Document:

EX-4.2

 Exhibit 4.2 
 Exchange and Registration Rights Agreement 
 Millar Western Forest
Products Ltd. 
 8.50% Senior Notes Due 2021 

 
  

Exchange and Registration Rights Agreement 
 April 7, 2011     
 Goldman, Sachs & Co., 

HSBC Securities (USA) Inc. 
 KKR Capital Markets
LLC 
     As representatives of the several Purchasers 
     named in Schedule I to the Purchase Agreement 
 c/o Goldman,
Sachs & Co. 
 200 West Street 

New York, New York 10282-2198 
 Ladies and
Gentlemen: 
 Millar Western Forest Products Ltd., a corporation established under the laws of the Province of Alberta (the
“Company”), proposes to issue and sell to the Purchasers (as defined herein) upon the terms set forth in the Purchase Agreement (as defined herein) $210,000,000 in aggregate principal amount of its 8.50% Senior Notes due 2021 (the
“Notes”). As an inducement to the Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Purchasers thereunder, the Company agrees with the Purchasers for the benefit of holders (as
defined herein) from time to time of the Transfer Restricted Securities (as defined herein) as follows: 
 1. Certain
Definitions. For purposes of this Exchange and Registration Rights Agreement (this “Agreement”), the following terms shall have the following respective meanings: 

“Base Interest” shall mean the interest that would otherwise accrue on the Securities under the terms
thereof and the Indenture, without giving effect to the provisions of this Agreement. 
 The term
“broker-dealer” shall mean any broker or dealer registered with the Commission under the Exchange Act. 
 “Business Day” shall mean a day, other than Saturday, Sunday or a federal holiday in the United States or Canada. 

“Canadian Securities Laws” shall mean securities legislation promulgated by any province of Canada and
the rules and regulations thereunder. 
 “Closing Date” shall mean the date on which the
Securities are initially issued. 
 “Commission” shall mean the United States Securities and
Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. 

  
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 Exchange and Registration Rights Agreement 

 

 “EDGAR System” means the Electronic Data Gathering
Analysis and Retrieval filing system of the Commission and the rules and regulations pertaining thereto promulgated by the Commission in Regulation S-T under the Securities Act and the Exchange Act, in each case as the same may be amended or
succeeded from time to time (and without regard to format). 
 “Effective Time,” in the case of
(i) an Exchange Registration, shall mean the time and date as of which the Commission declares the Exchange Offer Registration Statement effective or as of which the Exchange Offer Registration Statement otherwise becomes effective and
(ii) a Shelf Registration, shall mean the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective. 

“Effectiveness Target Date” shall have the meaning assigned thereto in Section 2(c). 

“Electing Holder” shall mean any holder of Transfer Restricted Securities that has returned a completed
and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(ii) or Section 3(d)(iii) and the instructions set forth in the Notice and Questionnaire. 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the Commission thereunder, as the same may be amended or succeeded from time to time. 

“Exchange Notes” shall have the meaning assigned thereto in Section 2(a). 

“Exchange Offer” shall have the meaning assigned thereto in Section 2(a). 

“Exchange Offer Registration Statement” shall have the meaning assigned thereto in Section 2(a).

 “Exchange Registration” shall have the meaning assigned thereto in Section 3(c).

 “Guarantor” shall have the meaning assigned thereto in the Indenture. 

The term “holder” shall mean the registered holders of the Transfer Restricted Securities on the Closing
Date and other persons who subsequently acquire Transfer Restricted Securities from time to time (including any successors or assigns), in each case for so long as such person owns any Transfer Restricted Securities; provided that for purposes of
any obligation of the Company to give notice to any holders, “holder” shall mean the record owner of Transfer Restricted Securities. 
 “Indenture” shall mean the trust indenture, dated as of April 7, 2011, among the Company, The Bank of New York Mellon, as trustee, and BNY Trust Company of Canada, as co-trustee, as
the same may be amended from time to time. 
 “Notice and Questionnaire” means a Notice of
Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto. 

The term “person” shall mean a corporation, limited liability company, association, partnership,
organization, business, individual, government or political subdivision thereof or governmental agency. 

  
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 Exchange and Registration Rights Agreement 

 

 “Purchase Agreement” shall mean the Purchase Agreement,
dated as of March 31, 2011, among the Purchasers and the Company relating to the Securities. 

“Purchasers” shall mean the Purchasers named in Schedule I to the Purchase Agreement. 

“Registration Default” shall have the meaning assigned thereto in Section 2(c). 

“Registration Default Period” shall have the meaning assigned thereto in Section 2(c). 

“Registration Expenses” shall have the meaning assigned thereto in Section 4. 

“Resale Period” shall have the meaning assigned thereto in Section 2(a). 

“Restricted Holder” shall mean (i) a holder that is an affiliate of the Company within the meaning
of Rule 405, (ii) a holder who acquires Exchange Notes outside the ordinary course of such holder’s business, (iii) a holder who has arrangements or understandings with any person to participate in the Exchange Offer for the purpose
of distributing Exchange Notes and (iv) a holder that is a broker-dealer, but only with respect to Exchange Notes received by such broker-dealer pursuant to an Exchange Offer in exchange for Transfer Restricted Securities acquired by the
broker-dealer directly from the Company. 
 “Rule 144,” “Rule 405”, “Rule 415”,
“Rule 424”, “Rule 430B” and “Rule 433” shall mean, in each case, such rule promulgated by the Commission under the Securities Act, as the same may be amended or succeeded from time to time. 

“Securities” shall mean, collectively, the Notes and the Exchange Notes. 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations
promulgated by the Commission thereunder, as the same may be amended or succeeded from time to time. 

“Shelf Registration” shall have the meaning assigned thereto in Section 2(b). 

“Shelf Registration Statement” shall have the meaning assigned thereto in Section 2(b). 

“Special Interest” shall have the meaning assigned thereto in Section 2(c). 

“Transfer Restricted Securities” shall mean the Notes; until the earliest of the following: 

(1) the date on which such Note has been exchanged by a Person other than a broker-dealer for an Exchange Note in the
Exchange Offer; 
 (2) following the exchange by a broker-dealer in the Exchange Offer of a Note for an
Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement; 

(3) the date on which such Note has been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement; 
 (4) the date on which such Note is distributed to the
public pursuant to Rule 144 under circumstances in which any legend borne by such Note relating to the restrictions on transferability thereof, under the Securities Act or otherwise, is removed by the Company or pursuant to the Indenture; or

  
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 Exchange and Registration Rights Agreement 

 

 (5) such Note shall cease to be outstanding. 

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the rules and
regulations promulgated by the Commission thereunder, as the same may be amended or succeeded from time to time. 

“Trustee” shall mean each of The Bank of New York Mellon and BNY Trust Company of Canada, individually,
or both of them collectively, as applicable, together with any successors thereto in such capacity. 
 Unless the context
otherwise requires, any reference herein to a “Section” or “clause” refers to a Section or clause, as the case may be, of this Agreement, and the words “herein,” “hereof” and “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision. 
 2.
Registration Under the Securities Act. 
 (a) Except as set forth in Section 2(b) below, the Company
agrees to file under the Securities Act, on or prior to 360 days after the Closing Date, a registration statement relating to an offer to exchange (such registration statement, the “Exchange Offer Registration Statement”, and such
offer, the “Exchange Offer”) any and all of the Notes for a like aggregate principal amount of debt securities issued by the Company, which debt securities are substantially identical to the Notes (and are entitled to the benefits
of the Indenture), except that they have been registered pursuant to an effective registration statement under the Securities Act and do not contain provisions for the Special Interest contemplated in Section 2(c) below (such new debt
securities hereinafter called “Exchange Notes”). The Exchange Notes will be issued as evidence of the same continuing indebtedness of the Company and will not constitute the creation of new indebtedness. The Company agrees to use
its reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act on or prior to 450 days after the Closing Date. The Exchange Offer will be registered under the Securities Act on the
appropriate form and will comply with all applicable tender offer rules and regulations under the Exchange Act. Unless the Exchange Offer would not be permitted by applicable law or Commission policy, the Company further agrees to use its reasonable
best efforts to (i) commence and complete the Exchange Offer on or prior to 45 Business Days (or longer to the extent required by United States federal securities laws) after such registration statement has become effective and
(ii) exchange Exchange Notes for all Notes that have been properly tendered and not withdrawn on or prior to the expiration of the Exchange Offer. The Exchange Offer will be deemed to have been “completed” only (i) if the
Exchange Notes received by holders other than Restricted Holders in the Exchange Offer for Notes are, upon receipt, transferable by each such holder without restriction under the Securities Act and the Exchange Act and without material restrictions
under the blue sky or securities laws of a substantial majority of the states of the United States and (ii) upon the Company having exchanged, pursuant to the Exchange Offer, Exchange Notes for all Notes that have been properly tendered and not
withdrawn before the expiration of the Exchange Offer. The Company agrees to include in the Exchange Offer Registration Statement a prospectus for use in any resales by any holder of Exchange Notes that is a broker-dealer, which has acquired such
Notes for its own account as a result of market-making activities or other trading activities and not directly from the Company, and to keep such Exchange Offer Registration Statement effective for a period (the “Resale Period”)
beginning when 

  
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Exchange Notes are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 180th day after the Exchange Offer has been completed or such time as the Company reasonably believes that such
broker-dealers no longer own any Notes, other than Notes acquired from the Company. With respect to such Exchange Offer Registration Statement, such holders shall have the benefit of the rights of indemnification and contribution set forth in
Subsections 6(a), (c), (d) and (e). 
 (b) If (i) the Company is not (A) required to file the
Exchange Offer Registration Statement; or (B) permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy, or (ii) any holder of Transfer Restricted Securities notifies the
Company in writing prior to the 20th day following the consummation of the Exchange Offer that (X) it is prohibited by applicable law or Commission policy from participating in the Exchange Offer; (Y) that it may not resell the Exchange
Notes acquired by it in the Exchange Offer to the public in the United States without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales; or (Z) it
is a broker-dealer and owns Notes acquired directly from the Company or an affiliate of the Company, the Company will (i) file under the Securities Act on or prior to 60 days after such filing obligation arises (but no earlier than 360 days
after the Closing Date), a “shelf” registration statement providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all of the Transfer Restricted Securities affected thereby, pursuant to Rule 415
or any similar rule that may be adopted by the Commission (such filing, the “Shelf Registration” and such registration statement, the “Shelf Registration Statement”). The Company agrees to use its reasonable best
efforts to cause the Shelf Registration Statement to become or be declared effective on or prior to 150 days after such Shelf Registration Statement filing obligation arises (but not earlier than 450 days after the Closing Date). The Company agrees
to use its reasonable best efforts to keep such Shelf Registration Statement continuously effective for a period ending on the earlier of the first anniversary of the Effective Time or such time as there are no longer any Transfer Restricted
Securities outstanding. No holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or to use the prospectus forming a part thereof for resales of Notes unless such holder is an Electing Holder. The
Company agrees, after the Effective Time of the Shelf Registration Statement and promptly upon the request of any holder of Transfer Restricted Securities that is not then an Electing Holder, to take any action reasonably necessary to enable such
holder to use the prospectus forming a part thereof for resales of Transfer Restricted Securities, including, without limitation, any action necessary to identify such holder as a selling securityholder in the Shelf Registration Statement (whether
by post-effective amendment thereto or by filing a prospectus pursuant to Rules 430B and 424(b) under the Securities Act identifying such holder), provided, however, that nothing in this sentence shall relieve any such holder of the
obligation to return a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(iii). The Company further agrees to supplement or make amendments to the Shelf Registration Statement, as and when required by
the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or rules and regulations thereunder for shelf registration, and the Company agrees to
furnish to each Electing Holder copies of any such supplement or amendment prior to its being used or promptly following its filing with the Commission. 
 (c) In the event that (i) the Company has not filed the Exchange Offer Registration Statement or the Shelf Registration Statement prior to the date on which such registration statement is required to
be filed pursuant to Section 2(a) or Section 2(b), respectively, or (ii) such Exchange Offer Registration Statement or Shelf Registration Statement has not 

  
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 Exchange and Registration Rights Agreement 

 

 
become effective or been declared effective by the Commission prior to the date on which such registration statement is required to become or be declared effective pursuant to Section 2(a)
or Section 2(b), respectively (the “Effectiveness Target Date”), or (iii) the Exchange Offer has not been completed within 45 Business Days after the initial effective date of the Exchange Offer Registration Statement relating to
the Exchange Offer (if the Exchange Offer is then required to be made) or (iv) any Exchange Offer Registration Statement or Shelf Registration Statement required by Section 2(a) or Section 2(b) is filed and declared effective but
thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the time periods specified herein (each such event referred to in clauses (i) through (iv), a “Registration
Default” and each period during which a Registration Default has occurred and is continuing, a “Registration Default Period”), then, as liquidated damages for such Registration Default, subject to the provisions of
Section 9(b), special interest (“Special Interest”), in addition to the Base Interest, shall accrue to each holder of Transfer Restricted Securities, with respect to the first 90-day period immediately following the occurrence
of the first Registration Default, in an amount equal to US$0.05 per week per US$1,000 principal amount of Transfer Restricted Securities held by such holder. The amount of Special Interest will increase by an additional US$0.05 per week per
US$1,000 principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Special Interest for all Registration Defaults of US$0.25 per week
per US$1,000 principal amount of Transfer Restricted Securities. The Company shall not be required to pay Special Interest for more than one Registration Default at any given time. Following the cure of all Registration Defaults, the accrual of
Special Interest will cease. All accrued Special Interest through each record date with respect to the succeeding Interest Payment Date will be paid by the Company on each Interest Payment Date (as defined in the Indenture) to the Global Note Holder
(as defined in the Indenture) by wire transfer of immediately available funds or by federal funds check and to holders of Certificated Notes (as defined in the Indenture) by wire transfer to the accounts specified by them or by mailing checks to
their registered addresses if no such accounts have been specified. 
 (d) The Company shall use its reasonable
best efforts to take all actions necessary or advisable to be taken by it to ensure that the transactions contemplated herein are effected as so contemplated. 
 (e) Any reference herein to a registration statement or prospectus as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time;
and any reference herein to any post-effective amendment to a registration statement or to any prospectus supplement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such
time. 
 3. Registration Procedures. 
 If the Company files a registration statement pursuant to Section 2(a) or Section 2(b), the following provisions shall apply: 

(a) At or before the Effective Time of the Exchange Offer Registration Statement or any Shelf Registration Statement,
whichever may occur first, the Company shall qualify the Indenture under the Trust Indenture Act. 
 (b) In the
event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture. 

  
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 Exchange and Registration Rights Agreement 

 

 (c) In connection with the Company’s obligations with respect to
the registration of Exchange Notes as contemplated by Section 2(a) (the “Exchange Registration”), if applicable, the Company shall, as soon as practicable (or as otherwise specified): 

(i) prepare and file with the Commission, on or prior to 360 days after the Closing Date, an Exchange Offer
Registration Statement on any form which may be utilized by the Company and which shall permit the Exchange Offer and resales of Exchange Notes by broker-dealers that have not acquired such Notes directly from the Company during the Resale Period to
be effected as contemplated by Section 2(a), and use its reasonable best efforts to cause such Exchange Offer Registration Statement to become effective on or prior to 450 days after the Closing Date; 

(ii) as soon as practicable, prepare and file with the Commission such amendments and supplements to such Exchange
Offer Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Exchange Offer Registration Statement for the periods and purposes contemplated in Section 2(a) and as may be
required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Exchange Offer Registration Statement, and promptly provide each broker-dealer holding Exchange Notes not acquired directly from
the Company with such number of copies of the prospectus included therein (as then amended or supplemented), in conformity in all material respects with the requirements of the Securities Act and the Trust Indenture Act, as such broker-dealer
reasonably may request prior to the expiration of the Resale Period, for use in connection with resales of Exchange Notes; 
 (iii) promptly notify each broker-dealer that has requested and received copies of the prospectus included in such Exchange Offer Registration Statement, and confirm such advice in writing,
(A) in cases where a broker-dealer has specifically requested information on when such Exchange Offer Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been
filed, or information with respect to any comments by the Commission and by the blue sky or securities commissioner or regulator of any state or province with respect thereto or on any request by the Commission for amendments or supplements to such
Exchange Offer Registration Statement or prospectus or for additional information, (B) with respect to the Exchange Offer Registration Statement or any post-effective amendment, when the same has become effective, (C) of the issuance by
the Commission of any stop order suspending the effectiveness of such Exchange Offer Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the
Company contemplated by Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Exchange Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose, (F) the occurrence of any event that causes the Company to become an “ineligible issuer” as defined in Rule 405, or (G) if at any time during the
Resale Period when a prospectus is required to be delivered under the Securities Act, that such Exchange Offer Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material
respects to the applicable requirements of the Securities Act and the Trust Indenture Act and any applicable Canadian Securities Laws or contains 

  
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 Exchange and Registration Rights Agreement 

 

 
an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances
then existing; 
 (iv) in the event that the Company would be required, pursuant to
Section 3(c)(iii)(G), to notify any broker-dealers holding Exchange Notes, promptly prepare and furnish to each such holder a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of
such Exchange Notes during the Resale Period, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and shall not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; 

(v) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of such
Exchange Offer Registration Statement or any post-effective amendment thereto at the earliest practicable date; 

(vi) use its reasonable best efforts to (A) register or qualify the Exchange Notes under the securities laws or
blue sky laws of such jurisdictions as are contemplated by Section 2(a) and ensure that the Exchange Notes can be offered in a private placement in each of the provinces of Canada where holders are resident on or prior to the commencement of
the Exchange Offer, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions until the expiration of the Resale Period,
(C) take any and all other actions as may be reasonably necessary or advisable to enable each broker-dealer holding Exchange Notes not acquired directly from the Company to consummate the disposition thereof in such jurisdictions and
(D) obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Exchange Registration, the Exchange Offer and the offering and sale of Exchange Notes by
broker-dealers during the Resale Period; provided, however, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but
for the requirements of this Section 3(c)(vi), (2) consent to general service of process or taxation in any such jurisdiction or become subject to taxation in any such jurisdiction, (3) make any changes to its articles of
incorporation or by-laws or other governing documents or any agreement between it and its shareholders or (4) file a prospectus in any province or territory of Canada to make the Transfer Restricted Securities or Exchange Notes freely tradeable
in Canada; 
 (vii) obtain a CUSIP number for all Exchange Notes, not later than the applicable Effective
Time; and 
 (viii) comply with all applicable rules and regulations of the Commission, and make generally
available to its securityholders no later than eighteen months after the Effective Time of such Exchange Offer Registration Statement, an “earning statement” of the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158 thereunder). 

  
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 (d) In connection with the Company’s obligations with respect to
the Shelf Registration, if applicable, the Company shall, as soon as practicable (or as otherwise specified): 

(i) prepare and file with the Commission, within the time periods specified in Section 2(b), a Shelf Registration
Statement on any form which may be utilized by the Company and which shall register all of the Transfer Restricted Securities for resale by the holders thereof in accordance with such method or methods of disposition as may be specified by the
holders of Transfer Restricted Securities as, from time to time, may be Electing Holders and use its reasonable best efforts to cause such Shelf Registration Statement to become effective within the time periods specified in Section 2(b);

 (ii) mail the Notice and Questionnaire to the holders of Transfer Restricted Securities (A) not
less than 30 days prior to the anticipated Effective Time of the Shelf Registration Statement or (B) in the case of an “automatic shelf registration statement” (as defined in Rule 405), mail the Notice and Questionnaire to the holders
of Transfer Restricted Securities not later than the Effective Time of such Shelf Registration Statement, and in any such case no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement, and no holder
shall be entitled to use the prospectus forming a part thereof for resales of Transfer Restricted Securities at any time, unless and until such holder has returned a completed and signed Notice and Questionnaire to the Company; 

(iii) after the Effective Time of the Shelf Registration Statement, upon the request of any holder of Transfer
Restricted Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to such holder; provided that the Company shall not be required to take any action to name such holder as a selling securityholder in the
Shelf Registration Statement or to enable such holder to use the prospectus forming a part thereof for resales of Transfer Restricted Securities until 30 Business Days after such holder has returned a completed and signed Notice and Questionnaire to
the Company; 
 (iv) as soon as practicable, prepare and file with the Commission such amendments and
supplements to such Shelf Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Shelf Registration Statement for the period specified in Section 2(b) and as may be
required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Shelf Registration Statement, and furnish to the Electing Holders copies of any such supplement or amendment simultaneously with
or prior to its being used or filed with the Commission to the extent such documents are not publicly available on the Commission’s EDGAR System; 
 (v) comply with the provisions of the Securities Act and any applicable Canadian Securities Laws with respect to the disposition of all of the Transfer Restricted Securities covered by such Shelf
Registration Statement in accordance with the intended methods of disposition by the Electing Holders provided for in such Shelf Registration Statement; 
 (vi) provide (A) the Electing Holders and not more than one counsel for all the Electing Holders the opportunity to review and provide comments with respect to such Shelf Registration Statement,
each prospectus included therein or filed with the Commission and each amendment or supplement thereto; 

(vii) for a reasonable period prior to the filing of such Shelf Registration Statement, and throughout the period
specified in Section 2(b), make available 

  
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during reasonable business hours at the Company’s principal place of business or such other reasonable place for inspection by the persons referred to in Section 3(d)(vi) who shall
certify to the Company that they have a current intention to sell the Transfer Restricted Securities pursuant to the Shelf Registration Statement such financial and other information and books and records of the Company, and cause the officers,
employees, counsel and independent chartered accountants of the Company to respond to such inquiries, as shall be reasonably necessary (and in the case of counsel, not violate an attorney-client privilege, in such counsel’s reasonable belief),
in the judgment of the respective counsel referred to in Section 3(d)(vi), to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and
information gathering on behalf of the Electing Holders shall be conducted by one counsel designated by the holders of at least a majority in aggregate principal amount of the Notes held by the Electing Holders at the time outstanding and
provided further that each such party shall be required to agree in writing to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company as being confidential, until such
time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such Shelf Registration Statement or otherwise), or (B) such person shall be required so to disclose such information pursuant to a
subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such
requirement), or (C) such information is required to be set forth in such Shelf Registration Statement or the prospectus included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus
in order that such Shelf Registration Statement, prospectus, amendment or supplement, as the case may be, complies with applicable requirements of the United States federal securities laws and the rules and regulations of the Commission and does not
contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; 

(viii) promptly notify each of the Electing Holders and confirm such advice in writing, (A) in cases where a
broker-dealer has specifically requested information on when such Shelf Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, or, with respect to any comments
by the Commission and by the blue sky or securities commissioner or regulator of any state or province with respect thereto (which comments need only be provided to any underwriter in the event of an underwritten offering pursuant to Section 7
or any sales or placement agent in an offering of such Electing Holders’ Notes and in the event there is no such underwriter or sales or placement agent the Company will not be under an obligation to provide such comments to any Electing
Holder) or on any request by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus or for additional information, (B) with respect to such Shelf Registration Statement or any post-effective amendment,
when the same has become effective, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Company set forth in Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Company of any notification with respect to the suspension of the

  
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qualification of the Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (F) the occurrence of any event that causes the Company to become
an “ineligible issuer” as defined in Rule 405, or (G) if at any time when a prospectus is required to be delivered under the Securities Act, that such Shelf Registration Statement, prospectus, prospectus amendment or supplement or
post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and any applicable Canadian Securities Laws or contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; 

(ix) use its reasonable best efforts to obtain the withdrawal of (A) any order suspending the effectiveness of
such Shelf Registration Statement or any post-effective amendment thereto at the earliest practicable date, (B) the suspension of the qualification of the Notes for sale in any jurisdiction or (C) the initiation or threatening of any
proceeding for such purpose; 
 (x) if requested by any Electing Holder, promptly incorporate in a
prospectus supplement or post-effective amendment such information as is required by the applicable rules and regulations of the Commission and as such Electing Holder specifies should be included therein relating to the terms of the sale of such
Notes, including information with respect to the principal amount of Notes being sold by such Electing Holder, the name and description of such Electing Holder, the offering price of such Notes and any discount, commission or other compensation
payable in respect thereof and with respect to any other terms of the offering of the Notes to be sold by such Electing Holder; and make all required filings of such prospectus supplement or post-effective amendment promptly after notification of
the matters to be incorporated in such prospectus supplement or post-effective amendment; 
 (xi) furnish
to each Electing Holder and the counsel referred to in Section 3(d)(vi) an executed copy (or a conformed copy) of such Shelf Registration Statement, each such amendment and supplement thereto (in each case including all exhibits thereto (in the
case of an Electing Holder, upon request) and documents incorporated by reference therein) and such number of copies of such Shelf Registration Statement (excluding exhibits thereto and documents incorporated by reference therein unless specifically
so requested by such Electing Holder) and of the prospectus included in such Shelf Registration Statement (including each preliminary prospectus and any summary prospectus), in conformity in all material respects with the applicable requirements of
the Securities Act and the Trust Indenture Act and any applicable Canadian Securities Laws, to the extent such documents are not available through the Commission’s EDGAR System, and such other documents, as such Electing Holder may reasonably
request in order to facilitate the offering and disposition of the Notes owned by such Electing Holder and to permit such Electing Holder to satisfy the prospectus delivery requirements of the Securities Act; and subject to Section 3(e), the
Company hereby consents to the use of such prospectus (including such preliminary and summary prospectus) and any amendment or supplement thereto by each such Electing Holder, in each case in the form most recently provided to such person by the
Company, in connection with the offering and sale of the Notes covered by the prospectus (including such preliminary and summary prospectus) or any supplement or amendment thereto, provided, however, that the Company shall not be required for any
such purpose to file a prospectus in any province or territory of Canada to make the Notes or Exchange Notes freely tradable in Canada; 

  
 11 

 Exchange and Registration Rights Agreement 

 

 (xii) use its reasonable best efforts to (A) register or qualify
the Notes to be included in such Shelf Registration Statement under such securities laws or blue sky laws of such jurisdictions as any Electing Holder shall reasonably request and ensure that any Notes can be offered in a private placement in all
the provinces of Canada where the holders are resident, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the
period the Shelf Registration Statement is required to remain effective under Section 2(b) and for so long as may be necessary to enable any such Electing Holder to complete its distribution of Notes pursuant to such Shelf Registration
Statement, (C) take any and all other actions as may be reasonably necessary or advisable to enable each such Electing Holder to consummate the disposition in such jurisdictions of such Notes and (D) obtain the consent or approval of each
governmental agency or authority, whether federal, state, provincial or local, which may be required to effect the Shelf Registration or the offering or sale in connection therewith or to enable the selling holder or holders to offer, or to
consummate the disposition of, their Notes in the United States; provided, however, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(d)(xii), (2) consent to general service of process or taxation in any such jurisdiction or become subject to taxation in any such jurisdiction, (3) make any changes to its
certificate of incorporation or by-laws or other governing documents or any agreement between it and its shareholders or, as applicable, (4) file a prospectus in any province or territory of Canada to make the Notes or Exchange Notes freely
tradeable in Canada; 
 (xiii) unless any Notes shall be in book-entry only form, cooperate with the
Electing Holders to facilitate the timely preparation and delivery of certificates representing Notes to be sold, which certificates, if so required by any securities exchange upon which any Notes are listed, shall be printed, penned, lithographed,
engraved or otherwise produced by any combination of such methods, on steel engraved borders, and which certificates shall not bear any restrictive legends; 
 (xiv) obtain a CUSIP number for all Securities that have been registered under the Securities Act, not later than the applicable Effective Time; 

(xv) notify in writing each holder of Notes of any proposal by the Company to amend or waive any provision of this
Agreement pursuant to Section 9(i) and of any amendment or waiver effected pursuant thereto, each of which notices shall contain the text of the amendment or waiver proposed or effected, as the case may be; and 

(xvi) comply with all applicable rules and regulations of the Commission, and make generally available to its
securityholders no later than eighteen months after the Effective Time of such Shelf Registration Statement an “earning statement” of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at
the option of the Company, Rule 158 thereunder). 
 (e) In the event that the Company would be required, pursuant
to Section 3(c)(iii)(F) or Section 3(d)(viii)(G), to notify each broker-dealer or the Electing Holders, the Company shall promptly prepare and furnish to each of the Electing Holders a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of 

  
 12 

 Exchange and Registration Rights Agreement 

 

 
Notes, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and any applicable Canadian Securities Laws, and
shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. Each Electing Holder
agrees that upon receipt of any notice from the Company pursuant to Section 3(c)(iii)(F) or Section 3(d)(viii)(G), such broker-dealer or Electing Holder shall forthwith discontinue the disposition of Notes pursuant to the Shelf
Registration Statement applicable to such Notes until such broker-dealer or Electing Holder shall have received copies of such amended or supplemented prospectus, and if so directed by the Company, such broker-dealer or Electing Holder shall destroy
or deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, of the prospectus covering such Notes in such Electing Holder’s possession at the time of receipt of such notice. 

(f) In the event of a Shelf Registration, in addition to the information required to be provided by each Electing Holder
in its Notice and Questionnaire, the Company may require such Electing Holder to furnish to the Company such additional information regarding such Electing Holder and such Electing Holder’s intended method of distribution of Notes as may be
required in the reasonable judgment of counsel for the Company in order to comply with the Securities Act. Each such Electing Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously
furnished by such Electing Holder to the Company or of the occurrence of any event in either case as a result of which any prospectus relating to such Shelf Registration Statement contains or would contain an untrue statement of a material fact
regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Notes or omits to state any material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Notes
required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly to furnish to the Company any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain, with respect to such Electing Holder or the disposition of such Notes, an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the circumstances then existing. 
 (g) As
a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each holder of Notes shall furnish, upon the request of the Company, prior to the completion of the Exchange Offer, a written representation to the
Company (which may be contained in the letter of transmittal or “agent’s message” transmitted via The Depository Trust Company’s Automated Tender Offer Procedures, in either case contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an “affiliate” of the Company, as defined in Rule 405 of the Securities Act, or if it is such an “affiliate”, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, (B) it is not engaged in and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Notes to be issued
in the Exchange Offer, (C) it is acquiring the Exchange Notes in its ordinary course of business, (D) if it is a broker-dealer that holds Exchange Notes that were acquired for its own account as a result of market-making activities or
other trading activities (other than Notes acquired directly from the Company or any of its affiliates), it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Notes received by it
in the Exchange Offer, (E) if it is a broker-dealer, that it did not purchase the Notes to be exchanged in the Exchange Offer from the Company or any of its affiliates, and (F) it is not acting on behalf of any person who could

  
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 Exchange and Registration Rights Agreement 

 

 
not truthfully and completely make the representations contained in the foregoing subclauses (A) through (E), and such holder shall make such other written representations as the Company may
reasonably request in order to comply with applicable laws. 
 (h) Until the expiration of one year after the
Closing Date, the Company will not, and will not permit any of its “affiliates” (as defined in Rule 144) to, resell any of the Securities that have been reacquired by any of them except pursuant to an effective registration statement, or a
valid exemption from the registration requirements, under the Securities Act. 
 4. Registration Expenses. 

The Company agrees to bear and to pay or cause to be paid promptly all expenses incident to the Company’s performance of or
compliance with this Agreement, including (a) all Commission and any Financial Industry Regulatory Authority registration, filing and review fees and expenses in connection with such registration, filing and review, (b) all fees and
expenses in connection with the qualification of the Notes and the Exchange Notes, as applicable, for offering and sale under the state securities and blue sky laws referred to in Section 3(d)(xii) and determination of their eligibility for
investment under the laws of such jurisdictions as the Electing Holders may designate, including any reasonable fees and disbursements of counsel for the Electing Holders in connection with such qualification and determination, (c) all expenses
relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the expenses of preparing the Notes or Exchange Notes, as applicable, for delivery and the expenses of printing or producing any selling agreements and blue sky or legal investment memoranda and all other documents in
connection with the offering, sale or delivery of Notes or Exchange Notes, as applicable, to be disposed of (including certificates representing the Notes or Exchange Notes, as applicable), (d) messenger, telephone and delivery expenses
relating to the offering, sale or delivery of Notes or Exchange Notes, as applicable, and the preparation of documents referred in clause (c) above, (e) fees and expenses of the Trustee under the Indenture, any agent of the Trustee and any
counsel for the Trustee and of any collateral agent or custodian, (f) internal expenses (including all salaries and expenses of the Company’s officers and employees performing legal or accounting duties), (g) reasonable fees,
disbursements and expenses of counsel and independent chartered accountants of the Company, (h) reasonable fees, disbursements and expenses of one counsel for the Electing Holders retained in connection with a Shelf Registration, as selected by
the Electing Holders of at least a majority in aggregate principal amount of the Notes held by Electing Holders (which counsel shall be reasonably satisfactory to the Company), (i) any fees charged by securities rating services for rating the
Notes or the Exchange Notes, as applicable, and (j) fees, expenses and disbursements of any other persons, including special experts, retained by the Company in connection with such registration (collectively, the “Registration
Expenses”). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Notes, the Company shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly
after receipt of a request therefor. Notwithstanding the foregoing, the holders of the Notes being registered shall pay all agency fees and commissions and underwriting discounts and commissions, if any, and transfer taxes, if any, attributable to
the sale of such Notes or Exchange Notes, as applicable, and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above.

  
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 Exchange and Registration Rights Agreement 

 

 5. Representations and Warranties. 

The Company represents and warrants to, and agrees with, each Purchaser and each of the holders from time to time of Notes that:

 (a) Each registration statement covering Notes or Exchange Notes, as applicable, and each prospectus
(including any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(c) or Section 3(d) and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective
or is filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act and the Trust Indenture Act and any applicable Canadian Securities Laws, and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and, in the case of a prospectus, not misleading in light of the circumstances under which they were made; and
at all times subsequent to the Effective Time when a prospectus would be required to be delivered under the Securities Act, other than (A) from (i) such time as a notice has been given to holders of Notes pursuant to
Section 3(c)(iii)(G) or Section 3(d)(viii)(G) until (ii) such time as the Company furnishes an amended or supplemented prospectus pursuant to Section 3(c)(iv) or Section 3(e), each such registration statement, and each
prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 3(c) or Section 3(d), as then amended or supplemented, will conform in all material respects to the requirements of the Securities Act and the
Trust Indenture Act and any applicable Canadian Securities Laws, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company
by a holder of Notes or any underwriter or placement agent of any offering described therein expressly for use therein. 
 (b) Any documents incorporated by reference in any prospectus referred to in Section 5(a), when they become or became effective or are or were filed with the Commission, as the case may be, will
conform or conformed in all material respects to the requirements of the Securities Act or the Exchange Act or any applicable Canadian Securities Laws, as applicable, and none of such documents will contain or contained an untrue statement of a
material fact or will omit or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a holder of Notes or any underwriter or placement agent of any offering described therein, expressly for use therein. 

(c) The compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions
herein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of
the provisions of the articles of incorporation, as amended, or the by-laws or other governing documents, as applicable, of the Company or (iii) result in any violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its 

  
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 Exchange and Registration Rights Agreement 

 

 
subsidiaries or any of their respective properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is
required for the consummation by the Company of the transactions contemplated by this Agreement, except (x) the registration under the Securities Act of the Notes or the Exchange Notes, as applicable, and qualification of the Indenture under
the Trust Indenture Act, (y) such consents, approvals, authorizations, registrations or qualifications as may be required under any applicable Canadian Securities Laws, Canadian federal or provincial corporate law or state securities or blue
sky laws in connection with the offering and distribution of the Notes or the Exchange Notes, as applicable, and (z) such consents, approvals, authorizations, registrations or qualifications that have been obtained and are in full force and
effect as of the date hereof. 
 (d) This Agreement has been duly authorized, executed and delivered by the
Company. 
 6. Indemnification and Contribution. 

(a) Indemnification by the Company. The Company will indemnify and hold harmless each of the holders of Notes
included in an Exchange Offer Registration Statement and each of the Electing Holders of Notes included in a Shelf Registration Statement against any losses, claims, damages or liabilities, joint or several, to which such holder or such Electing
Holder may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact
contained in any Exchange Offer Registration Statement or any Shelf Registration Statement, as the case may be, under which such Notes or Exchange Notes, as the case may be, were registered under the Securities Act, or any preliminary, final or
summary prospectus (including, without limitation, any “issuer free writing prospectus” as defined in Rule 433) contained therein or furnished by the Company to any such holder or any such Electing Holder or the Market Maker, or any
amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each
such holder and each such Electing Holder for any and all legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such
registration statement, or preliminary, final or summary prospectus (including, without limitation, any “issuer free writing prospectus” as defined in Rule 433), or amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by such person expressly for use therein. 
 (b) Indemnification
by the Electing Holders. The Company may require, as a condition to including any Notes in any Shelf Registration Statement filed pursuant to Section 2(b), that the Company shall have received an undertaking reasonably satisfactory to it
from each Electing Holder of Notes included in such Shelf Registration Statement, severally and not jointly, to (i) indemnify and hold harmless the Company and all other Electing Holders of Notes included in such Shelf Registration Statement,
against any losses, claims, damages or liabilities to which the Company or such other Electing Holders may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus (including, without limitation, any “issuer free

  
 16 

 Exchange and Registration Rights Agreement 

 

 
writing prospectus” as defined in Rule 433) contained therein or furnished by the Company to any Electing Holder, or any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Electing Holder expressly for use therein, and (ii) reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that no such Electing Holder shall be required to undertake liability
to any person under this Section 6(b) for any amounts in excess of the dollar amount of the proceeds to be received by such Electing Holder from the sale of such Electing Holder’s Transfer Restricted Securities pursuant to such
registration. 
 (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under
subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or
contemplated by this Section 6, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified
party otherwise than under the indemnification provisions of or contemplated by Section 6(a) or Section 6(b). In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the
defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on
behalf of any indemnified party, and, no indemnified party shall effect the settlement or compromise of, or consent to the entry of any judgment with respect to any pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder without the consent of the indemnifying party from which indemnification or contribution may be sought, which consent shall not be unreasonably withheld. 

(d) Contribution. If for any reason the indemnification provisions contemplated by Section 6(a) or
Section 6(b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection 

  
 17 

 Exchange and Registration Rights Agreement 

 

 
with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were determined by pro rata allocation (even if the holders were treated as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in this Section 6(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to
above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d), no
Electing Holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such holder from the sale of any Notes (after deducting any fees, discounts and commissions applicable thereto)
exceeds the amount of any damages which such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The holders’ obligations in this Section 6(d) to contribute shall be several in proportion
to the principal amount of Notes registered by them and not joint. 
 (e) The obligations of the Company under
this Section 6 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each holder, each Electing Holder, and each person, if any,
who controls any of the foregoing within the meaning of the Securities Act; and the obligations of the holders and the Electing Holders contemplated by this Section 6 shall be in addition to any liability which the respective holder or Electing
Holder may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his consent, is named in any registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the meaning of the Securities Act, as well as to each officer and director of the other holders and to each person, if any, who controls such other holders within the meaning of
the Securities Act. 
 7. Underwritten Offerings. 

Each holder of Transfer Restricted Securities hereby agrees with the Company and each other such holder that no holder of Transfer
Restricted Securities may participate in any underwritten offering hereunder unless (a) the Company gives its prior written consent to such underwritten offering, (b) the managing underwriter or underwriters thereof shall be designated by
Electing Holders holding at least a majority in aggregate principal amount of the Transfer Restricted Securities to be included in such offering, provided that such designated managing underwriter or underwriters is or are reasonably acceptable to
the Company, (c) each holder of Transfer Restricted Securities participating in such underwritten offering agrees to sell such holder’s Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the
persons entitled selecting the managing underwriter or underwriters hereunder and (d) each holder of Transfer Restricted Securities participating in such underwritten offering 

  
 18 

 Exchange and Registration Rights Agreement 

 

 
completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. The
Company hereby agrees with each holder of Transfer Restricted Securities that, to the extent it consents to an underwritten offering hereunder, it will negotiate in good faith and execute all indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, including using its reasonable best efforts to procure customary legal opinions and auditor “comfort” letters. 

8. Facilitation of Sales Pursuant to Rule 144. The Company covenants to the holders of Transfer Restricted Securities that to the
extent it shall be required to do so under the Exchange Act, the Company shall timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c)(1) of Rule 144), and shall take such further action as any holder of Transfer Restricted Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Transfer
Restricted Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144. Upon the request of any holder of Transfer Restricted Securities in connection with that holder’s sale pursuant to
Rule 144, the Company shall deliver to such holder a written statement as to whether it has complied with such requirements. 

9. Miscellaneous. 
 (a) No Inconsistent Agreements. The Company represents, warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to Transfer Restricted
Securities, Exchange Notes or Securities, as applicable, or any other securities which would be inconsistent with the terms contained in this Agreement. 
 (b) Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if the Company fails to perform any of its obligations hereunder and that the Purchasers and
the holders from time to time of the Transfer Restricted Securities may be irreparably harmed by any such failure, and accordingly agree that the Purchasers and such holders, in addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations of the Company under this Agreement in accordance with the terms and conditions of this Agreement, in any court of the United States or any state thereof having
jurisdiction. Time shall be of the essence in this Agreement. 
 (c) Notices. All notices, requests,
claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally, by facsimile or by courier, or three days after being deposited in the mail
(registered or certified mail, postage prepaid, return receipt requested) as follows: If to the Company, at 16640-111 Avenue, Edmonton, Alberta T5M2S5, and if to a holder, to the address of such holder set forth in the security register or other
records of the Company, or to such other address as the Company or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 

(d) Parties in Interest. All the terms and provisions of this Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto, the holders from time to time of the Transfer Restricted Securities and the respective successors and assigns of the foregoing. In the event that any transferee of any holder of Transfer
Restricted Securities shall acquire Transfer Restricted Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any 

  
 19 

 Exchange and Registration Rights Agreement 

 

 
further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Agreement. If the
Company shall so request, any such successor, assign or transferee shall agree in writing to acquire and hold the Transfer Restricted Securities subject to all of the applicable terms hereof. 

(e) Additional Guarantors. The Company hereby covenants that in the event that prior to (i) the consummation
of the Exchange Offer, if the Exchange Offer is consummated or (ii) the termination of the period referred to in Section 2(b) of this Agreement, if the Shelf Registration is effected, any subsidiary of the Company becomes a Guarantor under
the Indenture, the Company shall, as soon as practicable, cause such subsidiary to become a party hereto and by becoming a party hereto such subsidiary shall make the warranties, agreements, representations and covenants to the holders of the
Transfer Restricted Securities as those of the Company. 
 (f) Survival. The respective indemnities,
agreements, representations, warranties and each other provision set forth in this Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf
of any holder of Transfer Restricted Securities, any director, officer or partner of such holder, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Transfer Restricted Securities pursuant to the
Purchase Agreement, the transfer and registration of Transfer Restricted Securities by such holder and the consummation of an Exchange Offer. 
 (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 

(h) Headings. The descriptive headings of the several Sections and paragraphs of this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 
 (i) Entire Agreement; Amendments. This Agreement and the other writings referred to herein (including the Indenture and the form of Securities) or delivered pursuant hereto which form a part hereof
contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Company and the holders of at least a majority in
aggregate principal amount of the Transfer Restricted Securities at the time outstanding. Each holder of any Transfer Restricted Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this
Section 9(i), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Transfer Restricted Securities or is delivered to such holder. 

(j) Inspection. For so long as this Agreement shall be in effect, this Agreement and a complete list of the names
and addresses of all the record holders of Transfer Restricted Securities shall be made available for inspection and copying on any Business Day by any holder of Transfer Restricted Securities for proper purposes only (which shall include any
purpose related to the rights of the holders of Transfer Restricted Securities under the Securities, the Indenture and this Agreement) at the offices of the Company at the address thereof set forth in Section 9(c) and at the office of the
Trustee under the Indenture. 

  
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 Exchange and Registration Rights Agreement 

 

 (k) Counterparts. This Agreement may be executed by the parties
in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 
 (l) Severability. If any provision of this Agreement, or the application thereof in any circumstance, is held to be invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of such provision in every other respect and of the remaining provisions contained in this Agreement shall not be affected or impaired thereby. 

(m) Agent for Service of Process; Submission to Jurisdiction. The Company irrevocably (i) agrees that any
legal suit, action or proceeding against the Company brought by any holder, Purchaser, agent or underwriter or by any person who controls any holder, agent or underwriter arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in any Federal or state courts located in the Borough of Manhattan in The City of New York in the State of New York (“New York Court”), (ii) waives, to the fullest extent each party may effectively do so, any
objection which such party may now or hereafter have to the laying of venue of any such proceeding and (iii) submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company has designated and
appointed, by separate written agreement, CT Corporation Systems, 111 Eighth Avenue, New York, New York, 10011, as its authorized agent (the “Authorized Agent”) upon whom process may be served in any such action arising out of or based on
this Agreement, the transactions contemplated hereby, which may be instituted in any New York Court by any holder, agent or underwriter or by any person who controls any holder, agent or underwriter, expressly consents to the jurisdiction of any
such court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto. The Company represents and warrants that the Authorized Agent has agreed to act as such agent for service of
process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and
written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company. 
 (n) Tax. All payments under this Agreement shall be made in U.S. dollars and without withholding or deduction of any tax, assessment or other governmental charge (collectively, “Tax”)
unless required by law; and if the Company shall be required to deduct or withhold any Tax, the Company shall pay to any indemnified party such additional amounts as shall be required so that the net amount received by any indemnified party from the
Company after such deduction, withholding or payment shall equal the amount otherwise due to such indemnified party pursuant to this Agreement. 
 (o) Judgment Currency. In respect of any judgment or order given or made for any amount due hereunder that is expressed and paid in a currency (the “non-U.S. judgment currency”) other
than United States dollars, the Company will indemnify any person indemnified under Section 6(a) hereof against any loss incurred by such indemnified person as a result of any variation as between (i) the rate of exchange at which the
United States dollar amount is converted into the non-U.S. judgment currency for the purpose of such judgment or order and (ii) the rate of exchange at which such indemnified person is able to purchase United States dollars with the amount of
the non-U.S. judgment currency actually received by such indemnified person. In respect of any judgment or order given or made for 

  
 21 

 Exchange and Registration Rights Agreement 

 

 
any amount due hereunder to the Company that is expressed and paid in a currency (the “non-Canadian judgment currency”) other than Canadian dollars, such indemnifying person under
Section 6(b) hereof will indemnify the Company and other Electing Holders, as applicable, against any loss incurred by the Company and other Electing Holders, as applicable, as a result of any variation as between (i) the rate of exchange
at which the Canadian dollar amount is converted into the non-Canadian judgment currency for the purpose of such judgment or order and (ii) the rate of exchange at which the Company and other Electing Holders, as applicable, are able to
purchase Canadian dollars with the amount of the non-Canadian judgment currency actually received by the Company and other Electing Holders, as applicable. The foregoing indemnity shall constitute separate and independent obligations, and shall
continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term “rate of exchange” shall include any premiums and costs of exchange payable in connection with the purchase of or conversion into United
States or Canadian dollars, as applicable. 

  
 22 

 Exchange and Registration Rights Agreement 

 

 If the foregoing is in accordance with your understanding, please sign and return to us
three counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Purchasers and the Company. It is understood that
your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Company for examination upon request, but without warranty
on your part as to the authority of the signers thereof. 
 [Signature pages follow] 

  
 23 

					
	Very truly yours,
	
	Millar Western Forest Products Ltd.
		
	By:	 	 /s/ Kevin Edgson

		 	Name:	 	Kevin Edgson
		 	Title:	 	Vice President and Chief Financial Officer

 [Signature Page to Exchange and Registration Rights Agreement] 

 Accepted as of the date hereof: 

 

			
	Goldman, Sachs & Co.
		
	By:	 	 /s/    Goldman, Sachs &
Co.        

		 	(Goldman, Sachs & Co.)
	
	HSBC Securities (USA) Inc.
		
	By:	 	  

		 	Name:
		 	Title:
	
	KKR Capital Markets LLC
		
	By:	 	  

		 	Name:
		 	Title:
		
		 	On behalf of each of the Purchasers

 [Signature Page to Registration Rights Agreement] 

 Accepted as of the date hereof: 

 

					
	Goldman, Sachs & Co.
		
	By:	 	  

		 	(Goldman, Sachs & Co.)
	
	HSBC Securities (USA) Inc.
		
	By:	 	 /s/ Diane M. Kenna

		 	Name:	 	Diane M. Kenna
		 	Title:	 	Senior Vice President
	
	KKR Capital Markets LLC
		
	By:	 	  

		 	Name:	 	
		 	Title:	 	
		
		 	On behalf of each of the Purchasers

 [Signature Page to Registration Rights Agreement] 

 Accepted as of the date hereof: 

 

					
	Goldman, Sachs & Co.
		
	By:	 	  

		 	(Goldman, Sachs & Co.)
	
	HSBC Securities (USA) Inc.
		
	By:	 	  

		 	Name:	 	
		 	Title:	 	
	
	KKR Capital Markets LLC
		
	By:	 	 /s/ Adam Smith

		 	Name:	 	Adam Smith
		 	Title:	 	Authorized Signatory
		
		 	On behalf of each of the Purchasers

 [Signature Page to Registration Rights Agreement] 

 Exchange and Registration Rights Agreement 

 

 Exhibit A 
 Millar Western Forest Products Ltd. 
 INSTRUCTION TO DTC PARTICIPANTS

 (Date of Mailing) 
 URGENT - IMMEDIATE ATTENTION REQUESTED 
  

	
	 DEADLINE FOR RESPONSE: [—]

 The Depository Trust Company
(“DTC”) has identified you as a DTC Participant through which beneficial interests in the Millar Western Forest Products Ltd. (the “Company”) 8.50% Senior Notes due 2021 (the “Notes”) are held.

 The Company is in the process of registering the Notes under the Securities Act of 1933, as amended, for resale by the beneficial owners
thereof. In order to have their Notes included in the registration statement, beneficial owners must complete and return the enclosed Notice of Registration Statement and Selling Securityholder Questionnaire. 

It is important that beneficial owners of the Notes receive a copy of the enclosed materials as soon as possible as their rights to have the Notes
included in the registration statement depend upon their returning the Notice and Questionnaire by [—]. Please forward a copy of the enclosed documents to each beneficial owner that holds interests
in the Notes through you. If you require more copies of the enclosed materials or have any questions pertaining to this matter, please contact Millar Western Forest Products Ltd., 16640-111 Avenue, Edmonton, Alberta T5M2S5 (Telephone:
(780) 486-8200). 
 Notice of Registration Statement 
 and 
 Selling Securityholder Questionnaire 

[Date] 
 Reference is hereby
made to the Exchange and Registration Rights Agreement (the “Exchange and Registration Rights Agreement”) between Millar Western Forest Products Ltd. (the “Company”) and the Purchasers named therein. Pursuant to the
Exchange and Registration Rights Agreement, the Company has filed or will file with the United States Securities and Exchange Commission (the “Commission”) a registration statement on Form F-4 (the “Shelf Registration
Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Company’s 8.50% Senior Notes due 2021. A copy of the Exchange and Registration Rights
Agreement has been filed as an exhibit to the Shelf Registration Statement and can be obtained from the Commission’s website at www.sec.gov. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in
the Exchange and Registration Rights Agreement. 
 Each beneficial owner of Transfer Restricted Securities (as defined below) is entitled to
have the Transfer Restricted Securities beneficially owned by it included in the Shelf Registration Statement. In order to have Transfer Restricted Securities included in the Shelf Registration

  
 A-1

 Exchange and Registration Rights Agreement 

 

 
Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire (“Notice and Questionnaire”) must be completed, executed and delivered to the
Company’s counsel at the address set forth herein for receipt ON OR BEFORE [—]. Beneficial owners of Transfer Restricted Securities who do not properly complete, execute and return this Notice
and Questionnaire by such date (i) will not be named as selling securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Transfer Restricted Securities. 

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly,
holders and beneficial owners of Transfer Restricted Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and
related Prospectus. 
 The term “Transfer Restricted Securities” is defined in the Exchange and Registration Rights Agreement.

  
 A-2

 Exchange and Registration Rights Agreement 

 

 ELECTION 
 The undersigned holder (the “Selling Securityholder”) of Transfer Restricted Securities hereby elects to include in the Shelf Registration Statement the Transfer Restricted Securities
beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Transfer Restricted Securities by the terms and conditions of this Notice and
Questionnaire and the Exchange and Registration Rights Agreement, including, without limitation, Section 6 of the Exchange and Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.

 Pursuant to the Exchange and Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company, its
officers who sign any Shelf Registration Statement, and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act of 1934, as amended (the
“Exchange Act”), against certain loses arising out of an untrue statement, or the alleged untrue statement, of a material fact in the Shelf Registration Statement or the related prospectus or the omission, or alleged omission, to
state a material fact required to be stated in such Shelf Registration Statement or the related prospectus, but only to the extent such untrue statement or omission, or alleged untrue statement or omission, was made in reliance on and in conformity
with the information provided in this Notice and Questionnaire. 
 Upon any sale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, the Selling Securityholder will be required to deliver to the Company and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.

  
 A-3

 Exchange and Registration Rights Agreement 

 

 The Selling Securityholder hereby provides the following information to the Company and represents and
warrants that such information is accurate and complete: 
 QUESTIONNAIRE 

 

															
	(1)	 	(a)	 	Full legal name of Selling Securityholder:
		 		 	  

			
		 	(b)	 	Full legal name of registered Holder (if not the same as in (a) above) of Transfer Restricted Securities listed in Item (3) below:
		 		 	  

			
		 	(c)	 	Full legal name of DTC Participant (if applicable and if not the same as (b) above) through which Transfer Restricted Securities listed in Item (3) below are
held:
		 		 	  

		
	(2)	 	Address for notices to Selling Securityholder:
		 		 	  
	  	
		 		 	  
	  	
		 		 	  
	  	
		 		 	Telephone:	 	  
	  	
		 		 	Fax:	 	  
	  	
		 		 	Contact Person: 	 	  
	  	

															
		 		 	 E-mail for Contact Person:	 	  
	  	
		
	(3)	 	Beneficial Ownership of Notes:
			
		 		 	 Except as set forth below in this Item (3), the undersigned does not beneficially own any
Notes.

															
				
		 	(a)	 	Principal amount of Transfer Restricted Securities beneficially owned:	  	  

															
		 		 	 CUSIP No(s). of such Transfer Restricted Securities:
	 	  

															
			
		 	(b)	 	Principal amount of Notes other than Transfer Restricted Securities beneficially owned:
		 		 	  

															
		 		 	CUSIP No(s). of such other Notes:	 	  

											
			
		 	(c)	 	Principal amount of Transfer Restricted Securities that the undersigned wishes to be included in 
the Shelf Registration

											
		 		 	  Statement:	 	  

															
		 		 	CUSIP No(s). of such Transfer Restricted Securities to be included in the Shelf Registration 
Statement:	  	  

															
		
	(4)	 	Beneficial Ownership of Other Notes of the Company:
			
		 		 	Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any other securities of the Company,
other than the Notes listed above in Item (3).
			
		 		 	State any exceptions here:
		 		 	  

		 		 	  

		 		 	  

  
 A-4

 Exchange and Registration Rights Agreement 

 

															
	(5)	 	Individuals who exercise dispositive powers with respect to the Notes:
			
		 		  	If the Selling Securityholder is not an entity that is required to file reports with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (a
“Reporting Company”), then the Selling Securityholder must disclose the name of the natural person(s) who exercise sole or shared dispositive powers with respect to the Notes. Selling Securityholders should disclose the beneficial
holders, not nominee holders or other such others of record. In addition, the Commission has provided guidance that Rule 13d-3 of the Securities Exchange Act of 1934 should be used by analogy when determining the person or persons sharing voting
and/or dispositive powers with respect to the Notes.
			
		 	(a)	  	Is the holder a Reporting Company?
								
		 		  	Yes	 		 	                	 	No                    	  		  	
			
		 		  	If “No”, please answer Item (5)(b).
			
		 	(b)	  	List below the individual or individuals who exercise dispositive powers with respect to the Notes:
		 		  	  

		 		  	  

		 		  	  

			
		 		  	Please note that the names of the persons listed in (b) above will be included in the Shelf Registration Statement and related
Prospectus.
		
	(6)	 	Relationships with the Company:
			
		 		  	Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any
position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
			
		 		  	State any exceptions here:
		 		  	  

		 		  	  

		 		  	  

		
	(7)	 	Plan of Distribution:
			
		 		  	Except as set forth below, the undersigned Selling Securityholder intends to distribute the Transfer Restricted Securities listed above in Item (3) only as
follows (if at all): Such Transfer Restricted Securities may be sold from time to time directly by the undersigned Selling Securityholder. Such Transfer Restricted Securities may be sold in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market,
or (iv) through the writing of options. In connection with

  
 A-5

 Exchange and Registration Rights Agreement 

 

															
		 		  	sales of the Transfer Restricted Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the Transfer Restricted Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Transfer Restricted Securities short and deliver Transfer Restricted Securities to close out
such short positions, or loan or pledge Transfer Restricted Securities to broker-dealers that in turn may sell such securities.
			
		 		  	State any exceptions here:
		 		  	  

		 		  	  

		 		  	  

			
		 		  	Note: In no event may such method(s) of distribution take the form of an underwritten offering of Transfer Restricted Securities without the prior written agreement
of the Company.
		
	(8)	 	Broker-Dealers:
			
		 		  	The Commission requires that all Selling Securityholders that are registered broker-dealers or affiliates of registered broker-dealers be so identified in the Shelf
Registration Statement. In addition, the Commission requires that all Selling Securityholders that are registered broker-dealers be named as underwriters in the Shelf Registration Statement and related Prospectus, even if they did not receive the
Transfer Restricted Securities as compensation for underwriting activities.
			
		 	(a)	  	State whether the undersigned Selling Securityholder is a registered broker-dealer:
								
		 		  	Yes	 		 	                	 	No                    	  		  	
			
		 	(b)	  	If the answer to (a) is “Yes”, you must answer (i) and (ii) below, and (iii) below if applicable. Your answers to (i) and
(ii) below, and (iii) below if applicable, will be included in the Shelf Registration Statement and related Prospectus.
					
		 		  	(i)	 		 	Were the Notes acquired as compensation for underwriting activities?
								
		 		  	Yes	 		 	                	 	No                    	  		  	
			
		 		  	If you answered “Yes”, please provide a brief description of the transaction(s) in which the Notes were acquired as compensation:
		 		  	  

		 		  	  

		 		  	  

					
		 		  	(ii)	 		 	Were the Notes acquired for investment purposes?
								
		 		  	Yes	 		 	                	 	No                    	  		  	
					
		 		  	(iii)	 		 	If you answered “No” to both (i) and (ii), please explain the Selling Securityholder’s reason for acquiring the Notes:
		 		  	  

		 		  	  

		 		  	  

  
 A-6

 Exchange and Registration Rights Agreement 

 

															
		 	(c)	  	State whether the undersigned Selling Securityholder is an affiliate of a registered broker-dealer and, if so, list the name(s) of the broker-dealer
affiliate(s):
								
		 		  	Yes	 		 	                	 	No                    	  		  	
		 		  	  

		 		  	  

		 		  	  

			
		 	(d)	  	If you answered “Yes” to question (c) above:
					
		 		  	(i)	 		 	Did the undersigned Selling Securityholder purchase Transfer Restricted Securities in the ordinary course of business?
								
		 		  	Yes	 		 	                	 	No                    	  		  	
			
		 		  	If the answer is “No” to question (d)(i), provide a brief explanation of the circumstances in which the Selling Securityholder acquired the Transfer
Restricted Securities:
		 		  	  

		 		  	  

		 		  	  

					
		 		  	(ii)	 		 	At the time of the purchase of the Transfer Restricted Securities, did the undersigned Selling Securityholder have any agreements, understandings or arrangements,
directly or indirectly, with any person to dispose of or distribute the Transfer Restricted Securities?
								
		 		  	Yes	 		 	                	 	No                    	  		  	
			
		 		  	If the answer is “Yes” to question (d)(ii), provide a brief explanation of such agreements, understandings or arrangements:
		 		  	  

		 		  	  

		 		  	  

			
		 		  	If the answer is “No” to Item (8)(d)(i) or “Yes” to Item (8)(d)(ii), you will be named as an underwriter in the Shelf Registration
Statement and the related Prospectus.
		
	(9)	 	Hedging and short sales:
			
		 	(a)	  	State whether the undersigned Selling Securityholder has or will enter into “hedging transactions” with respect to the Transfer Restricted
Securities:
								
		 		  	Yes	 		 	                	 	No                    	  		  	
			
		 		  	If “Yes”, provide below a complete description of the hedging transactions into which the undersigned Selling Securityholder has entered or will enter and the
purpose of such hedging transactions, including the extent to which such hedging transactions remain in place:
		 		  	  

		 		  	  

		 		  	  

  
 A-7

 Exchange and Registration Rights Agreement 

 

															
		 	(b)	  	Set forth below is Interpretation A.65 of the Commission’s July 1997 Manual of Publicly Available Interpretations regarding short selling:
			
		 		  	“An issuer filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling shareholders wanted
to do a short sale of common stock “against the box” and cover the short sale with registered shares after the effective date. The issuer was advised that the short sale could not be made before the registration statement becomes
effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective
date.”
			
		 		  	By returning this Notice and Questionnaire, the undersigned Selling Securityholder will be deemed to be aware of the foregoing interpretation.

*        *        *      
  *        * 
 By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act, particularly Regulation M (or any successor rule or regulation). 
 The Selling Securityholder hereby acknowledges its obligations under the Exchange and Registration Rights Agreement to indemnify and hold harmless the Company and certain other persons as set forth in the
Exchange and Registration Rights Agreement. 
 In the event that the Selling Securityholder transfers all or any portion of the Transfer
Restricted Securities listed in Item (3) above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under
this Notice and Questionnaire and the Exchange and Registration Rights Agreement. 
 By signing below, the Selling Securityholder consents to
the disclosure of the information contained herein in its answers to Items (1) through (9) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that
such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus. 
 In accordance with the Selling Securityholder’s obligation under Section 3(d) of the Exchange and Registration Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the
Shelf Registration Statement remains in effect and to provide such additional information that the Company may reasonably request regarding such Selling Securityholder and the intended method of distribution of Transfer Restricted Securities in
order to comply with the Securities Act. Except as otherwise provided in the Exchange and Registration Rights Agreement, all notices hereunder and pursuant to the Exchange and Registration Rights Agreement shall be made in writing, by hand-delivery,
first-class mail, or air courier guaranteeing overnight delivery as follows: 
  

											
		 		  	(i)	  	To the Company:	 		 	
						
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	

  
 A-8

 Exchange and Registration Rights Agreement 

 

											
		 		  	(ii)	  	With a copy to:	 		 	
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	
		 		  		  		 	  
	 	

 Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company’s counsel,
the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and
assigns of the Company and the Selling Securityholder (with respect to the Transfer Restricted Securities beneficially owned by such Selling Securityholder and listed in Item (3) above). This Notice and Questionnaire shall be governed in all
respects by the laws of the State of New York. 

  
 A-9

 Exchange and Registration Rights Agreement 

 

 IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire
to be executed and delivered either in person or by its duly authorized agent. 
 Dated:
                     
  

			
	  

	Selling Securityholder
	(Print/type full legal name of beneficial owner of Transfer Restricted Securities)
		
	By:	 	  

	Name:
	Title:

 PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [—] TO THE COMPANY’S COUNSEL AT: 
  

					
		  	  
	  	
		  	  
	  	
		  	  
	  	
		  	  
	  	
		  	  
	  	

  
 A-10

 Exchange and Registration Rights Agreement 

 

 Exhibit B 
 NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT 
 The Bank of New York Mellon 

101 Barclay Street 4E 
 New York, NY 10286

 Telecopier No.: (212) 815-5366 

Attention: Joellen McNamara 
 BNY Trust Company
of Canada 
 600 The Dome Tower 

333-7th Avenue, S.W. 
 Calgary, Alberta T2P 2Z1

 Telecopier No.: (403) 232-2400 

Attention: George Bragg 
  

	 	Re:	Millar Western Forest Products Ltd. (the “Company”) 

	 	  	8.50% Senior Notes due 2021 

 Dear Sirs:

 Please be advised that
                     has transferred US $              aggregate principal amount of the
above-referenced Notes pursuant to an effective Registration Statement on Form [        ] (File No. 333-            ) filed by the
Company. 
 We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied
and that the above-named beneficial owner of the Notes is named as a “Selling Holder” in the Prospectus dated [—] or in supplements thereto, and that the aggregate
principal amount of the Notes transferred are the Notes listed in such Prospectus opposite such owner’s name. 
 Dated: 

 

			
	Very truly yours,
		
		 	  

		 	(Name)
		
	By:	 	  

		 	(Authorized Signature)

  
 Endnotes-1EX-4.4

 Exhibit 4.4 

 
 

 
 December 29, 2006 
 Millar Western Forest Products Ltd. 
 16640 - 111th Avenue 
 Edmonton, Alberta 
 Canada 

 

			
	Attention:	 	Mr. Mac Millar, President & CEO
		 	Mr. Kevin Edgson, Chief Financial Officer

 Dear Sirs: 
 On
the basis of the financial statements and other information provided by you in connection with your request for continued and increased financing, we are pleased to advise that HSBC Bank Canada (the “Bank”) has authorized and hereby
offers to make available to you the following credit facilities on the terms and conditions set out below: 
  

	1.	Borrower: 

 Millar
Western Forest Products Ltd. (the “Borrower”). 
  

	2.	Credit Facilities: 

  

	 	2.1.	Operating facility in the principal amount of Cdn.$30,000,000 (the “Operating Loan”), which shall be available in Canadian Dollars, or U.S. Dollars to
a maximum of the lesser of US$25,000,000 or the U.S. Dollar Equivalent of Cdn.$30,000,000, or any combination thereof, and shall also include a bank guarantee facility in the principal amount of Cdn.$30,000,000 or the U.S. Dollar
Equivalent thereof (the “B/G Sub-Facility”), provided that the aggregate of all Canadian Dollar advances and the Canadian Dollar Equivalent of all U.S. Dollar advances outstanding under the Operating Loan together with the face
amount of all Canadian Dollar bank guarantees or letters of credit and the Canadian Dollar Equivalent of all U.S. Dollar bank guarantees or letters of credit issued and outstanding under the B/G Sub-Facility shall at no time exceed
Cdn.$30,000,000; 

  

	 	2.2.	MasterCard facility in the principal amount of Cdn.$400,000 (the “MasterCard Facility”); and 

 

	 	2.3.	demand foreign exchange contract line of US$120,000,000 in respect of which the exchange risk limit is the equivalent of Cdn.$18,144,000 (the “F/X
Facility”), 

 (collectively, the “Loans”). 

HSBC Bank Canada 
 Vancouver Main Branch,
Suite 200 - 885 West Georgia Street, Vancouver, B.C. V6C 3G1 
 Tel: (604) 685-1000     Fax: (604) 641-1808

	3.	Definitions and Interpretation: 

 The capitalized terms used in this Facility Letter shall have the meanings given to such terms either in the body of this Facility Letter or at the end of the schedule attached hereto (the
“Schedule”), whichever is applicable, and the Schedule and all of the provisions thereof are hereby incorporated into and shall form an integral part of this Facility Letter. 

 

	4.	Purpose: 

  

	 	4.1.	The Operating Loan shall continue to be used generally to assist in financing the day to day operating requirements of the Borrower; 

 

	 	4.2.	The MasterCard Facility shall continue to be used to issue HSBC MasterCards to the Borrower; 

 

	 	4.3.	The F/X Facility shall be used to enable the Borrower to enter into forward exchange contracts with the Bank having terms to maturity of up to 12 months for the
purchase or sale of U.S. Dollars up to but not exceeding US$120,000,000 (“Forward Exchange Contracts”), with “Notional Risk” thereunder not to exceed Cdn.$ 18,144,000, to assist the Borrower in hedging against currency
fluctuations with respect to the purchase by the Borrower of materials provided by suppliers or the sale by the Borrower of inventory to purchasers based in the United States. In this Facility Letter “Notional Risk” means an amount
equal to the applicable percentage of the Canadian Dollar Equivalent of the aggregate value of all such Forward Exchange Contracts outstanding at any given time, determined by the Bank on the basis of the duration of the Forward Exchange Contract
and the rates of conversion applicable under the applicable Forward Exchange Contracts from time to time. The Bank shall have the option from time to time in its discretion based upon its assessment of the foreign exchange market to amend the
percentage utilized by the Bank in calculating Notional Risk and corresponding maximum amount of Forward Exchange Contracts. For indication purposes, as at December 27, 2006 the percentage utilized by the Bank in determining Notional Risk for
12 month Forward Exchange Contracts is 21%. 

  

	5.	Availability: 

 For
so long as there exists no Event of Default: 
  

	 	5.1.	Subject to the Margin Requirements and upon satisfaction of the Conditions Precedent specified below, the Operating Loan may, at the Borrower’s option, be made
available by direct advances in Canadian or U.S. Dollars or, if the Borrower so elects by LIBOR Advances pursuant to section 8.2 below or Bankers’ Acceptances subject to the provisions of Section 6 of the Schedule;

  

	 	5.2.	The MasterCard Facility shall continue to be made available to the Borrower upon the Borrower entering into MasterCard Agreements with the Bank and the Borrower
providing the Bank with such other information and material as is required by the Bank; and 

  
 2 

	 	5.3.	The F/X Facility shall be made available to the Borrower upon satisfaction of the Conditions Precedent set forth below, provided that during the existence of the F/X
Facility: 

  

	 	5.3.1.	no more than US$60,000,000 of Forward Exchange Contracts with terms greater than 3 months; and 

 

	 	5.3.2.	no more than US$25,000,000 of Forward Exchange Contracts with terms greater than 6 months, 

shall be permitted. 
  

	6.	Margin Requirements: 

 In addition to the loan limits specified under the heading Credit Facilities above, the amounts available to the Borrower under the Operating Loan shall be limited by the following margin requirements
(the “Margin Requirements”): 
  

	 	6.1.	The aggregate of: 

  

	 	6.1.1.	100% of the Canadian Dollar advances outstanding under the Operating Loan; 

 

	 	6.1.2.	the Canadian Dollar Equivalent of 100% of the U.S. Dollar advances outstanding under the Operating Loan; 

 

	 	6.1.3.	100% of the face amounts of the Bankers’ Acceptances made available and outstanding under the Operating Loan; 

 

	 	6.1.4.	100% of the face amounts of the Canadian Dollar bank guarantees or letters of credits issued and outstanding under the B/G Sub-Facility; 

 

	 	6.1.5.	the Canadian Dollar Equivalent of 100% of the U.S. Dollar bank guarantees or letters of credit issued and outstanding under the B/G Sub-Facility;

 shall at no time exceed a value which is equal to the aggregate of: 

 

	 	6.1.6.	95% of Government of Canada Receivables; 

  

	 	6.1.7.	95% of Insured Receivables; 

  

	 	6.1.8.	95% of L/C Supported Receivables; 

  

	 	6.1.9.	90% of Kimberley Clark Receivables; 

  
 3 

	 	6.1.10.	75% of Other Acceptable Receivables; 

  

	 	6.1.11.	50% of Acceptable Unfinished Products Inventory; 

  

	 	6.1.12.	60% of Acceptable Finished Products Inventory, 

 provided that the maximum contribution which may be made to any margin calculation pursuant hereto on account of Acceptable Inventory shall not exceed: 

 

	 	(a)	50% of the Borrowing Base, for the period between June 1 and November 30 in each year; and 

 

	 	(b)	60% of the Borrowing Base, for the period between December 1 and May 31 in each year; 

less: 
  

	 	6.1.13.	100% of the face amount of Priority Payables. 

  

	7.	Repayment: 

  

	 	7.1.	All amounts outstanding under the Operating Loan and the F/X Facility shall be repaid upon the occurrence of an Event of Default, provided that unless and until the
occurrence of an Event of Default: 

  

	 	7.1.1.	the Borrower shall pay interest, as provided under the heading “Interest and Fees” below, in respect of all amounts outstanding under the Operating Loan,
including, without limitation, all direct advances and any amounts advanced by the Bank from time to time as a result of call for payment made under any bank guarantee or letter of credit issued pursuant to the B/G Sub-Facility and any amounts
advanced by the Bank from time to time upon the maturity of any Bankers’ Acceptances, such payments to be made: 

  

	 	(a)	in the case of any advances (collectively, “LIBOR Advances” and any one a “LIBOR Advance”) made under the Operating Loan in respect of
which the Borrower has, in accordance with the terms of this Facility Letter, selected an interest rate based upon LIBOR, on the last day of the applicable LIBOR Period or every 3 months, whichever is earlier; and 

 

	 	(b)	in the case of all other amounts advanced and remaining outstanding under the Operating Loan, on the last day of each and every month for so long as the Operating Loan
remains available and has not been cancelled; 

  
 4 

	 	7.1.2.	the Operating Loan shall in any event be repayable in full on May 31, 2009 (the “Maturity Date”); 

 

	 	7.2.	the Borrower shall repay the MasterCard Facility in accordance with the terms and conditions of the MasterCard Agreement; 

 

	 	7.3.	any and all liabilities of or losses suffered by the Bank in connection with any Forward Exchange Contract entered by the Bank with the Borrower under the F/X Facility
shall be paid to the Bank by the Borrower on demand, provided that unless and until otherwise demanded, the Borrower shall fulfil all of its obligations under all such Forward Exchange Contracts as they become due. 

 

	8.	Interest and Fees: 

  

	 	8.1.	Interest on the daily balance of the principal advanced under the Operating Loan, including, without limitation, all direct advances and any amounts advanced by the
Bank from time to time as a result of call for payment made under any bank guarantee or letter of credit issued pursuant to the B/G Sub-Facility and any amounts advanced by the Bank from time to time upon the maturity of any Bankers’
Acceptances, shall be payable at a rate equal to the Bank’s Prime Rate plus one half of one percent (0.50%) per annum in the case of monies advanced in Canadian Dollars and at a rate equal to the Bank’s U.S. Base Rate plus one half of one
percent (0.50%) in the case of monies advanced in U.S. Dollars, in each case calculated monthly, from the date of advance, both before and after demand, default and judgment, until actual payment is made, with overdue interest to become principal
and bear interest at the same rate; by accepting this letter, the Borrower acknowledges that, as of December 27, 2006, the Bank’s Prime Rate was six percent (6.0%) per annum and the Bank’s U.S. Base Rate was eight and
three-quarters of one percent (8.75%) per annum; a certificate of a Vice President or Assistant Vice-President of the Bank shall be conclusive evidence of the Bank’s Prime Rate and the Bank’s U.S. Base Rate from time to time;

  

	 	8.2.	Notwithstanding section 8.1 above, the Borrower may, at its option, to be exercised in accordance with the Required Notice, elect to have: 

 

	 	8.2.1.	all or part of the funds yet to be advanced under the Operating Loan be made available as; 

 

	 	8.2.2.	all or a part of the face amount of any Bankers’ Acceptance to, upon the maturity of such Bankers’ Acceptance, be converted to; 

 

	 	8.2.3.	all or part of an existing LIBOR Advance to, upon the expiry of the LIBOR Period, be “rolled over” or continued as; 

a LIBOR Advance in a minimum amount of US$1,000,000 and in whole multiples of US$100,000 thereafter, and in such event interest shall be
payable by the Borrower in respect of such advance at a rate equal to 2.0% per annum above 

  
 5 

 
LIBOR, calculated monthly, from the date of advance, both before and after demand, default and judgment, until actual payment is made, with overdue interest to become principal and bear interest
at the same rate; 
  

	 	8.3.	The Borrower shall pay to the Bank: 

  

	 	8.3.1.	the sum of $150,000 as a non-refundable set-up and application fee in respect of the amendment to the Loans which shall be deemed to be earned upon issuance of this
Facility Letter and payable upon execution of this Facility Letter; 

  

	 	8.3.2.	a monthly standby fee equal to 0.25% per annum of the unadvanced portion of the Operating Loan. The fee shall be based upon the daily undrawn portion of the
Operating Loan. The standby fee shall be calculated daily beginning on the day that the Bank determines that the Borrower has satisfied the Conditions Precedent to the availability of the Operating Loan and shall be payable monthly in arrears on the
last Business Day of each and every month; 

  

	 	8.3.3.	in respect of the Operating Loan, a monthly administration fee of $500, payable on the last day of each month during which the Operating Loan remains available to the
Borrower; and 

  

	 	8.3.4.	at the time of issuance by the Bank of each bank guarantee or letter of credit under the B/G Sub-Facility, a fee equal to 1.0% per annum of the face amount of each
bank guarantee or letter of credit, calculated over the term thereof; 

  

	 	8.3.5.	in accordance with section 6 of the Schedule, at the time of stamping of each Bankers’ Acceptance, a stamping fee of 1.75% per annum of the face amount of
each Bankers’ Acceptance calculated over the term thereof. 

  

	9.	Security: 

 The
Loans and the Borrower’s liabilities and obligations hereunder shall be evidenced and secured by the following documents (collectively, the “Security Documents”) completed and, where necessary, registered, in a form and manner
satisfactory to the Bank’s solicitors: 
 ON HAND 

 

	 	9.1.	corporation banking resolution from the Borrower; 

  

	 	9.2.	confirmation of placement by the Borrower of (a) an all risk insurance policy (including extended coverage, earthquake and flood endorsements) on all of
Borrower’s inventory which shall confirm that the Bank is first loss payee under such policy with respect to all of the Borrower’s inventory, (b) a business interruption insurance policy and (c) a public liability insurance
policy, all such policies in amounts and from an insurer or insurers satisfactory to the Bank; 

  
 6 

	 	9.3.	assignment of inventory from the Borrower in favour of the Bank creating a first security interest and charge under Section 427 of the Bank Act (Canada),
including all ancillary legal forms of the Bank in this regard; and 

  

	 	9.4.	all such additional certificates, documents and opinions as the Bank and its solicitors have required. 

TO BE OBTAINED 
  

	 	9.5.	line of credit by way of current account overdraft agreement from the Borrower in the principal amount of Cdn.$30,000,000; 

 

	 	9.6.	agreement for U.S. Dollar line of credit by way of current account overdraft from the Borrower in the principal amount of the lesser of US$25,000,000 and the
U.S. Dollar Equivalent of Cdn.$30,000,000; 

  

	 	9.7.	LIBOR Agreement from the Borrower; 

  

	 	9.8.	assignment of inventory from the Borrower in favour of the Bank creating a first security interest and charge under Section 427 of the Bank Act (Canada),
including all ancillary legal forms of the Bank in this regard; 

  

	 	9.9.	security agreement from the Borrower in favour of the Bank creating a security interest by way of a first fixed charge over all of the Borrower’s present and
after-acquired inventory and accounts receivable; 

  

	 	9.10.	depository Bills Agreement from the Borrower in connection with the issuance of Bankers’ Acceptances; 

 

	 	9.11.	power of Attorney from the Borrower in connection with the issuance of Bankers’ Acceptances; 

 

	 	9.12.	forward exchange contract agreement in respect of each Forward Exchange Contract entered into by the Bank with the Borrower under the F/X Facility;

  

	 	9.13.	assignment from the Borrower in respect of insurance issued by EDC, together with the applicable consent to the assignment by EDC; 

 

	 	9.14.	application and indemnity agreement from the Borrower with respect to each bank guarantee or letter of credit issued under the B/G Sub-Facility; and

  

	 	9.15.	all such additional certificates, documents and opinions as the Bank and its solicitors may reasonable require. 

  
 7 

	10.	Conditions Precedent: 

  

	 	10.1.	It shall be a condition precedent to the amendments to the Loans as set out in this Facility Letter and the continued availability of the Loans that the Bank shall have
received: 

  

	 	10.1.1.	this Facility Letter accepted by the Borrower; and 

  

	 	10.1.2.	confirmation that the Borrower is in compliance with each of the terms and conditions of this Facility Letter. 

 

	 	10.2.	It shall be a condition precedent to the continued availability of the Loans after 30 days from the Borrower’s acceptance of this Facility Letter that the Bank
shall have received the Security Documents in sections 9.5-9.15 above completed and, where necessary, registered in form and manner satisfactory to the Bank’s solicitors. 

 

	11.	Conditions of Loans: 

 So long as the Loans remain available to the Borrower are not cancelled, the following covenants of the Borrower shall apply: 

 

	 	11.1.	the Borrower shall at all times maintain the Margin Requirements specified above; 

 

	 	11.2.	the Borrower shall not, without the prior written consent of the Bank: 

  

	 	11.2.1.	permit its minimum tangible net worth to at any time be less than Cdn.$65,000,000, such ratio to be tested quarterly or more frequently as determined by the Bank but no
more than monthly, calculated in accordance with GAAP applied on a consistent basis and where, for the purposes of the calculation of such ratio: 

  

	 	(a)	“tangible net worth”: 

  

	 	(i)	shall include paid up capital and retained earnings; 

  

	 	(ii)	shall include “power purchase rights” which for purposes of this section shall mean such sum as evidenced by a separate line item in the Borrower’s
audited financial statements; 

  

	 	(iii)	shall include the book value attributable to the Borrower’s timber quotas; 

 

	 	(iv)	shall include the cash surrender (book) value attributable to the life insurance policies in which the Borrower is the beneficiary; 

  
 8 

	 	(v)	shall exclude unrealized foreign exchange gains or losses related to the Senior Notes from January 1, 2007 provided that such gains or losses are not materially
different, as determined by the Bank, from the relevant figures set out in financial statements for the Borrower dated November 30, 2006 which have been delivered to the Bank; and 

 

	 	(vi)	shall exclude the value of goodwill and any intangible assets; and 

  

	 	(b)	“intangible assets” shall include, without limitation, any prepaid expenses, deferred charges, investments or advances to or other indebtedness owed
by: 

  

	 	(i)	any Affiliates of the Borrower; 

  

	 	(ii)	any shareholders of the Borrower; or 

  

	 	(iii)	any Affiliates of any shareholders of the Borrower; 

  

	 	11.2.2.	sell, lease, assign, transfer or otherwise dispose of or enter into any agreement to sell, lease, assign, transfer or dispose of its saw and pulp mills (ie. the Boyle,
Alberta and White Court Alberta mills) including the related land and any structures and fixtures upon such related land so that the mills remain at all times in operating condition, whether now owned or hereafter acquired; 

 

	 	11.2.3.	incur any additional indebtedness for borrowed money other than firstly by way of the indebtedness outstanding under the Senior Notes as at the date of this Facility
Letter, and secondly by way of indebtedness to a maximum of $25,000,000 (“Other Permitted Indebtedness”) which shall include indebtedness secured by Purchase Money Liens to the extent such Purchase Money Liens are Permitted Liens;

  

	 	11.2.4.	redeem, purchase or prepay any of the Senior Notes except that the Borrower shall have the option to utilize up to an aggregate of $20,000,000 of the Operating Loan to
redeem, purchase or prepay the Senior Notes; 

  

	 	11.2.5.	amend or permit any amendments to be made to the Forest Management Agreements; 

 

	 	11.2.6.	create any Subsidiaries unless concurrent with their creation, such Subsidiaries grant to the Bank a guarantee of the Loans and a first priority security interest over
any such Subsidiaries’ present and after acquired personal property and such amendments are made to the Facility Letter on account of the creation of such Subsidiaries as determined by the Bank acting reasonably; 

  
 9 

	 	11.2.7.	permit any terms and conditions of the Senior Notes to be in default; 

  

	 	11.2.8.	take or refrain from taking any other action that would cause any of the representations and warranties of the Borrower under this Facility Letter to be false or
misleading; 

  

	 	11.2.9.	except for Permitted Encumbrances, grant or allow any Lien whether fixed or floating, to be registered against or exist on any of its assets; 

 

	 	11.2.10.	declare or pay dividends on any class or kind of its shares, repurchase or redeem any of its shares or reduce its capital in any way whatsoever or repay any
shareholders’ advances, or make loans, provide financial assistance or become guarantor or endorser or otherwise become liable upon any note or other obligation other than in the normal course of business of the Borrower, or make any
investments, acquisitions, asset purchases other than current assets whether inter-company or otherwise unless: 

  

	 	(a)	the Threshold Borrowing/Margin Surplus Level does not exist and the making of any such dividends, repurchases, redemptions, repayments, loans, financial assistance,
guarantees, incurrences of liability, investments, acquisitions or asset purchases does not cause there to exist a Threshold Borrowing/Margin Surplus Level; 

 

	 	(b)	the aggregate of any such dividends, repurchases, redemptions, repayments, loans, financial assistance, guarantees, incurrences of liability, investments, acquisitions
or asset purchases are for less than the Borrower’s operating earnings for the previous four fiscal quarter period; and 

  

	 	(c)	there then exists no Event of Default or the making of any such dividends, repurchases, redemptions, repayments, loans, financial assistance, guarantees, investments,
acquisitions or asset purchases will not create an Event of Default; 

 provided that this negative covenant shall
not apply unless the Borrower is at the time such dividend, repurchase, redemption, repayment, loan, financial assistance, guarantee, incurrence of liability, investment, acquisition or asset purchase is made, then indebted to the Bank under the
Operating Loan or the making of any such dividends, repurchases, redemptions, repayments, loans, financial assistance, guarantees, incurrences of liability, investments, acquisitions or asset purchases causes the Borrower to then be indebted to the
Bank under the Operating Loan, by way of direct advances or utilization of the B/G Sub-Facility; 

  
 10 

	 	11.2.11.	amalgamate, merge or enter into any similar proceedings with or permit any reorganization or Change of Ownership of the Borrower; 

 

	 	11.2.12.	change its name without providing the Bank with prior written notice thereof and promptly taking other steps, if any, as the Bank reasonably requests to permit the Bank
to perfect the Security Documents with respect to the change of name; or 

 - and in addition to the
foregoing conditions - 
  

	 	11.2.13.	if the Threshold Borrowing/Margin Surplus Level does exist, permit its Working Capital Ratio to at any time be less than 1.25:1.0 for each of its fiscal quarters, such
covenant to be tested quarterly or more frequently as determined by the Bank but not more than monthly; 

  

	 	11.2.14.	if the Threshold Borrowing/Margin Surplus Level does exist, permit its EBITDA to at any time be less than the amount which is equal to 125% of the Debt Service
Requirement (the “Debt Service Covenant”), such covenant to be tested quarterly or more frequently as determined by the Bank but no more than monthly. “Debt Service Requirement” means the aggregate interest payments
required to be made by the Borrower under the Operating Loan, the Senior Notes and the Other Permitted Indebtedness on a rolling four quarter basis; 

  

	 	11.2.15.	if the Threshold Borrowing/Margin Surplus Level does exist, incur Capital Expenditures (net of disposals of any capital equipment during that same period) in any
consecutive four fiscal quarters of the Borrower in excess of $20,000,000; and 

  

	 	11.2.16.	if the Threshold Borrowing/Margin Surplus Level does exist, make any investments, acquisitions, asset purchases other than current assets, whether inter-company or
otherwise, with proceeds of the Operating Loan other than as may be permitted in Section 11.2.15 above. 

  

	 	11.3.	by not later than 30 days from the Borrower’s acceptance of this Facility Letter, the Borrower shall provide to the Bank the Security Documents set forth in
sections 9.3 - 9.15 above completed and where necessary registered in form and manner satisfactory to the Bank’s solicitors. 

  
 11 

	12.	Financial Statements and Reports: 

 The Borrower shall from time to time deliver to the Bank the following: 
  

	 	12.1.	monthly, within 30 days of each calendar month end: 

  

	 	12.1.1.	aged list of accounts receivable of the Borrower, with: 

  

	 	(a)	those accounts that are overdue for over 90 days that would otherwise constitute Other Acceptable Receivables, accounts from those customers from whom other accounts
receivable remain overdue for in excess of 90 days, accounts from Affiliates of the Borrower and accounts disputed by customers of the Borrower or subject to set off each listed separately; and 

 

	 	(b)	Government of Canada Receivables, L/C Supported Receivables, Kimberley Clark Receivables and Insured Receivables listed separately; 

 

	 	12.1.2.	list of Priority Payables as at each calendar month end with verification therefor as is required by the Bank; 

 

	 	12.1.3.	declaration of inventory in accordance with the Bank’s format under Section 427 of the Bank Act (Canada) signed by a senior officer of the Borrower
detailing raw materials, work in progress, and finished products, together with any additional supporting data that the Bank may require; and 

  

	 	12.1.4.	margin declaration of inventory and accounts receivable signed by a senior officer of the Borrower in accordance with the Bank’s format, together with any
additional supporting data that the Bank may require; 

  

	 	12.2.	quarterly, within 60 days of the Borrower’s first, second and third fiscal quarter year ends: 

 

	 	12.2.1.	internally prepared profit and loss statements for the Borrower in form and substance satisfactory to the Bank; and 

 

	 	12.2.2.	compliance certificate in respect of the Financial Covenants in a form acceptable to the Bank; provided that if the Threshold Borrowing/Margin Surplus Level does not
exist, the Compliance Certificate is required only in respect of the Borrower’s minimum tangible net worth covenant set forth in section 11.2.1 above; 

 

	 	12.3.	annually, within 180 days of the Borrower’s fiscal year end: 

  

	 	12.3.1.	audited financial statements prepared by an accountant acceptable to the Bank in accordance with GAAP applied on a consistent basis; 

 

	 	12.3.2.	proforma financial statements, cash flow forecast and budget for the following fiscal year of the Borrower; 

  
 12 

	 	12.4.	Personal Property Registry and Registrar of Companies searches as and when requested by the Bank; 

 

	 	12.5.	promptly, upon receipt of or upon any amendment thereto, copies of insurance policies issued by the Export Development Corporation of Canada in favour of the Borrower
which policies shall have loss payable clauses in favour of the Bank; and 

  

	 	12.6.	all such additional financial statements and information as and when requested by the Bank. 

 

	13.	Lapse, Cancellation, Annual Review: 

 This Facility Letter shall lapse and all obligations of the Bank hereunder and in respect of the Loans shall cease, all at the option of the Bank if in the opinion of the Bank the conditions precedent
hereunder have not been met and the Loans made available in accordance with this Facility Letter by February 28, 2007. The availability of the Loans and the terms and conditions of the offer of credit contained herein shall be subject to
periodic review by the Bank in the Bank’s sole discretion, and the Bank shall be under no obligation to conduct any such review or to provide a renewal letter or extension letter or other notification of such review if such review is conducted.
The Bank shall have the option to conduct corporate, personal property registry and land registry searches in respect of the Borrower not less than annually, at the Borrower’s sole cost. Upon the occurrence of an Event of Default and demand
being made by the Bank for repayment of the amount outstanding under the Loans, or any of them, any unadvanced portion of the Loans shall be immediately cancelled and the Borrower shall, in respect of each bank guarantee, letter of credit and
Bankers’ Acceptance issued under the Loans and within 15 days from the date demand is made, either: 
  

	 	13.1.	pay to the Bank the face amount of the applicable bank guarantee, letter of credit or Bankers’ Acceptance, as the case may be; or 

 

	 	13.2.	pledge in favour of and on terms and conditions acceptable to the Bank, as continuing security for its contingent obligations and liabilities to the Bank in respect of
the applicable bank guarantee, letter of credit or Bankers’ Acceptance, as the case may be, cash collateral or a deposit instrument or other liquid collateral security in a form acceptable to the Bank in an amount equal to the face amount of
the applicable bank guarantee, letter of credit or Bankers’ Acceptance. 

 This Facility Letter shall henceforth be read in
substitution for and replacement of the credit agreement dated June 27, 2001 between the Bank, Canadian Imperial Bank of Commerce, the Borrower and others, as amended and supplemented from time to time (together the “Credit
Agreement”) and the terms and conditions of the Credit Agreement shall be superseded by and the Loans shall be governed by the terms and conditions set forth in this Facility Letter. Without limitation of any of the foregoing, the Borrower
acknowledges and agrees that this shall not, by virtue of any amendments to the Credit Agreement and the substitution of this Facility Letter 

  
 13 

 
therefor be deemed to have been any refinancing, repayment, extinguishment or novation of any indebtedness, obligation or liability of the Borrower existing at the date of issuance of this
Facility Letter. 
 [The remainder of this page has been intentionally left blank] 

  
 14 

 This Facility Letter and the terms and conditions of the Loans set forth herein may be accepted by the
Borrower by signing, dating and returning to the Bank by 5:00 p.m. on December 29, 2006 the enclosed copy of this letter executed by the Borrower. The Bank shall then instruct its solicitors to commence preparation of the additional Security
Documents. 
  

									
	 Yours very truly.

HSBC bank Canada
	 		 		 	
					
	By	 	/s/ Cory M. Bailey	 		 	By:	 	/s/ Wayne Berg
		 	Cory M. Bailey,	 		 	For	 	Wayne Berg,
		 	Assistant Vice President	 		 		 	Vice President
		 	Commercial Financial Services	 		 		 	Commercial Financial Services

  
 — — — — —
— — 
 AGREED TO AND ACCEPTED THIS 30 DAY OF
DECEMBER 2006. 
  

			
	THE BORROWER:
	
	MILLAR WESTERN FOREST PRODUCTS LTD.
		
	Per:	 	 /s/ Kevin Edgson

  
 15 

 SCHEDULE TO FACILITY LETTER 

FROM HSBC BANK CANADA 
 TO MILLAR WESTERN FOREST PRODUCTS LTD. 
 DATED DECEMBER 29, 2006

  

	1.	Representations and Warranties 

The Borrower represents and warrants, as at the time of drawing under or other utilization of the Loans, that: 

 

	 	1.1.	it has been duly incorporated and organized, is properly constituted and is entitled to conduct its business in all jurisdictions in which it carries on business or has
assets; 

  

	 	1.2.	the execution of the Facility Letter and the Security Documents and the incurring of liability and indebtedness to the Bank does not and will not contravene:

  

	 	1.2.1.	any Legal Requirement applicable to the Borrower; or 

  

	 	1.2.2.	any provision contained in any other loan or credit agreement or borrowing instrument or contract to which the Borrower is a party; or 

 

	 	1.2.3.	the constating documents of the Borrower; 

  

	 	1.3.	the Facility Letter and the Security Documents have been duly authorized, executed and delivered by the Borrower and constitute valid and binding obligations of the
Borrower and are enforceable in accordance with their respective terms; 

  

	 	1.4.	all necessary Legal Requirements have been met and all other authorizations, approvals, consents and orders have been obtained with respect to the Loans and the
execution and delivery of the Facility Letter and Security Documents; 

  

	 	1.5.	the Borrower has obtained, maintained and is in good standing with respect to, all required licences, permits and approvals from any and all Governmental Authorities
and all applicable stock exchange and securities commission rules required in respect of its property and operations and the listing of its securities which are material to the financial condition of the Borrower. The Borrower has made all filings
required under all Legal Requirements which are material to the operation of its business; 

  

	 	1.6.	the Borrower is conducting its business and operations in compliance in all material respects with all Legal Requirements and all applicable stock exchanges and
securities commission rules; 

	 	1.7.	the Borrower has no Subsidiaries; 

  

	 	1.8.	the Borrower has filed all tax returns which, to the knowledge of the Borrower, are required to have been filed, has paid all taxes shown to be due and payable on such
returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Government Authority (other than those the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on its books) and no tax liens have been filed and, to the knowledge of the Borrower, after due inquiry, no claims are
being asserted with respect to any such taxes, fees or other charges; 

  

	 	1.9.	the Borrower maintains insurance for its assets and businesses, including business interruption insurance, in such amount, against such risks and with such deductibles
as are generally maintained by companies carrying on a business comparable to that carried on by the Borrower which policies pertaining to the Borrower’s inventory and accounts receivable contain mortgage and loss payable clauses in favour of
the Bank; and 

  

	 	1.10.	all financial and other information provided to the Bank in connection with the Loans is true and accurate, and acknowledges that the offer of credit contained in the
Facility Letter is made in reliance on the truth and accuracy of this information and the above representations and warranties. 

  

	2.	Interest, Fees and Payment 

  

	 	2.1.	Interest on the daily balance of principal advanced under the Loans and remaining unpaid from time to time shall be payable by the Borrower as set out in the Facility
Letter both before and after demand, default and judgment; 

  

	 	2.2.	In the case of interest based on the Bank’s Prime Rate and the Bank’s U.S. Base Rate, interest shall be compounded and payable on the last day of each month;

  

	 	2.3.	In the case of interest based on LIBOR, interest shall be payable on the expiration of the LIBOR Period selected by the Borrower or every 3 months, whichever is
earlier; 

  

	 	2.4.	If the Borrower repays any portion of the Loans accruing interest based on LIBOR on a date other than the expiration of the LIBOR Period whether as a result of a demand
for repayment by the Bank or otherwise, it shall also concurrently pay to the Bank the applicable Compensating Amount; 

  

	 	2.5.	Interest based on the Bank’s U.S. Base Rate and on LIBOR shall be computed on the basis of a year of 360 days and for actual days that the amounts are outstanding
under the Loans on this basis. For the purpose of the Interest Act (Canada), the annual rate of interest to which interest computed on the basis of a year of 360 days is equivalent is the rate of interest as provided in the Facility Letter
multiplied by the number of days in such year and divided by 360; 

  
 S-2

	 	2.6.	Upon the expiration of a LIBOR Period, unless another interest rate option is selected by the Borrower, interest shall accrue at the applicable rate in the Facility
Letter based on the Bank’s Prime Rate or the Bank’s U.S. Base Rate, as the case may be, depending on whether the funds are outstanding in Canadian or U.S. Dollars; 

 

	 	2.7.	The fees collected by the Bank in connection with the Loans, or any of them, shall be its property as consideration for the time, effort and expense incurred by it in
the review of documents and financial statements, and the Borrower acknowledges and agrees that the determination of these costs is not feasible and that the fees set out in the Facility Letter represent a reasonable estimate of such costs;

  

	 	2.8.	All payments by the Borrower to the Bank shall be made at the address of the Vancouver Main Branch of the Bank or at such other place as the Bank may specify in writing
from time to time. Any payment delivered or made to the Bank by 1:00 p.m. local time at the place where such payment is to be made shall be credited as of that day, but if made afterwards shall be credited as of the next day on which the said branch
is open for business; 

  

	 	2.9.	Notwithstanding anything to the contrary contained in the Facility Letter, the Bank may, in its discretion, make an advance under the Loans to pay any unpaid interest
or fees which have become due under the terms of the Facility Letter; 

  

	 	2.10.	The obligation of the Borrower to make all payments under the Facility Letter and the Security Documents shall be absolute and unconditional and shall not be limited or
affected by any circumstance, including, without limitation: 

  

	 	2.10.1.	any set-off, compensation, counterclaim, recoupment, defense or other right which the Borrower may have against the Bank or anyone else for any reason whatsoever; or

  

	 	2.10.2.	any insolvency, bankruptcy, reorganization or similar proceedings by or against the Borrower. 

 

	 	2.11.	In addition to and not in limitation of any rights now or hereafter available to the Bank whether under applicable law or arising in the Security Documents, the Bank is
authorized, at any time and from time to time, upon delivery of written notice to the Borrower to set-off and appropriate and to apply any and all deposits (general and special) and any other indebtedness at any time held by or owing by the Bank to
or for the credit of the Borrower against and on account of the obligations and liabilities of the Borrower to the Bank under this Facility Letter. The Bank agrees to provide written notice of the exercise of any of the rights under this section
immediately after the exercise of such rights. 

  
 S-3

	 	2.12.	The remedies, rights and powers of the Bank under this Facility Letter, the Security Documents and at law and in equity are cumulative and not alternative and are not
in substitution for any other remedies, rights or powers of the Bank and no delay or omission in exercise of such remedy, right, or power shall exhaust such remedies, rights or powers or be construed as a waiver of any of them.

  

	3.	Conditions of Loans 

 In addition
to the conditions set out in the Facility Letter, the following conditions shall apply until the Loans are repaid in full and cancelled: 
  

	 	3.1.	The Bank shall have the right to waive the delivery of any of the Security Documents or the performance of any term or condition of the Facility Letter, and may advance
all or any portion of the Loans prior to satisfaction of any of the Conditions Precedent set forth in the Facility Letter, but waiver by the Bank of any obligation or condition shall not constitute a waiver of such obligation or condition for any
future advance; 

  

	 	3.2.	All financial terms and covenants shall be determined in accordance with GAAP, applied on a consistent basis; 

 

	 	3.3.	If the amount outstanding under any Loan in Canadian Dollars plus the Canadian Dollar Equivalent of the amount outstanding under any Loan in a currency other than
Canadian dollars at any time exceeds the amount authorized under that Loan as provided under the heading “Credit Facilities” in the Facility Letter, the Bank may, from time to time, in its sole discretion: 

 

	 	3.3.1.	limit the further utilization of that Loan; 

  

	 	3.3.2.	convert all or part of the amount outstanding under that Loan to Canadian Dollars in which event, interest shall accrue and be paid on such converted amounts at the
rate set out in the Facility Letter for Canadian dollar advances accruing interest with reference to the Bank’s Prime Rate; or 

  

	 	3.3.3.	require the Borrower to pay down the excess; 

  

	 	3.4.	Any amount payable by the Borrower to the Bank under the Facility Letter or the Security Documents may be debited to any account of the Borrower with the Bank;

  

	 	3.5.	The Borrower shall indemnify the Bank against any loss incurred by it as a result of any judgment or order being given or made for the payment of any amount due under
the Facility Letter or the Security Documents, where: 

  

	 	3.5.1.	such judgment or order is expressed and paid in a currency (the “Judgment Currency”) other than the currency of an outstanding loan (the “Loan
Currency”); and 

  
 S-4

	 	3.5.2.	there is a variation between: 

  

	 	(a)	the rate of exchange at which the Loan Currency amount is converted into the Judgment Currency for the purposes of such judgment or order, and 

 

	 	(b)	the rate of exchange at which the Bank is able to purchase the Loan Currency with the amount of the Judgment Currency then actually received by the Bank.

 The foregoing indemnity shall constitute a separate and independent obligation of the Borrower and shall apply
irrespective of any indulgence granted to the Borrower from time to time, and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term “rate of exchange”, shall include any premiums and
costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency. 
  

	4.	Hazardous Substances 

  

	 	4.1.	To the best of the knowledge of the Borrower having made due and diligent inquiry, no Hazardous Substance is being stored on any part of the Lands except in compliance
with Environmental Laws, nor, so far as the Borrower is aware, due and diligent inquiry having been made, have any such substances been stored or used on the Lands prior to the Borrower’s ownership or leasehold interest in, possession or
control of the Lands except in compliance with Environmental Laws. The Borrower agrees to provide written notice to the Bank immediately upon the Borrower becoming aware that the Lands or any adjacent property are being or have been contaminated
with any Hazardous Substance except in compliance with Environmental Laws. The Borrower will not permit any activities on the Lands which directly or indirectly could result in the Lands or any other property being contaminated with any Hazardous
Substance except in compliance with Environmental Laws; and 

  

	 	4.2.	The Borrower shall promptly comply with all statutes, regulations and ordinances, and with all orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, storage, treatment, control, removal or cleanup of any Hazardous Substance in, on, or under the Lands that becomes contaminated with any Hazardous Substance as a result of construction, operations or
other activities on, or the contamination of, the Lands, or incorporated in any improvements thereon. 

  

	5.	Events of Default 

The Indebtedness shall, at the option of the Bank, immediately become due and payable and the Security Documents will become enforceable
upon the occurrence of any one or more of the following events (collectively the “Events of Default” and any one an “Event of Default”): 

 

	 	5.1.	Default in Principal - if the Borrower fails to repay any Indebtedness on account of principal payable under the Loans, on the due date thereof;

  
 S-5

	 	5.2.	Default in Interest, etc. - if the Borrower fails to repay any Indebtedness on account of, interest, fees, expenses or any other amount (other than principal)
payable under this Facility Letter or any Security Document, on the due date thereof and such failure continues for three (3) Business Days or more; 

  

	 	5.3.	Default in Performance, etc. - if the Borrower defaults in the performance or observance of any covenant contained in this Facility Letter (except monetary
covenants set forth in sections 5.1 and 5.2 above) and such default continues unremedied for thirty (30) days after notice thereof is given to the Borrower by the Bank, specifying such default and requiring it to be remedied;

  

	 	5.4.	Representations and Warranties - if (i) any representation or warranty made in this Facility Letter or in any of the Security Documents is untrue or
incorrect in any material respect when made or deemed to have been made, (ii) any representation or warranty made in any quarterly Compliance Certificate which is delivered by the Borrower pursuant to section 12.2.2 is untrue or incorrect in
any material respect as of the date on which such quarterly Compliance Certificate is delivered to the Bank; 

  

	 	5.5.	Cross Default - if 

  

	 	5.5.1.	the Borrower has defaulted or at any time defaults, in the payment of any indebtedness owed by the Borrower in an aggregate cumulative amount of more than $1,000,000
when the same becomes due, including any period of grace applicable thereto; 

  

	 	5.5.2.	the Borrower defaults in the observance or performance of any agreement or condition relating to any indebtedness owed by the Borrower having an outstanding amount in
excess of $1,000,000 or its equivalent in any other currency, at the time of default and any applicable cure period has expired or if the Borrower defaults in the performance of any other covenant contained in any agreement under which such
obligations are created and any applicable cure period has expired so that the repayment of any such indebtedness having an outstanding amount in excess of $1,000,000 has become accelerateable; or 

 

	 	5.5.3.	the Borrower defaults in the observance or performance of any of its obligations under the Senior Notes; 

 

	 	5.6.	Judgements - if final judgements for the payment of money in excess of $1,000,000 in the aggregate are rendered against the Borrower and within 30 days after the
date of entry has expired, such judgements have not been discharged bonded, stayed on appeal, paid or dismissed; 

  
 S-6

	 	5.7.	Encumbrances - if an encumbrancer takes possession of any property or asset of the Borrower with a fair market value in excess of $1,000,000 in the aggregate or
if distress or execution or any similar process is levied or enforced there against and remains unsatisfied for such period as would permit such property or assets to be sold thereunder; 

 

	 	5.8.	Consents, etc. - if any governmental or other consent, license, or authorization required to make the Facility Letter or any Security Document legal, valid,
binding and enforceable or required in order to enable the Borrower thereunder to perform its obligations thereunder is withdrawn or ceases to be in full force and effect; 

 

	 	5.9.	Voluntary Insolvency, etc. - if the Borrower passes a resolution or institutes proceedings for its winding-up, liquidation or dissolution or takes action to
become a voluntary bankrupt, or consents to the filing of a bankruptcy proceeding against it, or files a proposal, a notice of intention to make a proposal, a petition or answer or consent seeking reorganization, readjustment, arrangement,
composition or similar relief under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act, the Canada Business Corporations Act, the Business Corporations Act (Alberta), or any other
similar law or consents to the filing of any such petition or proceeding, or consents to the appointment of a receiver, liquidator, trustee or assignee in bankruptcy or insolvency or similar officer of itself, of its property, or makes an assignment
for the benefit of creditors, or is unable, or an officer or director of the Borrower admits in writing its inability to pay its debts as they become due, or otherwise acknowledges its insolvency, or commits any other act of bankruptcy, or
voluntarily suspends transaction of its usual business or any action is taken by the Borrower in furtherance of any of the foregoing; 

  

	 	5.10.	 Involuntary Insolvency, etc. - if the Borrower is deemed for the purposes of any Legal Requirements to be insolvent or if any application is
made with respect to the Borrower under the Companies Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada), or similar legislation, domestic or foreign, seeking reorganization, readjustment, arrangement,
composition or similar relief for the Borrower under any Legal Requirement, or if a proceeding is instituted for the winding up, liquidation or dissolution of the Borrower or seeking an order adjudging the Borrower insolvent or the appointment of
any receiver, liquidator, trustee or similar officer of the Borrower or over all or a substantial part of its property, or a petition in bankruptcy is presented against the Borrower under a bankruptcy or similar statute, domestic or foreign,
provided that such application, proceeding or petition is not dismissed, stayed or withdrawn within thirty (30) days after the Borrower has notice or knowledge of the institution thereof; provided further that an Event of Default shall
have occurred under this Section 5.10 immediately (i) upon the appointment of a receiver, trustee, custodian, liquidator or similar officer of the Borrower, (ii) if it is determined by the Bank, acting reasonably in its sole
discretion, that the applicable Borrower is not contesting such application, proceeding or petition in good faith, or (iii) if 

  
 S-7

	 	
assets with an aggregate fair market value in excess of $1,000,000 have been attained, in all cases whether or not such application, proceeding or petition is dismissed, stayed or withdrawn
within thirty (30) days after the Borrower has notice or knowledge of the institution thereof; or 

  

	 	5.11.	Material Adverse Change - if there occurs a Material Adverse Change. 

 

	6.	Bankers’ Acceptances 

 So long as there are no Events of Default that are continuing, the Loans shall be made available to the Borrower as follows: 

 

	 	6.1.	The Bank will not be obligated to accept any Bankers’ Acceptances: 

  

	 	6.1.1.	unless the Borrower has given the Bank Required Notice in such forms as the Bank may approve; 

 

	 	6.1.2.	except for amounts which are in face amounts of not less than $500,000 and integral multiples of $10,000; and, unless otherwise agreed by the Bank, each of the
Bankers’ Acceptances will be for a term of 30, 60, 90, or 180 days after the date of acceptance of the order by the Bank and will mature on a Business Day; provided that the Bank, in circumstances of market disruption or liquidity, shall have
the discretion to restrict the term or maturity dates of Bankers’ Acceptances; 

  

	 	6.1.3.	if in the determination of the Bank acting reasonably, a market for Bankers’ Acceptances does not exist at any time or the Bank cannot for other reasons, after
reasonable efforts, readily sell Bankers’ Acceptances or perform its obligations under this Facility Letter with respect to Bankers’ Acceptances; 

 

	 	6.1.4.	which are in respect of amounts which are not scheduled for repayment prior to the Maturity Date; 

 

	 	6.1.5.	if an Event of Default has occurred which is continuing; 

  

	 	6.2.	The Borrower will pay to the Bank at the time of stamping each Bankers’ Acceptance an annual fee equal to 1.75% of the face amount thereof. Such annual fee will be
calculated on the basis of a year of 365 days (or 366 days, in the case of a leap year); but if the term of such Bankers’ Acceptance is greater or less than one year, then such annual fee will be prorated according to the ratio that the number
of days from the date of the Bankers’ Acceptance to the expiry date thereof, both inclusive, bears to 365 days (or 366 days, in the case of a leap year). 

 

	 	6.3.	The Borrower will also pay to the Bank for each Bankers’ Acceptance its other prevailing fees and charges for issuing the same and effecting payment thereunder,
and will pay on request all other out-of-pocket disbursements or costs incurred by the Bank in relation to the issuance of, or payment pursuant to, any Bankers’ Acceptances. 

  
 S-8

	 	6.4.	The Bankers’ Acceptances will be on the terms and conditions set forth in the Bank’s standard forms and will otherwise be on such terms and conditions as are
acceptable to the Bank; and the issuance and availability thereof will be subject to such practices, policies, and procedures as the Bank may impose or dictate from time to time. Upon request by the Bank, the Borrower will forthwith execute and
deliver, or cause to be executed and delivered, the Bank’s standard forms and all such ancillary or related documents and instruments as the Bank may require. 

 

	 	6.5.	Any executed Bankers’ Acceptances delivered by the Borrower to the Bank need only be held in safekeeping with the same degree of care as if they were the
Bank’s property and the Bank were keeping them at the place at which they are to be held; but the Bank will not be deemed to be an insurer thereof. 

  

	 	6.6.	If requested by the Borrower, the Bank will make arrangements for the sale of the Bankers’ Acceptances in Canada. The Bank may, at its sole discretion, purchase
all or any of the Bankers’ Acceptances. 

  

	 	6.7.	Unless on or before the maturity date of any Bankers’ Acceptance, the Borrower has paid to the Bank funds in the amount becoming so payable, the said amount will
be deemed to be an advance on that date by the Bank to the Borrower under the Operating Loan. 

  

	 	6.8.	Upon any demand for payment being made under the Operating Loan, or upon the happening of any Event of Default, the Bank will not accept any further Bankers’
Acceptances issued by the Borrower; and the face amount of any Bankers’ Acceptances which have not yet matured or become due will thereupon be deemed to have been advanced by the Bank to the Borrower, which deemed advances shall be in
satisfaction of any other obligations of the Borrower in respect of such Bankers’ Acceptances. 

  

	 	6.9.	Amounts advanced by the Bank to the Borrower or deemed to have been advanced under paragraph 6.7 or 6.8 will be charged against the Operating Loan, as the case may be,
will bear interest at the rate of interest payable under the Operating Loan, as the case may be, calculated and payable from and including the date of maturity of each Bankers’ Acceptance at the times and in the manner specified by sections 7
and 8 of the body of this Facility Letter. 

  

	 	6.10.	If the Borrower repays any portion of the Operating Loan with respect to any amount made available by way of Bankers’ Acceptance on a date other than the maturity
date for such Bankers’ Acceptance, whether as a result of a demand for payment by the Bank or otherwise, it shall also concurrently pay to the Bank the applicable Compensating Amount. 

  
 S-9

	 	6.11.	Upon the maturity of a Bankers’ Acceptance, unless another interest rate option is selected by the Borrower, interest shall accrue at the applicable rate in this
Facility Letter based on the Bank’s Prime Rate. 

  

	 	6.12.	The Borrower agrees that: 

  

	 	6.12.1.	the difference between the amount of an advance under the applicable Loan, requested by the Borrower by way of Bankers’ Acceptances and the actual proceeds of the
Bankers’ Acceptances; 

  

	 	6.12.2.	the difference between the actual proceeds of a Bankers’ Acceptance and the amount required to pay a maturing Bankers’ Acceptance, if a Bankers’
Acceptance is being rolled over; and 

  

	 	6.12.3.	the difference between the actual proceeds of a Bankers’ Acceptance and the amount required to repay an advance under the Operating Loan, which is being converted
to a Bankers’ Acceptance, 

 shall be funded and paid by the Borrower from its own resources, by 11:00 a.m.
on the day of the advance or may be advanced as an advance under the Operating Loan, if the Borrower is otherwise entitled to an advance under the Operating Loan, as the case may be. 

 

	 	6.13.	The Borrower will not claim any days of grace or require any presentation, demand, protest, or other notice of any kind whatsoever in respect of the Bankers’
Acceptances, all of which are hereby expressly waived. 

  

	 	6.14.	The obligations of the Borrower with respect to Bankers’ Acceptances under this Facility Letter shall be unconditional and irrevocable, and shall be paid strictly
in accordance with the terms of this Facility Letter under all circumstances, including without limitation, the following circumstances: 

  

	 	6.14.1.	any lack of validity or enforceability of any order accepted by the Bank as a Bankers’ Acceptance; or 

 

	 	6.14.2.	the existence of any claim, set-off, defence or other right which the Borrower may have at any time against the holder of the Bankers’ Acceptance, the Bank or any
other person or entity whether in connection with this Facility Letter or otherwise. 

  

	7.	General 

  

	 	7.1.	Site Visits - Representatives of the Bank shall be entitled to attend at and view the Lands and any other premises from which the Borrower conducts its
business(es) and all personal property thereon and all financial records of the Borrower at any time and at the Borrower’s cost, on reasonable notice, and in any event not less frequently than annually in conjunction with the annual review of
the Loans. 

  
 S-10

	 	7.2.	Legal and Other Expenses - The Borrower shall pay all legal fees and disbursements in respect of the Loans, the preparation and issuance of the Facility Letter
and the Security Documents, the enforcement and preservation of the Bank’s rights and remedies, all appraisals, insurance consultation, and similar fees, and all other fees and disbursements of the Bank, whether or not the documentation is
completed or any funds are advanced under the Loans. 

  

	 	7.3.	Currency - In the Facility Letter, words or figures expressed in dollars or the symbol for dollars without any other indication mean Canadian Dollars; provided
that: 

  

	 	7.3.1.	all advances made available by the Bank under the Loans shall be repaid in the currency in which they are denominated; 

 

	 	7.3.2.	interest on advances made under the Loans in Canadian dollars, stamping fees with respect to Bankers’ Acceptances and fees with respect to Canadian Dollar bank
guarantees or letters of credit shall be payable in Canadian Dollars; and 

  

	 	7.3.3.	interest on U.S. Dollar advances and amounts payable in respect of LIBOR advances, and fees with respect to U.S. Dollar bank guarantees or letters of credit
shall be payable in U.S. Dollars; 

  

	 	7.4.	Non-Merger and Conflict - None of the execution, delivery or, where applicable, registration of the Security Documents or the disbursement of funds under the
Loans will in any way merge or extinguish the terms and conditions of the Facility Letter, which terms and conditions will continue in full force and effect. In the event of any inconsistency or conflict between any provision contained in the
Facility Letter and any provision contained in any of the Security Documents, the provisions of the Facility Letter shall prevail, but the omission from the Facility Letter of any provision contained in any of the Security Documents shall not be
considered to be an inconsistency or conflict for the purposes hereof. 

  

	 	7.5.	Assignment - The Borrower shall not be entitled to assign any of the rights and benefits conferred by the Facility Letter. The Facility Letter and the Security
Documents may be freely assigned by the Bank, in whole or in part, without the consent of the Borrower. 

  

	 	7.6.	Syndication - 

  

	 	7.6.1.	 The rights, benefits and obligations of the Bank under or in respect of this Facility Letter and the Security Documents (referred to in this section as
the “Rights”) may in whole or in part, be participated (a “Participation”), or syndicated, sold or assigned (a “Syndication”) by the Bank from time to time to one or more financial institutions;
provided that (a) in the case of a Syndication the Bank shall first have notified the Borrower, and the Borrower shall have consented thereto in 

  
 S-11

	 	
writing, such consents not to be unreasonably withheld, (b) the Participant in a Syndication shall execute and deliver to the Agent a duly completed Assignment Agreement (other than for the
signature of the Bank). 

  

	 	7.6.2.	If required by the Borrower, the Bank shall use its commercially reasonable efforts to pursue a Syndication. 

 

	 	7.6.3.	For the purpose of such Participation or Syndications, the Bank may provide to a potential participant, transferee or assignee (a “Participant”) on a
confidential basis access to any and all information disclosed to the Bank pursuant to this Facility Letter or in the possession of the Bank. 

  

	 	7.7.	In the event of a Syndication to a Participant, such Participant, to the extent of the rights and obligations syndicated, sold or assigned to it, shall become entitled
to such rights and obligations to the same extent as if such Participant were an original party to this Facility Letter together with the Bank in respect thereof, and the syndicating Lender shall be released and discharged accordingly.

  

	 	7.8.	If the Rights are the subject of a Participation and unless an agreement to the contrary is entered into by the Bank with the Participant, all references in this
Facility Letter to the Bank will thereafter be construed as a reference to such additional Participant, provided that the Borrower will be entitled to deal with such Participant as it were the sole owner of the Rights and the Bank will not be
released from any of its obligations under this Facility Letter by virtue of the Participation and provided further that such documents do not adversely modify the Borrower’s rights or increase its obligations under this Facility Letter. The
Borrower acknowledges and agrees that each lender will be entitled, in its own name and on behalf of the Participants, to enforce for the benefit of, or as agent for, any Participants, any and all rights, claims and interests of such Participants,
in respect of the Rights subject to a Participation. A lender granting a Participation shall not grant or assign any Participant any rights to approve any amendment, waiver, proposed consent to or under this Facility Letter or any Security
Documents. No lender will be responsible for any default by any other Lender in its obligation not to so grant or assign any of such rights. 

  

	 	7.9.	Credit Reporting - The Borrower consents to the obtaining from any credit reporting agency or from any person all information that the Bank may require at any
time, and consents to the disclosure at any time of any information concerning the Borrower to any credit grantor with whom any of them have financial relations or to any credit reporting agency. 

 

	 	7.10.	 Waiver - Failure by the Bank to insist upon strict performance by the Borrower of any obligation or covenant under the Facility Letter or any of
the Security Documents or to exercise any option or right herein or therein shall not be a waiver or relinquishment for the future of such obligation or covenant, option or 

  
 S-12

	 	
right, but the same shall remain in full force and effect and the Bank shall have the right to insist upon the strict performance by the Borrower of any and all of the terms and provisions of the
Facility Letter and the Security Documents. 

  

	 	7.11.	Variation - No term or requirement of the Facility Letter or any of the Security Documents may be waived or varied orally or by any course of conduct of any
officer, employee, or agent of the Bank. Any amendment to the Facility Letter or any of the Security Documents must be in writing and signed by a duly authorized officer of the Bank. 

 

	 	7.12.	Notice 

 Any notice
required to be given hereunder or under any Security Document shall be in writing and may effectively be given by a party hereto by delivery of such notice to the other party at the address below or at such other address as either party may in
writing notify the other party or by facsimile transmission and confirmed in writing to: 
 In the case of the Bank: 

to the address or telecopier number 
 of the Vancouver Main Branch of the Bank 
 Attention: Senior Vice President
and Manager 
 Telecopier No. 604-641-1808 
 In the case of the Borrower: 
 c/o 16640 - 111th Avenue 

Edmonton, Alberta 
 Canada 
 Attention: Kevin Edgson, Chief Financial Officer 

Telecopier No. 780-486-8282 
 Notice shall be deemed to have been received by a party within 3 Business Days of delivery to the applicable address contemplated above. Notices by facsimile transmission shall be deemed to have been
given upon receipt thereof at the address indicated above. 
  

	 	7.13.	Governing Law - This Facility Letter shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada
applicable therein. 

  

	 	7.14.	 Submission to Jurisdiction - The Borrower hereby irrevocably attorns and submits to the non-exclusive jurisdiction of the courts of the
Provinces of Alberta and British Columbia. The Borrower, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waives any right it may have to a trial by jury in any litigation based upon or

  
 S-13

	 	
arising out of this Facility Letter or any related instrument or agreement or any of the transactions contemplated by this Facility Letter or any course of conduct, dealing, statements (whether
oral or written) or action of any of them. The Borrower shall not seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any respect or relinquished by the parties hereto except by a written instrument executed by all of them. 

 

	 	7.15.	Bank’s Solicitors - Legal work and documentation is to be performed on behalf of the Bank by Messrs. Lawson Lundell LLP, Barristers and Solicitors, 1600
Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia. 

  

	 	7.16.	Bank’s Accounts - The Borrower acknowledges that the actual recording of the amount of any advance or repayment thereof under the Loans, and interest, fees
and other amounts due in connection with the Loans, in an account of the Borrower maintained by the Bank shall constitute prima facie evidence of the Borrower’s indebtedness and liability from time to time under the Loans; provided that the
obligation of the Borrower to pay or repay any indebtedness and liability in accordance with the terms and conditions of the Loans shall not be affected by the failure of the Bank to make such recording. The Borrower also acknowledges being indebted
to the Bank for principal amounts shown as outstanding from time to time in the Bank’s account records, and all accrued and unpaid interest in respect of such amounts, in accordance with the terms and conditions of this Facility Letter.

  

	 	7.17.	Counterparts and Telecopy - This Facility Letter may be signed in counterparts and by telecopy, each of which counterparts shall be deemed to be an original, and
all such counterparts and telecopies together shall constitute one and the same instrument. 

  

	 	7.18.	Time of Essence - Time shall be of the essence of the Facility Letter. 

 

	 	7.19.	Payments on Business Day - Whenever any payment or performance under this Facility Letter and the Security Documents would otherwise be due on a day other than a
Business Day, such payment shall be made on the following Business Day, unless the following Business Day is in a different calendar month or would fall after the Maturity Date, in which case the payment shall be made on the preceding Business Day.

  

	8.	Definitions and Interpretation 

 In
the attached Facility Letter the following terms shall have the following meanings: 
  

	 	8.1.	 “Acceptable Finished Products Inventory” means the aggregate value, determined by the Bank from its review of the most recent
financial statements and inventory declaration provided by the Borrower in accordance with the 

  
 S-14

	 	
Facility Letter and based on the lower of the cost to the Borrower and the fair market value, of all finished products produced and owned by the Borrower and located in Canada arising from its
lumber and pulp (including pulp bush) for resale over or in respect of which the Bank holds a first mortgage, charge or security interest; 

  

	 	8.2.	“Acceptable Inventory” means together Acceptable Finished Products Inventory and Acceptable Unfinished Products Inventory; 

 

	 	8.3.	“Acceptable Unfinished Products Inventory” means the aggregate value, determined by the Bank from its review of the most recent financial statements
and inventory declaration provided by the Borrower in accordance with the Facility Letter and based on the lower of the cost to the Borrower and the fair market value, of all unfinished lumber and pulp owned by the Borrower and located in Canada and
pulp bush logs adequately insured under fire insurance for resale or for the production of goods for resale but which expressly excludes Acceptable Finished Products Inventory, over or in respect of which the Bank holds a first mortgage, charge or
security interest; 

  

	 	8.4.	“Affiliate” means any party that would, pursuant to the Income Tax Act (Canada), as amended, supplemented or replaced from time to time, not be
considered to be dealing at “arms length” with the party in question and any partnership or other organization in which the Borrower has the right to make or control management decisions and shall include any Affiliate of any such
Affiliate; 

  

	 	8.5.	“Agent” means HSBC Bank Canada; 

  

	 	8.6.	“Bank’s Prime Rate” means the floating annual rate of interest established and recorded as such by the Bank from time to time as a reference rate
for purposes of determining floating rates of interest it will charge on loans denominated in Canadian Dollars and made in Canada; 

  

	 	8.7.	“Bank’s U.S. Base Rate” means the floating annual rate of interest established and recorded as such by the Bank from time to time as a reference
rate for the purposes of determining rates of interest it will charge on loans denominated in U.S. Dollars made in Canada based on a year of 360 days; 

  

	 	8.8.	“Borrowing Base” means the aggregate of 75% of Other Acceptable Receivables, 95% of Government of Canada Receivables, 95% of Insured Receivables and
95% of L/C Supported Receivables and 50% of Acceptable Inventory; 

  

	 	8.9.	“Business Day” means a day upon which the branch of Bank issuing the Facility Letter is open for business; 

 

	 	8.10.	“Canadian Dollar Equivalent” means at any time on any date in relation to any amount in a currency other than Canadian dollars, the amount of Canadian
dollars required for the Borrower to purchase that amount of such other currency at the spot rate of exchange quoted by the Bank at or about 10:30 a.m. (local Vancouver time) on such date, including all premiums and costs of exchange;

  
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	 	8.11.	“Canadian Dollars” and “CDN.$” each mean lawful currency of Canada; 

 

	 	8.12.	“Capital Expenditure” means, for any particular period, those expenditures of the Borrower which would, in accordance with GAAP, on a consolidated
basis, be considered Capital Expenditures of the Borrower, for such period (including Capitalized Leased Obligations provided that notwithstanding the requirements of GAAP, the amount attributable to Capitalized Lease Obligations for such period
shall be the amount recorded during such period on the cash flow statement of the Borrower as principal lease payments on Capital Leases; 

  

	 	8.13.	“Capital Lease” means, with respect to any Person, any lease of personal property or other arrangement relating to personal property or assets which
would be required to be accounted for as a capital lease obligation on a balance sheet of such Person if such balance sheet were prepared in accordance with GAAP; 

 

	 	8.14.	“Capitalized Leased Obligations” means with respect to any Person, any payment obligation of such Person, under a Capital Lease that, in accordance
with GAAP, is required to be capitalized; 

  

	 	8.15.	“Capital Stock” means, with respect to any Person, any and all present and future shares, partnership or other interests, participations or other
equivalent rights in the person’s capital, however designated and whether voting or non-voting; 

  

	 	8.16.	“Change of Ownership” means the acquisition by any Person or group of Persons, beneficially or otherwise (whether by purchase, exchange, merger,
consolidation or otherwise), directly or indirectly, in one transaction or in a series of related transactions of any Voting Stock comprising (or the right to exercise the voting rights with respect to Voting Stock comprising) of the Borrower;

  

	 	8.17.	“Compensating Amount” means an amount determined by the Bank to be the net cost, if any, incurred by the Bank as a direct result of the repayment of
all or a portion of a Loan accruing interest based on LIBOR, on a date other than the expiration of the LIBOR Period, or as a result of the payment of any amount owing in respect of a Bankers’ Acceptance on any date other than the date of
maturity for such Bankers’ Acceptance, including, without limitation, the loss or expense sustained or incurred by the Bank relating to such payment. A certificate of an Assistant Vice President or Vice President of the Bank shall, absent
manifest error, be conclusive evidence of the Compensating Amount from time to time; 

  

	 	8.18.	“Debt” of any Person means, without duplication: 

  

	 	8.18.1.	all Debt for borrowed money of such Person, including obligations with respect to bankers’ acceptances, letters of credit and letters of guarantee;

  
 S-16

	 	8.18.2.	all indebtedness of such Person for the deferred purchase price of property or services represented by a note or other evidence of indebtedness or other securities;

  

	 	8.18.3.	all indebtedness 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 a seller or lender under such agreement in the event of default are limited to repossession or sale of such property); 

  

	 	8.18.4.	all obligations under leases which, in accordance with GAAP, are recorded as Capital Leases, in respect of which such Person is liable as lessee;

  

	 	8.18.5.	the aggregate amount at which capital stock or other equity interest in such Person which are redeemable or retractable at the option of the holder thereof may be
retracted or redeemed; and 

  

	 	8.18.6.	all Debt guaranteed by such Person, 

 and all renewals, extensions or refinancing thereof; 
  

	 	8.19.	“EBITDA” means, in respect of any given period, Net Income before interest on Debt, Taxes on Net Income and depreciation and amortization and
non-recurring charges for the four fiscal quarters then ended, all determined in accordance with GAAP; 

  

	 	8.20.	“EDC” means the Export Development Corporation of Canada; 

 

	 	8.21.	“Environmental Laws” means any and all statutes, laws, by-laws, regulations, rules, codes, orders, directors, guidelines, permits, policies,
interpretations, decisions and other lawful requirements now or hereafter in effect, of any governmental authority having jurisdiction in connection with or pertaining to any Hazardous Substances, the protection of the environment, land use, zoning,
health, chemical use, safety, sanitation or the health or welfare of any living thing; 

  

	 	8.22.	“Events of Default” means that term as defined in section 5 of this Schedule, and “Event of Default” means any one of them;

  

	 	8.23.	“Facility Letter” means the letter from the Bank to the Borrower to which this Schedule is attached, together with this Schedule, and includes all
amendments and replacements thereof; 

  

	 	8.24.	“Financial Covenants” means those financial covenants set forth in sections 11.2.1, 11.2.13, 11.2.14 and 11.2.15 in the body of this Facility Letter;

  

	 	8.25.	 “Forest Management Agreements” means all those existing and future agreements entered into between the Borrower and the Province of
Alberta with 

  
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respect to the Borrower’s right, title and interest in the forest tenures, term supply licenses or other logging rights and benefits held by the Borrower in the operation of its business;

  

	 	8.26.	“GAAP” means Canadian generally accepted accounting principles, including such principles recommended by the Canadian Institute of Chartered
Accountants as contained in the “CICA Handbook”, as the same may be amended, replaced or restated from time to time, and, in the absence of a specific recommendation contained in the “CICA Handbook”, such accounting principles
generally accepted in practice; 

  

	 	8.27.	“Government Authority” means any government legislature, regulatory authority, agency, commission, board or court or other law, regulation or rule
making entity having or purporting to have jurisdiction on behalf of any nation, state, country or other subdivision; 

  

	 	8.28.	“Government of Canada Receivables” means those accounts receivable of the Borrower from the Government of Canada which have been assigned to the Bank
and in respect of which the Bank holds a first security interest; 

  

	 	8.29.	“Hazardous Substances” means any substance, defined or designated as hazardous or toxic waste, hazardous or toxic material, a hazardous, toxic or
radioactive substance or other similar term, by any Environmental Law, or any substance or materials, the use or disposition of which is regulated by any Environmental Law; 

 

	 	8.30.	“Indebtedness” means the full amount of all indebtedness and liability, direct or indirect, of the Borrower to the Bank arising under or in connection
with the Facility Letter and the Security Documents, and any of them, outstanding from time to time (including, without limitation, the amount outstanding under the Loans, accrued interest thereon, the face amount of all bank guarantees and letters
of credit issued and outstanding under the B/G Sub-Facility, and all fees and costs payable in connection therewith); 

  

	 	8.31.	“Insured Receivables” means those accounts receivable of the Borrower which are insured for payment by the Canadian Export Development Corporation or
similar insurer approved by the Bank in respect of which the Bank holds a first security interest; 

  

	 	8.32.	“Kimberley Clark Receivables” means those accounts receivables of the Borrower which have been assigned to the Bank and in respect of which the Bank
holds a first security interest, from Kimberley Clark, from which shall be excluded all accounts receivable from Kimberley Clark: 

  

	 	8.32.1.	which have been outstanding for in excess of 90 days from the date of the issuance of the applicable invoice; and 

 

	 	8.32.2.	which are disputed by Kimberley Clark or subject to set-off; 

  
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	 	8.33.	“Lands” means those lands and premises owned by the Borrower or upon which the Borrower carries on any of its business; 

 

	 	8.34.	“L/C Supported Receivables” means those accounts receivable of the Borrower which are supported by a bank guarantee or letter of credit in a form and
issued by a financial institution acceptable to the Bank and which have been assigned to the Bank and in respect of which the Bank holds a first security interest; 

 

	 	8.35.	“Legal Requirement” means all laws, statutes, codes, ordinances, orders, awards, judgments, decrees, injunctions, rules, regulations, authorizations,
consents, approvals, orders, permits, franchises, licences, directions and requirements of all Governmental Authorities; 

  

	 	8.36.	“LIBOR” means with respect to a particular LIBOR Period, the rate of interest (rounded upwards if necessary to the nearest full multiple of
one-sixteenth of one percent) at which the Bank, in accordance with its normal practice, would be prepared to offer to leading banks on the London prime inter-bank market for delivery an the first day of the applicable LIBOR Period approved by the
Bank and for a period equal to such LIBOR Period based on the number of days comprised therein, a deposit of a comparable amount of United States dollars to be outstanding during such LIBOR Period, at or about 11:00 a.m. London, England local time,
two Business Days prior to the commencement of the LIBOR Period; 

  

	 	8.37.	“LIBOR Advance” means any advance made under the Operating Loan in respect of which the Borrower has, in accordance with the terms of this Facility
Letter, selected an interest rate based upon LIBOR, on the last day of the applicable LIBOR Period or every 3 months, whichever is earlier; 

  

	 	8.38.	“LIBOR Period” means a period of one, two, three, four, five or six months or 360 days but expiring not later than the final date for payment of the
subject Loan; 

  

	 	8.39.	“Lien” means, any mortgage, lien, pledge, charge, security interest or other encumbrance (including any judgment or attachment lien); or any interest
or title of any vendor, lessor, consignor or lender to, or other secured party of, a Person under any consignment, conditional sale or other title retention agreement or lease, upon or with respect to any property or asset of such Person; and any
liens for Taxes and any liens, trusts or deemed trusts in favour of any Government Authority of any kind whatsoever; 

  

	 	8.40.	“Material Adverse Change” means any one or more transactions, events or conditions which have a material adverse effect on (a) the ability of the
Borrower to perform and discharge its obligations under this Facility Letter; or (b) the Bank’s ability to enforce its rights or remedies under this Facility Letter or any of the Security Documents; 

  
 S-19

	 	8.41.	“Net Income” means with reference to any period, the net income (or loss) for the Borrower as determined in accordance with GAAP;

  

	 	8.42.	“Other Acceptable Receivables” means the aggregate value of all accounts receivable of the Borrower that are not Government of Canada Receivables, L/C
Supported Receivables or Insured Receivables which have been assigned to the Bank and in respect of which the Bank holds a first security interest, from customers approved by the Bank, from which shall be excluded all accounts receivable:

  

	 	8.42.1.	which have been outstanding for in excess of 90 days from the date of issuance of the applicable invoice; 

 

	 	8.42.2.	from “Affiliates” of the Borrower; 

  

	 	8.42.3.	which are disputed by the customers of the Borrower or subject to set-off; and 

 

	 	8.42.4.	from customers of the Borrower from whom other accounts receivable have been outstanding for in excess of 90 days from the date of invoice therefor;

  

	 	8.43.	“Permitted Encumbrances” means any of the following: 

  

	 	8.43.1.	liens for taxes, assessments or governmental charges or levies not at the time due and delinquent or the validity of which the Borrower is contesting in good faith and
in respect of which the Borrower has set aside, on its books, reserves considered by the Bank as adequate therefor; 

  

	 	8.43.2.	undetermined or inchoate liens and charges incidental to current operations which have not been filed against the Borrower or which relate to obligations not due or
delinquent; 

  

	 	8.43.3.	warehousemen’s, woodmen’s, carriers, maritime and other similar liens which relate to obligations not due or delinquent; 

 

	 	8.43.4.	easements, rights-of-way or similar rights in real property granted to or reserved by other person which do not materially impair the usefulness, in the business of the
Borrower, of the real property subject thereto; 

  

	 	8.43.5.	the right reserved to or vested in any governmental or public authority by any lease, licence, franchise, grant, permit or statutory provision to terminate any lease,
licence, franchise, grant or permit, or to require annual or other periodic payments as a condition of the continuance thereof; 

  

	 	8.43.6.	 the encumbrance resulting from the deposit of cash or obligations as security when the Borrower is required to do so by governmental or other

  
 S-20

	 	
public authority or by normal business practice in connection with contracts, licences or tenders or similar matters in the ordinary course of business and for the purpose of carrying on the same
or to secure Workers’ Compensation, surety or appeal bonds or to secure costs of litigation when required by law; 

  

	 	8.43.7.	security given to a public utility or any governmental or other public authority when required in connection with the operations of the Borrower;

  

	 	8.43.8.	security granted to the Borrower’s bank in respect of inventory and intangibles (as those terms are defined in the Personal Property Security Act), under
the Bank Act (Canada), the Personal Property Security Act, or otherwise; 

  

	 	8.43.9.	Purchase Money Lien; 

  

	 	8.44.	“Permitted Liens” means, as at any time, the Liens listed in Schedule A, as such Schedule may be amended from time to time by agreement between the
Required Lenders and the Borrower; 

  

	 	8.45.	“Person” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without
share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;

  

	 	8.46.	“Priority Payables” means the aggregate of any amounts payable by the Borrower to any Government Authority or other Person which, in the opinion of the
Bank or its solicitors, rank pari passu to or in priority to any mortgage, security interest, encumbrance, hypothecation, assignment, Lien or other claim in or to such real and personal property, assets and undertaking that the Bank may have
pursuant to the Security Documents; 

  

	 	8.47.	“Purchase Money Lien” means any Lien created upon any personal property of the Borrower to secure or securing the whole or any part of the purchase
price of such property or to secure or securing the repayment of money borrowed to pay the whole or any part of such purchase price or cost or any vendor’s privilege or lien on such property securing all or any part of such purchase price or
cost and any Lien to which any property acquired by the Borrower is subject at the time of such acquisition; provided that any such Lien is limited to the property so acquired and the aggregate of the indebtedness arising and outstanding at any one
time from the Purchase Money Liens do not exceed Cdn.$1,000,000; 

  

	 	8.48.	“Required Notice” means a notice in form and content approved by the Bank given to the branch of the Bank referred to above not later than 10:30 a.m.
local time three Business Days immediately preceding the date on which: 

  

	 	8.48.1.	an advance is to be made; 

  
 S-21

	 	8.48.2.	a rollover is to be made from one interest option to another; or 

  

	 	8.48.3.	a Banker’s Acceptance is to be issued for acceptance by the Bank; 

 as the case may be, stating the date, amount and term of the requested advance or rollover, or particulars of the banker’s acceptance or letter of credit. 

With respect to the foregoing, a certificate of a manager or account manager of the Bank shall be prima facie evidence of the
Bank’s Prime Rate, from time to time. 
  

	 	8.49.	“Release” includes discharge, spray, inject, inoculate, abandon, deposit, spill, leak, seep, pour, emit, empty, throw, dump, place and exhaust;

  

	 	8.50.	“Senior Notes” means the 7-3/4% Senior Notes due 2013 issued by the Borrower pursuant to the Offering Memorandum; 

 

	 	8.51.	“Stock” means all shares, options, warrants, equity interests, equity participations, or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited partnership or equivalent entity whether voting or nonvoting or participating or non-participating; 

  

	 	8.52.	“Subsidiary” has the meaning ascribed to a “subsidiary body corporate” in the Business Corporations Act (Alberta);

  

	 	8.53.	“Taxes” includes all present and future taxes, rates, levies or assessments (ordinary or extraordinary), imposts, stamp taxes, royalties, duties, fees,
dues, deductions, withholdings, sales taxes or charges, added value charges, charges or taxes on capital or reserves, levied, assessed or imposed by any government or governmental authority, and any restrictions or conditions resulting in a tax and
all penalty, interest and other payments on or in respect thereof; 

  

	 	8.54.	“Threshold Borrowing/Margin Surplus Level” means at any time either more than $20,000,000 being advanced and outstanding under the Operating Loan
(including outstanding bank guarantees or letters of credit under the B/G Sub-Facility) or the Borrowing Base exceeding the amount then advanced and outstanding under the Operating Loan (including outstanding bank guarantees and letters of credit
under the B/G Sub-Facility) by less than $15,000,000; 

  

	 	8.55.	“U.S. Dollar Equivalent” means at any time on any date in relation to any amount in a currency other than U.S. Dollars, the amount of U.S. Dollars
required for the Borrower to purchase that amount of such other currency at the spot rate of exchange quoted by the Bank at or about 10:30 a.m. (local Vancouver time) on such date, including all premiums and costs of exchange;

  

	 	8.56.	“U.S. Dollars” and “U.S.$” each mean lawful currency of the United States of America; 

  
 S-22

	 	8.57.	“Voting Stock” means Stock of any class the holder of which is entitled to vote in any or all circumstances; 

 

	 	8.58.	“Working Capital Ratio” means at any time, the ratio of the Borrower’s consolidated current assets (less prepaids and for greater certainty bush
logs are to be included in current assets) to its consolidated current liabilities calculated in each case in accordance with GAAP, but in any event, including in current liabilities all amounts outstanding under the Loans other than for Letters of
Credits which are issued in respect of current liabilities, and excluding from current assets all prepaid expenses; [tested quarterly]. 

  
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