming Lien on all of the property of the U.S. Loan Parties and the Canadian
Borrower (including, without limitation, cash, inventory, receivables, rights
under license agreements, property, plant and equipment and the residual interest
of the U.S. Loan Parties and the Canadian Borrower in any Receivables
Securitization Programs) that is subject to the existing liens which secure (1) the
obligations of the Loan Parties under or in connection with the Pre-Petition
Credit Agreement, and (2) other Liens, obligations or indebtedness of the
Loan Parties junior to the Pre-Petition Credit Agreement (collectively, the “Primed Liens”), which Primed Liens
shall be primed by and made subject and subordinate to the perfected first
priority senior priming Liens to be granted to the Administrative Agent, which
senior priming Liens in favor of the Administrative Agent shall also prime any
Liens granted after the commencement of the Cases to provide adequate
protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed
Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely
to the extent such Non-Primed Liens secure claims in an aggregate amount less
than or equal to US$60,000,000; and

 

(E)                                 in
the Canadian Cases, pursuant to an order of the Canadian Court, in respect of
the Secured Obligations of the Canadian Borrower, such Secured Obligations will
be secured by a superpriority charge and senior priming security interest (“CCAA DIP Lenders’ Charge”) over all of
the present and future assets of the Canadian Borrower 

 

79

 

with priority over all existing
liens and security, including the Primed Liens; and

 

(ii)           With
respect to the Canadian Secured Obligations of the Canadian Loan Parties:

 

(A)                              in
the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code,
such Secured Obligations shall at all times constitute an allowed Superpriority
Claim and be payable from and have recourse to all pre-petition and post-petition
property of the estates of the Canadian Loan Parties and all proceeds thereof
(including, upon entry of the Final Order, any proceeds of Avoidance Actions),
and which Superpriority Claim shall be senior to the Superpriority Claim
granted to the Pre-Petition Agent and the Pre-Petition Secured Lenders pursuant
to Section 2.24(d) below;

 

(B)                                in
the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code,
such Secured Obligations shall at all times be secured by a perfected first
priority Lien on all unencumbered property of the Canadian Loan Parties
(including, upon entry of the Final Order, any proceeds of Avoidance Actions)
and on all cash maintained in any Collateral Account and any investments of the
funds contained therein, provided that amounts in the Collateral Accounts shall
not be subject to the Carve-Out or the CCAA Charges;

 

(C)                                in
the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code,
such Secured Obligations shall be secured by a perfected junior Lien upon all
property of the Canadian Loan Parties that is subject to valid and perfected
Liens in existence on the Filing Date or that is subject to valid Liens in
existence on the Filing Date that are perfected subsequent to the Filing Date
as permitted by Section 546(b) of the Bankruptcy Code (other than
certain property that is subject to the existing Liens that secure obligations
under the Pre-Petition Credit Agreement, which liens shall be primed by the
liens to be granted to the Administrative Agent described in the following
clause (D));

 

(D)                               in
the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code,
such Secured Obligations shall be secured by a perfected first priority, senior
priming Lien on all of the property of the Canadian Loan Parties (including, 

 

80

 

without limitation, cash,
inventory, receivables, rights under license agreements, property, plant and
equipment and the residual interest of the Canadian Loan Parties in any
Receivables Securitization Programs) that is subject to the Primed Liens, which
Primed Liens shall be primed by and made subject and subordinate to the
perfected first priority senior priming Liens to be granted to the
Administrative Agent, which senior priming Liens in favor of the Administrative
Agent shall also prime any Liens granted after the commencement of the Cases to
provide adequate protection Liens in respect of any of the Primed Liens, but
shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other
Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an
aggregate amount less than or equal to US$60,000,000; and

 

(E)                                 in
the Canadian Cases, pursuant to an order of the Canadian Court, such Secured
Obligations will be secured by the CCAA DIP Lenders’ Charge over all of the
present and future assets of the Canadian Loan Parties with priority over all
existing liens and security, including the Primed Liens;

 

subject in
each case only to the following:

 

(x)            with
respect to the Cases and assets of the U.S. Loan Parties, (x) in the event
of the occurrence and during the continuance of an Event of Default or an event
that would constitute an Event of Default with the giving of notice or lapse of
time or both (a “Default”),
the payment of allowed and unpaid professional fees and disbursements incurred
by (A) the U.S. Loan Parties and (B) any statutory committees
appointed in the Cases of the U.S. Loan Parties, in an aggregate amount of
items (A) and (B) not in excess of the lesser of (I) US$4,000,000
(plus all unpaid professional fees and disbursements reported on the Borrowing
Base Certificate delivered immediately prior to the occurrence of such Default
or Event of Default, to the extent such fees and expense are subsequently
allowed by the Bankruptcy Court), and (II) US$6,500,000, and (y) the
payment of fees pursuant to 28 U.S.C. § 1930 and to the Clerk of the Bankruptcy
Court ((x) and (y), collectively, the “Carve-Out”);

 

(y)           the
CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the
Canadian Cases will be subject to the court ordered administration charge in an
aggregate amount not in excess of US$1,000,000 (the “Administration
Charge”) for the 

 

81

 

payment of (a) allowed and
unpaid professional fees and disbursements incurred by professionals retained
by the Canadian Loan Parties and (b) allowed and unpaid professional fees
and disbursements of the monitor in the Canadian Cases including allowed and
unpaid legal fees and expenses of its counsel (and including any allowed and
unpaid professional fees and disbursements incurred by the parties referred to
in (a) and (b), prior to the occurrence of such Event of Default); and

 

(z)            the
CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the
Canadian Cases will also be subject to the Canadian Court ordered directors
charge in an amount not exceeding US$8,600,000 (the “Directors
Charge”), securing the Canadian Loan Parties’ obligation to
indemnify the officers and directors of the Canadian Loan Parties for personal
liability which may arise from non-payment by the Canadian Loan Parties of the
following (which shall be separately identified on the most recent Borrowing
Base Certificate): (a) all outstanding and future wages, salaries,
employee and pension benefits, vacation pay, bonuses and expenses payable on or
after the Filing Date, in each case incurred in the ordinary course of business
and consistent with existing compensation policies and arrangements; (b) any
statutory deemed trust amounts in favour of the Crown in right of Canada or of
any Province thereof or any other taxation authority which are required to be
deducted from employees’ wages, including, without limitation, amounts in
respect of (i) employment insurance, (ii) Canada Pension Plan, (iii) Quebec
Pension Plan, and (iv) income taxes; (c) all goods and services or
other applicable sales taxes required to be remitted by the Canadian Loan
Parties in connection with the sale of goods and services by the Canadian Loan
Parties, but only where such sales taxes are accrued or collected after the
Filing Date, or where such sales taxes were accrued or collected prior to the
Filing Date but are not required to be remitted until on or after the Filing
Date; and (d) any amount payable to the Crown in right of Canada or of any
Province thereof or any political subdivision thereof or any other taxation
authority in respect of municipal realty, municipal business or other taxes,
assessments or levies of any nature or kind which are entitled at law to be
paid in priority to claims of secured creditors and which are attributable to
or in respect of the carrying on of the business by the Canadian Loan Parties;

 

provided
that no portion of the Carve-Out shall be utilized for the payment of
professional fees and disbursements incurred in connection with any challenge
to the amount, extent, priority, validity, perfection or enforcement of (A) the
Indebtedness of the Loan Parties owed to the parties primed by the priming
Liens or to the collateral securing such Indebtedness or any other 

 

82

 

action against
such parties or (B) the Secured Obligations.  Amounts in the Collateral Accounts shall not
be subject to the Carve-Out.  By execution
hereof, the Loan Parties hereby consent to the priming Liens referenced in
clauses (i)(D) and (ii)(D) above. 
Notwithstanding the foregoing, so long as no Default or Event of Default
shall have occurred and be continuing, the Loan Parties shall be permitted to
pay compensation and reimbursement of expenses allowed and payable under 11
U.S.C. §§ 328, 330 and 331, or as allowed and payable pursuant to orders of the
Canadian Court, as the same may be due and payable, and any compensation and
expenses previously paid, or accrued but unpaid, prior to the occurrence of
such Default or Event of Default shall not reduce the Carve-Out or the
Administration Charge.

 

(b)           As a component of
adequate protection, the administrative agents under the Pre-Petition Credit
Agreement (collectively, the “Pre-Petition
Agent”) shall receive from the applicable Borrowers (i) following
the Closing Date, immediate cash payment of all accrued and unpaid interest
(including any pre-petition interest) on the obligations of such Borrower under
the Pre-Petition Credit Agreement (the “Pre-Petition
Debt”) and letter of credit fees at the non-default contract
rate applicable on the Filing Date as provided for in the Pre-Petition Credit
Agreement, and all other accrued and unpaid fees and disbursements (including,
but not limited to, fees and expenses owed to the Pre-Petition Agent and
incurred prior to the Filing Date), (ii) current cash payments of all fees
and expenses owing by such Borrower payable to the Pre-Petition Agent under the
Pre-Petition Credit Agreement, including, but not limited to, the reasonable
fees and disbursements of counsel, financial and other consultants for the
Pre-Petition Agent (including, but not limited to, such fees and disbursements
incurred prior to the Filing Date), and (iii) current cash payments of all
accrued but unpaid interest on the Pre-Petition Debt owing by such Borrower,
and letter of credit and other fees, in each case at the non-default contract
rate applicable on the Filing Date (including LIBOR pricing options) under the
Pre-Petition Credit Agreement, provided that, without prejudice to the rights
of any other party to contest such assertion, the lenders under the
Pre-Petition Credit Agreement (the “Pre-Petition
Secured Lenders”) reserve their rights to assert claims for the
payment of additional interest calculated at any other applicable rate of
interest (including, without limitation, default rates), or on any other basis,
provided for in the Pre-Petition Credit Agreement.

 

(c)           As a further component
of adequate protection, to the extent of the diminution in the value of
collateral on the Petition Date securing the Pre-Petition Debt, including use
of cash collateral, the Pre-Petition Agent and the Pre-Petition Secured Lenders
shall be granted junior replacement security interests in and Liens upon all of
the property of the U.S. Loan Parties (including, upon entry of the Final
Order, any proceeds of Avoidance Actions), which security interests and Liens
shall be subject to the Carve-Out and shall be junior to the security interest
in and Liens upon the property of the U.S. Loan Parties granted under Section 364(d)(1) of
the Bankruptcy Code for the benefit of the Administrative Agent and the
Lenders.

 

(d)           As a further
component of adequate protection, the Pre-Petition Agent and the Pre-Petition
Secured Lenders shall be granted, subject to the payment of the Carve-Out, a
Superpriority Claim in an amount equal to the diminution in the value of
collateral on the Filing Date securing the indebtedness under the Pre-Petition
Credit Agreement, as provided for in section 507(b) of the Bankruptcy
Code, immediately junior to the claims under section 364(c)(1) of the
Bankruptcy Code held by the Administrative Agent and the Lenders and payable
from all 

 

83

 

property of
the U.S. Loan Parties; provided, however, that the Pre-Petition
Agent and the Pre-Petition Secured Lenders shall not receive or retain any
payments, property or other amounts in respect of the Superpriority Claims
under section 507(b) of the Bankruptcy Code unless and until payment in
full of all Secured Obligations of the U.S. Loan Parties.

 

(e)           Subject to the
priorities set forth in subsection (a) above and to the Carve-Out, in the
case of the U.S. Loan Parties, or the Administration Charge, in the case of the
Canadian Loan Parties, as to all real property the title to which is held by a
Loan Party, or the possession of which is held by a Loan Party pursuant to
leasehold interest, the Loan Parties hereby assign and convey as security,
grant a security interest in, hypothecate, mortgage, pledge and set over unto
each Applicable Agent, on behalf of the Secured Parties all of the right, title
and interest of the Loan Parties, in all of such owned real property and in all
such leasehold interests, together in each case with all of the right, title
and interest of the Loan Parties in and to all buildings, improvements, and
fixtures related thereto, any lease or sublease thereof, all general
intangibles relating thereto and all proceeds thereof.  Each Loan Party acknowledges that, pursuant
to the Orders, the Liens in favor of the Applicable Agents on behalf of the
Secured Parties in all of such real property and leasehold instruments of the
Loan Parties shall be perfected without the recordation of any instruments of
mortgage or assignment.  The Loan Parties
further agree that, upon the request of the Administrative Agent, in the
exercise of its business judgment, the Loan Parties shall enter into separate fee
mortgages in recordable form with respect to such properties and other
Collateral Documents, each on terms satisfactory to the Administrative Agent; provided,
however, that no U.S. Loan Party shall be required to pledge in excess
of 65% of the capital stock of its direct Foreign Subsidiaries (other than
capital stock of the Canadian Borrower) or any of the capital stock of any
indirect Foreign Subsidiaries.

 

(f)            To the extent any
Loan Party makes aggregate payments to the Lenders in excess of the aggregate
amount of all Loans received by such Loan Party after the commencement of the
Cases, then such Loan Party, after the payment in full of all Secured
Obligations and the termination of the Revolving Commitment, shall be entitled
to a claim under Section 364(c)(1) of the Bankruptcy Code or the
Initial Order, as applicable, against each other Loan Party, in such amount as
may be determined by the Bankruptcy Court or the Canadian Court taking into
account the relative benefits received by each such person, and such claims
shall be deemed to be subordinate and junior in all respects to the
superpriority claims and charges of the Lenders and the superpriority claims
granted as adequate protection to the Primed Parties.

 

Section 2.25           Use of
Cash Collateral.  Notwithstanding
anything to the contrary contained herein, neither the U.S. Borrower nor the
Canadian Borrower shall be permitted to request a Borrowing under Section 2.7
unless the Loan Parties shall at that time have the use of substantially all
cash collateral subject to the Orders for the purposes described in Section 3.10.

 

Section 2.26           Right of
Set-Off.  Subject to the provisions
of Section 7.1, upon the occurrence and during the continuance of
any Event of Default, each Agent and each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law and without
further order of or application to the Bankruptcy Court or the Canadian Court,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other Indebtedness at any time owing
by each such Agent and each such Lender to 

 

84

 

or for the credit or the account of any Loan
Party against any and all of the Secured Obligations of such Loan Party now or
hereafter existing under the Loan Documents, irrespective of whether or not
such Agent or such Lender shall have made any demand under any Loan Document
and although such obligations may not have been accelerated.  Each Lender and each Agent agrees promptly to
notify the Loan Parties after any such set-off and application made by such
Lender or by such Agent, as the case may be, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.  The rights of each Lender
and each Agent under this Section are in addition to other rights and
remedies which such Lender and such Agent may have upon the occurrence and
during the continuance of any Event of Default.

 

Section 2.27           Security
Interest in Collateral Accounts.  The
Loan Parties, pursuant to Section 364(c)(2) of the Bankruptcy Code,
hereby assign and pledge to the Applicable Agent, for the ratable benefit of
the Secured Parties, and hereby grant to the Applicable Agent, for the ratable
benefit of the Secured Parties, a first priority security interest, senior to
all other Liens, if any, in all of the Loan Parties’ right, title and interest
in and to the Collateral Accounts and any investment of the funds contained
therein.  Cash held in the Letter of
Credit Account or the Canadian Letter of Credit Account shall not be available
for use by the Loan Parties, whether pursuant to Section 363 of the
Bankruptcy Code or otherwise.

 

Section 2.28           Payment
of Obligations.  Subject to the
provisions of Section 7.1, upon the maturity (whether by
acceleration or otherwise) of any of the Secured Obligations under this
Agreement or any other Loan Documents of the Loan Parties, the Lenders shall be
entitled to immediate payment of such Secured Obligations without further
application to or order of the Bankruptcy Court or the Canadian Court.  The Borrowers and the U.S. Loan Parties shall
be jointly and severally liable for payment of all Secured Obligations under
this Agreement or any of the other Loan Documents.  The U.S. Loan Parties and the Canadian Loan
Parties shall be jointly and severally liable for payment of all Canadian
Guaranteed Obligations under this Agreement or any of the other Loan Documents.

 

Section 2.29           No
Discharge; Survival of Claims.  Each
of the Loan Parties agrees that (i) its obligations hereunder shall not be
discharged by the entry of an order (w) confirming a Reorganization Plan
in any of the Cases under the Bankruptcy Code or under the CCAA, (x) converting
any of the U.S. Cases to a case under Chapter 7 of the Bankruptcy Code or any
of the Canadian Cases to similar liquidation proceeding in the Canadian Cases, (y) dismissing
or terminating any of the Cases, or (z) appointing any trustee in
bankruptcy, interim receiver, receiver or receiver-manager or similar officer
or agent with respect to the Canadian Loan Parties (and each of the Loan
Parties, pursuant to Section 1141(d)(4) of the Bankruptcy Code,
hereby waives any such discharge) and (ii) the Superpriority Claims and
the CCAA DIP Lenders’ Charge granted to the Agents and the Lenders pursuant to
the Orders and described in Section 2.24 shall not be affected in
any manner by the entry of an order confirming a Reorganization Plan.

 

Section 2.30           Fifteen
Month Facility Extension Option.  The
Borrowers may extend the Maturity Date from January 28, 2010 to April 28,
2010 (the “Fifteen Month Facility Extension Option”)
subject to, and the Maturity Date shall be so extended upon satisfaction of,
the following conditions precedent:

 

85

 

(i)            the
Borrowers shall provide written notice to the Administrative Agent at least
thirty (30) days prior to January 28, 2010 of their intention to exercise
the Fifteen Month Facility Extension Option;

 

(ii)           the
Borrowers shall pay a fee to the Administrative Agent on or before the initial
Maturity Date for the account of the Lenders equal to 1.0% of the outstanding
principal balance of the Term Loans plus the then aggregate Commitments;

 

(iii)          the Loan Parties shall have filed with the
Bankruptcy Court and the Canadian Court a Reorganization Plan providing for the
full repayment of the Loans in cash upon consummation thereof;

 

(iv)          as
of the initial Maturity Date, (a) Excess Availability plus (b) the
Loan Parties’ Available Cash shall be at least US$150,000,000 of which Excess
Availability is not less than US$100,000,000 (taking into account the reduction
in the U.S. PP&E Component and Canadian PP&E Component to be effective
on January 28, 2010); and

 

(v)           no
Default or Event of Default shall have occurred and be continuing as of the
initial Maturity Date.

 

The
Administrative Agent will notify the Borrowers and the Lenders upon the
effectiveness of the Fifteen Month Facility Extension Option.

 

Section 2.31           Eighteen
Month Facility Extension Option. 
Following exercise of the Fifteen Month Facility Extension Option, the
Borrowers may extend the Maturity Date from April 28, 2010 to July 28,
2010 (the “Eighteen Month Facility Extension Option”)
subject to, and the Maturity Date shall be so extended upon satisfaction of,
the following conditions precedent:

 

(i)            the
Borrowers shall provide written notice to the Administrative Agent at least
thirty (30) days prior to April 28, 2010 of their intention to exercise
the Eighteen Month Facility Extension Option;

 

(ii)           the
Borrowers shall pay a fee to the Administrative Agent on or before April 28,
2010 for the account of the Lenders equal to 1.0% of the outstanding principal
balance of the Term Loans plus the then aggregate Commitments;

 

(iii)          Required
Lenders shall have approved the extension of the Maturity Date to July 28,
2010;

 

(iv)          the
Loan Parties shall not have withdrawn from the Bankruptcy Court or the Canadian
Court a Reorganization Plan and confirmation or approval of such Reorganization
Plan shall not 

 

86

 

have been denied by the
Bankruptcy Court or the Canadian Court, as applicable, at any time prior to April 28,
2010;

 

(v)           as
of April 28, 2010, (a) Excess Availability plus (b) the
Loan Parties’ Available Cash shall be at least US$150,000,000 of which Excess
Availability is not less than US$100,000,000 (taking into account the reduction
in the U.S. PP&E Component and Canadian PP&E Component to be effective
on April 28, 2010); and

 

(vi)          no
Default or Event of Default shall have occurred and be continuing as of April 28,
2010.

 

The
Administrative Agent will notify the Borrowers and the Lenders upon the
effectiveness of the Eighteen Month Facility Extension Option.

 

Section 2.32           Mitigation
Obligations; Replacement of Lenders.

 

(a)           If any Lender
requests compensation under Section 2.16, or if the Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.19,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.16 or Section 2.19,
as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender.  The Borrowers hereby
agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

 

(b)           If any Lender
requests compensation under Section 2.16, or if the Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender) pursuant to Section 2.19,
or if any Lender becomes a Defaulting Lender, then the Borrowers may, at their
sole expense and effort, upon notice to such Lender and the Applicable Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Section 9.3), all
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrowers shall
have received the prior written consent of the Applicable Agent (and if a
Revolving Commitment is being assigned, the Fronting Banks), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in Letters of Credit, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.16
or payments required to be made pursuant to Section 2.19, such
assignment will result in a reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver

 

87

 

by such Lender
or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.

 

Section 2.33                                Defaulting
Lenders.  Notwithstanding any
provision of this Agreement to the contrary, if any Lender becomes a Defaulting
Lender, then the following provisions shall apply for so long as such Lender is
a Defaulting Lender:

 

(a)           fees shall cease to
accrue on the unfunded portion of the Revolving Commitment of such Defaulting
Lender pursuant to Section 2.21;

 

(b)           the Commitment and
Credit Exposure of such Defaulting Lender shall not be included in determining
whether all Lenders or the Required Lenders have taken or may take any action
hereunder (including any consent to any amendment or waiver pursuant to Section 9.10),
provided that any waiver, amendment or modification requiring the consent of
all Lenders or each affected Lender which affects such Defaulting Lender
differently than other affected Lenders shall require the consent of such
Defaulting Lender;

 

(c)           if any LC Exposure
exists at the time a Lender becomes a Defaulting Lender then:

 

(i)                                     all
or any part of such LC Exposure which pertains to the U.S. Letter of Credit
Outstandings shall be reallocated among the non-Defaulting Lenders having U.S.
Revolving Commitments in accordance with their respective Applicable
Percentages but only to the extent (x) the sum of all non-Defaulting
Lenders’ U.S. Revolving Loans plus such Defaulting Lender’s LC Exposure in
respect of U.S. Letter of Credit Outstandings does not exceed the total of all
non-Defaulting Lenders’ U.S. Revolving Commitments and (y) the conditions
set forth in Section 4.2 are satisfied at such time;

 

(ii)                                  all
or any part of such LC Exposure which pertains to the Canadian Letter of Credit
Outstandings shall be reallocated among the non-Defaulting Lenders having
Canadian Revolving Commitments in accordance with their respective Applicable
Percentages but only to the extent (x) the sum of all non-Defaulting
Lenders’ Canadian Revolving Loans plus such Defaulting Lender’s LC Exposure in
respect of Canadian Letter of Credit Outstandings does not exceed the total of
all non-Defaulting Lenders’ Canadian Revolving Commitments and (y) the
conditions set forth in Section 4.2 are satisfied at such time

 

(iii)                               if
the reallocation described in clauses (i) or (ii) above cannot, or
can only partially, be effected, neither the Fronting Banks nor any Lender
shall have any obligation to issue new Letters of Credit under this Agreement
unless the Borrowers shall have cash collateralized such Defaulting Lender’s LC
Exposure (after giving 

 

88

 

effect to any partial
reallocation pursuant to clauses (i) and (ii) above) in accordance
with the procedures set forth in Section 2.4(c) for so long as
such LC Exposure is outstanding;

 

(iv)                              if
the Borrowers cash collateralize any portion of such Defaulting Lender’s LC
Exposure pursuant to Section 2.33(c), the Borrowers shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.21
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

 

(v)                                 if
the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to Section 2.33(c),
then the fees payable to the Lenders pursuant to Section 2.21 shall
be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages; or

 

(vi)                              if
any Defaulting Lender’s LC Exposure is neither cash collateralized nor
reallocated pursuant to Section 2.33(c), then, without prejudice to
any rights or remedies of any Fronting Bank or any Lender hereunder, all letter
of credit fees payable under Section 2.22 with respect to such
Defaulting Lender’s LC Exposure shall be payable to such Fronting Bank until such
LC Exposure is cash collateralized or reallocated;

 

(d)           so long as any
Lender is a Defaulting Lender, no Fronting Bank shall be required to issue,
amend or increase any Letter of Credit, unless it is satisfied that the related
exposure will be 100% covered by the Commitments of the non-Defaulting Lenders
or cash collateral will be provided by the Borrowers in accordance with Section 2.33(c),
and participating interests in any such newly issued or increased Letter of
Credit shall be allocated among non-Defaulting Lenders in a manner consistent
with Section 2.33(c)(i) (and Defaulting Lenders shall not
participate therein); and

 

(e)           any amount payable
to such Defaulting Lender hereunder (whether on account of principal, interest,
fees or otherwise and including any amount that would otherwise be payable to
such Defaulting Lender pursuant to Section 2.26 but excluding Section 2.32(b))
shall, in lieu of being distributed to such Defaulting Lender, be retained by
the Applicable Agent in a segregated account and, subject to any applicable
requirements of law, be applied at such time or times as may be determined by
the Applicable Agent (i) first, to the payment of any amounts owing
by such Defaulting Lender to the Applicable Agent hereunder, (ii) second,
pro rata, to the payment of any amounts owing by such Defaulting Lender to any
Fronting Bank hereunder, (iii) third, if so determined by the
Applicable Agent or requested by a Fronting Bank, to be held in such account as
cash collateral for future funding obligations of the Defaulting Lender of any
participating interest in any Letter of Credit, (iv) fourth, to the
funding of any Loan in respect of which such Defaulting Lender has failed to
fund its portion thereof as required by this Agreement, as determined by the
Applicable Agent, (v) fifth, if so determined by the Applicable
Agent and the Borrowers, held in such account as cash collateral for future
funding obligations of the Defaulting Lender of any Loans under this Agreement,
(vi) sixth, to the 

 

89

 

payment of any
amounts owing to the Lenders or a Fronting Bank as a result of any judgment of
a court of competent jurisdiction obtained by any Lender or such Fronting Bank
against such Defaulting Lender as a result of such Defaulting Lender’s breach
of its obligations under this Agreement, (vii) seventh, to the
payment of any amounts owing to the Borrowers as a result of any judgment of a
court of competent jurisdiction obtained by the Borrowers against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under
this Agreement, and (viii) eighth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if such
payment is (x) a prepayment of the principal amount of any Loans or
reimbursement obligations in respect of Letter of Credit disbursements for
which a Defaulting Lender has funded its participation obligations and (y) made
at a time when the conditions set forth in Section 4.2 are satisfied,
such payment shall be applied solely to prepay the Loans of, and reimbursement
obligations owed to, all non-Defaulting Lenders pro rata prior to being applied
to the prepayment of any Loans, or reimbursement obligations owed to, any
Defaulting Lender.

 

In the event that the
Applicable Agent, the Borrowers and each Fronting Bank each agrees that a
Defaulting Lender has adequately remedied all matters that caused such Lender
to be a Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted
to reflect the inclusion of such Lender’s Revolving Commitment and on such date
such Lender shall purchase at par such of the Loans of the other Lenders as the
Applicable Agent shall determine may be necessary in order for such Lender to
hold such Loans in accordance with its Applicable Percentage.

 

ARTICLE 3.      REPRESENTATIONS
AND WARRANTIES

 

In order to induce the Lenders to make Loans and issue or participate
in Letters of Credit hereunder, the Loan Parties, jointly and severally,
represent and warrant as follows:

 

Section 3.1                                      Organization
and Authority.  Each of the Loan
Parties and its respective Subsidiaries (i) is duly organized, validly
existing and in good standing under the law of its jurisdiction of
organization; (ii) is duly qualified to do business and in good standing
in each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect; (iii) subject to the entry of the Orders (as applicable),
has the requisite power and authority to effect the transactions contemplated
hereby, and by the other Loan Documents to which it is a party, and (iv) subject
to the entry by the Bankruptcy Court or the Canadian Court, as applicable, of
the Orders, has all requisite power and authority and the legal right to own
and operate its properties, and to conduct its business as now or currently
proposed to be conducted.

 

Section 3.2                                      Due
Execution.  Upon the entry by the
Bankruptcy Court and the Canadian Court, as applicable, of the Orders, the
execution, delivery and performance by each of the Loan Parties of each of the
Loan Documents to which it is a party, including, without limitation, the grant
of the Liens by each of the Loan Parties hereunder and under the Collateral
Documents, (i) are within the respective powers of each of the Loan
Parties, have been duly authorized by all necessary action, including the
consent of shareholders, partners or members, where required, and do not (A) contravene
the Organizational Documents of any of the Loan Parties, (B) violate any
Requirement of Law that could reasonably be expected to result in a Material
Adverse Effect, (C) conflict with or result in a breach of, or constitute
a default under, 

 

90

 

any indenture, mortgage or deed of trust
entered into after the Filing Date or any material lease, agreement or other
instrument entered into after the Filing Date binding on the Loan Parties or
any of their respective properties, or (D) result in or require the
creation or imposition of any Lien under any document described in clause (C) upon
any of the property of any of the Loan Parties other than Liens granted
pursuant to this Agreement and the Collateral Documents; and (ii) do not
require the consent, authorization by or approval of or notice to or filing or
registration with any Governmental Authority other than the entry of the
Interim Order (or the Final Order, as applicable).  Except for the entry of the Interim Order (or
the Final Order, as applicable), no authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority or regulatory body
is required for the perfection of the security interests or the exercise by the
Agents or the Lenders of their respective rights and remedies under the Loan
Documents.  Upon the entry by the
Bankruptcy Court and the Canadian Court, as applicable, of the Orders, this
Agreement shall have been duly executed and delivered by each of the Loan
Parties.  Upon the entry by the
Bankruptcy Court and the Canadian Court, as applicable, of the Orders, this
Agreement, and each of the other Loan Documents to which the Loan Parties are
or will be a party, when delivered hereunder or thereunder, will be, a legal,
valid and binding obligation of each Loan Party, enforceable against the Loan Parties
in accordance with its terms and the Orders subject to general principles of
equity.

 

Section 3.3                                      Statements
Made.  The information that has been
delivered in writing by any of the Loan Parties to the Agents, the Bankruptcy
Court or the Canadian Court (other than projections and information of a
general economic nature) taken as a whole, as of the date such information was
so furnished, does not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, taken as a whole, not
materially misleading; and, to the extent that any such information constitutes
projections, such projections were prepared in good faith on the basis of
assumptions, methods, data, tests and information believed by the Loan Parties
to be reasonable at the time such projections were furnished.  All representations and warranties, as made
or deemed made as of a particular time, shall survive execution of each of the
Loan Documents and the making of each Loan or issuance of each Letter of
Credit, and may be relied upon by the Agents and the Lenders as being true and
correct as of the date when made or deemed made until all of the Loan Parties’
Obligations are fully and indefeasibly paid.

 

Section 3.4                                      Financial
Statements.  The Loan Parties have
furnished the Lenders with copies of the audited consolidated financial
statements and schedules of the Parent and its consolidated Subsidiaries for
the fiscal year ended December 31, 2007 and the unaudited financial
statements for each succeeding fiscal quarter thereafter through and including
the fiscal quarter ending September 30, 2008.  Such financial statements present fairly in
all material respects the financial condition and results of operations of the
Parent and its consolidated Subsidiaries on a consolidated basis as of such
dates and for such periods, except, in the case of unaudited financial
statements, for the absence of footnote disclosure and for normal year-end
audit adjustments; such balance sheets and the notes thereto disclose all
liabilities, direct or contingent, of the Loan Parties and their Subsidiaries
as of the dates thereof required to be disclosed by GAAP and such financial
statements were prepared in a manner consistent with GAAP.  Since the fiscal year ended December 31,
2007, and the fiscal quarter ended September 30, 2008, there has been no
event or condition that has had, or could reasonably be expected to 

 

91

 

have, a Material Adverse Effect other than
those which customarily occur as a result of events and circumstances leading
up to and following the commencement the Cases.

 

Section 3.5                                      Ownership.  Each of the Persons listed on Schedule 3.5
is a direct or indirect Subsidiary of the Parent and Schedule 3.5 correctly sets
forth the ownership interest of each of the Loan Parties in their respective
Subsidiaries, in each case as of the Closing Date, and the jurisdiction of
organization of each Subsidiary.  None of
the Loan Parties owns any other Subsidiaries, whether directly or indirectly,
other than as set forth on Schedule 3.5, as
may be updated by the Loan Parties from time to time.  The Loan Parties have valid title to all
assets included from time to time in the Canadian PP&E Component and the
U.S. PP&E Component and to all other material properties and possessions
under lease.

 

Section 3.6                                      Liens.  There are no Liens of any nature whatsoever
on any assets of any of the Loan Parties or their Subsidiaries other than
Permitted Liens.  Except as set forth on Schedule
3.6, none of the Loan Parties is a party to any contract, agreement, lease
or instrument the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of a Lien on any
assets of any Loan Party or any of their Subsidiaries or otherwise result in a
violation of this Agreement other than the Liens granted to the Applicable
Agents (for the benefit of the Secured Parties) as provided for in this
Agreement.  The aggregate amount of
claims secured by the Non-Primed Liens, other than the Calpine Debt, does not
exceed US$60,000,000.

 

Section 3.7                                      Compliance
with Law.

 

(a)           The operations of
the Loan Parties and their Subsidiaries comply in all material respects with
all Environmental Laws; (i) except as set forth on Schedule 3.7, to
the knowledge of the Loan Parties, none of the operations of the Loan Parties
or their Subsidiaries is the subject of any Governmental Authority investigation
evaluating whether any violation of Environmental Laws has occurred or remedial
action involving a material expenditure by the Loan Parties is needed to
respond to the presence or release of any Hazardous Waste or Hazardous
Substance in or into the environment which, in each case, would be reasonably
likely to result in a Material Adverse Effect; and (ii) the Loan Parties
and their Subsidiaries do not have any contingent liability in connection with
any violation of Environmental Laws or release of any Hazardous Waste or
Hazardous Substance into the environment that is reasonably likely to result in
a Material Adverse Effect.

 

(b)           None of the Loan
Parties or their Subsidiaries is in violation of any law, rule or
regulation, or in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority the violation of which, or a default with
respect to which, would have a Material Adverse Effect.

 

Section 3.8                                      Insurance.  All policies of insurance of any kind or
nature owned by or issued to the Loan Parties and their Subsidiaries,
including, without limitation, policies of life, fire, theft, product
liability, public liability, property damage, other casualty, employee
fidelity, workers’ compensation, employee health and welfare, title, property
and liability insurance, are in full force and effect and are of a nature and
provide such coverage as (i) is customarily carried 

 

92

 

by companies of the size and character of the
Loan Parties and their Subsidiaries or (ii) was carried by the Loan
Parties and their Subsidiaries prior to commencement of the Cases.

 

Section 3.9                                      The
Orders.  On the date of the making of
the initial Loans or the issuance of the initial Letters of Credit hereunder,
whichever first occurs, the Interim Order will have been entered and will not
have been stayed, amended, vacated, reversed or rescinded except as approved by
the Administrative Agent, in its exclusive discretion in writing.  On the date of the making of any Loan or the
issuance of any Letter of Credit, the Interim Order (or the Final Order, as
applicable), shall have been entered and shall not have been amended, stayed,
vacated or rescinded except as approved in writing by the Administrative Agent,
in its exclusive discretion.  Upon the
maturity (whether by the acceleration or otherwise) of any of the obligations
of the Loan Parties hereunder and under the other Loan Documents, the Lenders
shall, subject to the provisions of Section 7.1 and the Orders, be
entitled to immediate payment of such obligations, and to enforce the remedies
provided for hereunder, without further application to or order by the
Bankruptcy Court or the Canadian Court.

 

Section 3.10                                Use
of Proceeds.  The proceeds of the
Loans will be used for (i) working capital, Letters of Credit and Capital
Expenditures; (ii) other general corporate purposes of the Loan Parties
(including intercompany loans to the extent permitted by this Agreement); (iii) for
the refinancing in full of the Indebtedness outstanding under the Receivables
Securitization Programs; (iv) payment of any related transaction costs,
fees and expenses; and (v) the costs of administration of the Cases.  The Letters of Credit will be issued for
purposes consistent with the ordinary course of business of the Loan Parties,
as determined by the Loan Parties in their reasonable judgment, or for such
other purposes as are acceptable to the Administrative Agent.  The proceeds of Loans may not be used in
connection with the investigation (including discovery proceedings), initiation
or prosecution of any claims, causes or action, adversary proceedings or other
litigation against the Lenders or the Administrative Agent; provided,
however, that no more than US$100,000 of the proceeds of the Loans or the
Collateral may be used by any statutory committee of unsecured creditors to
investigate, and by the monitor in the Canadian Cases to review, the
pre-petition liens and claims of the Pre-Petition Agent and the Pre-Petition
Lenders.

 

Section 3.11                                Litigation.  There are no unstayed actions, suits or
proceedings pending or, to the knowledge of the Loan Parties threatened,
against or affecting any Loan Party or any of their respective Subsidiaries or
any of their respective properties, before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that are reasonably likely to have a Material Adverse Effect.

 

Section 3.12                                Intellectual
Property. Set forth on Schedule 3.12 hereto is a complete and accurate list
of all registered patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and licenses thereof, of each Loan
Party or any of their Subsidiaries, showing as of the Closing Date the
jurisdiction in which registered, the registration number, the date of
registration and the expiration date.

 

Section 3.13                                Taxes.  Except to the extent permitted by Section 5.4
hereof, each Loan Party has filed or caused to be filed all federal, state,
provincial, regional and other material tax returns, reports, elections and
filings or other documents that are required to be filed and has paid 

 

93

 

all taxes, fees, levies, withholdings or
charges shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other material taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested
in good faith by appropriate proceedings and with respect to which reserves, if
any, in conformity with GAAP have been provided on the books of such Loan
Party); other than deemed trusts and statutory liens and charges in favor of a
Governmental Authority in respect of amounts accrued but not yet due in the
usual and ordinary course of the business of the Loan Party, no material tax
Lien has been filed, and, to the knowledge of the Loan Parties, no material
claim is being asserted, with respect to any such tax, fee or other charge
(other than a claim the amount or validity of which is being contested in good
faith by the Loan Party and with respect to which reserves, if any, in
conformity with GAAP have been provided on the books of such Loan Party), and
for greater certainty taxes includes all taxes, charges, fees, levies, imposts
and other assessments, including all income, sales, use, goods and services,
harmonized sales, value added, capital, capital gains, alternative, net worth,
transfer, profits, withholding, payroll, employer health, excise, real property
and personal property taxes, and any other taxes, customs duties, fees,
assessments, or similar charges in the nature of a tax, including Canada
Pension Plan and provincial pension plan contributions, unemployment insurance
payments and workers’ compensation premiums, together with any installments
with respect thereto, and any interest, fines and penalties with respect
thereto, imposed by any Governmental Authority (including federal, state,
provincial, municipal and foreign Governmental Authorities), and whether
disputed or not.

 

Section 3.14                                Investment
Company Act; Other Regulations. 
Neither the Parent nor any other Loan Party is an “investment company”,
or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. 
The Loan Parties are not subject to any organizational or governing
document, or any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority that prohibits its
ability to incur Indebtedness, other than the Orders.

 

Section 3.15                                ERISA;
Employee Matters.

 

(a)           The Loan Parties and
each of their ERISA Affiliates are in substantial compliance with all
applicable provisions and requirements of ERISA with respect to each Plan, and
have substantially performed all their obligations under each Plan, except to
the extent that any non-compliance with ERISA or any such failure to perform
would not have a Material Adverse Effect on the Loan Parties or any of their
ERISA Affiliates.

 

(b)           No Termination Event
has occurred which has resulted, or is reasonably likely to result, in any
liability to the PBGC or to any other Person that would have a Material Adverse
Effect.

 

(c)           Except to the extent
required under Section 4980B of the Code or Section 601 of ERISA,
none of the Loan Parties maintains or contributes to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides
health or welfare benefits (through the purchase of insurance or otherwise) for
any retired or former employees of the Loan Parties, except to the extent that
the provision of such benefits would not have a Material Adverse Effect.

 

94

 

(d)           No Pension Plan has
an Unfunded Current Liability in an amount that would have a Material Adverse
Effect.

 

(e)           The Canadian Pension
Plans are duly registered under the ITA and any other applicable laws which
require registration, have been administered in all material respects in
accordance with their terms and with the ITA and such other applicable laws,
and, to the knowledge of the Canadian Borrower, no event has occurred which
could reasonably be expected to cause the loss of such registered status.  The Canadian Benefit Plans have been
administered in all material respects in accordance with their terms and
applicable laws.

 

(f)            All material
obligations of the Canadian Borrower and the other Canadian Loan Parties
required to be performed by the Canadian Borrower or the other Canadian Loan
Parties in connection with the Canadian Pension Plans and the funding
agreements therefor and the Canadian Benefit Plans have been performed on a
timely basis.

 

(g)           As of the Closing
Date, there are no outstanding disputes, investigations, examinations or other
legal proceedings concerning the assets of the Canadian Pension Plans or the
Canadian Benefit Plans.

 

(h)           No promises of
benefit improvements under the Canadian Pension Plans or the Canadian Benefit
Plans have been made, except where such improvement could not reasonably be
expected to have a Material Adverse Effect.

 

(i)            All contributions
or premiums required to be made or paid by the Canadian Borrower or any of its
Subsidiaries to the Canadian Pension Plans or the Canadian Benefit Plans have
been made on a timely basis in accordance with the terms of such plans and all
applicable laws.

 

(j)            To the knowledge of
the Canadian Borrower, there have been no improper withdrawals or applications
of the assets of the Canadian Pension Plans or the Canadian Benefit Plans.

 

Section 3.16                                Material
Subsidiaries.  As of the Filing Date,
the only Material Subsidiary (as such term is defined in the Pre-Petition
Credit Agreement) of the Parent that is a Domestic Subsidiary is the U.S.
Borrower.

 

Section 3.17                                Receivables
Securitization Indebtedness.  All
indebtedness evidenced by the notes issued pursuant to that certain Series 2004-2
Indenture Supplement to Master Indenture, dated as of November 23, 2004,
between SSCE Funding, LLC and Deutsche Bank Trust Company Americas, as
Indenture Trustee, as amended, restated, modified or waived from time to time,
was indefeasibly paid in full prior to the Filing Date.

 

ARTICLE 4.   CONDITIONS OF LENDING

 

Section 4.1                                      Conditions
Precedent to Initial Loans.  The
obligation of the Lenders to make the initial Loans or issue Letters of Credit
on the Closing Date is subject to the following conditions precedent:

 

95

 

(a)           Supporting Documents.  The Administrative Agent shall have received
for each of the Loan Parties:

 

(i)                                     Organizational
Documents, to the extent applicable, certified as of a recent date prior to the
Closing Date by the applicable Governmental Authority;

 

(ii)                                  signature
and incumbency certificates of the officers of such Loan Party executing the
Loan Documents to which it is a party, dated as of the Closing Date;

 

(iii)                               duly
adopted resolutions of the board of directors or similar governing body of each
Loan Party approving and authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party or by which
it or its assets may be bound as of the Closing Date, certified as of the
Closing Date by its secretary or assistant secretary as being in full force and
effect without modification or amendment;

 

(iv)                              a
good standing certificate or equivalent thereof from the applicable
Governmental Authority of each Loan Party’s jurisdiction of incorporation,
organization or formation and in each jurisdiction in which it is qualified as
a foreign corporation or other entity to do business, each dated a recent date
prior to the Closing Date; and

 

(v)                                 such
other documents as the Administrative Agent may reasonably request.

 

(b)           Interim Order.  Not later than five (5) days following
the Filing Date, the Administrative Agent and the Lenders shall have received a
certified copy of each Interim Order approving the Loan Documents and granting
the Superpriority Claim status and senior priming and other Liens described in Section 2.24
and the CCAA DIP Lenders’ Charge, in the case of the Initial Order, which
Interim Order (i) shall have been entered upon an application or motion of
the applicable Loan Parties, in form and substance satisfactory to the
Administrative Agent and the Co-Lead Arrangers and on such prior notice to such
parties as may be satisfactory to the Administrative Agent and the Co-Lead
Arrangers, (ii) shall authorize extensions of credit in amounts
satisfactory to the Administrative Agent and the Co-Lead Arrangers, (iii) shall
approve the payment by the Loan Parties of all of the Fees set forth in Section 2.20,
Section 2.21 and Section 2.22, (iv) shall be in
full force and effect, (v) shall not have been stayed, reversed, modified
or amended in any respect without the written consent of the Administrative
Agent and the Co-Lead Arrangers, (vi) shall be entered with the consent or
non-objection of a preponderance (as determined by the Administrative Agent and
the Co-Lead Arrangers in their exclusive discretion) of the secured creditors
of any of the Loan Parties under the Pre-Petition Credit Agreement, and (vii) if
the Interim Order is the subject of a pending appeal in any respect, neither
the making of such Loan nor the issuance of such Letter of Credit nor the
performance by any of the Loan Parties of any of their obligations hereunder or
under the Loan Documents or 

 

96

 

under any
other instrument or agreement referred to herein shall be the subject of a presently
effective stay pending appeal.

 

(c)           Loan Documents.  The Administrative Agent shall have received (i) this
Agreement, duly executed and delivered by the Administrative Agent, each Loan
Party and each Lender, (ii) the Security and Pledge Agreement in
substantially the form of Exhibit B-1 (the “Security and Pledge Agreement”),
duly executed by each Loan Party and delivered to the Administrative Agent, (iii) the
Canadian Security Agreement in substantially the form of Exhibit B-2,
and (iv) each of the other Loan Documents listed on Schedule 4.1
hereto.

 

(d)           First Day Orders.  All of the “first day orders” entered by the
Bankruptcy Court and by the Canadian Court at the time of the commencement of
the U.S. Cases, including but not limited to in respect of amounts of critical
vendor payments, if any, shall be reasonably satisfactory in form and substance
to the Administrative Agent and the Co-Lead Arrangers.

 

(e)           Opinions of Counsel.  The Administrative Agent and the Lenders
shall have received the favorable written opinions of counsel to the Loan
Parties, acceptable to the Administrative Agent, substantially in the forms of Exhibit D.

 

(f)            Payment of Fees.  The Loan Parties shall have paid to the
Applicable Agents and the Co-Lead Arrangers the then unpaid balance of all
accrued and unpaid Fees due under and pursuant to this Agreement and the
letters referred to in Section 2.20, which payments due on the
Closing Date may be made with the proceeds of Loans.

 

(g)           Corporate and
Judicial Proceedings. 
All corporate and judicial proceedings and all instruments and
agreements in connection with the transactions among the Loan Parties, the
Administrative Agent and the Lenders contemplated by this Agreement shall be
satisfactory in form and substance to the Administrative Agent in its exclusive
discretion, and the Administrative Agent shall have received all information
and copies of all documents and papers, including records of corporate and
judicial proceedings, which the Administrative Agent may have requested in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate, governmental or judicial authorities.

 

(h)           Information.  The Administrative Agent and the Lenders
shall have received all information required by the Patriot Act or any other “know-your-customer”
or anti-money laundering rules and regulations and such other information
(financial or otherwise) as may be reasonably requested by the Administrative
Agent and shall have discussed such information with the Loan Parties’
management and shall be satisfied with the nature and substance of such
discussions.

 

(i)            Availability.  The sum of (i) Excess Availability plus
(ii) aggregate amounts on deposit in the Investment Accounts, after giving
effect to the Loans and disbursements to be made on the Closing Date, shall be
at least US$150,000,000.

 

(j)            Budget.  The Administrative Agent and
the Lenders shall have received a forecast on a consolidated
basis of the Loan Parties’ income statement, balance sheet and cash flows for
each month of fiscal years 2009 and 2010, including information consolidated
solely as to the U.S. Loan Parties and solely as to the Canadian Loan Parties
and the material assumptions 

 

97

 

on which such
forecasts were based, and setting forth the anticipated disbursements and uses
of the Commitments, in form and substance satisfactory to the Administrative
Agent and the Co-Lead Arrangers (as updated from time to time pursuant to Section 5.1(f),
the “Budget”).

 

(k)           Cash Flow Forecast.  The Administrative
Agent and the Lenders shall have received a forecast of sources
and uses of cash by the U.S. Loan Parties and the Canadian Loan Parties on a
weekly basis covering the 13 calendar weeks succeeding the Filing Date, in form
and substance satisfactory to the Administrative Agent and the Co-Lead
Arrangers (as updated from time to time pursuant to Section 5.1(e),
the “Cash Flow Forecast”).

 

(l)            Compliance with Laws.  The Loan Parties shall have granted the
Administrative Agent access to and the right to inspect all reports, audits and
other internal information of the Loan Parties relating to environmental and
employee health and safety matters and any third party verification of certain
matters relating to compliance with applicable laws and regulations requested
by the Administrative Agent and the Administrative Agent shall be reasonably
satisfied that the Loan Parties are in compliance in all material respects with
all applicable Environmental Laws and be satisfied with the reasonably
estimated costs of maintaining compliance.

 

(m)          Lien Searches.  The
Administrative Agent shall have received lien searches conducted in the
jurisdictions in which the Loan Parties are organized or conduct business,
satisfactory to the Administrative Agent (dated as of a date reasonably
satisfactory to the Administrative Agent), reflecting the absence of Liens and
encumbrances on the assets of the Loan Parties other than Permitted Liens.

 

(n)           Securitization
Documents.  The Administrative Agent
shall have received the most recent reports prepared by the Loan Parties in
respect of the Receivables Securitization Programs satisfactory in form and
substance to the Administrative Agent in its exclusive discretion.

 

(o)           Field
Examinations.  The Administrative
Agent shall have received field examinations of the Loan Parties’ accounts
receivable, inventory and equipment and appraisals of all or such portions of
the Loan Parties’ assets the Administrative Agent may deem appropriate, which
field examinations and appraisals shall be satisfactory in form and substance
to the Administrative Agent.

 

(p)           Evidence of
Insurance.  The Administrative Agent
shall have received evidence of insurance policies for the Loan Parties and
their Subsidiaries satisfactory in form and substance to the Administrative
Agent.

 

(q)           Closing Documents.  The Administrative Agent shall have received
all documents required by this Agreement satisfactory in form and substance to
the Administrative Agent and the Co-Lead Arrangers.

 

(r)            Other Conditions.  Such other conditions as are satisfactory to
the Administrative Agent.

 

98

 

Section 4.2             Conditions Precedent to Each Loan and Each Letter of Credit.  The obligation of the Lenders to make each
Loan and of each Fronting Bank to issue, amend, renew or extend any Letter of
Credit, is subject to the following conditions precedent:

 

(a)           Notice.  The Applicable Agent (and to the
Administrative Agent if it is not the Applicable Agent) shall have received a
notice with respect to each Borrowing or the issuance of each Letter of Credit,
as the case may be, as required by ARTICLE 2.

 

(b)           Representations and
Warranties.  All
representations and warranties contained in this Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the
date of each Borrowing or the issuance of each Letter of Credit hereunder with
the same effect as if made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date.

 

(c)           No Default.  On the date of each Borrowing or the issuance
of each Letter of Credit hereunder, no Default or Event of Default shall have
occurred and be continuing.

 

(d)           Orders.  The Interim Order shall be in full force and
effect and shall not have been stayed, reversed, modified or amended in any
respect without the prior written consent of the Administrative Agent, provided
that at the time of the making of any Loan or the issuance of any Letter of
Credit the aggregate amount of either of which, when added to the sum of the
principal amount of all Loans then outstanding and the Letter of Credit Outstandings,
would exceed the amount authorized by the Interim Order (collectively, the “Additional Credit”), the Administrative
Agent and each of the Lenders shall have received a certified copy of the order
of the Bankruptcy Court and an order of the Canadian Court if deemed necessary
in the Administrative Agent’s exclusive discretion approving continued lending
(collectively, the “Final Order”)
in substantially the form set forth on Exhibit A-3 or such other
form as may be agreed by the Administrative Agent and the Loan Parties, which,
in any event, shall have been entered by the Bankruptcy Court (and Canadian
Court, as applicable) no later than forty-five (45) days after the entry of the
Interim Order, and at the time of the extension of any Additional Credit the
Final Order shall be in full force and effect, and shall not have been stayed,
reversed, modified or amended in any respect without the prior written consent
of the Administrative Agent; and, if either the Interim Order or the Final
Order is the subject of a pending appeal in any respect, neither the making of
the Loans nor the issuance of any Letter of Credit nor the performance by any
of the Loan Parties of any of their obligations under any of the Loan Documents
or under any other instrument or agreement referred to herein shall be the
subject of a presently effective stay pending appeal.

 

(e)           Payment of Fees and
Expenses.  The Loan
Parties shall have paid to the Applicable Agent the then unpaid balance of all
accrued and unpaid Fees and expenses then due and payable under and pursuant to
this Agreement and the letters referred to in Section 2.20.

 

(f)            Borrowing Base
Certificate.  The Administrative
Agent shall have received a Borrowing Base Certificate in accordance with Section 5.8
dated no more than seven (7) days prior to each Borrowing or the issuance
of each Letter of Credit, which Borrowing Base Certificate shall include
supporting schedules as required by the Administrative Agent.

 

99

 

(g)           Other Conditions.  Such other
conditions as are satisfactory to the Administrative Agent.

 

Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
the Loan Parties on the date thereof that the conditions specified above have
been satisfied or waived.

 

ARTICLE 5.                             AFFIRMATIVE COVENANTS

 

From the Closing Date and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account and the
Canadian Letter of Credit Account, or in excess of the face amount of
back-to-back letters of credit delivered, in each case pursuant to Section 2.4(c)),
or any amount shall remain outstanding or unpaid under this Agreement, each of
the Loan Parties and their respective Subsidiaries agree that, unless the
Required Lenders shall otherwise consent in writing:

 

Section 5.1             Financial Statements,
Reports, etc.  The Loan
Parties will, and will cause their Subsidiaries to, deliver to the
Administrative Agent and each of the Lenders:

 

(a)           within seventy-five
(75) days after the end of each fiscal year, (i) consolidated balance
sheets and related statements of income, stockholders’ equity, and cash flows,
showing the financial condition of the Loan Parties and their Subsidiaries
as of the close of such fiscal year and the results of their respective
operations during such year, the consolidated statements to be audited for the
Loan Parties and their respective Subsidiaries by their current independent
auditors or other independent public accountants of recognized national
standing and accompanied by an opinion of such accountants (which shall not be
qualified other than with respect to the Cases) and (ii) such statements
consolidated solely as to U.S. Loan Parties and consolidated solely as to
Canadian Loan Parties (on an unaudited basis and without footnotes), in each
case to be certified by a Financial Officer of Parent to the effect that such
consolidated financial statements fairly present in all material respects, the
financial condition and results of operations of the Loan Parties and their
Subsidiaries on a consolidated basis in accordance with GAAP;

 

(b)           within forty-five
(45) days after the end of the first three fiscal quarters of each fiscal year
of the Loan Parties, and within seventy-five (75) days after the end of the
fourth fiscal quarter of each fiscal year, (i) consolidated balance sheets
and related statements of income, stockholders’ equity and cash flows, showing
the financial condition of the Loan Parties and their Subsidiaries on a
consolidated basis, in each case as of the close of such fiscal quarter and the
results of their operations during such fiscal quarter and the then elapsed
portion of the fiscal year, and (ii) such statements consolidated solely
as to U.S. Loan Parties and consolidated solely as to Canadian Loan Parties, in
each case certified by a Financial Officer of the Parent as fairly presenting
in all material respects, the financial condition and results of operations of
the Loan Parties and their Subsidiaries on a consolidated basis in accordance
with GAAP, subject to normal year-end audit adjustments and the absence of
footnotes;

 

100

 

(c)           within twenty-five
(25) days after the end of each fiscal month (forty-five (45) days after the
end of the fiscal month ended January 31, 2009), (i) unaudited
monthly consolidated balance sheets and related statements of income and cash
flows of the Loan Parties and their Subsidiaries (including the amount of
Available Cash balances at the end of each such fiscal month), and (ii) such
statements consolidated solely as to U.S. Loan Parties and consolidated solely
as to Canadian Loan Parties, in each case in form and scope satisfactory to the
Administrative Agent and showing the results of the Loan Parties’ and their
Subsidiaries’ operations during such fiscal month and the then elapsed portion
of the fiscal year, which shall include a summary of the results of the Loan
Parties’ business operations for the preceding month as compared to the
corresponding period in the Budget, including a discussion of significant
variances, which summary shall describe the results of the Loan Parties and
their respective Subsidiaries on a consolidated basis;

 

(d)           (i) concurrently
with any delivery of financial statements under (a), (b) or (c) above
as applicable, a certificate of a Financial Officer of the Parent on behalf of
each of the Loan Parties in the form of Exhibit G (A) certifying
that no Event of Default or Default has occurred, or, if such an Event of
Default or Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto and (B) setting
forth computations in reasonable detail satisfactory to the Administrative
Agent demonstrating compliance with the provisions of Section 6.3, Section 6.4,
Section 6.5, Section 6.6, Section 6.11, and
Section 6.12 and (ii) accompanying the audited consolidated
financial statements delivered under (a)(i) above a certificate of the
accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines);

 

(e)           on the last Business
Day of each week, (i) an updated Cash Flow Forecast covering the next
succeeding thirteen (13) calendar weeks, and (ii) and a report comparing
the preceding week’s actual sources and uses of cash by the Loan Parties to
each  Cash Flow Forecast for such
week, in each case in form and substance satisfactory to the Administrative
Agent in its exclusive discretion;

 

(f)            no later than
forty-five (45) days after the end of each of the first three fiscal quarters
of each fiscal year of the Loan Parties, and within seventy-five (75) days from
the end of the last fiscal quarter of each fiscal year of the Loan Parties, an
update of the Budget satisfactory in form and substance to the Administrative
Agent in its exclusive discretion, and Loan Parties shall be available to
discuss such updated Budget with the Administrative Agent upon the
Administrative Agent’s reasonable request;

 

(g)           promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by any Loan Party with the Securities and
Exchange Commission, or any governmental authority succeeding to any of or all
the functions of said commission, or with any national or provincial securities
commission or exchange, as the case may be;

 

(h)           as soon as available
and in any event (A) within thirty (30) days after any Loan Party, or any
of their ERISA Affiliates knows or has reason to know that any Termination 

 

101

 

Event
described in clause (i) of the definition of Termination Event with
respect to any Single Employer Plan of any of the Loan Parties or such ERISA
Affiliate has occurred and (B) within ten (10) days after any of the
Loan Parties or any of their ERISA Affiliates knows or has reason to know that
any other Termination Event with respect to any such Plan has occurred, a
statement of a Financial Officer of such Loan Party describing such Termination
Event and the action, if any, which such Loan Party or such ERISA Affiliate
proposes to take with respect thereto;

 

(i)            promptly and in any
event within ten (10) days after receipt thereof by any of the Loan
Parties or any of their ERISA Affiliates from the PBGC copies of each notice
received by such Loan Party or any such ERISA Affiliate of the PBGC’s intention
to terminate any Single Employer Plan of such Loan Party or such ERISA Affiliate
or to have a trustee appointed to administer any such Plan;

 

(j)            if requested by the
Administrative Agent, promptly and in any event within thirty (30) days after
the filing thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan of any of the Loan Parties or any of their
ERISA Affiliates;

 

(k)           within ten (10) days
after notice is given or required to be given to the PBGC under Section 302(f)(4)(A) of
ERISA of the failure of any of the Loan Parties or any of their ERISA
Affiliates to make timely payments to a Plan, a copy of any such notice filed
and a statement of a Financial Officer of such Loan Party setting forth (A) sufficient
information necessary to determine the amount of the Lien under Section 302(f)(3),
(B) the reason for the failure to make the required payments and (C) the
action, if any, which the Loan Parties or any of their ERISA Affiliates
proposed to take with respect thereto;

 

(l)            promptly and in any
event within ten (10) days after receipt thereof by any of the Loan
Parties or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by such Loan Party or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the
termination of a Multiemployer Plan within the meaning of Title IV of ERISA, or
(D) the amount of liability incurred, or which may be incurred, by the
Loan Parties or any ERISA Affiliate in connection with any event described in
clause (A), (B) or (C) above;

 

(m)          promptly and in any
event within ten (10) days after receipt thereof by any of the Canadian
Loan Parties (A) copies of each annual and other return, report, or
valuation with respect to each registered pension plan as filed with any
applicable Governmental Authority, (B) copies of any direction, order, notice,
ruling or opinion received from any applicable Governmental Authority with
respect to any registered pension plan, and (C) notice of any increases
having a cost to one or more of the Canadian Loan Parties in excess of
US$5,000,000 per annum in the aggregate, in the benefits of any existing
pension plan or employee benefit plan or the establishment of any new pension
plan or employee benefit plan or the commencement of contributions to any such
plan to which any Canadian Loan Party was not previously contributing;

 

102

 

(n)           within twenty-five
(25) days after the end of each fiscal month, a schedule detailing the balance
of all accrued but unpaid Priority Payables;

 

(o)           promptly, from time
to time, such other information (including, without limitation, projections)
regarding the operations, business affairs and financial condition of any Loan
Party or any of its Subsidiaries, or compliance with the terms of any material
loan or financing agreement, as the Administrative Agent, at the request of any
Lender, may reasonably request;

 

(p)           promptly after the
same is available, copies of all pleadings, motions, applications, judicial
information, financial information and other documents filed in the Cases by or
on behalf of any of the Loan Parties with the Bankruptcy Court or the Canadian
Court, or distributed by or on behalf of any of the Loan Parties to any monitor
or official committee appointed in any of the Cases, providing copies of same
to counsel for the Administrative Agent;

 

(q)           promptly and in any
event within thirty (30) days after any Canadian Loan Party becomes aware or
has reason to become aware of any event which may give rise to the full
termination of any Canadian Pension Plan or partial termination of any Canadian
Pension Plan which could reasonably be expected to have a Material Adverse
Effect, a statement of a Financial Officer of such Loan Party describing such
event and the action, if any, which such Loan Party proposes to take with
respect thereto; and

 

(r)            within ten (10) days
after the failure of any of the Canadian Loan Parties to make current service
contributions to any Canadian Pension Plan, a copy of any such notice filed and
a statement of a Financial Officer of such Loan Party setting forth (A) sufficient
information necessary to determine the amount of any corresponding Lien, (B) the
reason for the failure to make the required payments and (C) the action,
if any, which the Loan Parties propose to take with respect thereto.

 

Section 5.2             Existence.  The Loan
Parties will, and will cause their Subsidiaries to,  preserve and maintain in full force and
effect all governmental rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of their businesses
except (i) (A) if in the reasonable business judgment of such Loan
Party it is in its best economic interest not to preserve and maintain such
rights, privileges, qualifications, permits, licenses and franchises, and (B) such
failure to preserve the same could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, and (ii) as otherwise
permitted in connection with sales of assets permitted by Section 6.12.

 

Section 5.3             Insurance.  The Loan
Parties will, and will cause their Subsidiaries to:  (a) keep their insurable properties
insured at all times, against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies of the
same or similar size in the same or similar businesses; and maintain in full
force and effect public liability insurance against claims for personal injury
or death or property damage occurring upon, in, about or in connection with the
use of any properties owned, occupied or controlled by any Loan Party in such
amounts and with such deductibles as are customary with companies of the same
or similar size in the same or similar businesses and in the same geographic
area, with financially sound and responsible insurance companies; and (b) maintain
such other insurance or self 

 

103

 

insurance as may be required by law, with
financially sound and responsible insurance companies.

 

Section 5.4             Obligations and Taxes. 
Except with the express written consent of the Administrative Agent in
each instance, each Loan Party will pay all its material obligations arising
after the Filing Date promptly and in accordance with their terms and pay and
discharge promptly all material taxes, assessments, governmental charges,
levies, fees, imposts and withholding obligations imposed upon it or upon its
income or profits or in respect of its property arising after the Filing Date,
before the same shall become in default, as well as all material lawful claims
for labor, materials and supplies or otherwise arising after the Filing Date
which, if unpaid, would become a Lien or charge upon such properties or any
part thereof; provided,
however,
that no Loan Party shall be required to pay and discharge or to cause to be
paid and discharged any such obligation, tax, assessment, charge, levy, fees,
imposts and withholding obligations or claim so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings (if the
Loan Parties shall have set aside on their books adequate reserves therefor).

 

Section 5.5             Notice of Event of Default, etc.  The Loan Parties will promptly give to the
Administrative Agent notice in writing of:

 

(i)                                     any
Default or Event of Default; and

 

(ii)                                  any
litigation, proceedings or material investigations which may exist at any time
between any Loan Party and any Governmental Authority.

 

Section 5.6             Access to Books and
Records; Collateral Reviews and Appraisals.

 

(a)           The Loan Parties
will, and will cause their Subsidiaries to, maintain or cause to be maintained
at all times true and complete books and records in accordance with GAAP of the
financial operations of the Loan Parties and their respective Subsidiaries; and
provide the Administrative Agent and its representatives access to all such
books and records during regular business hours, in order that the
Administrative Agent may examine and make abstracts from such books, accounts,
records and other papers for the purpose of verifying the accuracy of the
various reports delivered by the Loan Parties to the Administrative Agent or
the Lenders pursuant to this Agreement or for otherwise ascertaining compliance
with this Agreement, all at such reasonable times and as often as reasonably
requested and in any event no less frequently than two (2) times during
any calendar year and, so long as no Default or Event of Default shall have
occurred and be continuing, no more than four (4) times during any
calendar year.  The Loan Parties will
permit (and will cause their Subsidiaries to permit) any representatives
designated by the Administrative Agent to discuss their affairs, finances and
condition with their officers and independent accountants, all at such
reasonable times and as often as reasonably requested.

 

(b)           The Loan Parties
will, and will cause their Subsidiaries to, permit any representatives
designated by the Administrative Agent (including any consultants, accountants,
lawyers and appraisers retained by the Administrative Agent) to conduct
evaluations and 

 

104

 

appraisals of
the Loan Parties’ computation of the Borrowing Bases and the assets included in
the Borrowing Bases and such other assets and properties of the Loan Parties or
their Subsidiaries as the Administrative Agent or Required Lenders may require,
all at such reasonable times and as often as reasonably requested and in any
event no less frequently than two (2) times during any calendar year and,
so long as no Default or Event of Default shall have occurred and be continuing,
no more than four (4) times during any calendar year.  The Loan Parties shall pay the reasonable
fees (including reasonable and customary internally allocated fees of employees
of the Administrative Agent as to which invoices have been furnished) and expenses
of any such representatives retained by the Administrative Agent as to which
invoices have been furnished to conduct any such evaluation or appraisal,
including the reasonable fees and expenses associated with collateral
monitoring services performed by the ABL Portfolio Management Group of the
Administrative Agent.  To the extent
required by the Administrative Agent in its Permitted Discretion as a result of
any such evaluation, appraisal or monitoring, the Loan Parties also agree to
modify or adjust the computation of the Borrowing Bases (which may include
maintaining additional reserves, modifying the advance rates or modifying the
eligibility criteria for the components of the Borrowing Bases).

 

(c)           In the event that
historical accounting practices, systems or reserves relating to the components
of the Borrowing Bases are modified in a manner that is adverse to the Lenders
in any material respect, the Loan Parties will agree to maintain such
additional reserves (for purposes of computing the Borrowing Bases) in respect
to the components of the Borrowing Bases and make such other adjustments to its
parameters for including the components of the Borrowing Bases as the
Administrative Agent shall reasonably require based upon such modifications.

 

(d)           The Loan Parties
will, and will cause their Subsidiaries to, grant the Administrative Agent
access to and the right to inspect all reports, audits and other internal
information of the Loan Parties relating to environmental matters upon
reasonable notice, and obtain any third party verification of matters relating
to compliance with Environmental Laws reasonably requested by the
Administrative Agent at any time and from time to time.

 

Section 5.7             Maintenance of
Concentration Account; Cash Dominion.

 

(a)           Within sixty (60)
days of the Closing Date (or such later date as the Administrative Agent may
approve in its exclusive discretion), the U.S. Loan Parties will, and will
cause their Domestic Subsidiaries to, maintain with the Administrative Agent an
account or accounts to be used by the U.S. Loan Parties as their principal
domestic concentration or sweep account(s) into which shall be deposited
the available balances from the collection accounts of the U.S. Loan Parties
(other than Calpine or Smurfit-Stone Puerto Rico, Inc.) at the end of each
Business Day (as contemplated by Article 7 of the Security and Pledge
Agreement), net of disbursements paid in the ordinary course of business during
such Business Day and all of the U.S. Loan Parties’ and their Domestic Subsidiaries’
accounts shall be subject to a cash management system satisfactory to the
Administrative Agent in its exclusive discretion, including from and after such
sixtieth (60th)
day, (i) weekly sweeps of Available Cash in excess of US$50,000,000, such
cash to be applied to outstanding U.S. Revolving Loans (without a permanent
reduction of the U.S. Revolving Commitment), and (ii) full cash dominion,
including daily cash sweeps (other than cash of Calpine and other than with
respect to up to $2,000,000 

 

105

 

held in
deposit accounts of Smurfit-Stone Puerto Rico, Inc.) to the Concentration
Account if Excess Availability is less than US$150,000,000 for three
consecutive days, such cash to be applied to outstanding U.S. Revolving Loans
(without a permanent reduction of the U.S. Revolving Commitment).  The obligation of the U.S. Loan Parties to
comply with clause (ii) of the preceding sentence shall continue until
Excess Availability has exceeded US$150,000,000 for sixty (60) consecutive
days.  Upon the occurrence of an Event of
Default, all of the collections and account balances of the U.S. Loan Parties
and their Domestic Subsidiaries (other than Calpine) shall be swept on a daily
basis into the Concentration Account.

 

(b)           Within sixty (60)
days of the Closing Date (or such later date as the Administrative Agent may
approve in its exclusive discretion), the Canadian Loan Parties will, and will
cause their Canadian Subsidiaries to, maintain with JPMorgan Chase Bank, N.A.,
Toronto Branch, or a bank acceptable to the Canadian Administrative Agent, an
account or accounts to be used by the Canadian Loan Parties as their principal
domestic concentration or sweep account(s) into which shall be deposited
the available balances from the collection accounts of the Canadian Loan
Parties at the end of each Business Day (as contemplated by the Canadian
Security Agreement), net of disbursements paid in the ordinary course of
business during such Business Day and all of the Canadian Loan Parties’ and
their Canadian Subsidiaries’ accounts shall be subject to a cash management
system satisfactory to the Canadian Administrative Agent in its exclusive
discretion, including from and after such sixtieth (60th) day, full cash dominion,
including daily cash sweeps to the Canadian Concentration Account if Excess
Availability is less than US$150,000,000 for three consecutive days, such cash
to be applied to outstanding Canadian Revolving Loans (without a permanent
reduction of the Canadian Revolving Commitment).  The obligation of the Canadian Loan Parties
to remain in full cash dominion shall continue until Excess Availability has
exceeded US$150,000,000 for sixty (60) consecutive days.  Upon the occurrence of an Event of Default,
all of the collections and account balances of the Canadian Loan Parties and
their Canadian Subsidiaries shall be swept on a daily basis into the Canadian
Concentration Account.

 

Section 5.8             Borrowing Base Certificate. 
The Loan Parties will furnish to the Administrative Agent, no later than
(i) the last Business Day of each week with respect to the immediately
preceding week, a completed Borrowing Base Certificate showing the Borrowing
Bases, each as of the close of business on the last day of such period, (ii) fifteen
(15) days following the last day of the immediately preceding fiscal month, a
completed Borrowing Base Certificate showing the Borrowing Bases, each as of
the close of business on the last day of such period, (iii) if requested
by the Administrative Agent at any other time when the Excess Availability is
less than 20% of the Total Revolving Commitment, as soon as reasonably
available but in no event later than three (3) Business Days after such
request and (iv) at such other times as the Loan Parties may elect, a
completed Borrowing Base Certificate showing the Borrowing Bases, each as of
the date so requested, in each case with the information supporting the
Borrowing Base calculations required by Exhibit C-1 and Exhibit C-2
hereto, including the information set forth on the schedule of reporting
requirements attached thereto (in each case, as modified from time to time by
the Administrative Agent in its Permitted Discretion), all delivered
electronically in a file reasonably acceptable to the Administrative Agent; provided
that until the Receivables Securitization Termination Date, the Loan Parties
will deliver daily and monthly (by the 15th day of each month with respect to the
immediately preceding fiscal month) Borrowing Base Certificates.

 

106

 

Section 5.9             Compliance with Laws. 
Comply with requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including, without limitation, ERISA),
except to the extent that failure to comply herewith could not, in the
aggregate, have a Material Adverse Effect.

 

Section 5.10           Environmental Laws.

 

(a)           Exercise all
reasonable due diligence in order to comply in all material respects, and cause
(i) all tenants under any leases or occupancy agreements affecting any
portion of the Facilities and (ii) all other Persons on or occupying such
property under the control of any Loan Party, to comply in all material
respects with all Environmental Laws.

 

(b)           Promptly take any
and all necessary remedial action in connection with the presence, storage,
use, disposal, transportation or release of any Hazardous Waste or Hazardous
Substance on or under any Facility required to comply with all applicable
Environmental Laws and Governmental Authorizations unless the failure to so
comply could not reasonably be expected to have a Material Adverse Effect and (ii) in
the event the Loan Parties take any remedial action with respect to any
Hazardous Waste or Hazardous Substance on or under any Facility, conduct and
complete such remedial action in material compliance with all applicable
Environmental Laws and in accordance with the policies, orders and directives
of any applicable Governmental Authorities except when, and only to the extent
that, the Loan Parties’ liability for such presence, storage, use, disposal,
transportation or release of any such Hazardous Waste or Hazardous Substance is
being contested in good faith by the Loan Parties.

 

Section 5.11           Additional Collateral; Further Assurances.

 

(a)           The U.S. Borrower
and each other U.S. Loan Party shall cause each of its Domestic Subsidiaries
formed or acquired after the Closing Date in accordance with the terms of this
Agreement to become a U.S. Guarantor, and the Canadian Borrower and each other
Canadian Loan Party shall cause each Canadian Subsidiary formed or acquired
after the Closing Date to become a Canadian Guarantor, in each case, by
executing the Loan Party Joinder Agreement set forth as Exhibit F
hereto (the “Loan Party Joinder Agreement”)
on or before the twentieth (20th) day following the date of such acquisition or
formation. Upon execution and delivery thereof, each such Person (i) shall
automatically become a Guarantor hereunder and thereupon shall have all of the
rights, benefits, duties, and obligations in such capacity under the Loan
Documents and (ii) will grant Liens to the Applicable Agent, for the
benefit of the Applicable Agent and the Secured Parties, in any property of
such Loan Party which constitutes Collateral.

 

(b)           Without limiting the
foregoing, each Loan Party will, and will cause each Subsidiary to, execute and
deliver, or cause to be executed and delivered, to the Applicable Agent such
documents, agreements and instruments, and will take or cause to be taken such
further actions (including the filing and recording of financing statements and
other documents and such other actions or deliveries of the type required by Section 4.1,
as applicable), which may be required by law or which the Applicable Agent may,
from time to time, reasonably request to carry out the terms and conditions of
this Agreement and the other Loan Documents 

 

107

 

and to ensure
perfection and priority of the Liens created or intended to be created by the Collateral
Documents, all at the expense of the Loan Parties.

 

(c)           Each Loan Party
will, and will cause each Subsidiary to, execute and deliver, or cause to be
executed and delivered, to the Administrative Agent such documents, agreements
and instruments, and will take or cause to be taken such further actions, which
may be required by law or which the Administrative Agent may, from time to
time, reasonably request to carry out the terms and conditions of this
Agreement and the other Loan Documents, all at the expense of the Loan Parties.

 

Section 5.12           Material Contracts. 
Each Loan Party will, and will cause their Subsidiaries to, preserve and
maintain in full force and effect all contracts necessary or desirable in the
normal conduct of their businesses except where failure to preserve the same
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

Section 5.13           Receivables Securitization Programs.  On or before April 1, 2009 or such later
date as the Administrative Agent may approve in writing in its exclusive
discretion, each Loan Party will, and will cause their Subsidiaries to, (a) terminate
the Receivables Securitization Programs, repay all Indebtedness outstanding
thereunder, and provide evidence of such termination and payment in full, as
applicable, satisfactory to the Administrative Agent in its exclusive
discretion, (b) with respect to each Receivables Securitization Entity,
either (i) transfer all Accounts or other assets owned by such Receivables
Securitization Entity to a U.S. Loan Party free and clear of all Liens (other
than Liens in favor of the Agents on behalf of the Secured Parties and Liens in
favor of the Pre-Petition Agent on behalf of the Pre-Petition Secured Lenders
and other Permitted Liens that do not have priority over the Lien in favor of
the Applicable Agent for the benefit of the Secured Parties), or (ii) merge
such Receivables Securitization Entity with and into a U.S. Loan Party, with
such U.S. Loan Party being the surviving entity of such merger, in each case,
on terms satisfactory to the Administrative Agent in its exclusive discretion,
and (c) cause Smurfit-MBI, an Ontario limited partnership, to acquire all
of the interests of Computershare Trust Company of Canada, in its capacity as
trustee of King Street Funding Trust, in all outstanding Accounts and other
related assets that were purchased by Computershare Trust Company of Canada, in
its capacity as trustee of King Street Funding Trust, from Smurfit-MBI, and
such Accounts and other related assets shall be acquired by Smurfit-MBI free
and clear of all Liens (other than Liens in favor of the Agents on behalf of
the Secured Parties and Liens in favor of the Pre-Petition Agent on behalf of
the Pre-Petition Secured Lenders and other Permitted Liens that do not have
priority over the Lien in favor of the Applicable Agent for the benefit of the
Secured Parties), on terms satisfactory to the Administrative Agent in its
exclusive discretion.

 

Section 5.14           Restructuring Advisors. 
Retain PriceWaterhouse Coopers and Lazard Ltd. or such other third party
financial restructuring advisors as are reasonably satisfactory to the
Administrative Agent in its Permitted Discretion.

 

Section 5.15           Public Rating.  
Obtain a rating from S&P and Moody’s on the Loans no later than
ninety (90) days after the Closing Date.

 

108

 

Section 5.16           Use
of Proceeds.

 

(a)           The proceeds of the
Loans and the Letters of Credit (including disbursements from the U.S.
Investment Account, Canadian Investment Account, U.S. Term Loan Collateral
Account or the Canadian Term Loan Collateral Account) will be used only in
accordance with the purposes set forth in Section 3.10, and such
use or uses shall be substantially consistent with the Budget, as updated from
time to time.

 

(b)           No part of the
proceeds of any Loan and no Letter of Credit will be used, whether directly or
indirectly, for any purpose that constitutes a violation of any of the
regulations of the Board, including Regulations T, U and X.

 

ARTICLE 6.                             NEGATIVE COVENANTS

 

From the Closing Date and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.4(c)) or any amount shall remain
outstanding or unpaid under this Agreement, unless the Required Lenders shall
otherwise consent in writing:

 

Section 6.1             Liens.  Each of the
Loan Parties will not (and will not apply to the Bankruptcy Court or the
Canadian Court for authority to), and will cause their Subsidiaries not to,
incur, create, assume or suffer to exist any Lien or encumbrance on any asset
of the Loan Parties now owned or hereafter acquired by any Loan Party other
than Permitted Liens.

 

Section 6.2             Merger, etc.  Each of
the Loan Parties will not (and will not apply to the Bankruptcy Court or the
Canadian Court for authority to), and will cause their Subsidiaries not to,
consolidate, amalgamate, wind-up or merge with or into another Person, except
that, if at the time thereof and immediately after giving effect thereto no
Default or Event of Default shall have occurred and be continuing (i) any
Foreign Subsidiary (other than a Loan Party) may merge with any other Foreign
Subsidiary (other than a Loan Party) and (ii) any Receivables
Securitization Entity may merge into a U.S. Loan Party in a transaction in
which the U.S. Loan Party is the surviving entity.

 

Section 6.3             Indebtedness.  Each of
the Loan Parties will not (and will not apply to the Bankruptcy Court or the
Canadian Court for authority to), and will cause their Subsidiaries not to,
contract, create, incur, assume or suffer to exist any Indebtedness, except for
(i) the Secured Obligations; (ii) Indebtedness incurred prior to the
Filing Date (including existing Capital Lease Obligations) of the Loan Parties,
including the Indebtedness listed on Schedule 6.3; (iii) Indebtedness
incurred subsequent to the Filing Date secured by purchase money Liens and
Capital Lease Obligations in an aggregate amount not in excess of US$10,000,000
to the extent permitted by Section 6.4; (iv) Indebtedness
allowed under Section 6.7; (v) other unsecured Indebtedness
incurred subsequent to the Filing Date in an aggregate amount not to exceed
US$5,000,000; (vi) Indebtedness of Foreign Subsidiaries (other than
Canadian Loan Parties) in an aggregate amount not to exceed US$20,000,000
outstanding at any time, provided that such Indebtedness is non-recourse
to all of the Loan Parties; (vii) Indebtedness permitted by Section 6.11;
and (vii) Indebtedness permitted by Section 6.16; and (viii) Indebtedness
incurred to pay annual premiums for property and casualty insurance policies
maintained by the Parent or any Subsidiary not exceeding in an aggregate amount
at any time outstanding US$10,000,000.

 

109

 

Section 6.4             Capital Expenditures. 
Each of the Loan Parties will not (and will not apply to the Bankruptcy
Court or the Canadian Court for authority to), and will cause each of their
respective Subsidiaries not to, make Capital Expenditures during the periods
set forth below, in an aggregate amount (calculated on a consolidated basis) in
excess of the amount specified opposite such period:

 

	
  Period

  	
   

  	
  Maximum Capital Expenditures

  	
   

  
	
  February 1,
  2009 to March 31, 2009

  	
   

  	
  US$45,000,000

  	
   

  
	
  February 1,
  2009 to June 30, 2009

  	
   

  	
  US$90,000,000

  	
   

  
	
  February 1,
  2009 to September 30, 2009

  	
   

  	
  US$155,000,000

  	
   

  
	
  February 1,
  2009 to December 31, 2009

  	
   

  	
  US$205,000,000

  	
   

  
	
  12-month
  period ended March 31, 2010

  	
   

  	
  US$220,000,000

  	
   

  
	
  12-month
  period ended June 30, 2010

  	
   

  	
  US$220,000,000

  	
   

  

 

Section 6.5             EBITDA.

 

(a)           As of the end of
each fiscal month of the Loan Parties, commencing with the fiscal month ending February 28,
2009, the Loan Parties will not permit Consolidated EBITDA for any two (2) consecutive
calendar months to be negative (with each month measured separately and without
giving effect to any Downtime Credit).

 

(b)           As of the end of
each fiscal period of the Loan Parties, commencing with the fiscal month ending
February 28, 2009, the Loan Parties will not permit Consolidated EBITDA
for (i) each fiscal period beginning on February 1, 2009 and ending
on a date set forth below on or before December 31, 2009, to be less than
the respective amounts specified opposite such fiscal period, and (ii) for
each twelve-month period ending on a date set forth below after December 31,
2009, to be less than the respective amounts specified opposite such period:

 

	
  Period Ending

  	
   

  	
  Cumulative Consolidated EBITDA

  	
   

  
	
  February 28,
  2009

  	
   

  	
  US$17,900,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  US$40,600,000

  	
   

  
	
  April 30,
  2009

  	
   

  	
  US$59,000,000

  	
   

  
	
  May 31,
  2009

  	
   

  	
  US$82,300,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  US$112,900,000

  	
   

  
	
  July 31,
  2009

  	
   

  	
  US$144,300,000

  	
   

  
	
  August 31,
  2009

  	
   

  	
  US$188,200,000

  	
   

  
	
  September 30,
  2009

  	
   

  	
  US$221,200,000

  	
   

  
	
  October 31,
  2009

  	
   

  	
  US$261,000,000

  	
   

  
	
  November 30,
  2009

  	
   

  	
  US$288,000,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  US$314,400,000

  	
   

  
	
  January 31,
  2010

  	
   

  	
  US$344,100,000

  	
   

  
	
  February 28,
  2010

  	
   

  	
  US$349,400,000

  	
   

  
	
  March 31,
  2010

  	
   

  	
  US$355,400,000

  	
   

  
	
  April 30,
  2010

  	
   

  	
  US$357,300,000

  	
   

  
	
  May 31,
  2010

  	
   

  	
  US$361,100,000

  	
   

  
	
  June 30,
  2010

  	
   

  	
  US$366,100,000

  	
   

  

 

110

 

Section 6.6             Minimum Liquidity.  The Loan Parties will not permit the sum of
Excess Availability plus Available Cash held by the Loan Parties to be
less than US$50,000,000 for any period of three (3) consecutive days, provided
that such amount shall not be less than US$30,000,000 on any day.

 

Section 6.7             Guarantees and Other Liabilities.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, purchase or repurchase (or agree,
contingently or otherwise, so to do) the Indebtedness of, or assume, guarantee
(directly or indirectly or by an instrument having the effect of assuring
another’s payment or performance of any obligation or capability of so doing,
or otherwise), endorse or otherwise become liable, directly or indirectly, for
the obligations, stock or dividends of any Person, except (i) for any
guaranty of Indebtedness or other obligations (or otherwise becoming liable for
any of the obligations) of any of the Loan Parties in the ordinary course of
business and consistent with the past business practices with trade vendors if
such Indebtedness or the obligations are permitted by this Agreement, (ii) by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business, and (iii) any guaranty of Indebtedness of a Foreign
Subsidiary that is not a Loan Party by another Foreign Subsidiary that is not a
Loan Party.

 

Section 6.8             Chapter 11/CCAA Claims. 
Each of the Loan Parties will not (and will not apply to the Bankruptcy
Court or the Canadian Court for authority to), and will cause their
Subsidiaries not to, incur, create, assume, suffer to exist or permit (i) any
other Superpriority Claim which is pari  passu
with or senior to the claims of the Administrative Agent and the Lenders
against the Loan Parties hereunder, except for the Carve-Out or (ii) any
court ordered superpriority charge which is pari  passu with or
senior to the CCAA DIP Lenders’ Charge against the Canadian Loan Parties,
except for the CCAA Charges.

 

Section 6.9             Dividends; Capital Stock. 
Each of the Loan Parties will not (and will not apply to the Bankruptcy
Court or the Canadian Court for authority to), and will cause their
Subsidiaries not to, declare or pay, directly or indirectly, any dividends or
make any other distribution or payment, whether in cash, property, securities
or a combination thereof, with respect to (whether by reduction of capital or
otherwise) any shares of capital stock (or any options, warrants, rights or
other equity securities or agreements relating to any capital stock), or set
apart any sum for the aforesaid purposes on anything other than an arm’s-length
basis, except for dividends or distributions paid in cash by a Subsidiary to a
Loan Party or any other Person that owns capital stock or other equity
interests in such Subsidiary, ratably according to their respective holdings of
the type of capital stock or other equity interests in respect of which such
dividend or distribution is being made.

 

Section 6.10           Transactions with Affiliates.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, sell or transfer any property or assets
to, or otherwise engage in or permit to exist any other material transactions
with, any of its Affiliates (other than transactions (i) among Loan
Parties or (ii) among Subsidiaries that are not Loan Parties) other than
in the ordinary course of the Loan Parties’ businesses in good faith and at
commercially reasonable prices and 

 

111

 

on commercially reasonable terms and
conditions not less favorable to the Loan Parties than could be obtained on an
arm’s-length basis from a non-Affiliate.

 

Section 6.11           Investments, Loans and Advances.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, purchase, hold or acquire any capital
stock, evidences of Indebtedness or other securities of, make or permit to
exist any loans or advances to, or make or permit to exist any investment in,
any other Person (all of the foregoing, “Investments”),
except for (i) Investments by U.S. Loan Parties in the Canadian Borrower
or in the U.S. Loan Parties other than Calpine; (ii) Investments by
Canadian Loan Parties in U.S. Loan Parties other than Calpine; (iii) Permitted
Investments; (iv) Indebtedness owed by any Foreign Subsidiaries (other
than the Canadian Loan Parties) in an aggregate amount not to exceed
US$5,000,000 outstanding at any time; (v) Indebtedness owing, or to be
owed by the Canadian Loan Parties (other than the Canadian Borrower) to the
U.S. Loan Parties other than Calpine in an aggregate amount not to exceed
US$10,000,000 outstanding at any time; (vi) Indebtedness owed by the
Canadian Guarantors to the Canadian Borrower in an aggregate amount not to
exceed at any time the lesser of (a) Total Canadian Outstandings and (b) the
Canadian Borrowing Base; (vii) Indebtedness owed by the Canadian Borrower
to the U.S. Loan Parties other than Calpine; (viii) Investments listed on Schedule
6.11; (ix) additional investments in Foreign Subsidiaries (other than
Loan Parties) and in joint ventures listed on Schedule 6.11 in an
aggregate amount not to exceed US$5,000,000, plus up to an additional
US$20,000,000 to the extent not distributed to Foreign Subsidiaries in the
thirty (30) days prior to the Filing Date; (x) additional investments in
Calpine in an aggregate amount not to exceed US$10,000,000; (xi) Investments
consisting of securities or notes received in settlement of accounts receivable
incurred in the ordinary course of business from a customer that such Loan
Party has reasonably determined is unable to make cash payments in accordance
with the terms of such account receivable; (xii) Investments by Foreign
Subsidiaries (other than Canadian Subsidiaries) in other Foreign Subsidiaries
(other than Canadian Subsidiaries); and (xiii) other Investments in an
aggregate amount not to exceed US$1,000,000. 
Each of the Loan Parties will not (and will not apply to the Bankruptcy
Court or the Canadian Court for authority to), and will cause their
Subsidiaries not to, invest amounts on deposit in the U.S. Term Loan Collateral
Account or the U.S. Investment Account in any investment product other than
Permitted Investments described in clauses (i) through (vi) of the
definition thereof.

 

Section 6.12           Disposition of Assets. 
Except as may be authorized by orders of the Bankruptcy Court or the
Canadian Court, as applicable, and on terms and conditions acceptable to the
Administrative Agent, each of the Loan Parties will not, and will cause their
Subsidiaries not to, sell or otherwise dispose of any assets (including,
without limitation, the capital stock of any Subsidiary of the Loan Parties)
except for (i) sales of Inventory in the ordinary course of business, (ii) sales
of surplus assets of the Loan Parties no longer used in the Loan Parties’
business operations, (iii) sales of assets listed on Schedule 6.12,
(iv) sales and other dispositions from one Loan Party to another Loan
Party, provided, that any such sales or dispositions shall be in the
ordinary course of such Loan Parties’ business, made in good faith, at
commercially reasonable prices and on commercially reasonable terms and
conditions, unless such transactions are between (A) U.S. Loan Parties and
the Canadian Borrower or (B) Canadian Guarantors, (v) sales and other
dispositions from one Foreign Subsidiary (other than Canadian Subsidiaries) to 

 

112

 

another Foreign Subsidiary (other than
Canadian Subsidiaries), and (vi) sales of assets having a fair market
value not in excess of US$25,000,000 in the aggregate.

 

Section 6.13           Nature of Business. 
Each of the Loan Parties will not (and will not apply to the Bankruptcy
Court or the Canadian Court for authority to), and will cause their
Subsidiaries not to, modify or alter in any material manner the nature and type
of its business as conducted at or prior to the Filing Date or the manner in
which such business is conducted (except as required by the Bankruptcy Code or
CCAA).

 

Section 6.14           Restrictive Agreements among Loan Parties.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, except for this Agreement or to the
extent existing on the Filing Date and disclosed on Schedule 6.14, permit,
place or agree to permit or place any restrictions on the payment of dividends
or other distributions among the Loan Parties or their Subsidiaries or
Affiliates or the making of advances or any other cash payments among the Loan
Parties or their Subsidiaries or Affiliates.

 

Section 6.15           Right of Subrogation among Loan Parties.  Each of the Loan Parties will not (and will
not apply to the Bankruptcy Court or the Canadian Court for authority to), and
will cause their Subsidiaries not to, assert any right of subrogation against
any other Loan Party until all Borrowings and all Letters of Credit are paid in
full and the Commitments are terminated.

 

Section 6.16           Derivative Agreements. 
Each of the Loan Parties will not (and will not apply to the Bankruptcy
Court or the Canadian Court for authority to), and will cause their
Subsidiaries not to, enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which any Loan Party or
any Subsidiary has actual exposure (other than those in respect of capital
stock of any Person), and (b) Swap Agreements entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of any Loan Party or
any Subsidiary, provided that in each case such Swap Agreements may only
be entered into in the ordinary course of the Loan Parties’ business,
consistent with past practices.

 

Section 6.17           Reorganization Plan. 
The Loan Parties will not (and will not apply to the Bankruptcy Court or
the Canadian Court for authority to), file any Reorganization Plan that does
not provide for the repayment in full in cash on the effective date thereof of
all outstanding Secured Obligations.

 

ARTICLE 7.                             EVENTS OF DEFAULT

 

Section 7.1             Events of Default.  In
the case of the happening of any of the following events and the continuance
thereof beyond the applicable period of grace (if any) set forth below (each,
an “Event of Default”):

 

(a)           any representation
or warranty made by any Loan Party in this Agreement or in any Loan Document or
in connection with this Agreement or the credit extensions hereunder or any
statement or representation made in any report, financial statement,
certificate 

 

113

 

or other
document furnished by any Loan Party to the Lenders under or in connection with
this Agreement, shall prove to have been false or misleading in any material
respect when made or delivered; or

 

(b)           default shall be
made in the payment of any principal of the Loans or any reimbursement
obligation or cash collateralization in respect of Letters of Credit, when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise; or

 

(c)           default shall be
made in the payment of any fees or interest on the Loans or other amounts
payable by the Loan Parties hereunder (other than any amounts referred to in
clause (b) of this Section), when and as the same shall become due and
payable, and such failure shall continue unremedied for more than one (1) Business
Day; or

 

(d)           default shall be
made by any Loan Party, or any of their respective Subsidiaries, in the due
observance or performance of any covenants, conditions or agreements contained
in ARTICLE 6 hereof; or

 

(e)           default shall be
made by any Loan Party, or any of their respective Subsidiaries, in the due
observance or performance of any covenant, condition or agreement (other than
the covenants, conditions or agreements contained in ARTICLE 6 hereof)
to be observed or performed pursuant to the terms of this Agreement or any of
the other Loan Documents and such default shall continue unremedied for more
than ten (10) days following the earlier of (i) notice of such breach
by the Administrative Agent or any Lender or (ii) any Loan Party having
knowledge of such breach; or

 

(f)            any of the Cases
shall be dismissed or converted to a case under Chapter 7 of the Bankruptcy
Code, or any Loan Party shall file a motion or other pleading seeking the
dismissal of any of the Cases under Section 1112 of the Bankruptcy Code or
otherwise; a trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code, a
responsible officer or an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in Section 1106(a)(3) and
(4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code shall be appointed in any of the Cases and the order appointing
such trustee, responsible officer or examiner shall not be reversed or vacated
within thirty (30) days after the entry thereof; or a trustee in bankruptcy,
receiver, interim receiver, receiver and manager or official with similar
powers shall be appointed with respect to any Canadian Loan Party or its
assets; or an application shall be filed by any Loan Party for the approval of
any other Superpriority Claim (other than the Carve-Out) in any of the Cases
which is pari  passu
with or senior to the claims of the Administrative Agent and the Lenders
against any Loan Party hereunder, or there shall arise or be granted any such pari
passu or senior Superpriority Claim without the consent of the
Administrative Agent in its exclusive discretion (provided that the
Administrative Agent’s discretion with respect to the foregoing claims shall be
limited to claims for less than $1,000,000); or the Bankruptcy Court shall
enter an order terminating the use of cash collateral for the purposes
described in Section 3.10; or a motion shall be filed by any Loan
Party in any of the Canadian Cases for the approval of any other superpriority
charge other than the CCAA Charges against any of the Canadian Loan Parties, or
there shall arise any such pari  passu or senior charge without
the consent of the Administrative Agent in its exclusive discretion 

 

114

 

(provided that
the Administrative Agent’s discretion with respect to the foregoing claims
shall be limited to claims for less than $1,000,000); or

 

(g)           the Bankruptcy Court
or the Canadian Court shall enter an order or orders granting relief from the
automatic stay applicable under Section 362 of the Bankruptcy Code or the
stay in the Initial Order, as applicable, to the holder or holders of any
security interest to permit foreclosure or enforcement of any kind (or the
granting of a deed in lieu of foreclosure or the like) on any assets of any of
the Loan Parties which have a value in excess of US$5,000,000  in the aggregate; or

 

(h)           a Change of Control
shall occur; or

 

(i)            the Loan Parties
shall fail to deliver any certified Borrowing Base Certificate when due and
such default shall continue unremedied for more than (i) one (1) Business
Day with respect to a daily Borrowing Base Certificate, (ii) three (3) Business
Days with respect to a weekly Borrowing Base Certificate and (iii) five (5) Business
Days with respect to a monthly Borrowing Base Certificate; or

 

(j)            any Loan Document shall
not be for any reason, or any of the Loan Parties shall so assert in a pleading
filed in any court, in full force and effect and enforceable in all material
respects in accordance with its terms; or

 

(k)           an order of the
Bankruptcy Court or the Canadian Court shall be entered reversing, amending,
supplementing, staying for a period in excess of ten (10) days, vacating
or otherwise modifying any of the Orders without the prior written consent of
the Administrative Agent; or

 

(l)            any judgment or
order as to a post-petition liability or debt for the payment of money in
excess of US$1,000,000  shall be
rendered against any of the Loan Parties or any of their Subsidiaries and such
judgment shall remain undischarged and there shall be any period of thirty (30)
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or

 

(m)          any non-monetary
judgment or order with respect to a post-petition event shall be rendered
against any Loan Party, or any of their respective Subsidiaries, which does or
would reasonably be expected to cause a Material Adverse Effect; or

 

(n)           the Loan Parties or
any of their Subsidiaries shall make any Pre-Petition Payment (whether by way
of adequate protection or otherwise) of principal or interest or otherwise on
account of any pre-petition Indebtedness or payables (including, without
limitation, reclamation claims) other than Pre-Petition Payments authorized by
the Bankruptcy Court or Canadian Court in respect of (i) accrued payroll
and related employee benefit expenses as of the Filing Date, (ii) reclamation
claims in such amounts as determined by the Loan Parties and agreed to by the
Administrative Agent; (iii) materialmen’s, shippers, warehousemen’s and
other similar liens and certain other pre-petition claims permitted by the
Administrative Agent and authorized by the Bankruptcy Court or Canadian Court
in an aggregate amount not to exceed $46,000,000, (iv) the payment of
current interest and letter of credit fees (and the payment of all interest and
fees that are accrued and unpaid as of the Filing Date) at the applicable
non-default 

 

115

 

rates provided
for pursuant to the Pre-Petition Credit Agreement, all as described in the Loan
Parties’ “Motion for an Order (I) Authorizing Debtors to Obtain
Post-Petition Financing; (II) Granting Liens, Including Priming Liens, and
Superpriority Claims Pursuant to 11 U.S.C. § 364; (III) Authorizing Use of
Proceeds to Effectuate Payout of Securitization Facilities (IV) Authorizing
Use of Cash Collateral Pursuant to 11 U.S.C. § 363; (V) Granting Adequate
Protection Pursuant to 11 U.S.C. §§ 363 and 364; and (VI) Scheduling a
Final Hearing,” and as authorized by the Orders, (v) payments in
respect of prepetition claims of taxing authorities in an aggregate amount not
to exceed $23,100,000 as described in the Loan Parties’ “Motion for an Order
Authorizing the Payment of Prepetition Sales, Use, Property, and Other Taxes
and Governmental Charges;” (vi) the payment of pre-petition claims to
certain critical vendors in an aggregate amount not to exceed $60,000,00 as
described in the Loan Parties’ “Motion for an Order Authorizing the Payment
of Prepetition Claims of Certain Critical Vendors;” (vii) the payment
of certain pre-petition obligations owed to customers and brokers in an
aggregate amount not to exceed $23,000,000 as described in the Loan Parties’ “Motion
for an Order Authorizing the Debtors to Honor Certain Prepetition Obligations
to Customers and Brokers and to Otherwise Continue Prepetition Customer and
Broker Programs and Practices in the Ordinary Course of Business;” (viii) payment
of pre-petition obligations in respect of insurance programs in an aggregate
amount not to exceed $7,000,000 as described in the Loan Parties’ “Motion
for an Order Authorizing the Debtors to (I) Make Installment Payments
Under Prepetition Insurance Premium Financing Agreements, (II) Continue
Prepetition Insurance Programs in the Ordinary Course of Business, and (III) Pay
All Prepetition Obligations in Respect Thereof;” or (ix) such other
orders which are satisfactory in form and substance to the Administrative
Agent; or

 

(o)           any Termination
Event described in clauses (iii) or (iv) of the definition of such
term shall have occurred and shall continue unremedied for more than ten (10) days
and the sum (determined as of the date of occurrence of such Termination Event)
of the Insufficiency of the Plan in respect of which such Termination Event shall
have occurred and be continuing and the Insufficiency of any and all other
Plans with respect to which such a Termination Event (described in such clauses
(iii) or (iv)) shall have occurred and then exist is equal to or greater
than US$1,000,000; or

 

(p)           (i) any Loan
Party or any ERISA Affiliate thereof shall have been notified by the sponsor of
a Multiemployer Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan, (ii) such Loan Party or such ERISA Affiliate does not
have reasonable grounds to contest such Withdrawal Liability and is not in fact
contesting such Withdrawal Liability in a timely and appropriate manner, and (iii) the
amount of such Withdrawal Liability specified in such notice, when aggregated
with all other amounts required to be paid to Multiemployer Plans in connection
with Withdrawal Liabilities (determined as of the date of such notification),
exceeds US$1,000,000  allocable to
post-petition obligations or requires payments exceeding US$100,000  per annum in excess of the annual payments
made with respect to such Multiemployer Plans by such Loan Party or such ERISA
Affiliate for the plan year immediately preceding the plan year in which such
notification is received; or

 

(q)           any Loan Party or
any ERISA Affiliate thereof shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of Title IV of ERISA, if as a result of
such reorganization or termination the aggregate annual contributions of such
Loan Party and its ERISA Affiliates to 

 

116

 

all
Multiemployer Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the plan years that include the Closing Date by an amount exceeding
US$1,000,000; or

 

(r)            any Loan Party or
any ERISA Affiliate thereof shall have committed a failure described in Section 302(f)(1) of
ERISA (other than the failure to make any contribution accrued and unpaid as of
the Filing Date) and the amount determined under Section 302(f)(3) of
ERISA is equal to or greater than US$1,000,000; or

 

(s)           any Loan Party shall
have failed to make current service contributions to a Canadian Pension Plan
(other than the failure to make any contribution accrued and unpaid as of the
Filing Date); or

 

(t)            it shall be
determined (whether by the Bankruptcy Court, the Canadian Court or by any other
judicial or administrative forum) that any Loan Party is liable for the payment
of claims arising out of any failure to comply (or to have complied) with
applicable Environmental Laws the payment of which will have a Material Adverse
Effect and the enforcement thereof shall not have been stayed;

 

then, and in every such event and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders, shall, take one or more of the following actions without
further order of or application to the Bankruptcy Court or the Canadian Court, provided
that with respect to item (iv) below and the enforcement of liens or other
remedies with respect to collateral referred to in item (v) below, the
Administrative Agent shall provide the Borrowers (with a copy to counsel for
the Official Creditors’ Committee appointed in any of the U.S. Cases, to the
United States Trustee for the Bankruptcy Court’s District, and to any monitor
in the Canadian Cases) with five (5) business days’ prior written notice
(the “Default Notice”), and,
solely to the extent required in the Canadian Cases, with leave of the Canadian
Court:  (i) terminate forthwith the
Commitments; (ii) declare the Loans then outstanding to be forthwith due
and payable, whereupon the principal of the Loans together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Loan Parties accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Loan
Parties, anything contained herein or in any other Loan Document to the
contrary notwithstanding; (iii) require the Loan Parties upon demand to
forthwith deposit in the Letter of Credit Account or Canadian Letter of Credit
Account, as the case may be, cash in an amount, taken together with any amounts
then held in the Letter of Credit Account or Canadian Letter of Credit Account,
as the case may be, is equal to the greater of (A) an amount, as
determined by the Fronting Banks and the Applicable Agents, equal to the face
amount of all outstanding Letters of Credit issued by the Fronting Banks plus
the sum of all projected contractual obligations to the Applicable Agents, the
Fronting Banks and the Lenders of the Borrowers thereunder through the
expiration date(s) of such Letters of Credit, and (B) 105% of the
aggregate Letter of Credit Outstandings issued by the Fronting Banks  (and to the extent the Loan Parties shall fail to furnish
such funds as demanded by the Administrative Agent, the Administrative Agent
shall be authorized to debit the accounts of the Loan Parties maintained with
the Administrative Agent in such amount five (5) Business Days after the
giving of the Default Notice (the “Default Notice Period”));
(iv) set-off amounts in any Collateral Account or 

 

117

 

any other accounts maintained with the Administrative Agent or any
other Lender or their Affiliates and apply such amounts to the obligations of
the Loan Parties hereunder and in the other Loan Documents; or (v) exercise
any and all remedies (including, without limitation, with respect to the Liens
in favor of the Agents and the Secured Parties) under the Loan Documents and
under applicable law available to the Administrative Agent and the Lenders.

 

ARTICLE 8.                             THE AGENTS

 

Section 8.1             Administration.  The
general administration of the Loan Documents shall be performed by the
Administrative Agent.  Each Lender hereby
irrevocably authorizes each Agent, at its discretion, to take or refrain from
taking such actions as agent on its behalf and to exercise or refrain from
exercising such powers under the Loan Documents as are delegated by the terms
hereof or thereof, as appropriate, together with all powers reasonably
incidental thereto (including the release of Collateral in connection with any
transaction that is expressly permitted by the Loan Documents).  The Agents shall not have any duties or
responsibilities except as set forth in this Agreement and the remaining Loan
Documents.

 

Section 8.2             Advances and Payments. 
On the date of each Loan, the Applicable Agent shall be authorized (but
not obligated) to advance, for the account of each of the Lenders, the amount
of the Loan to be made by it in accordance with its Commitment hereunder.  Should the Applicable Agent do so, each of
the Lenders agrees forthwith to reimburse such Agent in immediately available
funds for the amount so advanced on its behalf by such Agent, together with
interest at the Federal Funds Effective Rate if not so reimbursed on the date
due from and including such date but not including the date of reimbursement.

 

Section 8.3             Sharing of Setoffs.

 

(a)           Each U.S. Lender
agrees that if it shall, through the exercise of a right of banker’s lien,
setoff or counterclaim against the U.S. Loan Parties and the Canadian Borrower,
including, but not limited to, a secured claim or other security or interest
arising from, or in lieu of, such secured claim and received by such U.S.
Lender under any applicable bankruptcy, insolvency or other similar law, or
otherwise, obtain payment in respect of its U.S. Loans as a result of which the
unpaid portion of its U.S. Loans is proportionately less than the unpaid
portion of the U.S. Loans of any other U.S. Lender (a) it shall promptly
purchase at par (and shall be deemed to have thereupon purchased) from such
other U.S. Lender a participation in the U.S. Loans of such other U.S. Lender,
so that the aggregate unpaid principal amount of each U.S. Lender’s U.S. Loans
and its participation in U.S. Loans of the other U.S. Lenders shall be in the
same proportion to the aggregate unpaid principal amount of all U.S. Loans then
outstanding as the principal amount of its U.S. Loans prior to the obtaining of
such payment was to the principal amount of all U.S. Loans outstanding prior to
the obtaining of such payment and (b) such other adjustments shall be made
from time to time as shall be equitable to ensure that the U.S. Lenders share
such payment pro-rata, provided that if any such non-pro-rata payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be rescinded (without interest). 
Each of the U.S. Loan Parties expressly consents to the foregoing
arrangements and agrees that any U.S. Lender holding (or deemed to be holding)
a participation in a U.S. Loan may exercise any and all rights of banker’s
lien, setoff (in each case, subject to the same notice requirements as pertain
to clause (iv) of the remedial provisions of Section 7.1) 

 

118

 

or
counterclaim with respect to any and all moneys owing by the U.S. Loan Parties
to such U.S. Lender as fully as if such U.S. Lender held a promissory note and
was the original obligee thereon, in the amount of such participation.

 

(b)           Each Canadian Lender
agrees that if it shall, through the exercise of a right of banker’s lien,
setoff or counterclaim against the Canadian Loan Parties and the U.S. Borrower,
including, but not limited to, a secured claim or other security or interest
arising from, or in lieu of, such secured claim and received by such Canadian
Lender under any applicable bankruptcy, insolvency or other similar law, or
otherwise, obtain payment in respect of its Canadian Loans as a result of which
the unpaid portion of its Canadian Loans is proportionately less than the
unpaid portion of the Canadian Loans of any other Canadian Lender (a) it
shall promptly purchase at par (and shall be deemed to have thereupon purchased)
from such other Canadian Lender a participation in the Canadian Loans of such
other Canadian Lender, so that the aggregate unpaid principal amount of each
Canadian Lender’s Canadian Loans and its participation in Canadian Loans of the
other Canadian Lenders shall be in the same proportion to the aggregate unpaid
principal amount of all Canadian Loans then outstanding as the principal amount
of its Canadian Loans prior to the obtaining of such payment was to the
principal amount of all Canadian Loans outstanding prior to the obtaining of
such payment and (b) such other adjustments shall be made from time to
time as shall be equitable to ensure that the Canadian Lenders share such
payment pro-rata, provided that if any such non-pro-rata payment is thereafter
recovered or otherwise set aside such purchase of participations shall be
rescinded (without interest).  Each of
the Canadian Loan Parties expressly consents to the foregoing arrangements and
agrees that any Canadian Lender holding (or deemed to be holding) a
participation in a Canadian Loan may exercise any and all rights of banker’s
lien, setoff (in each case, subject to the same notice requirements as pertain
to clause (iv) of the remedial provisions of Section 7.1) or
counterclaim with respect to any and all moneys owing by the Canadian Loan
Parties to such Canadian Lender as fully as if such Canadian Lender held a
promissory note and was the original obligee thereon, in the amount of such
participation.

 

Section 8.4             Agreement of Required Lenders.  Upon any occasion requiring or permitting an
approval, consent, waiver, election or other action on the part of the Required
Lenders, action shall be taken by the Agents for and on behalf or for the
benefit of all Lenders upon the direction of the Required Lenders, and any such
action shall be binding on all Lenders. 
No amendment, modification, consent, or waiver shall be effective except
in accordance with the provisions of Section 9.10.

 

Section 8.5             Liability of Agents.

 

(a)           Each Agent, when
acting on behalf of the Lenders, may execute any of its respective duties under
this Agreement by or through any of its respective officers, agents, and
employees, and neither the Agents nor their directors, officers, agents,
employees or Affiliates shall be liable to the Lenders or any of them for any
action taken or omitted to be taken in good faith, or be responsible to the
Lenders or to any of them for the consequences of any oversight or error of
judgment, or for any loss, unless the same shall happen through its gross
negligence or willful misconduct.  The
Agents and their respective directors, officers, agents, employees and
Affiliates shall in no event be liable to the Lenders or to any of them for any
action taken or omitted to be taken by them pursuant to instructions received
by them from the Required 

 

119

 

Lenders or in
reliance upon the advice of counsel selected by it.  Without limiting the foregoing, neither the
Agents, nor any of their respective directors, officers, employees, agents or
Affiliates shall be responsible to any Lender for the due execution, validity,
genuineness, effectiveness, sufficiency, or enforceability of, or for any
statement, warranty, or representation in, this Agreement, any Loan Document or
any related agreement, document or order, or shall be required to ascertain or
to make any inquiry concerning the performance or observance by the Loan
Parties of any of the terms, conditions, covenants, or agreements of this
Agreement or any of the Loan Documents.

 

(b)           Neither the Agents
nor any of their respective directors, officers, employees, agents or
Affiliates shall have any responsibility to the Loan Parties on account of the
failure or delay in performance or breach by any Lender or by the Loan Parties
of any of their obligations under this Agreement or any of the Loan Documents
or in connection herewith or therewith.

 

(c)           The Agents, in their
capacity as Agents hereunder, shall be entitled to rely on any communication,
instrument, or document reasonably believed by such person to be genuine or
correct and to have been signed or sent by a person or persons believed by such
person to be the proper person or persons, and such person shall be entitled to
rely on advice of legal counsel, independent public accountants, and other
professional advisers and experts selected by such person.

 

Section 8.6             Reimbursement and Indemnification.  Each Lender agrees (i) to reimburse (x) the
Agents for such Lender’s Applicable Percentage of any expenses and fees
incurred for the benefit of the Lenders under this Agreement and any of the
Loan Documents, including, without limitation, counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, and
any other expense incurred in connection with the operations or enforcement
thereof not reimbursed by the Loan Parties and (y) the Agents for such
Lender’s Applicable Percentage of any expenses of the Agents incurred for the
benefit of the Lenders that the Loan Parties have agreed to reimburse pursuant
to Section 9.5 and has failed to so reimburse and (ii) to
indemnify and hold harmless the Agents and any of their directors, officers,
employees, agents or Affiliates, on demand, in the amount of its proportionate
share, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against it or any of them in any way relating to or arising out of this
Agreement or any of the Loan Documents or any action taken or omitted by it or
any of them under this Agreement or any of the Loan Documents to the extent not
reimbursed by the Loan Parties (except such as shall result from their
respective gross negligence or willful misconduct).

 

Section 8.7             Rights of Agents.  It
is understood and agreed that the Agents shall have the same rights and powers
hereunder (including the right to give such instructions) as the other Lenders
and may exercise such rights and powers, as well as its rights and powers under
other agreements and instruments to which it is or may be party, and engage in
other transactions with any Loan Party, as though it were not an Agent
hereunder.

 

120

 

Section 8.8                                      Other Duties, etc. 
Anything herein to the contrary notwithstanding, none of the Joint
Bookrunners, lead arrangers, syndication agents, or documentation agents shall
have any powers, duties or responsibilities under this Agreement or any of the
other Loan Documents, except in its capacity, as applicable, as an Agent, a
Lender or Fronting Bank hereunder.

 

Section 8.9                                      Independent Lenders. 
Each Lender acknowledges that it has decided to enter into this
Agreement and to make the Loans hereunder based on its own analysis of the
transactions contemplated hereby and of the creditworthiness of the Loan
Parties and agrees that the Agents shall bear no responsibility therefor.

 

Section 8.10                                Notice of
Transfer.  The Administrative
Agent may deem and treat a Lender party to this Agreement as the owner of such
Lender’s portion of the Loans for all purposes, unless and until a written
notice of the assignment or transfer thereof executed by such Lender shall have
been received by the Administrative Agent.

 

Section 8.11                                Successor
Agents.  Each Agent may resign
at any time by giving written notice thereof to the Lenders and the Loan
Parties.  Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent, which shall
be reasonably satisfactory to the Loan Parties. 
If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment, within thirty (30) days after
the retiring Agent’s giving of notice of resignation, the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of a least
US$100,000,000, which shall be reasonably satisfactory to the Loan
Parties.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this ARTICLE 8 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.

 

Section 8.12                                Quebec
Security.

 

(a)                                  For
greater certainty, and without limiting the powers of any Agent, each of the
Agents, the Lenders and the Fronting Banks, for themselves, and each Lender for
each of its Affiliates, hereby irrevocably constitutes JPMorgan Chase Bank,
N.A., Toronto Branch as the holder of an irrevocable power of attorney (fondé de pouvoir within the meaning of Article 2692 of
the Civil Code of Québec) in order to hold hypothecs
and security granted by any Loan Party on property pursuant to the laws of the
Province of Québec in order to secure obligations of any Loan Party under any
bond, debenture or similar title of indebtedness, issued by any Loan Party, and
hereby agrees that JPMorgan Chase Bank, N.A., Toronto Branch may act as the
bondholder and mandatary (i.e. agent) with respect to any bond, debenture or
similar title of indebtedness that may be issued by any Loan Party and pledged
in favour of JPMorgan Chase Bank, N.A., Toronto Branch, for the benefit of the
Secured Parties. The execution by JPMorgan Chase Bank, N.A., Toronto Branch,
acting as fondé de pouvoir, bondholder and
mandatary, prior to the execution of this Agreement of any deeds of hypothec or
other security documents is hereby ratified and confirmed.

 

121

 

(b)                                 Notwithstanding
the provisions of Section 32 of An Act respecting the
special powers of legal persons (Québec), JPMorgan Chase Bank, N.A.,
Toronto Branch may acquire and be the holder of any bond, debenture or similar
title of indebtedness issued by any Loan Party (i.e. the fondé de
pouvoir may acquire and hold the first bond, debenture or similar
title of indebtedness issued under any deed of hypothec by any Loan Party).

 

(c)                                  The
constitution of JPMorgan Chase Bank, N.A., Toronto Branch as fondé de pouvoir, and as bondholder and mandatary with
respect to any bond, debenture, or similar title of indebtedness that may be
issued and pledged from time to time to JPMorgan Chase Bank, N.A., Toronto
Branch for the benefit of the Secured Parties, shall be deemed to have been
ratified and confirmed by each Person accepting an assignment of, a
participation in or an arrangement in respect of, all or any portion of any
Secured Parties’ rights and obligations under this Agreement by the execution
of an assignment, including an Assignment and Acceptance, or other agreement
pursuant to which it becomes such assignee or participant, and by each
successor Agent by the execution of an Assignment and Acceptance  or other agreement, or by the compliance
with other formalities, as the case may be, pursuant to which it becomes a
successor Agent under this Agreement.

 

(d)                                 JPMorgan
Chase Bank, N.A., Toronto Branch acting as fondé de pouvoir,
bondholder or mandatary shall have the same rights, powers, immunities,
indemnities and exclusions from liability as are prescribed in favour of the
Agents in this Agreement, which shall apply mutatis mutandis to
JPMorgan Chase Bank, N.A., Toronto Branch, acting as fondé de
pouvoir, bondholder or mandatary.

 

ARTICLE 9.       MISCELLANEOUS

 

Section 9.1                                      Notices.

 

(a)                                  Except
in the case of notices and other communications expressly permitted to be given
by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

 

(i)                                     if
to the Loan Parties, to Smurfit-Stone Container Corporation at Six CityPlace
Drive, 10th Floor, St. Louis, MO 63141, Attention of Chief
Financial Officer (Fax No. (314) 787-6162);

 

(ii)                                  if
to the Administrative Agent or the Collateral Agent, to JPMorgan Chase Bank,
Loan and Agency Services Group, 1111 Fannin Street, 10th Floor, Houston, Texas
77002, Attention of Christian Cho (Telecopy No. 713-427-6307) and Sylvia
Gutierrez (Telecopy No. 713-427-6307), with a copy to JPMorgan Chase Bank,
N.A., 277 Park Avenue, 8th Floor, New York, NY 10172, Attention of Ann
Kurinskas (Telecopy No. 212-622-4556);

 

(iii)                               if
to the Canadian Administrative Agent or the Canadian Collateral Agent, to
JPMorgan Chase Bank, N.A., Toronto Branch 200 Bay 

 

122

 

Street, Suite 1800,
Toronto, Ontario M5J 2J2, Attention of Amanda Vidulich (Telecopy No. 416-981-9128);

 

(iv)                              if
to JPMCB, as Fronting Bank with respect to any U.S. Revolving Facility Letter
of Credit, to it at JPMorgan Chase Bank, N.A., 300 South Riverside Plaza, L/C
Department, Mail code: IL1-0236, Chicago, IL 60606, Attention of Floro
Alcantara (Telephone: 312-954-1910) and Annette Bond (Telephone: 312-954-3240)
Fax: 312-954-0203, with a copy to JPMorgan Chase Bank, N.A., 277 Park Avenue,
8th Floor, New York, NY 10172, Attention of Ann Kurinskas (Telecopy No. 212-622-4556);
and

 

(v)                                 if
to JPMCB, as Fronting Bank with respect to any Canadian Revolving Facility
Letter of Credit, to it at JPMorgan Chase Bank, N.A., Toronto Branch L/C
Department, 200 Bay Street, Floor 18 Toronto, M5J 2J2, Canada, Attention of
Jennifer McLaughlin (Telephone: 416-981-2324; Fax: 416-981-2375), with a copy
to JPMorgan Chase Bank, N.A., 277 Park Avenue, 8th Floor, New York, NY 10172,
Attention of Ann Kurinskas (Telecopy No. 212-622-4556); and

 

(vi)                              if
to any Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.

 

(b)                                 Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to ARTICLE
2 unless otherwise agreed by the Administrative Agent and the
applicable Lender.  The Administrative
Agent or the Loan Parties may, in their respective discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by them; provided that approval of such
procedures may be limited to particular notices or communications.

 

(c)                                  Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

 

Section 9.2                                      Survival of Agreement, Representations and Warranties, etc.  All warranties, representations and covenants
made by any Loan Party herein or in any certificate or other instrument
delivered by it or on its behalf in connection with this Agreement shall be
considered to have been relied upon by the Lenders and shall survive the making
of the Loans herein contemplated regardless of any investigation made by any
Lender or on its behalf and shall continue in full force and effect so long as
any amount due or to become due hereunder is outstanding and unpaid and so long
as the Commitments have not been terminated. 
All statements in any such certificate or other instrument shall
constitute representations and warranties by the Loan Parties hereunder with
respect to the Loan Parties.

 

123

 

Section 9.3                                      Successors and Assigns.

 

(a)                                  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of a Fronting Bank that issues any Letter of Credit),
except that (i) the Borrowers may not assign or otherwise transfer any of
their rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrowers without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of a Fronting Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section)
and, to the extent expressly contemplated hereby, the Related Parties of each
of the Administrative Agent, the Fronting Bank(s) and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)

 

(i)                                     Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees (other than a Loan Party or an Affiliate of a
Loan Party) all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it) with the prior written consent (such consent not to be unreasonably
withheld) of:

 

(A)                              the
Administrative Agent, provided that no consent of the Administrative Agent
shall be required for an assignment of all or any portion of a Term Loan to a
Lender, an Affiliate of a Lender or an Approved Fund; and

 

(B)                                each
Fronting Bank, provided that no consent of any Fronting Bank shall be required
for an assignment of all or any portion of a Term Loan.

 

(ii)                                  Assignments
shall be subject to the following additional conditions:

 

(A)                              except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans of any Class, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless the
Administrative Agent otherwise consents;

 

124

 

(B)                                each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement,
provided that this clause shall not be construed to prohibit the assignment of
a proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

 

(C)                                the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500;

 

(D)                               the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire in which the assignee designates one or
more credit contacts to whom all syndicate-level information (which may contain
material non-public information about the Loan Parties and their Related
Parties or their respective securities) will be made available and who may
receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws;

 

(E)                                 no
such assignment shall be made to a Loan Party or any Affiliate of a Loan Party;
and

 

(F)                                 with
the exception of assignments from the Converting Lenders necessary to effect
further allocations of the Commitments and the Loans, and except as directed by
the Administrative Agent pursuant to Section 9.3(e), no such
assignments shall be made prior to the earlier of (I) the date the
Bankruptcy Court enters the Final Order or (II) the date the
Administrative Agent declares in writing the syndication of the Commitments to
be complete.

 

For the purposes of this Section 9.3(b), the term “Approved
Fund” has the following meaning:

 

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

 

(iii)                               Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and
Acceptance the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a 

 

125

 

Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Section 2.15, Section 2.16, Section 2.19,
Section 9.5, Section 9.6).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 9.3
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

(iv)                              The
Administrative Agent, acting for this purpose as an agent of the Borrowers,
shall maintain at one of its offices a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loans and
payments made by the Fronting Bank(s) pursuant to a Letter of Credit owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent, the Fronting Bank(s) and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrowers, the Fronting Bank(s) and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

 

(v)                                 Upon
its receipt of a duly completed Assignment and Acceptance executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it under this Agreement, the Administrative
Agent shall have no obligation to accept such Assignment and Acceptance and
record the information therein in the Register unless and until such payment
shall have been made in full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

126

 

(c)                                  Any
Lender may, without the consent of the Borrowers, the Administrative Agent, or
the Fronting Banks, sell participations to one or more banks or other entities
(a “Participant”) in all or
a portion of such Lender’s rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrowers, the Administrative
Agent, the Fronting Bank(s) and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section 9.10(a) that
affects such Participant.  The Loan
Parties agree that each Participant shall be entitled to the benefits of Section 2.15,
Section 2.16 and Section 2.19 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section.  To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 2.26 as though it were a Lender, provided such
Participant agrees to be subject to Section 8.3 as though it were a
Lender.

 

(d)                                 Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to
any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

(e)                                  Each
Lender having a Commitment on the Closing Date (a “Closing Date Lender”), hereby agrees to
execute and deliver, at any time and from time to time on or prior to the date
the Bankruptcy Court enters the Final Order, such Assignments and Acceptances
as the Administrative Agent may direct in order to effect secondary allocations
of the Commitments to other Persons who shall become Lenders hereunder.  The Closing Date Lenders shall effect such
assignments with the payment of a corresponding amount of fees to market as the
Administrative Agent may direct, but which fees, as paid by a Closing Date
Lender, shall be no greater than the amount of fees to market received by such
Closing Date Lender in connection with such Closing Date Lender’s initial
Commitments under this Agreement.

 

Section 9.4                                      Confidentiality.  Each
Agent, the Fronting Banks and each of the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential in accordance herewith), (b) to the extent
requested by any regulatory authority, (c) to the extent required by
Requirement of Laws or by any subpoena or similar legal process, (d) to
any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating

 

127

 

to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or participant in, or any prospective
assignee of or participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors)
to any swap or derivative transaction relating to the Loan Parties and their
obligations, (g) with the consent of the Borrowers or (h) to the
extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to any
Agent, any Fronting Bank or any Lender on a non-confidential basis from a
source other than the Borrowers. For the purposes of this Section, “Information” means all information
received from the Borrowers or any of their Subsidiaries relating to the
Borrowers or any of their Subsidiaries or any of their respective businesses,
other than any such information that is available to any Agent, any Fronting
Bank or any Lender on a non-confidential basis and not known by such Person to
be in contravention of any applicable confidentiality or similar provision
prior to disclosure by the Borrowers. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

EACH AGENT, EACH FRONTING BANK AND EACH OF
THE LENDERS ACKNOWLEDGES THAT INFORMATION FURNISHED TO IT MAY INCLUDE
MATERIAL NON-PUBLIC INFORMATION CONCERNING ANY OF THE LOAN PARTIES OR THEIR
SUBSIDIARIES AND THEIR RESPECTIVE RELATED PARTIES OR THEIR RESPECTIVE SECURITIES,
AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF
MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL
NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALL INFORMATION, INCLUDING REQUESTS FOR
WAIVERS AND AMENDMENTS, FURNISHED BY THE LOAN PARTIES OR THE AGENTS PURSUANT
TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL
INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE
LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE
LOAN PARTIES AND THE AGENTS THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE
QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES
AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

Section 9.5                                      Expenses.  Whether or
not the transactions hereby contemplated shall be consummated, the Loan Parties’
agree to pay all reasonable expenses incurred by each Agent and the Co-Lead
Arrangers (including, without limitation, the reasonable fees and disbursements
of Bryan Cave LLP, counsel for the Administrative Agent, any other local
counsel that such Agent shall retain (including Canadian and Delaware counsel)
and any internal or third-party 

 

128

 

appraisers, consultants and auditors advising
such Agent and the Co-Lead Arrangers and their counsel) in connection with the
preparation, execution, delivery and administration of this Agreement and the
other Loan Documents, the making of the Loans and the issuance of the Letters
of Credit, the perfection of the Liens contemplated hereby, the syndication of
the transactions contemplated hereby, the costs, fees and expenses of each
Agent and the Co-Lead Arrangers in connection with the initial and periodic
collateral reviews and appraisals, field audits, monitoring of assets
(including collateral monitoring fees of or incurred by the Administrative
Agent) and publicity expenses, and, following the occurrence of an Event of
Default, all expenses incurred by the Lenders and each Agent in the enforcement
or protection of the rights of any one or more of the Lenders or such Agent in
connection with this Agreement or the other Loan Documents, including but not
limited to the fees and disbursements of any counsel for the Lenders or such
Agent.  Such payments by the Loan Parties
shall be made upon delivery of a statement setting forth such costs and
expenses.  Whether or not the
transactions hereby contemplated shall be consummated, the Loan Parties agree
to reimburse the Administrative Agent and the Co-Lead Arrangers for the expenses
set forth in the Commitment Letter and the reimbursement provisions thereof are
hereby incorporated herein by reference. 
The obligations of the Loan Parties under this Section shall
survive the termination of this Agreement or the payment of the Loans.

 

Section 9.6                                      Indemnity.

 

(a)                                  Each
of the Loan Parties agree to indemnify and hold harmless each Agent, the
Co-Lead Arrangers and the Lenders and their directors, officers, employees,
trustees, advisors, agents and Affiliates (each an “Indemnified Party”) from
and against any and all expenses, losses, claims, damages and liabilities
incurred by such Indemnified Party arising out of claims made by any Person in
any way relating to the transactions contemplated hereby, but excluding
therefrom all expenses, losses, claims, damages, and liabilities to the extent
that they are determined by the final judgment of a court of competent
jurisdiction to have resulted from (i) the willful misconduct or gross
negligence of such Indemnified Party or (ii) an action commenced by such
Indemnified Party against a Loan Party and which action results in a final
judgment in favor of such Loan Party. 
The obligations of the Loan Parties under this Section shall
survive the termination of this Agreement and the payment of the Loans.

 

(b)                                 To
the extent that a Borrower fails to pay any amount required to be paid by it to
the Applicable Agent or a Fronting Bank under Section 9.5 or
paragraph (a) of this Section, each Lender severally agrees to pay to the
Applicable Agent or the Fronting Bank, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Applicable Agent or the Fronting Bank in its capacity as such.

 

(c)                                  To
the extent permitted by applicable law, no Loan Party, Agent or any of the
Lenders shall assert, and each Loan Party, Agent and Lender hereby waives, any
claim against any other Loan Party, Agent or any Lender, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument 

 

129

 

contemplated
hereby, any Loan or Letter of Credit or the use of the proceeds thereof except
to the extent such damages would otherwise be subject to indemnity hereunder.

 

Section 9.7                                      Choice of Law.  THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL, UNLESS OTHERWISE SPECIFIED
THEREIN, IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
WHOLLY WITHIN SUCH STATE AND THE BANKRUPTCY CODE.

 

Section 9.8                                      No Waiver.  No failure
on the part of any Agent or any of the Lenders to exercise, and no delay in
exercising, any right, power or remedy hereunder or any of the other Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.

 

Section 9.9                                      Extension of Maturity. 
Should any payment of principal of or interest or any other amount due
hereunder become due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of principal, interest shall be payable thereon at the rate herein
specified during such extension.

 

Section 9.10                                Amendments, etc.

 

(a)                                  No
modification, amendment or waiver of any provision of this Agreement, the
Security and Pledge Agreement or any other Loan Document, and no consent to any
departure by the Loan Parties therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given; provided, however, that no such
modification or amendment shall without the written consent of each Lender
affected thereby (x) increase the Commitment of such Lender (it being
understood that a waiver of an Event of Default shall not constitute an
increase in the Commitment of a Lender), or (y) reduce the principal
amount of any Loan (or any unreimbursed Letter of Credit) or the rate of
interest payable thereon, or extend any date for the payment of interest,
principal or fees hereunder or reduce any Fees payable hereunder or extend the
final maturity of the Loan Parties’ obligations hereunder (subject to Section 2.30
and Section 2.31); and, provided, further,
that no such modification or amendment shall without the written consent of (A) all
of the Lenders (i) amend or modify any provision of this Agreement which
provides for the unanimous consent or approval of the Lenders or the consent or
approval of each affected Lender, (ii) amend this Section 9.10
or the definition of Required Lenders or Super-majority Lenders, (iii) amend
or modify the Superpriority Claim status of the Lenders contemplated by Section 2.24,
(iv) increase the Total Revolving Commitment by an amount in excess of
US$100,000,000, (v) release all or substantially all of the Collateral
from the Liens created hereunder and under the other Loan Documents or (B) the Super-majority Lenders (i) release
any material portion (but less than all or substantially all) of the Collateral
from the Liens created hereunder and under the other Loan Documents (other than
with respect to asset sales permitted under Section 6.12), (ii) release
any Loan Party from its joint and several obligations under ARTICLE 10, (iii) alter
the eligibility 

 

130

 

standards or
amend any of the component definitions used in determining the Borrowing Bases
in a manner which would increase the amount of the Borrowing Bases, (iv) increase
the Total Revolving Commitment by an amount up to US$100,000,000, (v) increase
the advance rates in calculation of the Borrowing Bases, (vi) change Section 7.1(f) or
(vii) change Section 2.33. 
No such amendment or modification may adversely affect the rights and
obligations of the Agents or any Fronting Bank hereunder without its prior
written consent.  No notice to or demand
on any Loan Party shall entitle any Loan Party to any other or further notice
or demand in the same, similar or other circumstances.  Each assignee under Section 9.3
shall be bound by any amendment, modification, waiver, or consent authorized as
provided herein, and any consent by a Lender shall bind any Person subsequently
acquiring an interest on the Loans held by such Lender.  No amendment to this Agreement shall be
effective against any Loan Party unless in writing and signed by such Loan
Party.  The Administrative Agent shall
provide written notice to the monitor in the Canadian Cases promptly following
any request from the Canadian Loan Parties pursuant to this Agreement or any of
the other Loan Documents for the consent of the Lenders to release any material
portion of or all or substantially all of the Collateral from the Liens in
favor of the Agents on behalf of the Secured Parties or for the release of the
proceeds of such Collateral from such Liens.

 

(b)                                 Notwithstanding
anything to the contrary contained in Section 9.10(a), in the event
that any Loan Party requests that this Agreement be modified or amended in a
manner which would require the unanimous consent of all of the Lenders or the
consent of the Super-majority Lenders and such modification or amendment is
agreed to by the Consenting Lenders (as hereinafter defined), then with the
consent of the Loan Parties and the Consenting Lenders, the Loan Parties and
the Consenting Lenders shall be permitted to amend the Agreement without the
consent of the Lender or Lenders which did not agree to the modification or
amendment requested by such Loan Party (such Lender or Lenders, collectively
the “Minority
Lenders”) to provide for (w) the termination of the
Commitment of each of the Minority Lenders, (x) the addition to this
Agreement of one or more other financial institutions (each of which shall be
an Eligible Assignee), or an increase in the Revolving Commitment of one or
more of the Consenting Lenders, so that the Total Revolving Commitment after
giving effect to such amendment shall be in the same amount as the Total
Revolving Commitment immediately before giving effect to such amendment, (y) if
any Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new financial institutions or Consenting Lender or
Lenders, as the case may be, as may be necessary to repay in full the
outstanding Loans of the Minority Lenders immediately before giving effect to
such amendment and (z) such other modifications to this Agreement as may
be appropriate.  As used herein, the term
“Consenting Lenders” shall
mean, at any time, Lenders having aggregate Total Canadian Outstandings, Total
U.S. Outstandings and unused Commitments representing more than 66-2/3% of the
aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused Commitments
at such time.

 

Section 9.11                                Severability.  Any provision of this Agreement which is
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.

 

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Section 9.12                                Headings.
Section headings used herein are for convenience only and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.

 

Section 9.13                                Execution in
Counterparts.  This Agreement
may be executed in any number of counterparts, each of which shall constitute
an original, but all of which taken together shall constitute one and the same
instrument.

 

Section 9.14                                Prior
Agreements; Inconsistencies. 
This Agreement represents the entire agreement of the parties with
regard to the subject matter hereof and the terms of any letters and other
documentation entered into between any Loan Party and any Lender or the
Administrative Agent prior to the execution of this Agreement which relate to
Loans to be made hereunder shall be replaced by the terms of this Agreement
(except as otherwise expressly provided herein with respect to the Commitment
Letter and the fee letter referred to therein, including without limitation the
provisions of Section 2.20). 
In the event of any conflicts between the express provisions of this
Agreement and the Orders, the provisions of the Orders shall control to the
extent of any such inconsistency.  In the
event of any conflicts between the express provisions of this Agreement and the
Security Agreement, the provisions of this Agreement shall control to the
extent of any such inconsistency.

 

Section 9.15                                Further
Assurances.  Whenever and so
often as reasonably requested by an Agent, the Loan Parties will promptly
execute and deliver or cause to be executed and delivered all such other and
further instruments, documents or assurances, and promptly do or cause to be
done all such other and further things as may be necessary and reasonably
required in order to further and more fully vest in the Agents all rights,
interests, powers, benefits, privileges and advantages conferred or intended to
be conferred by this Agreement and the other Loan Documents.

 

Section 9.16                                Waiver of
Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.

 

Section 9.17                                Subordination
of Intercompany Indebtedness. 
Each of the Loan Parties agree that any and all Intercompany
Indebtedness owed to any Loan Party shall be subordinate and subject in right
of payment to the prior payment, in full and in cash, of all Secured
Obligations.  Notwithstanding any right
of any Loan Party to ask, demand, sue for, take or receive any payment in
respect of any Intercompany Indebtedness owed to any Loan Party, any and all
rights, liens and security interests of any Loan Party, whether now or
hereafter arising and howsoever existing, in any assets of any other Subsidiary
of Parent (whether constituting part of the Collateral given to the Agents for
the benefit of the Secured Parties to secure payment of all or any part of the
Secured Obligations or otherwise) shall be and are subordinated to the rights
of the Agents and the Secured Parties in those assets.  No Loan Party shall have any right to
possession of any such asset or to foreclose upon any such asset, whether by
judicial action or otherwise, unless and until all of the Secured Obligations
(other than unasserted contingent indemnity obligations) shall have been fully
paid and satisfied and all financing arrangements among the Loan Parties and
the Lenders have been terminated.  So
long as any Event of Default shall have occurred and be continuing, then, any
payment or distribution of any kind or 

 

132

 

character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any Intercompany Indebtedness owed by any Loan Party shall be paid or delivered
directly to the Administrative Agent for application on any of the Secured
Obligations, due or to become due, until such Secured Obligations (other than
contingent indemnity obligations) shall have first been fully paid and satisfied.  Each of the Loan Parties irrevocably
authorize and empower the Administrative Agent to demand, sue for, collect and
receive every such payment or distribution and give acquittance therefor and to
make and present for and on behalf of any Loan Party such proofs of claim and
take such other action, in the Administrative Agent’s own name or in the name
of the applicable Loan Party or otherwise, as the Administrative Agent may deem
necessary or advisable for the enforcement of this Section 9.17.  The Administrative Agent may vote such proofs
of claim in any such proceeding, receive and collect any and all dividends or
other payments or disbursements made thereon in whatever form the same may be
paid or issued and apply the same on account of any of the Secured
Obligations.  Should any payment,
distribution, security or instrument or proceeds thereof be received by any
Loan Party upon or with respect to the Intercompany Indebtedness at any time an
Event of Default shall have occurred and be continuing and prior to the
satisfaction of all of the Secured Obligations and the termination of all
financing arrangements among the Loan Parties and the Lenders, the applicable
Loan Party shall receive and hold the same in trust, as trustee, for the
benefit of the Lenders and shall so long as any Event of Default shall have
occurred and be continuing promptly deliver the same to the Administrative
Agent, for the benefit of the Lenders, in precisely the form received (except
for the endorsement or assignment of the applicable Loan Party where
necessary), for application to any of the Secured Obligations, due or not due,
and, until so delivered, the same shall be held in trust by the applicable Loan
Party as the property of the Lenders.  If
any Loan Party fails to make any such endorsement or assignment to the
Administrative Agent, the Administrative Agent or any of its officers or
employees are irrevocably authorized to make the same.  So long as any Event of Default shall have occurred
and be continuing, the Loan Parties agree that until the Secured Obligations
have been paid in full (in cash) and satisfied and all financing arrangements
among the Loan Parties and the Lenders have been terminated, the Loan Parties
will neither assign nor transfer to any Person (other than the Administrative
Agent) any claim the Loan Parties have or may have against any other Subsidiary
of the Parent.

 

Section 9.18                                Certain Post Closing Matters.

 

(a)                                  Notwithstanding
anything to the contrary contained in this Agreement, within the time periods
set forth below or such later date to which the Administrative Agent may, in
its exclusive discretion, agree in writing, the Loan Parties shall deliver to
the Administrative Agent:

 

(i)                                     within
ninety (90) days after the Closing Date, mortgages in favor of the Applicable
Agent and in form and substance reasonably satisfactory to the Administrative
Agent on such Eligible Real Property of the Loan Parties as may then constitute
all or any part of the U.S. PP&E Component or the Canadian PP&E Component,
together with such updated title commitments and related real estate due
diligence materials as the Administrative Agent may request in accordance with
the definition of Eligible Real Property;

 

133

 

(ii)                                  within
sixty (60) days after the Closing Date, account control agreements in favor of
the Applicable Agent and in form and substance reasonably satisfactory to the
Administrative Agent on deposit accounts and securities accounts of the Loan
Parties maintained with any institution other than such Applicable Agent;

 

(iii)                               within
ten (10) days after the Closing Date, the form of Final Order, in form and
substance satisfactory to the Administrative Agent in is exclusive discretion,
which shall be attached hereto as Exhibit A-3, delivery of which
was temporarily waived by the Lenders for the purposes of effectuating the
Closing Date;

 

(iv)                              within
three (3) Business Days after the Bankruptcy Court enters the U.S. Interim
Order, orders shall have been made in the Recognition Cases recognizing the
U.S. Cases of Smurfit-MBI and SLP Finance General Partnership and granting
charges over the assets of each of Smurfit-MBI and SLP Finance General
Partnership and otherwise in form satisfactory to the Administrative Agent,
which orders shall be in full force and effect and shall not have been stayed,
reversed, modified, or amended in any respect without the prior written consent
of the Administrative Agent;

 

(v)                                 within
fifteen (15) days after the Closing Date, certificates representing ownership
interests in Pledged Collateral (as defined in the Security and Pledge
Agreement) that are required to be delivered to the Administrative Agent
pursuant to the Security and Pledge Agreement, together with an update to Exhibit E
to the Security and Pledge Agreement providing the information contemplated by
but not included on such Exhibit E as of the Closing Date;

 

(vi)                              within
thirty (30) days after the Closing Date, the Organizational Documents and
certificate of good standing or similar certificate for Smurfit-Stone Puerto
Rico, Inc.;

 

(vii)                           within
ninety (90) days after the Closing Date, (A) a mortgage granted by MBI
Limited/Limitée, in its capacity as general partner of Smurfit-MBI, in favour
of the Canadian Collateral Agent in respect of the property municipally known
as 8150 Parkhill Drive, Milton, Ontario, and (B) a deed of hypothec and
issue of bonds by the Canadian Borrower in favour of the Canadian Collateral
Agent, as fondé de pouvoir, in respect of the property municipally known as 15400
Sherbrooke Street East, Montreal, Quebec, and such other documents related
thereto, in each case in form and substance reasonably satisfactory to the
Canadian Administrative Agent, together with such title insurance policies and
related real 

 

134

 

estate due diligence materials
and other materials as the Canadian Administrative Agent may request;

 

(viii)                        within
fifteen (15) days after the Closing Date, (A) Pledged Security
Certificates (as defined in the Canadian Security Agreement) required to be
delivered to the Canadian Collateral Agent pursuant to the Canadian Security
Agreement and other materials as may be required to provide the Canadian
Collateral Agent with control over such Pledged Security Certificates, and (B) each
Instrument evidencing obligations owing to any Canadian Loan Party in a
principal amount in excess of $1,000,000 included in or related to the
Collateral (as defined in the Canadian Security Agreement) endorsed and/or
accompanied by such instruments of assignment and transfer in such form and
substance as the Canadian Collateral Agent may reasonably request pursuant to
the Canadian Security Agreement, together with an update to Schedule A of the
Canadian Security Agreement providing the information contemplated by but not
included on such Schedule A as of the Closing Date;

 

(ix)                                within
one (1) day after the Closing Date, copies certified by the Secretary of
State of the State of Delaware of (x) the Certificate of Merger of SSCE
Funding, LLC with and into Stone Receivables LLC and (y) the Certificate
of Merger of Stone Receivables LLC with and into Smurfit-Stone Container
Enterprises, Inc.;

 

(x)                                   within
three (3) Business Days after the Closing Date, the Termination and
Reassignment Agreement with respect to the termination of the Canadian
Receivables Securitization Program in form and substance reasonably
satisfactory to the Administrative Agent;

 

(xi)                                within
three (3) Business Days after the Closing Date, the amended and restated
Initial Order in form and substance reasonably satisfactory to the
Administrative Agent; and

 

(xii)                             on or
before the date the Bankruptcy Court enters the Final Order, a cross border
protocol with respect to proceedings in the Cases before the Canadian Court and
the Bankruptcy Court in form and substance reasonably satisfactory to the
Administrative Agent.

 

(b)                                 All
conditions precedent and representations contained in the Loan Documents shall
be deemed modified to the extent necessary to effect the foregoing (and to
permit the taking of the actions described above within the time periods
required above); provided, that to the extent any representation and
warranty would not be true because the foregoing actions were not taken on the
Closing Date, the respective representation and warranty shall be required to
be true and correct at the time the respective action is taken in accordance 

 

135

 

with the
foregoing provisions of this Section 9.18.  The acceptance of the benefits of the making
of each Loan and the issuance of each Letter of Credit shall constitute a
representation, warranty and covenant by the Loan Parties to each of the
Lenders that the actions required pursuant to this Section 9.18
will be taken within the relevant time periods referred to in this Section 9.18
and that, at such time, all representations and warranties contained in this
Agreement shall then be true and correct without any modification pursuant to
this Section 9.18.

 

Section 9.19                                USA Patriot
Act.  Each Lender hereby
notifies the Loan Parties that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to
obtain, verify and record information that identifies the Loan Parties, which
information includes the name and address of the Loan Parties and other
information that will allow such Lender to identify the Loan Parties in
accordance with the Patriot Act.

 

Section 9.20                                Judgment Currency. (a)              Except as otherwise provided in Section 11.3,
the Loan Parties’ obligations hereunder and under the other Loan Documents to
make payments in Dollars or in Canadian Dollars (the “Obligation Currency”) shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation Currency,
except to the extent that such tender or recovery results in the effective
receipt by the Applicable Agent, the applicable Fronting Bank or the applicable
Lender of the full amount of the Obligation Currency expressed to be payable to
the Applicable Agent, the applicable Fronting Bank or the applicable Lender
under this Agreement or the other Loan Documents.  If, for the purpose of obtaining or enforcing
judgment against any Loan Party in any court or in any jurisdiction, it becomes
necessary to convert into or from any currency other than the Obligation
Currency (such other currency being hereinafter referred to as the “Judgment Currency”) an amount due in the
Obligation Currency, the conversion shall be made, at the Exchange Rate, in the
case of Canadian Dollars or Dollars, and, in the case of other currencies, the
rate of exchange (as quoted by the Administrative Agent or if the
Administrative Agent does not quote a rate of exchange on such currency, by a
known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the date immediately preceding the day on which
the judgment is given (such Business Day being hereinafter referred to as the “Judgment Currency Conversion Date”).

 

(b)                                 If
there is a change in the rate of exchange prevailing between the Judgment
Currency Conversion Date and the date of actual payment of the amount due, the
Loan Parties covenant and agree to pay, or cause to be paid, such additional
amounts, if any (but in any event not a lesser amount), as may be necessary to
ensure that the amount paid in the Judgment Currency, when converted at the
rate of exchange prevailing on the date of payment, will produce the amount of
the Obligation Currency which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial award at the rate of
exchange prevailing on the Judgment Currency Conversion Date.

 

(c)                                  For
purposes of determining the amount of any payment in the Obligation Currency
under this Section 9.20, the rate of exchange used shall take into
account any premium and costs payable in connection with the purchase of the
Obligation Currency.

 

136

 

Section 9.21                                Several Obligations; Nonreliance; Violation of Law. The
respective obligations of the Lenders hereunder are several and not joint and
the failure of any Lender to make any Loan or perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder. Each Lender hereby represents that it is not relying on or looking
to any margin stock for the repayment of the Borrowings provided for herein.
Anything contained in this Agreement to the contrary notwithstanding, neither
any Fronting Bank nor any Lender shall be obligated to extend credit to the
Borrowers in violation of any Requirement of Law.

 

Section 9.22                                Canadian
Anti-Money Laundering Legislation.

 

(a)                                  Each
of the Canadian Loan Parties acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)  and other applicable anti-money laundering, anti-terrorist
financing, government sanction and “know your client” laws, whether within
Canada or elsewhere (collectively, including any guidelines or orders
thereunder, “AML Legislation”),
the Applicable Agent and the Lenders may be required to obtain, verify and
record information regarding such Canadian Loan Party, its directors, authorized
signing officers, direct or indirect shareholders or other Persons in control
of such Canadian Loan Party, and the transactions contemplated hereby. Each of
the Canadian Loan Parties shall promptly provide all such information,
including supporting documentation and other evidence, as may be reasonably
requested by any Lender or the Applicable Agent, or any prospective assign or
participant of a Lender or the Applicable Agent, in order to comply with any
applicable AML Legislation, whether now or hereafter in existence.

 

(b)                                 If
the Applicable Agent has ascertained the identity of any Canadian Loan Party or
any authorized signatories of such Canadian Loan Party for the purposes of
applicable AML Legislation, then the Applicable Agent:

 

(i)                  shall
be deemed to have done so as an agent for each Lender, and this Agreement shall
constitute a “written agreement” in such regard between each Lender and such
Applicable Agent within the meaning of applicable AML Legislation; and

 

(ii)               shall
provide to each Lender copies of all information obtained in such regard
without any representation or warranty as to its accuracy or completeness.

 

Notwithstanding
the preceding sentence and except as may otherwise be agreed in writing, each
of the Lenders agrees that the Applicable Agent has no obligation to ascertain
the identity of any Canadian Loan Party or any authorized signatories of
such Canadian Loan Party on behalf of any Lender, or to confirm the
completeness or accuracy of any information it obtains from such Canadian Loan
Party or any such authorized signatory in doing so.

 

Section 9.23                                Conversion.

 

(a)                                  In
connection with the completion of syndication efforts, on a date designated by
the Administrative Agent on not less than one (1) Business Days notice to
the U.S. 

 

137

 

Borrower, the
Converting Lenders and Bank of America, N.A., and which date shall be no later
than the later of (i) the date the Bankruptcy Court enters the Final Order
and (ii) forty (40) days after the Closing Date (the “Conversion Date”), to the extent the
percentage obtained by dividing the U.S. Revolving Commitment of a Converting
Lender on the Closing Date by the aggregate Commitments of such Converting
Lender on the Closing Date (immediately prior to the initial funding of the
Term Loans) is greater than 33.333%, the Converting Lenders may elect to
decrease their U.S. Revolving Commitments by an amount to be specified by each
such Converting Lender and increase their outstanding U.S. Term Loans by the amount
of such decrease (each, a “U.S. Term Loan
Conversion”), provided, that the amount of a U.S. Term
Loan Conversion by a Converting Lender shall not result in the percentage
obtained by dividing the U.S. Revolving Commitment of a Converting Lender (after
giving effect to such U.S. Term Loan Conversion) by the aggregate Revolving
Commitments and Term Loans of such Converting Lender at the time of such
conversion (after giving effect to any assignments by such Converting Lender
after the Closing Date and on or prior to such date, the “U.S. Revolving Credit Hold Percentage”)
to be less than 33.333%; provided, further, that no U.S. Term
Loan Conversion shall result in the U.S. Revolving Credit Utilization to be
greater than the Interim U.S. Revolving Commitment (after giving effect to such
conversion); and provided, further, that if the U.S. Revolving
Credit Hold Percentage of the Converting Lenders is less than the percentage
obtained by dividing the U.S. Revolving Commitment of Bank of America, N.A. by
the aggregate Revolving Commitments and Term Loans of Bank of America, N.A. at
the time of such conversion, Bank of America, N.A. shall be deemed to be a
Converting Lender and may decrease such amount of its U.S. Revolving Commitment
(and thereby increase its outstanding U.S. Term Loans by such amount) as may be
necessary to reduce its U.S. Revolving Credit Hold Percentage to not less than
the U.S. Revolving Credit Hold Percentage of the other Converting Lenders.  To effect a U.S. Term Loan Conversion, a
Converting Lender shall provide written notice (a “U.S. Conversion Notice”) to the U.S.
Borrower, the other Converting Lenders and the Administrative Agent on or prior
to the Conversion Date setting forth the percentage of such Converting Lender’s
U.S. Revolving Commitment that will be converted to a U.S. Term Loan.  On the date of the Administrative Agent’s
delivery of notice regarding the establishment of the Conversion Date, JPMCB
and Deutsche Bank Trust Company Americas shall advise Bank of America, N.A. of
the U.S. Revolving Credit Hold Percentage. 
Each U.S. Conversion Notice received by the Administrative Agent shall
be irrevocable.

 

(b)                                 Subject
to the limitations set forth in Section 9.23(a) above, on the
conversion date specified by a Converting Lender in its U.S. Conversion Notice:

 

(i)                                     such
Converting Lender shall make an amount available to the Administrative Agent at
its office most recently designated for such purpose, no later than 12:00 Noon,
New York City time, in U.S. Dollars and in immediately available funds, equal
to (A) the percentage of such Converting Lender’s U.S. Revolving
Commitment that will be converted to a U.S. Term Loan multiplied by (B) the
difference between (x) the U.S. Revolving Commitment of such Converting
Lender on such date (as determined immediately prior to any U.S. Term Loan
Conversions on such date), minus (y) the aggregate outstanding U.S.
Revolving Loans of such Converting Lender on such date (prior to giving 

 

138

 

effect to any conversion of
U.S. Revolving Loans to U.S. Term Loans as provided in clause (ii)(y) below);
provided, that, if the foregoing amount is zero, the Converting Lender
shall not be required to make any amount available to the Administrative Agent;

 

(ii)                                  upon
the Administrative Agent’s receipt of funds pursuant to clause (i) above,
if applicable, (x) the Administrative Agent shall deposit such funds in
the U.S. Term Loan Collateral Account and such funds shall be deemed to be an
outstanding U.S. Term Loan (subject to disbursement to the U.S. Borrower as
provided in Section 2.7(c)), (y) an amount equal to (A) the
percentage of such Converting Lender’s U.S. Revolving Commitment that will be
converted to a U.S. Term Loan multiplied by (B) the aggregate outstanding
U.S. Revolving Loans of such Converting Lender on such date (prior to giving
effect to any conversion of U.S. Revolving Loans to U.S. Term Loans as provided
in this clause (y)) shall be deemed to be an outstanding U.S. Term Loan and
shall cease to be a U.S. Revolving Loan, and (z) the U.S. Revolving
Commitment of such Converting Lender shall be reduced permanently in an amount
equal to the amount of such Converting Lender’s U.S. Revolving Commitment that
was converted to a U.S. Term Loan;

 

(iii)                               each
U.S. Term Loan made pursuant to clause (i) above or deemed to be made
pursuant to clause (ii) above shall be an ABR Loan (which ABR Loan may be
converted in accordance with the terms of this Agreement); and

 

(iv)                              each
U.S. Revolving Lender’s undivided interest and participation in each U.S.
Revolving Facility Letter of Credit pursuant to Section 2.4(f) shall
be adjusted to account for the reduction in the aggregate U.S. Revolving
Commitment.

 

(c)                                  In
connection with the completion of syndication efforts, on the Conversion Date,
to the extent the percentage obtained by dividing the Canadian Revolving
Commitment of a Converting Lender on the Closing Date by the aggregate
Commitments of such Converting Lender on the Closing Date (immediately prior to
the initial funding of the Term Loans) is greater than 8.666%, the Converting
Lenders may elect to decrease their Canadian Revolving Commitments by an amount
to be specified by each such Converting Lender and increase their outstanding
Canadian Term Loans by the amount of such decrease (each, a “Canadian Term Loan Conversion”), provided,
that the amount of a Canadian Term Loan Conversion by a Converting Lender shall
not result in the percentage obtained by dividing the Canadian Revolving
Commitment of a Converting Lender (after giving effect to such Canadian Term
Loan Conversion) by the aggregate Revolving Commitments and Term Loans of such
Converting Lender at the time of such conversion (after giving effect to any
assignments by such Converting Lender after the Closing Date and on or prior to
such date, the “Canadian

 

139

 

Revolving
Credit Hold Percentage”) to be less than 8.666%; provided,
further, that no Canadian Term Loan Conversion shall result in the
Canadian Revolving Credit Utilization to be greater than the Interim Canadian
Revolving Commitment (after giving effect to such conversion); and provided,
further, that if the Canadian Revolving Credit Hold Percentage of the
Converting Lenders is less than the percentage obtained by dividing the
Canadian Revolving Commitment of Bank of America, N.A., Canada Branch, by the
aggregate Revolving Commitments and Term Loans of Bank of America, N.A., Canada
Branch, at the time of such conversion, Bank of America, N.A., Canada Branch,
shall be deemed to be a Converting Lender and may decrease such amount of its
Canadian Revolving Commitment (and thereby increase its outstanding Canadian
Term Loans by such amount) as may be necessary to reduce its Canadian Revolving
Credit Hold Percentage to not less than the Canadian Revolving Credit Hold
Percentage of the other Converting Lenders. 
To effect a Canadian Term Loan Conversion, a Converting Lender shall
provide written notice (a “Canadian
Conversion Notice”) to the Canadian Borrower, the other
Converting Lenders and the Canadian Administrative Agent on or prior to the
Conversion Date setting forth the percentage of such Converting Lender’s
Canadian Revolving Commitment that will be converted to a Canadian Term
Loan.  On the date of the Administrative
Agent’s delivery of notice regarding the establishment of the Conversion Date,
JPMCB and Deutsche Bank Trust Company Americas shall advise Bank of America,
N.A., Canada Branch, of the Canadian Revolving Credit Hold Percentage.  Each Canadian Conversion Notice received by
the Canadian Administrative Agent shall be irrevocable.

 

(d)                                 Subject
to the limitations set forth in Section 9.23(c) above, on the
conversion date specified by a Converting Lender in its Canadian Conversion
Notice:

 

(i)                                     such
Converting Lender shall make an amount available to the Canadian Administrative
Agent at its office most recently designated for such purpose, no later than
12:00 Noon, New York City time, in U.S. Dollars and in immediately available
funds, equal to (A) the percentage of such Converting Lender’s Canadian
Revolving Commitment that will be converted to a Canadian Term Loan multiplied
by (B) the difference between (x) the Canadian Revolving Commitment
of such Converting Lender on such date (as determined immediately prior to any
Canadian Term Loan Conversions on such date), minus (y) the
aggregate outstanding Canadian Revolving Loans of such Converting Lender on
such date (prior to giving effect to any conversion of Canadian Revolving Loans
to Canadian Term Loans as provided in clause (ii)(y) below); provided,
that, if the foregoing amount is zero, the Converting Lender shall not be
required to make any amount available to the Canadian Administrative Agent;

 

(ii)                                  upon
the Canadian Administrative Agent’s receipt of funds pursuant to clause (i) above,
if applicable, (x) the Canadian Administrative Agent shall deposit such
funds in the Canadian Term Loan Collateral Account and such funds shall be
deemed to be an outstanding Canadian Term Loan (subject to disbursement to the
Canadian Borrower as provided in Section 2.7(d)), (y) an 

 

140

 

amount equal to (A) the
percentage of such Converting Lender’s Canadian Revolving Commitment that will
be converted to a Canadian Term Loan multiplied by (B) the aggregate
outstanding Canadian Revolving Loans of such Converting Lender on such date
(prior to giving effect to any conversion of Canadian Revolving Loans to
Canadian Term Loans as provided in this clause (y)) shall be deemed to be an
outstanding Canadian Term Loan and shall cease to be a Canadian Revolving Loan,
and (z) the Canadian Revolving Commitment of such Converting Lender shall
be reduced permanently in an amount equal to the amount of such Converting
Lender’s Canadian Revolving Commitment that was converted to a Canadian Term
Loan;

 

(iii)                               each
Canadian Term Loan made pursuant to clause (i) above or deemed to be made
pursuant to clause (ii) above shall be an ABR Loan (which ABR Loan may be
converted in accordance with the terms of this Agreement); and

 

(iv)                              each
Canadian Revolving Lender’s undivided interest and participation in each
Canadian Revolving Facility Letter of Credit pursuant to Section 2.4(f) shall
be adjusted to account for the reduction in the aggregate Canadian Revolving
Commitment.

 

ARTICLE 10.                                                                      GUARANTY

 

Section 10.1                                U.S.
Guaranty.  Each of the Borrowers and
the U.S. Guarantors, each in its capacity as a Guarantor, hereby agrees that it
is jointly and severally liable for, and, as primary obligor and not merely as
surety, absolutely and unconditionally guarantees to the Administrative Agent
(for the benefit of the Secured Parties) the prompt payment when due, whether
at stated maturity, upon acceleration or otherwise, and at all times
thereafter, of the Secured Obligations and all costs and expenses including,
without limitation, all court costs and attorneys’ and paralegals’ fees
(including allocated costs of in-house counsel and paralegals) and expenses
paid or incurred by the Secured Parties in endeavoring to collect all or any
part of the Secured Obligations from, or in prosecuting any action against, any
Borrower, any other Guarantor or any other guarantor of all or any part of the
Secured Obligations (such costs and expenses, together with the Secured Obligations,
collectively the “U.S. Guaranteed
Obligations”).  Each of
the Borrowers and the U.S. Guarantors further agrees that the U.S. Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal. All terms of this Guaranty apply
to and may be enforced by or on behalf of any domestic or foreign branch or
Affiliate of any Lender that extended any portion of the Secured Obligations.

 

Section 10.2                                Canadian
Guaranty.  Each of the
Canadian Guarantors, each in its capacity as a Guarantor, hereby agrees that it
is jointly and severally liable for, and, as primary obligor and not merely as
surety, absolutely and unconditionally guarantees to the Canadian
Administrative Agent (for the benefit of the Secured Parties) the prompt
payment when due, 

 

141

 

whether at stated maturity, upon acceleration
or otherwise, and at all times thereafter, of the Canadian Secured Obligations
and all costs and expenses including, without limitation, all court costs and
attorneys’ and paralegals’ fees (including allocated costs of in-house counsel
and paralegals) and expenses paid or incurred by the Secured Parties in
endeavoring to collect all or any part of the Canadian Secured Obligations
from, or in prosecuting any action against, the Canadian Borrower, any other
Canadian Guarantor or any other guarantor of all or any part of the Canadian
Secured Obligations (such costs and expenses, together with the Canadian
Secured Obligations, collectively the “Canadian Guaranteed
Obligations”, and, together with the U.S. Guaranteed
Obligations, the “Guaranteed Obligations”).
Each of the Canadian Guarantors further agrees that the Canadian Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal. All terms of this Guaranty apply
to and may be enforced by or on behalf of any domestic or foreign branch or
Affiliate of any Lender that extended any portion of the Canadian Secured
Obligations.

 

Section 10.3                                Guaranty of
Payment.  This Guaranty is a
guaranty of payment and not of collection. Each Guarantor waives any right to
require any Secured Party to sue any Loan Party, any other guarantor, or any
other person obligated for all or any part of the Guaranteed Obligations (each,
an “Obligated Party”), or otherwise to
enforce its payment against any collateral securing all or any part of the
Guaranteed Obligations.

 

Section 10.4                                No
Discharge or Diminishment of Guaranty.

 

(a)                                  Except
as otherwise provided for herein, the obligations of each Guarantor hereunder
are unconditional and absolute and not subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment
in full in cash of the Guaranteed Obligations), including:  (i) any claim of waiver, release,
extension, renewal, settlement, surrender, alteration, or compromise of any of
the Guaranteed Obligations, by operation of law or otherwise; (ii) any
change in the corporate existence, structure or ownership of any Loan Party or
any other guarantor of or other person liable for any of the Guaranteed
Obligations; (iii) any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Obligated Party, or their assets or any
resulting release or discharge of any obligation of any Obligated Party; or (iv) the
existence of any claim, setoff or other rights which any Guarantor may have at
any time against any Obligated Party, the Agents, any Fronting Bank, any
Lender, or any other person, whether in connection herewith or in any unrelated
transactions.

 

(b)                                 The
obligations of each Guarantor hereunder are not subject to any defense or
setoff, counterclaim, recoupment, or termination whatsoever by reason of the
invalidity, illegality, or unenforceability of any of the Guaranteed
Obligations or otherwise, or any provision of applicable law or regulation
purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.

 

(c)                                  Further,
the obligations of any Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of any Secured Party to assert any
claim or demand or to enforce any remedy with respect to all or any part of the
Guaranteed Obligations; (ii) any waiver or modification of or supplement
to any provision of any agreement relating to the Guaranteed Obligations; (iii) any
release, non-perfection, or invalidity of any indirect or 

 

142

 

direct
security for the obligations of any Loan Party for all or any part of the
Guaranteed Obligations or any obligations of any other guarantor of or other
person liable for any of the Guaranteed Obligations; (iv) any action or
failure to act by any Secured Party with respect to any collateral securing any
part of the Guaranteed Obligations; or (v) any default, failure or delay,
willful or otherwise, in the payment or performance of any of the Guaranteed
Obligations, or any other circumstance, act, omission or delay that might in
any manner or to any extent vary the risk of such Guarantor or that would
otherwise operate as a discharge of any Guarantor as a matter of law or equity
(other than the indefeasible payment in full in cash of the Guaranteed
Obligations).

 

Section 10.5                                Defenses
Waived.  To the fullest extent
permitted by applicable law, each Guarantor hereby waives any defense based on
or arising out of any defense of any Borrower or any other Guarantor or the
unenforceability of all or any part of the Guaranteed Obligations from any
cause, or the cessation from any cause of the liability of any Borrower or any other
Guarantor, other than the indefeasible payment in full in cash of the
Guaranteed Obligations. Without limiting the generality of the foregoing, each
Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any Obligated Party, or any other person.  Each Agent may, at its election, foreclose on
any Collateral held by it by one or more judicial or nonjudicial sales, accept
an assignment of any such Collateral in lieu of foreclosure or otherwise act or
fail to act with respect to any collateral securing all or a part of the
Guaranteed Obligations, compromise or adjust any part of the Guaranteed
Obligations, make any other accommodation with any Obligated Party or exercise
any other right or remedy available to it against any Obligated Party, without
affecting or impairing in any way the liability of such Guarantor under this
Guaranty except to the extent the Guaranteed Obligations have been fully and
indefeasibly paid in cash.  To the
fullest extent permitted by applicable law, each Guarantor waives any defense
arising out of any such election even though that election may operate,
pursuant to applicable law, to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of any Guarantor against any Obligated
Party or any security.

 

Section 10.6                                Rights of
Subrogation.  No Guarantor
will assert any right, claim or cause of action, including, without limitation,
a claim of subrogation, contribution or indemnification that it has against any
Obligated Party, or any Collateral, until the Guaranteed Obligations have been
paid in full and the Commitments have been terminated.

 

Section 10.7                                Reinstatement;
Stay of Acceleration.  If at
any time any payment of any portion of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned upon the insolvency, bankruptcy, or
reorganization of any Loan Party or otherwise, each Guarantor’s obligations
under this Guaranty with respect to that payment shall be reinstated at such
time as though the payment had not been made and whether or not any Secured
Party is in possession of this Guaranty. 
If acceleration of the time for payment of any of the Guaranteed
Obligations is stayed upon the insolvency, bankruptcy or reorganization of any
Loan Party, all such amounts otherwise subject to acceleration under the terms
of any agreement relating to the Guaranteed Obligations shall nonetheless be
payable by the Guarantors forthwith on demand by the Lender.

 

143

 

Section 10.8           Information. 
Each Guarantor assumes all responsibility for being and keeping itself
informed of the Borrowers’ financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations
and the nature, scope and extent of the risks that each Guarantor assumes and
incurs under this Guaranty, and agrees that no Secured Party shall have any
duty to advise any Guarantor of information known to it regarding those
circumstances or risks.

 

Section 10.9           Termination. 
Each Guarantor acknowledges and agrees that this Guaranty is irrevocable
until the Guaranteed Obligations have been paid in full and the Commitments
have been terminated. The Lenders may continue to make loans or extend credit
to the Borrowers based on this Guaranty. Each Guarantor will continue to be
liable to the Lenders for any Guaranteed Obligations created, assumed or
committed from time to time, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any
part of that Guaranteed Obligations.

 

Section 10.10         Taxes.  All
payments of the Guaranteed Obligations will be made by each Guarantor free and
clear of and without deduction for any Taxes in accordance with Section 2.19.

 

Section 10.11         Maximum Liability.  The provisions of this Guaranty are
severable, and in any action or proceeding involving any corporate law of any
Governmental Authority, or any state, provincial, regional, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under this Guaranty
would otherwise be held or determined to be avoidable, invalid or unenforceable
on account of the amount of such Guarantor’s liability under this Guaranty,
then, notwithstanding any other provision of this Guaranty to the contrary, the
amount of such liability shall, without any further action by the Guarantors or
the Lenders, be automatically limited and reduced to the highest amount that is
valid and enforceable as determined in such action or proceeding (such highest
amount determined hereunder being the relevant Guarantor’s “Maximum Liability”.  This Section with respect to the Maximum
Liability of each Guarantor is intended solely to preserve the rights of the
Lenders to the maximum extent not subject to avoidance under applicable law,
and no Guarantor nor any other person or entity shall have any right or claim
under this Section with respect to such Maximum Liability, except to the
extent necessary so that the obligations of any Guarantor hereunder shall not
be rendered voidable under applicable law. Each Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Liability of each Guarantor without impairing this Guaranty or affecting the
rights and remedies of the Lenders hereunder, provided that, nothing in this
sentence shall be construed to increase any Guarantor’s obligations hereunder
beyond its Maximum Liability.

 

Section 10.12         Contribution. 
In the event any Guarantor (a “Paying Guarantor”)
shall make any payment or payments under this Guaranty or shall suffer any loss
as a result of any realization upon any collateral granted by it to secure its
obligations under this Guaranty, each other Guarantor (each a “Non-Paying Guarantor”) shall
contribute to such Paying Guarantor an amount equal to such Non-Paying
Guarantor’s “Contribution Percentage” of such payment or payments made, or
losses suffered, by such Paying Guarantor. 
For purposes of this ARTICLE 10, each Non-Paying Guarantor’s “Contribution
Percentage” with respect to any such payment or loss by a Paying Guarantor
shall be determined as of the date on which such payment or loss was 

 

144

 

made by reference to the ratio of (i) such
Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder) or,
if such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrowers after the Closing Date (whether by loan, capital infusion or by other
means) to (ii) the aggregate Maximum Liability of all Guarantors hereunder
(including such Paying Guarantor) as of such date (without giving effect to any
right to receive, or obligation to make, any contribution hereunder), or to the
extent that a Maximum Liability has not been determined for any Guarantor, the
aggregate amount of all monies received by such Guarantors from the Borrowers
after the Closing Date (whether by loan, capital infusion or by other
means).  Nothing in this provision shall
affect any Guarantor’s several liability for the entire amount of the
Guaranteed Obligations (up to such Guarantor’s Maximum Liability).  Each of the Guarantors covenants and agrees
that its right to receive any contribution under this Guaranty from a
Non-Paying Guarantor shall be subordinate and junior in right of payment to the
payment in full in cash of the Guaranteed Obligations.  This provision is for the benefit of both the
Agents, the Fronting Banks, the Lenders and the Guarantors and may be enforced
by any one, or more, or all of them in accordance with the terms hereof.

 

Section 10.13         Liability Cumulative.  The liability of each Loan Party as a
Guarantor under this ARTICLE 10 is in addition to and shall be
cumulative with all liabilities of each Loan Party to the Agents, the Fronting
Banks and the Lenders under this Agreement and the other Loan Documents to
which such Loan Party is a party or in respect of any obligations or
liabilities of the other Loan Parties, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.

 

ARTICLE 11.                       COLLECTION ALLOCATION MECHANISM

 

Section 11.1           Implementation of CAM.

 

(a)           On the Termination
Date, the Lenders shall automatically and without further act (and without
regard to the provisions of Section 9.3) be deemed to have
exchanged interests in the Credit Facilities such that in lieu of the interest
of each Lender in each Credit Facility in which it shall participate as of such
date (including such Lender’s interest in the Obligations of each Loan Party in
respect of each such Credit Facility), such Lender shall hold an interest in
every one of the Credit Facilities (including the Obligations of each Loan
Party in respect of each such Credit Facility), whether or not such Lender
shall previously have participated therein, equal to such Lender’s CAM
Percentage thereof.  Each Lender and each
Loan Party hereby consents and agrees to the CAM Exchange, and each Lender
agrees that the CAM Exchange shall be binding upon its successors and assigns and
any Person that acquires a participation in its interests in any Credit
Facility.  Each Loan Party agrees from
time to time to execute and deliver to the Administrative Agent all instruments
and documents as the Administrative Agent shall reasonably request to evidence
and confirm the respective interests of the Lenders after giving effect to the
CAM Exchange.

 

(b)           As a result of the
CAM Exchange, upon and after the Termination Date, each payment received by the
Administrative Agent pursuant to any Loan Document in respect of the
Obligations, and each distribution made by the Administrative Agent in respect
of the 

 

145

 

Obligations,
shall be distributed to the Lenders pro rata in accordance with their respective
CAM Percentages.  Any direct payment
received by a Lender upon or after the Termination Date, including by way of
setoff, in respect of the Obligations shall be paid over to the Administrative
Agent for distribution to the Lenders in accordance herewith.

 

Section 11.2           Letters of
Credit.

 

(a)           In the event that on
the Termination Date any Letter of Credit shall be outstanding and undrawn in
whole or in part, or any amount drawn under any such Letter of Credit shall not
have been reimbursed by the applicable Borrower or with the proceeds of a
Revolving Loan, each Lender having, on such date and prior to giving effect to
the CAM Exchange, Letter of Credit Outstandings with respect to such Letter of
Credit shall promptly pay over to the Administrative Agent, in immediately
available funds, in the case of any undrawn amount, and in Dollars, in the case
of any unreimbursed amount, an amount equal to such Lender’s Applicable
Percentage of such undrawn face amount or (to the extent it has not already
done so) such unreimbursed drawing, as the case may be, together with interest
thereon from the Termination Date to the date on which such amount shall be
paid to the Administrative Agent at the rate that would be applicable at the
time to an ABR Loan in a principal amount equal to such amount.  The Administrative Agent shall establish a
separate account or accounts for each Lender (each, an “LC Reserve Account”) for the amounts
received with respect to each such Letter of Credit pursuant to the preceding
sentence.  The Administrative Agent shall
deposit in each Lender’s LC Reserve Account such Lender’s CAM Percentage of the
amounts received from the Lenders as provided above.  The Administrative Agent shall have sole
dominion and control over each LC Reserve Account, and the amounts deposited in
each LC Reserve Account shall be held in such LC Reserve Account until
withdrawn as provided in paragraph (b), 
(c),  (d)  or (e) 
below.  The Administrative Agent shall
maintain records enabling it to determine the amounts paid over to it and
deposited in the LC Reserve Accounts in respect of each Letter of Credit and
the amounts on deposit in respect of each Letter of Credit attributable to each
Lender’s CAM Percentage.  The amounts
held in each Lender’s LC Reserve Account shall be held as a reserve against the
outstanding Letter of Credit Outstandings, shall be the property of such
Lender, shall not constitute Loans to or give rise to any claim of or against
any Loan Party and shall not give rise to any obligation on the part of either
Borrower to pay interest to such Lender, it being agreed that the reimbursement
obligations in respect of Letters of Credit shall arise only at such times as
drawings are made thereunder, as provided in ARTICLE 2.

 

(b)           In the event that on
or after the Termination Date any drawing shall be made in respect of a Letter
of Credit, the Administrative Agent shall, at the request of the applicable
Fronting Bank, withdraw from the LC Reserve Account of each Lender any amounts,
up to the amount of such Lender’s CAM Percentage of such drawing, deposited in
respect of such Letter of Credit and remaining on deposit and deliver such
amounts to the applicable Fronting Bank in satisfaction of the reimbursement
obligations of the Lenders under Section 2.4(g) (but not of
either Borrower under Section 2.4(e)).  In the event any Lender shall default on its
obligation to pay over any amount to the Administrative Agent in respect of any
Letter of Credit as provided in this Section 11.2, the applicable
Fronting Bank shall, in the event of a drawing thereunder, have a claim against
such Lender to the same extent as if such Lender had defaulted on its
obligations under Section 2.4(g), but shall have no claim against
any other Lender in respect of such defaulted amount, notwithstanding the
exchange of interests in the 

 

146

 

applicable
Borrower’s reimbursement obligations pursuant Section 11.1.  Each other Lender shall have a claim against
such defaulting Lender for any damages sustained by it as a result of such
default, including, in the event such Letter of Credit shall expire undrawn,
its CAM Percentage of the defaulted amount.

 

(c)           In the event that
after the Termination Date any Letter of Credit shall expire undrawn, the Administrative
Agent shall withdraw from the LC Reserve Account of each Lender the amount
remaining on deposit therein in respect of such Letter of Credit and distribute
such amount to such Lender.

 

(d)           With the prior
written approval of the Administrative Agent and the applicable Fronting Bank
(not to be unreasonably withheld), any Lender may withdraw the amount held in
its LC Reserve Account in respect of the undrawn amount of any Letter of
Credit.  Any Lender making such a
withdrawal shall be unconditionally obligated, in the event there shall
subsequently be a drawing under such Letter of Credit, to pay over to the
Administrative Agent, for the account of the applicable Fronting Bank, on
demand, its CAM Percentage of such drawing.

 

(e)           Pending the withdrawal
by any Lender of any amounts from its LC Reserve Account as contemplated by the
above paragraphs, the Administrative Agent will, at the direction of such
Lender and subject to such rules as the Administrative Agent may prescribe
for the avoidance of inconvenience, invest such amounts in Permitted
Investments.  Each Lender which has not
withdrawn its CAM Percentage of amounts in its LC Reserve Account as provided
in paragraph (d)  above shall have the right, at intervals reasonably
specified by the Administrative Agent, to withdraw the earnings on investments
so made by the Administrative Agent with amounts in its LC Reserve Account and
to retain such earnings for its own account.

 

Section 11.3           Conversion. 
In the event the Termination Date shall occur, Obligations owed by the
Loan Parties denominated in any currency other than Dollars (other than, for
the avoidance of doubt, obligations in respect of undrawn Canadian Revolving
Facility Letters of Credit denominated in Canadian Dollars) shall, automatically
and with no further act required, be converted to obligations of the same Loan
Parties denominated in Dollars.  Such
conversion shall be effected based upon the Exchange Rates in effect with
respect to the relevant currencies on the Termination Date.  On and after any such conversion, all amounts
accruing and owed to any Lender in respect of its Obligations shall accrue and
be payable in Dollars at the rates otherwise applicable hereunder (and, in the
case of interest on Loans, at the default rate applicable to ABR Loans
hereunder).  Notwithstanding the
foregoing provisions of this Section 11.3, any Lender may, by
notice to the Borrowers and the Administrative Agent prior to the Termination
Date, elect not to have the provisions of this Section 11.3 apply
with respect to all Obligations owed to such Lender immediately following the
Termination Date, and, if such notice is given, all Obligations owed to such
Lender immediately following the Termination Date shall remain designated in
their original currencies.

 

[REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]

 

147

 

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

 

	
   

  	
  SMURFIT-STONE CONTAINER

  ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  150 North Michigan Avenue

  
	
   

  	
  Chicago, IL 60601

  
	
   

  	
   

  
	
   

  	
  FEIN: 36-2041256

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-STONE CONTAINER CANADA

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  630 Rene-Levesque Blvd. West,
  Suite 3000

  
	
   

  	
  Montreal, QC

  
	
   

  	
  H3B 5C7

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-STONE CONTAINER

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  150 North Michigan Avenue

  
	
   

  	
  Chicago, IL 60601

  
	
   

  	
   

  
	
   

  	
  FEIN: 43-1531401

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit Agreement

  	
   

  
								

 

 

	
   

  	
  CALPINE
  CORRUGATED LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  3366
  E. Muscat Avenue

  
	
   

  	
  Fresno,
  CA 93725

  
	
   

  	
   

  
	
   

  	
  FEIN: 11-3740470

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAMEO CONTAINER CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 36-2425701

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LOT 24D REDEVELOPMENT

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 37-1356747

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATLANTA & SAINT ANDREWS BAY

  RAILWAY COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 63-6000093

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit Agreement

  	
   

  
								

 

 

	
   

  	
  STONE
  INTERNATIONAL SERVICES

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 36-3599630

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STONE GLOBAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 36-4200806

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STONE CONNECTICUT PAPERBOARD

  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 36-3498038

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-STONE PUERTO RICO, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Amelia Industrial Park

  
	
   

  	
  47 Amelia Street

  
	
   

  	
  Guaynabo, Puerto Rico 00968

  
	
   

  	
   

  
	
   

  	
  FEIN: 66-0665984

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit Agreement

  	
   

  
									

 

 

	
   

  	
  SMURFIT NEWSPRINT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 93-0361650

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLP
  FINANCE I, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 43-1898169

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLP FINANCE II, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 43-1903935

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMBI INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Six CityPlace Drive

  
	
   

  	
  Creve Coeur, MO 63141

  
	
   

  	
   

  
	
   

  	
  FEIN: 13-4182567

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit Agreement

  	
   

  
										

 

 

	
   

  	
  3083527
  NOVA SCOTIA COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  630
  Rene-Levesque Blvd. West, Suite 3000

  
	
   

  	
  Montreal, QC

  
	
   

  	
  H3B 5C7

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MBI LIMITED/LIMITÉE

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  7120 Hurontario Street

  
	
   

  	
  No. 200

  
	
   

  	
  Mississauga, ON

  
	
   

  	
  L5W 0A9

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-MBI, by its general partner, MBI

  Limited/Limitée

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  7120 Hurontario Street

  
	
   

  	
  No. 200

  
	
   

  	
  Mississauga, ON

  
	
   

  	
  L5W 0A9

  
	
   

  	
   

  
	
   

  	
  STONE CONTAINER FINANCE COMPANY

  OF CANADA II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  1959 Upper Water Street, Suite 900

  
	
   

  	
  Halifax, NS

  
	
   

  	
  B3J 2X2

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit Agreement

  	
   

  
								

 

 

	
   

  	
  639647 BRITISH COLUMBIA LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  7120
  Hurontario Street

  
	
   

  	
  No. 200

  
	
   

  	
  Mississauga,
  ON

  
	
   

  	
  L5W 0A9

  
	
   

  	
   

  
	
   

  	
  B.C. SHIPPER SUPPLIES LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  7120
  Hurontario Street

  
	
   

  	
  No. 200

  
	
   

  	
  Mississauga,
  ON

  
	
   

  	
  L5W 0A9

  
	
   

  	
   

  
	
   

  	
  SPECIALTY CONTAINERS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  7120
  Hurontario Street

  
	
   

  	
  No. 200

  
	
   

  	
  Mississauga,
  ON

  
	
   

  	
  L5W 0A9

  
	
   

  	
   

  
	
   

  	
  SLP FINANCE GENERAL
  PARTNERSHIP, by

  its general partner, SLP Finance I, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  630, Boul.
  Rene-Levesque Ouest

  
	
   

  	
  Bureau 3000

  
	
   

  	
  Montreal, QC

  
	
   

  	
  H3B 5C7

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit Agreement

  	
   

  
											

 

 

	
   

  	
  FRANCOBEC COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  1000 Chemin
  de l’Usine

  
	
   

  	
  La Tuque, QC

  
	
   

  	
  G9X3P8

  
	
   

  	
   

  
	
   

  	
  605681 N.B. INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  44 Chipman
  Hill, Suite 1000, Post Office Box 7289

  Stn A, Saint John, NB E2L 4S6

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit
  Agreement

  	
   

  
							

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
  Individually and as Administrative Agent
  and

  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., TORONTO

  BRANCH

  
	
   

  	
  as Canadian Administrative Agent and
  Canadian

  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Page to Credit Agreement

  	
   

  
									

 

 

Annex A-1

 

Canadian
Revolving Commitment Amounts

 

	
  LENDER

  	
   

  	
  COMMITMENT

  	
   

  
	
  JPMorgan Chase Bank, N.A., Toronto Branch

  	
   

  	
  US$21,350,000.00

  	
   

  
	
  Deutsche Bank Trust Company Americas

  	
   

  	
  US$21,350,000.00

  	
   

  
	
  Bank of America, N.A., Canada Branch

  	
   

  	
  US$8,000,000.00

  	
   

  
	
  The Bank of Nova Scotia

  	
   

  	
  US$5,633,333.33

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  US$8,666,666.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  US$65,000,000

  	
   

  

 

 

Annex A-2

 

U.S.
Revolving Commitment Amounts

 

	
  LENDER

  	
   

  	
  COMMITMENT

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  US$71,500,000.00

  	
   

  
	
  Deutsche Bank Trust Company Americas

  	
   

  	
  US$71,500,000.00

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  US$52,000,000.00

  	
   

  
	
  The Bank of Nova Scotia

  	
   

  	
  US$21,666,666.67

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  US$33,333,333.33

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  US$250,000,000

  	
   

  

 

 

Annex A-3

 

U.S. Term
Loan Commitment Amounts

 

	
  LENDER

  	
   

  	
  COMMITMENT

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  US$106,482,758.62

  	
   

  
	
  Deutsche Bank Trust Company Americas

  	
   

  	
  US$106,482,758.62

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  US$34,666,666.67

  	
   

  
	
  The Bank of Nova Scotia

  	
   

  	
  US$34,666,666.67

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  US$53,333,333.33

  	
   

  
	
  The Foothill Group, Inc.

  	
   

  	
  US$64,367,816.09

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  US$400,000,000

  	
   

  

 

 

Annex A-4

 

Canadian
Term Loan Commitment Amounts

 

	
  LENDER

  	
   

  	
  COMMITMENT

  	
   

  
	
  JPMorgan Chase Bank, N.A., Toronto Branch

  	
   

  	
  US$8,167,241.38

  	
   

  
	
  Deutsche Bank Trust Company Americas

  	
   

  	
  US$8,167,241.38

  	
   

  
	
  Bank of America, N.A., Canada Branch

  	
   

  	
  US$5,333,333.33

  	
   

  
	
  The Bank of Nova Scotia

  	
   

  	
  US$3,033,333.33

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  US$4,666,666.67

  	
   

  
	
  The Foothill Group, Inc.

  	
   

  	
  US$5,632,183.91

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  US$35,000,000

  	
   

  

 

 

Exhibit A-1

 

Form of
U.S. Interim Order

 

Exhibit A-2

 

Form of
Initial Order

 

Exhibit A-3

 

Form of
Final Order

 

Exhibit B-1

 

Form of
Security and Pledge Agreement

 

Exhibit B-2

 

Form of
Canadian Security Agreement

 

Exhibit C-1

 

Form of
Weekly Borrowing Base Certificate

 

Exhibit C-2

 

Form of
Monthly Borrowing Base Certificate

 

Exhibit D

 

Form of
Opinion of Counsel

 

 

Exhibit E

 

Form of
Assignment and Acceptance

 

This Assignment and
Acceptance (the “Assignment and Acceptance”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below
(as amended, modified or restated from time to time, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Acceptance as if set forth
herein in full.

 

For
an agreed consideration, the Assignor hereby irrevocably sells and assigns to
the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit and guarantees
included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights
and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Acceptance, without representation or warranty by the Assignor.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [and is an Affiliate/Approved Fund of [identify
  Lender]]

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrowers:

  	
  SMURFIT-STONE CONTAINER ENTERPRISES, INC. and SMURFIT-STONE CONTAINER
  CANADA INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative Agent:

  	
  JPMORGAN CHASE BANK, N.A., as the administrative agent under the
  Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit Agreement:

  	
  The US$750,000,000 Credit Agreement dated as of January 28,
  2009 among SMURFIT-STONE
  CONTAINER ENTERPRISES, INC., SMURFIT-STONE CONTAINER CANADA INC., the

  

 

 

	
   

  	
   

  	
   

  	
  other Loan Parties parties thereto, the Lenders parties thereto,
  JPMORGAN CHASE BANK, N.A., as Administrative Agent, and the other agents
  parties thereto

  

 

6.                                       Assigned Interest:

 

	
  Facility Assigned
 (e.g. “U.S. Revolving

  Commitment,” “Canadian

  Revolving Commitment,”

  “U.S. Term Loans,” or

  “Canadian Term Loans”)

  	
   

  	
  Aggregate Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned

  of

  Commitment/Loans

  set forth, to at least 9

  decimals, as a

  percentage of the

  Commitment/Loans

  of all Lenders

  thereunder

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

Effective Date: _____________________, 20___

 

The
Assignee agrees to deliver to the Administrative Agent a completed
Administrative Questionnaire in which the Assignee designates on or more credit
contacts to whom all syndicate-level information (which may contain material
non-public information about the Company, the Loan Parties and their Related
Parties or their respective securities) will be made available and who may
receive such information in accordance with the Assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.

 

The
terms set forth in this Assignment and Acceptance are hereby agreed to:

 

	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  
				

 

 

	
  [Consented to and] Accepted:

  	
   

  
	
   

  	
   

  
	
  [JPMORGAN CHASE BANK, N.A., as

  	
   

  
	
  Administrative Agent]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  [Consented to:]

  	
   

  
	
   

  	
   

  
	
  [JPMORGAN CHASE BANK, N.A., as Fronting Bank]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  

 

 

ANNEX 1

 

STANDARD TERMS AND
CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

 

1. Representations and
Warranties.

 

1.1 Assignor. The Assignor (a) represents
and warrants that (i) it is the legal and beneficial owner of the Assigned
Interest, (ii) the Assigned Interest is free and clear of any lien,
encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Acceptance and to consummate the transactions contemplated hereby;
and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit
Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of
any Borrower, any of their Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or
observance by any Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

 

1.2. Assignee. The
Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Acceptance and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant to Section 5.1
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) attached
to the Assignment and Acceptance is any documentation required to be delivered
by it pursuant to the terms of Section 2.19(f), duly completed and
executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

2. Payments. From and
after the Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest,

 

 

fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

 

3. General Provisions.
This Assignment and Acceptance shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns. This
Assignment and Acceptance may be executed in any number of counterparts, which
together shall constitute one instrument. Delivery of an executed counterpart
of a signature page of this Assignment and Acceptance by facsimile shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the law of the State of New York applicable to
contracts made and to be performed wholly within such state and the Bankruptcy
Code.

 

 

Exhibit F

 

Form of
Loan Party Joinder Agreement

 

THIS
LOAN PARTY JOINDER AGREEMENT (this “Agreement”),
dated as of
                                    ,
is entered into between                       ,
a                       
(the “New Subsidiary”) and JPMORGAN CHASE BANK, N.A., in its
capacity as administrative agent (the “Administrative
Agent”) under that certain Credit Agreement, dated as of January 28,
2009, among SMURFIT-STONE CONTAINER ENTERPRISES, INC.,
a Delaware corporation, SMURFIT-STONE
CONTAINER CANADA INC., a corporation continued under the Companies Act (Nova
Scotia) (collectively, the “Borrowers”),
SMURFIT-STONE CONTAINER CORPORATION, a Delaware corporation, the other
Loan Parties party thereto, the Lenders
party thereto, the Administrative Agent and JPMORGAN CHASE BANK N.A.,
TORONTO BRANCH, as Canadian Administrative Agent (as the same may be amended, modified, extended or restated from time
to time, the “Credit Agreement”).
All capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Credit Agreement.

 

The
New Subsidiary and the Administrative Agent, for the benefit of the Lenders,
hereby agree as follows:

 

1.             [Use for Domestic Subsidiaries:  The New Subsidiary
hereby acknowledges, agrees and confirms that, by its execution of this
Agreement, the New Subsidiary will be deemed to be a Loan Party under the
Credit Agreement and a “U.S. Guarantor”
for all purposes of the Credit Agreement and shall have all of the obligations
of a Loan Party and a U.S. Guarantor thereunder as if it had executed the
Credit Agreement. The New Subsidiary hereby ratifies, as of the date hereof,
and agrees to be bound by, all of the terms, provisions and conditions
contained in the Credit Agreement, including without limitation (a) all of
the representations and warranties of the Loan Parties set forth in Article III
of the Credit Agreement, (b) all of the covenants set forth in Articles
V and VI of the Credit Agreement, and (c) all of the guaranty
obligations applicable to U.S. Guarantors set forth in Article X of
the Credit Agreement. Without limiting the generality of the foregoing terms of
this paragraph 1, the New Subsidiary, subject to the limitations set forth in Section 10.11
of the Credit Agreement, hereby guarantees, jointly and severally with the
Borrowers and other U.S. Guarantors, to the Administrative Agent and the
Lenders, as provided in Article X of the Credit Agreement, the
prompt payment and performance of the U.S. Guaranteed Obligations in full when
due (whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof and agrees that if any
of the U.S. Guaranteed Obligations are not paid or performed in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise), the New Subsidiary will, jointly and severally together with the
Borrowers and other U.S. Guarantors, promptly pay and perform the same, without
any demand or notice whatsoever, and that in the case of any extension of time
of payment or renewal of any of the U.S. Guaranteed Obligations, the same will
be promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.]

 

1.             [Use for Canadian Subsidiaries:  The New Subsidiary
hereby acknowledges, agrees and confirms that, by its execution of this
Agreement, the New Subsidiary will be deemed

 

 

to be a Loan Party under the
Credit Agreement and a “Canadian
Guarantor” for all purposes of the Credit Agreement and shall have all
of the obligations of a Loan Party and a Canadian Guarantor thereunder as if it
had executed the Credit Agreement. The New Subsidiary hereby ratifies, as of
the date hereof, and agrees to be bound by, all of the terms, provisions and
conditions contained in the Credit Agreement, including without limitation (a) all
of the representations and warranties of the Loan Parties set forth in Article III
of the Credit Agreement, (b) all of the covenants set forth in Articles
V and VI of the Credit Agreement, and (c) all of the guaranty
obligations applicable to the Canadian Guarantors set forth in Article X
of the Credit Agreement. Without limiting the generality of the foregoing terms
of this paragraph 1, the New Subsidiary, subject to the limitations set forth
in Section 10.11 of the Credit Agreement, hereby guarantees,
jointly and severally with the other Canadian Guarantors, to the Administrative
Agent and the Lenders, as provided in Article X of the Credit
Agreement, the prompt payment and performance of the Canadian Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise) strictly in accordance with the terms
thereof and agrees that if any of the Canadian Guaranteed Obligations are not
paid or performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and
severally together with the other Canadian Guarantors, promptly pay and perform
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Canadian Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.]

 

2.             If required, the New Subsidiary is,
simultaneously with the execution of this Agreement, executing and delivering
such Collateral Documents (and such other documents and instruments) as
requested by the Administrative Agent in accordance with the Credit Agreement.

 

3.             The address of the New Subsidiary
for purposes of Section 9.1 of the Credit Agreement is as follows:

 

________________________

 

________________________

 

________________________

 

Attention:
_______________

 

4.             The New Subsidiary hereby waives
acceptance by the Administrative Agent and the Lenders of the guaranty by the
New Subsidiary upon the execution of this Agreement by the New Subsidiary.

 

5.             This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the same instrument.

 

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

 

 

IN
WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly
executed by its authorized officer, and the Administrative Agent, for the
benefit of the Lenders, has caused the same to be accepted by its authorized
officer, as of the day and year first above written.

 

 

	
   

  	
  [NEW SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

	
  Acknowledged and accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JPMORGAN CHASE BANK, N.A.,

  	
   

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
						

 

 

Exhibit G

 

Form of
Compliance Certificate

 

	
  To:

  	
  The Administrative Agent and the Lenders

  
	
   

  	
  parties to the Credit Agreement described below

  

 

This Compliance Certificate
(this “Certificate”) is furnished pursuant to that certain Credit Agreement
dated as of January 28, 2009 (as amended, modified, restated, renewed or extended from time to
time, the “Agreement”) among Smurfit-Stone Container Enterprises, Inc., a
Delaware corporation (the “U.S. Borrower”), Smurfit-Stone Container Canada
Inc., a company continued under the Companies Act (Nova Scotia) (the “Canadian
Borrower”), Smurfit-Stone Container Corporation, a Delaware corporation (the “Parent”),
the other Loan Parties party thereto, the Lenders party thereto, JPMorgan Chase
Bank, N.A., as Administrative Agent and Collateral Agent for the Lenders, and
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and
Canadian Collateral Agent for the Lenders. Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings
ascribed thereto in the Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES, ON ITS
BEHALF AND ON BEHALF OF EACH LOAN PARTY, THAT:

 

1.     I am the duly elected                  of
the Parent;

 

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 the Loan Parties and their Subsidiaries during
the accounting period covered by the attached financial statements [for quarterly or monthly financial
statements add: and such financial statements present fairly in
all material respects the financial condition and results of operations of the
Loan Parties and their consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes];

 

3.     The examinations described in paragraph 2 did not disclose,
except as set forth below, and I have no knowledge of (i) the existence of
any condition or event which constitutes a Default or Event of Default during
or at the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate or (ii) any change in
GAAP or in the application thereof that has occurred since the date of the
audited financial statements referred to in Section 3.4 of the Agreement;

 

4.     I hereby certify that no Loan Party has changed (i) its
name, (ii) its chief executive office, (iii) principal place of
business, (iv) the type of entity it is or (v) its state of
incorporation or organization without having given the Administrative Agent the
notice required by Section 4.15 of the Security and Pledge
Agreement and/or Section 6 of the Canadian Security Agreement, as
applicable; and

 

 

5.     Schedule I attached hereto sets forth financial data and
computations evidencing the Loan Parties’ compliance with certain covenants of
the Agreement, all of which data and computations are true, complete and
correct.

 

Described below are the
exceptions, if any, to paragraph 3 by listing, in detail, the (i) nature
of the condition or event, the period during which it has existed and the
action which the Loan Parties have taken, are taking, or propose to take with
respect to each such condition or event or (ii) the change in GAAP or the
application thereof and the effect of such change on the attached financial
statements:

 

____________________________________________________________________________________________________

 

____________________________________________________________________________________________________

 

____________________________________________________________________________________________________

 

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
                        ,
20    .

 

	
   

  	
  SMURFIT-STONE CONTAINER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

 

SCHEDULE I

 

Compliance as of
              ,
20     with

Section 6.3,
6.4, 6.5, 6.6, 6.11 and 6.12 of

the Agreement

 

 

Schedule
4.1

 

Closing
Documents

 

	
  1.

  	
   

  	
  Credit Agreement

  
	
  2.

  	
   

  	
  Security and Pledge Agreement

  
	
  3.

  	
   

  	
  Canadian Security Agreement

  
	
  4.

  	
   

  	
  Deed of Hypothec and Issue of Bonds made by
  each of Canadian Borrower, Smurfit-MBI, MBI Limited, 3083527 Nova Scotia
  Company, Francobec Company, 639647 British Columbia Ltd. and SLP Finance
  I, Inc. and SLP Finance II, Inc., as partners of SLP Finance
  General Partnership, in favour of JPMorgan Chase Bank, N.A., Toronto Branch,
  as fondé de pouvoir

  
	
  5.

  	
   

  	
  25% Demand Bond issued by the Canadian
  Borrower in favour of the Canadian Collateral Agent

  
	
  6.

  	
   

  	
  Pledge of Bond Agreement made by Canadian
  Borrower in favour of the Canadian Collateral Agent

  
	
  7.

  	
   

  	
  Delivery order in respect of the 25% Demand
  Bond by Canadian Borrower in favour of JPMorgan Chase Bank, N.A., Toronto
  Branch, as fondé de pouvoir

  
	
  8.

  	
   

  	
  Payoff and Termination Letter with respect
  to VFN, Series 2004-2

  
	
  9.

  	
   

  	
  Redemption Funding Agreement with respect
  to Series 2004-1 Notes

  
	
  10.

  	
   

  	
  Lien Releases with respect to
  Series 2004-1 Notes

  
	
  11.

  	
   

  	
  U.S. Interim Order

  
	
  12.

  	
   

  	
  Initial Order entered by Ontario Superior
  Court of Justice

  
	
  13.

  	
   

  	
  Recognition Order entered by Ontario
  Superior Court of Justice

  
	
  14.

  	
   

  	
  Participation Fee Letter

  
	
  15.

  	
   

  	
  Funding Letter

  
	
  16.

  	
   

  	
  Notice of Borrowing with respect to the U.S.
  Term Loan

  
	
  17.

  	
   

  	
  Notice of Borrowing with respect to
  Canadian Term Loan

  
	
  18.

  	
   

  	
  Notice of Borrowing with respect to
  Revolving Loans

  
	
  19.

  	
   

  	
  Borrowing Base Certificate

  
	
  20.

  	
   

  	
  Cash Flow Forecast

  
	
  21.

  	
   

  	
  Lien Searches

  
	
  22.

  	
   

  	
  Securitization Reports

  
	
  23.

  	
   

  	
  Insurance CertificatesExhibit 10.1

 

AMENDMENT NO. 2

TO

SECOND AMENDED AND RESTATED CREDIT
AGREEMENT

 

This Amendment No. 2 to Second Amended and Restated Credit Agreement
dated as of January 20, 2009 (this “Amendment”), is made among TETRA TECH, INC., a Delaware corporation (the “Borrower”),
BANK OF AMERICA, N.A., as
Administrative Agent, each of the Lenders signatory hereto and each of the
Guarantors signatory hereto.  Each
capitalized term used and not otherwise defined in this Amendment has the
definition specified in the Credit Agreement described below.

 

RECITALS:

 

A.            The Borrower, Bank of America, N.A.,
as administrative agent (in such capacity, the “Administrative Agent”),
and each lenders from time to time party thereto (each, a “Lender” and,
collectively, the “Lenders”) have entered into that certain Second
Amended and Restated Credit Agreement dated as of March 30, 2007 (as
amended by that certain Amendment No. 1 to Second Amended and Restated
Credit Agreement dated as of May 30, 2008, the “Credit Agreement”),
pursuant to which the Lenders have made available to the Borrower a revolving
credit facility.

 

B.            Each of the Guarantors has entered
into a Guaranty pursuant to which it has guaranteed the payment and performance
of the obligations of the Borrower under the Credit Agreement and the other
Loan Documents.

 

C.            The Borrower has advised the
Administrative Agent and the Lenders that it desires to amend certain
provisions of the Credit Agreement as set forth below.

 

D.            The Administrative
Agent and the Lenders are willing to so amend the Credit Agreement on the terms
and conditions contained in this Amendment.

 

In consideration of the premises and further valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

 

1.                                     Amendments to Credit Agreement.  Subject to the terms and conditions set forth
herein, and in reliance upon the representations and warranties of the Borrower
made herein, the Credit Agreement is amended as follows:

 

(a)                                The
existing definition of “Excluded Subsidiary” in Section 1.02
is deleted in its entirety and the following is inserted in lieu thereof:

 

“Excluded Subsidiary”
means any Subsidiary of the Borrower designated as such on Schedule 5.13
and any other Subsidiary designated as such from time to time in writing by the
Borrower to the Administrative Agent; provided, that, the Borrower may
remove any Subsidiary from the list of Excluded Subsidiaries from time to time
in order to maintain compliance with Section 7.16 so long as the
Borrower has caused such Subsidiary to execute a Guaranty Joinder Agreement and
Security Joinder Agreement to the extent such execution would be 

 

 

required under Section 6.12(e) (for
the purposes of such Section, treating such Subsidiary as if it were formed or
acquired on the effective date of such designation).

 

(b)                               Clause
(v) of the proviso to Section 7.02(g) is amended by
inserting “(unless such acquired Equity Interests are acquired by an Excluded
Subsidiary and limited, in the case of each entity that is a “controlled
foreign corporation” under Section 957 of the Code, to a pledge of 65% of
the voting Equity Interests of such first-tier foreign subsidiary to the extent
the pledge of any greater percentage would result in material adverse tax
consequences to the Borrower)” after “so acquired” and before the semicolon in
the last line thereof.

 

2.                                       Effectiveness; Conditions
Precedent.  The amendments herein provided shall be
effective upon the satisfaction of the following conditions precedent:

 

(a)                                The Administrative Agent shall have received
each of the following documents or instruments in form and substance acceptable
to the Administrative Agent:

 

(i)                                   one or more counterparts of this Amendment,
duly executed by the Borrower, each Guarantor and the Required Lenders; and

 

(ii)                                such other documents, instruments, opinions,
certifications, undertakings, further assurances and other matters as the
Administrative Agent shall reasonably request.

 

(b)                               All
fees and expenses payable to the Administrative
Agent and the Lenders (including (x) an amendment fee of $7,000  to each Lender that executes and returns this Amendment to
the Administrative Agent by 3:00 pm PST on  January 20,
2009, and (y) the fees and expenses of counsel to the Administrative Agent estimated to
date) shall have been paid in full (without prejudice to final settling of
accounts for such fees and expenses).

 

3.                                       Consent of the Guarantors.  Notwithstanding that such consent is not
required by the Loan Documents, each of the Guarantors hereby consents,
acknowledges and agrees to the amendments set forth herein and hereby confirms
and ratifies in all respects the Loan Documents to which such Person is a party
(including without limitation the continuation of such Person’s payment and
performance obligations and the effectiveness and priority of any Liens granted
thereunder, in each case upon and after the effectiveness of this Amendment and
the amendment contemplated hereby) and the enforceability of such Loan
Documents against such Person in accordance with its terms.

 

4.                                       Representations and
Warranties.  In order to induce the Administrative Agent
and the Lenders to enter into this Amendment, the Borrower represents and
warrants to the  Administrative Agent and
such Lenders as follows:

 

(a)                                The representations and warranties made by it
in Article V of the Credit Agreement, and by each Loan Party in
each of the Loan Documents to which such Loan Party is a party are true and
correct on and as of the date hereof, except to 

 

2

 

the extent that such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties are true and correct as of such
earlier date;

 

(b)                               Since the date of the most recent financial
reports of the Borrower delivered pursuant to Section 6.01 of the
Credit Agreement, no act, event, condition or circumstance has occurred or
arisen which, singly or in the aggregate with one or more other acts, events,
occurrences or conditions (whenever occurring or arising), has had or could
reasonably be expected to have a Material Adverse Effect;

 

(c)                                The
Persons appearing as Guarantors on the signature pages to this Agreement
constitute all Persons who are required to be Guarantors pursuant to the terms
of the Credit Agreement and the other Loan Documents, including without
limitation all Persons who became Subsidiaries or were otherwise required to
become Guarantors after the Closing Date, and each of such Persons has become
and remains a party to a Guaranty as a Guarantor;

 

(d)                               This Amendment has been duly authorized,
executed and delivered by the Borrower and the Guarantors and constitutes a
legal, valid and binding obligation of such Persons, except as may be limited
by general principles of equity or by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally; and

 

(e)                                No
Default or Event of Default has occurred and is continuing.

 

5.                                       Entire Agreement.  This Amendment, together with all the Loan
Documents (collectively, the “Relevant Documents”), sets forth the
entire understanding and agreement of the parties hereto in relation to the
subject matter hereof and supersedes any prior negotiations and agreements
among the parties relating to such subject matter.  No promise, condition, representation or
warranty, express or implied, not set forth in the Relevant Documents shall
bind any party hereto, and no such party has relied on any such promise, condition,
representation or warranty.  Each of the
parties hereto acknowledges that, except as otherwise expressly stated in the
Relevant Documents, no representations, warranties or commitments, express or
implied, have been made by any party to the other in relation to the subject
matter hereof or thereof.  None of the
terms or conditions of this Amendment may be changed, modified, waived or
canceled orally or otherwise, except in writing and in accordance with Section 10.01
of the Credit Agreement.

 

6.                                       Full Force and Effect of
Agreement.  Except as hereby specifically amended,
modified or supplemented, the Credit Agreement and all other Loan Documents are
hereby confirmed and ratified in all respects and shall be and remain in full
force and effect according to their respective terms.

 

3

 

7.                                       Counterparts.  This
Amendment may be executed in any number of counterparts, each of which shall be
deemed an original as against any party whose signature appears thereon, and
all of which shall together constitute one and the same instrument.  Delivery of an executed counterpart of a
signature page of this Amendment by telecopy, facsimile or other
electronic transmission (including .PDF)
shall be effective as delivery of a manually executed counterpart of this Amendment.

 

8.                                       Governing Law; Jurisdiction,
Etc.  This
Amendment shall in all respects be governed by, and construed in accordance
with, the laws of the State of New York, and shall be further subject to the
provisions of Section 10.14 of the Credit Agreement.

 

9.                                       Enforceability. 
Should any one or more of the provisions of this Amendment be determined
to be illegal or unenforceable as to one or more of the parties hereto, all
other provisions nevertheless shall remain effective and binding on the parties
hereto.

 

10.                                 References.  All
references in any of the Loan Documents to the “Credit Agreement” shall mean
the Credit Agreement, as amended hereby.

 

11.                                 Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the Borrower, each Guarantor, the Administrative Agent
and each Lender, and their respective successors and assignees to the extent
such assignees are permitted assignees as provided in Section 10.06
of the Credit Agreement.

 

[Remainder of page left blank
intentionally; signature pages follow.]

 

4

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be made,
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  TETRA TECH, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Dan
  L. Batrack

  
	
   

  	
  Name:    Dan L. Batrack

  
	
   

  	
  Title:  
     Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  ADVANCED MANAGEMENT

  
	
   

  	
  TECHNOLOGY,
  INC.

  
	
   

  	
  ARD,
  INC.

  
	
   

  	
  ARDAMAN &
  ASSOCIATES, INC.

  
	
   

  	
  COSENTINI
  ASSOCIATES, INC.

  
	
   

  	
  DELANEY CRUSHED STONE

  
	
   

  	
  PRODUCTS,
  INC.

  
	
   

  	
  ENGINEERING MANAGEMENT

  
	
   

  	
  CONCEPTS,
  INC.

  
	
   

  	
  GEOTRANS, INC.

  
	
   

  	
  HARTMAN & ASSOCIATES, INC.

  
	
   

  	
  TETRA TECH CONSTRUCTION

  
	
   

  	
  SERVICES,
  INC.

  
	
   

  	
  TETRA TECH EC, INC.

  
	
   

  	
  TETRA TECH EM INC.

  
	
   

  	
  TETRA TECH EXECUTIVE SERVICES, INC.

  
	
   

  	
  TETRA TECH NUS, INC.

  
	
   

  	
  THE DELANEY GROUP, INC.

  
	
   

  	
  WESTERN UTILITY CONTRACTORS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Dan
  L. Batrack

  
	
   

  	
  Name:    Dan L. Batrack

  
	
   

  	
  Title:      Vice President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF
  AMERICA, N.A.,  as
  Administrative

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert Rittelmeyer

  
	
   

  	
  Name:    Robert Rittelmeyer

  
	
   

  	
  Title:      Vice
  President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  BANK OF
  AMERICA, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Mathew Griesbach

  
	
   

  	
  Name:    Mathew Griesbach

  
	
   

  	
  Title:      Vice
  President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  BMO
  CAPITAL MARKETS FINANCING,

  INC.,  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Joann
  L. Holman

  
	
   

  	
  Name:    Joann
  L. Holman

  
	
   

  	
  Title:   
    Managing Director

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  NORTHERN
  TRUST COMPANY,  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  John E. Burda

  
	
   

  	
  Name:    John
  E. Burda

  
	
   

  	
  Title:   
    Senior Vice President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  THE
  PRUDENTIAL INSURANCE COMPANY

  OF AMERICA,  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Matthew
  Douglass

  
	
   

  	
  Name:    Matthew
  Douglass

  
	
   

  	
  Title:   
    Vice President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  PRUDENTIAL
  RETIREMENT INSURANCE

  AND ANNUITY COMPANY,  as
  a Lender

  
	
   

  	
   

  
	
   

  	
  By:  Prudential Investment Management, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Cornelia Cheng

  
	
   

  	
  Name:    Cornelia
  Cheng

  
	
   

  	
  Title:   
    Vice President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  UNION
  BANK OF CALIFORNIA, N.A.,  as
  a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Peter Thompson

  
	
   

  	
  Name:    Peter
  Thompson

  
	
   

  	
  Title:   
    Vice President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION,  as
  a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Conan
  Schleicher

  
	
   

  	
  Name:    Conan
  Schleicher

  
	
   

  	
  Title:      Vice
  President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

 

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION,  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Jared Myres

  
	
   

  	
  Name:    Jared
  Myres

  
	
   

  	
  Title:      Vice
  President

  

 

Amendment
No. 2 to Second Amended and Restated Credit Agreement

Signature
Page

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