Table of Contents

 

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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE		1
SECTION 1.1. Definitions		1
SECTION 1.2. Other Definitions		33
SECTION 1.3. Incorporation by Reference of Trust Indenture Act		35
SECTION 1.4. Rules of Construction		36
ARTICLE II THE SECURITIES		36
SECTION 2.1. Form, Dating and Terms		36
SECTION 2.2. Execution and Authentication		45
SECTION 2.3. Registrar and Paying Agent		46
SECTION 2.4. Paying Agent to Hold Money in Trust		47
SECTION 2.5. Securityholder Lists		47
SECTION 2.6. Transfer and Exchange		48
SECTION 2.7. Form of Certificate to be Delivered upon Termination of Restricted Period		52
SECTION 2.8. Form of Certificate to be Delivered in Connection with Transfers to Institutional Accredited Investors		53
SECTION 2.9. Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S		55
SECTION 2.10. Mutilated, Destroyed, Lost or Stolen Securities		56
SECTION 2.11. Outstanding Securities		57
SECTION 2.12. Temporary Securities		57
SECTION 2.13. Cancellation		58
SECTION 2.14. Payment of Interest; Defaulted Interest		58
SECTION 2.15. Computation of Interest		59
SECTION 2.16. CUSIP, Common Code and ISIN Numbers		59
ARTICLE III COVENANTS		60
SECTION 3.1. Payment of Securities		60
SECTION 3.2. Limitation on Indebtedness		60
SECTION 3.3. Limitation on Restricted Payments		64
SECTION 3.4. Limitation on Restrictions on Distributions from Restricted Subsidiaries		71
SECTION 3.5. Limitation on Sales of Assets and Subsidiary Stock		74
SECTION 3.6. Limitation on Liens		81
SECTION 3.7. Limitation on Sale/Leaseback Transactions		81
SECTION 3.8. Limitation on Affiliate Transactions		81
SECTION 3.9. Limitation on Sale of Capital Stock of Restricted Subsidiaries		83
SECTION 3.10. Change of Control		83

 

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SECTION 3.11. SEC Reports		85
SECTION 3.12. Future Guarantors		87
SECTION 3.13. Maintenance of Office or Agency		88
SECTION 3.14. Corporate Existence		88
SECTION 3.15. Payment of Taxes and Other Claims		88
SECTION 3.16. Payments for Consent		89
SECTION 3.17. Compliance Certificate		89
SECTION 3.18. Further Instruments and Acts		89
SECTION 3.19. Limitation on Lines of Business		89
SECTION 3.20. Statement by Officers as to Default		89
ARTICLE IV SUCCESSOR COMPANY		89
SECTION 4.1. Merger and Consolidation		89
ARTICLE V REDEMPTION OF SECURITIES		91
SECTION 5.1. Redemption		91
SECTION 5.2. Applicability of Article		91
SECTION 5.3. Election to Redeem; Notice to Trustee		91
SECTION 5.4. Selection by Trustee of Securities to Be Redeemed		92
SECTION 5.5. Notice of Redemption		92
SECTION 5.6. Deposit of Redemption Price		93
SECTION 5.7. Securities Payable on Redemption Date		93
SECTION 5.8. Securities Redeemed in Part		94
SECTION 5.9. Additional Amounts; Optional Tax Redemption		94
ARTICLE VI DEFAULTS AND REMEDIES		96
SECTION 6.1. Events of Default		96
SECTION 6.2. Acceleration		99
SECTION 6.3. Other Remedies		99
SECTION 6.4. Waiver of Past Defaults		100
SECTION 6.5. Control by Majority		100
SECTION 6.6. Limitation on Suits		100
SECTION 6.7. Rights of Holders to Receive Payment		101
SECTION 6.8. Collection Suit by Trustee		101
SECTION 6.9. Trustee May File Proofs of Claim		101
SECTION 6.10. Priorities		101
SECTION 6.11. Undertaking for Costs		103
ARTICLE VII TRUSTEE		103
SECTION 7.1. Duties of Trustee		103
SECTION 7.2. Rights of Trustee		104
SECTION 7.3. Individual Rights of Trustee		106
SECTION 7.4. Trustee’s Disclaimer		106

 

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		Page
SECTION 7.5. Notice of Defaults		106
SECTION 7.6. Reports by Trustee to Holders		106
SECTION 7.7. Compensation and Indemnity		106
SECTION 7.8. Replacement of Trustee		107
SECTION 7.9. Successor Trustee by Merger		108
SECTION 7.10. Eligibility; Disqualification		109
SECTION 7.11. Preferential Collection of Claims Against the Company		109
SECTION 7.12. Trustee’s Application for Instruction from the Company		109
ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE		109
SECTION 8.1. Discharge of Liability on Securities; Defeasance		109
SECTION 8.2. Conditions to Defeasance		111
SECTION 8.3. Application of Trust Money		112
SECTION 8.4. Repayment to the Company		112
SECTION 8.5. Indemnity for U.S. Government Obligations		112
SECTION 8.6. Reinstatement		113
ARTICLE IX AMENDMENTS		113
SECTION 9.1. Without Consent of Holders		113
SECTION 9.2. With Consent of Holders		114
SECTION 9.3. Compliance with Trust Indenture Act		116
SECTION 9.4. Revocation and Effect of Consents and Waivers		116
SECTION 9.5. Notation on or Exchange of Securities		116
SECTION 9.6. Trustee to Sign Amendments		117
ARTICLE X SUBSIDIARY GUARANTEE		117
SECTION 10.1. Subsidiary Guarantee		117
SECTION 10.2. Limitation on Liability; Termination, Release and Discharge		119
SECTION 10.3. Right of Contribution		120
SECTION 10.4. No Subrogation		121
ARTICLE XI COLLATERAL AND SECURITY		121
SECTION 11.1. The Collateral		121
SECTION 11.2. Further Assurances		122
SECTION 11.3. After-Acquired Property		123
SECTION 11.4. Impairment of Security Interest		124
SECTION 11.5. Real Estate Mortgages and Filings		124
SECTION 11.6. Release of Liens on the Collateral		125
SECTION 11.7. Authorization of Actions to be Taken by the Trustee or the Collateral Agent Under the Collateral Documents		126
SECTION 11.8. Collateral Accounts		128

 

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ARTICLE XII MISCELLANEOUS			129
SECTION 12.1. Trust Indenture Act Controls			129
SECTION 12.2. Notices			129
SECTION 12.3. Communication by Holders with other Holders			130
SECTION 12.4. Certificate and Opinion as to Conditions Precedent			130
SECTION 12.5. Statements Required in Certificate or Opinion			131
SECTION 12.6. When Securities Disregarded			131
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar			131
SECTION 12.8. Legal Holidays			131
SECTION 12.9. GOVERNING LAW			131
SECTION 12.10. No Recourse Against Others			132
SECTION 12.11. Successors			132
SECTION 12.12. Multiple Originals			132
SECTION 12.13. Qualification of Indenture			132
SECTION 12.14. Table of Contents; Headings			132
SECTION 12.15. WAIVERS OF JURY TRIAL			132
SECTION 12.16. Intercreditor Agreement Controls			132
SECTION 12.17. Force Majeure			133
SCHEDULE 3.4
SCHEDULE 3.8
EXHIBIT A	Form of the Series A Note
EXHIBIT B	Form of the Series B Note
EXHIBIT C	Form of Indenture Supplement to Add Subsidiary Guarantors
EXHIBIT D	Form of Note Security Agreement
EXHIBIT E	Form of Mortgage
EXHIBIT F	Form of Intercreditor Agreement

 

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CROSS-REFERENCE TABLE

 

 

N.A. means Not Applicable.

 

Note:  This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.

 

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INDENTURE dated as of June 3, 2009, among CELLU TISSUE HOLDINGS, INC., a Delaware corporation (the “ Company ”), THE SUBSIDIARY GUARANTORS (as defined herein) parties hereto and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (the “ Trustee ”), as Trustee.

 

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (i) the Company’s 11½% Senior Secured Notes, Series A, due 2014, issued on the date hereof and the guarantees thereof by all of the Company’s subsidiaries (the “ Initial Securities ”), (ii) if and when issued, an unlimited principal amount of additional 11½% Senior Secured Notes, Series A, due 2014 in a non-registered offering or 11½% Senior Secured Notes, Series B, due 2014 in a registered offering of the Company, and the guarantees thereof by certain of the Company’s subsidiaries that may be offered from time to time subsequent to the Issue Date, in each case subject to Section 2.1 (the “ Additional Securities ”) as provided in Section 2.1(a)  and (iii) if and when issued, the Company’s 11½% Senior Secured Notes, Series B, due 2014 and the guarantees thereof by certain of the Company’s subsidiaries that may be issued from time to time in exchange for Initial Securities or any Additional Securities in an offer registered under the Securities Act as provided in the Registration Rights Agreement, as hereinafter defined, (the “ Exchange Securities ,” and together with the Initial Securities and Additional Securities, the “ Securities ”):

 

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1.   Definitions .

 

“ Acquired Indebtedness ” means Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition.  Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (i) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets.

 

“ Additional Amounts ” has the meaning ascribed to it in Section 5.9(a) .

 

“ Additional Assets ” means:

 

(1)    any property, plant, equipment or other assets (excluding any assets that would be Second Priority Collateral) to be used by the Company or a Restricted Subsidiary in a Related Business;

 

(2)    the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary; or

 

 

(3)    Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

 

provided , however , that, in the case of clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a Related Business.

 

“ Additional Interest ” means any additional interest payable by the Company pursuant to Section 2(d) of the Registration Rights Agreement.

 

“ Additional Securities ” has the meaning ascribed to it in the second introductory paragraph of this Indenture.

 

“ Affiliate ” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing; provided that, exclusively for purposes of Section 3.8 hereof, beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control.

 

“ Asset Disposition ” means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors’ qualifying shares), property or other assets (each referred to for the purposes of this definition as a “disposition”) by the Company or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction; provided that (i) the disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries, taken as a whole, will be governed by Section 3.10 and Section 4.1 and (ii) the disposition of all the Voting Stock of or all or substantially all of the assets of any Subsidiary Guarantor will be governed by Section 3.9 and Section 10.2(b) , respectively.

 

Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions:

 

(1)            a disposition of assets by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary; provided that in the case of a sale by a Restricted Subsidiary to another Restricted Subsidiary, the Company directly or indirectly owns an equal or greater percentage of the Common Stock of the transferee than of the transferor, and provided, further, that in the case of a sale of Collateral, the transferee shall cause such amendments, supplements or other instruments to be executed, filed, and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Lien on the Collateral owned by or transferred to the transferee, together with such financing statements or comparable documents as may be required to perfect any security interests in such Collateral which may be perfected by the

 

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filing of a financing statement or a similar document under the Uniform Commercial Code or other similar statute or regulation of the relevant states or jurisdictions;

 

(2)            the sale of Cash Equivalents in the ordinary course of business;

 

(3)            a disposition of inventory in the ordinary course of business;

 

(4)            a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business;

 

(5)            transactions permitted under Section 4.1 ;

 

(6)            an issuance of Capital Stock by a Restricted Subsidiary to the Company or to a Wholly-Owned Subsidiary;

 

(7)            for purposes of Section 3.5 only, the making of a Permitted Investment (other than a Permitted Investment to the extent such transaction results in the receipt of cash or Cash Equivalents by the Company or its Restricted Subsidiaries) or a disposition subject to Section 3.3 ;

 

(8)            an Asset Swap effected in compliance with Section 3.5 ;

 

(9)            dispositions of assets in a single transaction or series of related transactions with an aggregate fair market value in any calendar year of less than $5.0 million;

 

(10)          the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

 

(11)          dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

 

(12)          the issuance by a Restricted Subsidiary of Preferred Stock that is permitted under Section 3.2 ;

 

(13)          the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property; and

 

(14)          foreclosure on assets.

 

“ Asset Disposition Offer ” has the meaning set forth in Section 3.5(b) .

 

“ Asset Swap ” means a concurrent purchase and sale or exchange of Related Business Assets between the Company or any of its Restricted Subsidiaries and another Person; provided that any cash received must be applied in accordance with Section 3.5 .

 

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“ Attributable Indebtedness ” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate implicit in the transaction) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended), determined in accordance with GAAP; provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligations.”

 

“ Average Life ” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

 

“ Bankruptcy Law ” means Title 11 of the United States Code or similar federal or state law for the relief of debtors.

 

“ Board of Directors ” means, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof.

 

“ Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of a Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

 

“ Borrowing Base ” means, as of the date of determination, an amount equal to the sum, without duplication of (1) 85% of the net book value of the Company’s and its Restricted Subsidiaries’ accounts receivable at such date and (2) 65% of the net book value of the Company’s and its Restricted Subsidiaries’ inventories at such date.  Net book value shall be determined in accordance with GAAP and shall be calculated using amounts reflected on the most recent available balance sheet (it being understood that the accounts receivable and inventories of an acquired business may be included if such acquisition has been completed on or prior to the date of determination).

 

“ Business Day ” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close.

 

“ Capital Stock ” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock and limited liability or partnership interests (whether general or limited), but excluding any debt securities convertible into such equity.

 

“ Capitalized Lease Obligations ” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the

 

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capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.

 

“ Cash Equivalents ” means:

 

(1)            securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States ( provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than one year from the date of acquisition;

 

(2)            marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition and, at the time of acquisition, having a credit rating of “A” or better from either Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc.;

 

(3)            demand deposits, trust accounts, certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc., or “A” or the equivalent thereof by Moody’s Investors Service, Inc., and having combined capital and surplus in excess of $500 million;

 

(4)            repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) entered into with any bank meeting the qualifications specified in clause (3) above;

 

(5)            commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc. or “P-2” or the equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and

 

(6)            interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (5) above.

 

“ Change of Control ” means:

 

(1)            any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether

 

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such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company or any of its direct or indirect parent entities (or their successors by merger, consolidation or purchase of all or substantially all of their assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of the Company or any of its direct or indirect parent entities held by a parent entity, if such person or group “beneficially owns” (as defined above), directly or indirectly, more than 50% of the voting power of the Voting Stock of such parent entity); or

 

(2)            the first day on which a majority of the members of the Board of Directors of the Company or Holdings are not Continuing Directors; or

 

(3)            the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company or Holdings and its Restricted Subsidiaries taken as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder; or

 

(4)            the adoption by the stockholders of the Company or Holdings of a plan or proposal for the liquidation or dissolution of the Company or Holdings.

 

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

 

“ Collateral ” means all property and assets, whether now owned or hereafter acquired, in which Liens are, from time to time, purported to be granted to secure the Securities pursuant to the Collateral Documents.

 

“ Collateral Accounts ” means any segregated account under the sole control of the Trustee that is free from all other Liens, including the First Priority Collateral Account and the Second Priority Collateral Account, and includes all cash and Cash Equivalents received by the Trustee or the Collateral Agent from Asset Dispositions of Collateral, Recovery Events, Asset Swaps involving the transfer of Collateral, foreclosures on or sales of Collateral, any issuance of Additional Securities or any other awards or proceeds pursuant to the Collateral Documents, including earnings, revenues, rents, issues, profits and income from the Collateral received pursuant to the Collateral Documents, and interest earned thereon.

 

“ Collateral Agent ” means The Bank of New York Mellon Trust Company, N.A., acting as the collateral agent under the Collateral Documents.

 

“ Collateral Disposition Offer ” has the meaning set forth in Section 3.5(a) .

 

“ Collateral Documents ” means the mortgages, deeds of trust, deeds to secure debt, security agreements, pledge agreements, agency agreements and other instruments and documents executed and delivered pursuant to this Indenture or any of the foregoing, as the same may be amended, supplemented or otherwise modified from time to time and pursuant to which Collateral is pledged, assigned or granted to or on behalf of the Collateral Agent for the ratable benefit of the Holders and the Trustee or notice of such pledge, assignment or grant is given.

 

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“ Commodity Agreement ” means any commodities futures contract, commodity swap, commodity option or other similar agreement or arrangement entered into by the Company or any Restricted Subsidiary designed to protect the Company or any of its Restricted Subsidiaries against fluctuations in the price of commodities actually used in the ordinary course of business of the Company and its Restricted Subsidiaries.

 

“ Common Stock ” means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.

 

“ Company ” means the Person named as the “Company” in the first introductory paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

 

“ Consolidated Coverage Ratio ” means as of any date of determination, with respect to any Person, the ratio of (x) the aggregate amount of Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements are in existence to (y) Consolidated Interest Expense for such four fiscal quarters; provided, however , that:

 

(1)                                   if the Company or any Restricted Subsidiary:

 

(a)                                   has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving Credit Facility outstanding on the date of such calculation will be deemed to be (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or

 

(b)                                  has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred

 

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under any revolving Credit Facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period;

 

(2)            if since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition or disposed of or discontinued (as defined under GAAP) any company, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio includes such a transaction:

 

(a)            the Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets that are the subject of such disposition or discontinuation for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period; and

 

(b)            Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, redeemed, retired, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such transaction for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);

 

(3)            if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary or is merged with or into the Company or a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of a company, division, operating unit, segment, business, group of related assets or line of business, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and

 

(4)            if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) will have Incurred any Indebtedness or discharged any Indebtedness, made any disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (1), (2) or

 

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(3) above if made by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting Officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act).  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months).  If any Indebtedness that is being given pro forma effect bears an interest rate at the option of the Company, the interest rate shall be calculated by applying such optional rate chosen by the Company.

 

“ Consolidated EBITDA ” for any period means, without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted (except as specified in clause (10) below) (and not added back) in calculating such Consolidated Net Income:

 

(1)            Consolidated Interest Expense; plus

 

(2)            Consolidated Income Taxes; plus

 

(3)            consolidated depreciation expense; plus

 

(4)            consolidated amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 “Goodwill and Other Intangibles” and Financial Accounting Standard No. 144 “Accounting for the Impairment or Disposal of Long Lived Assets”; plus

 

(5)            other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation) less non-cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or reserve for, anticipated cash charges made in any prior period); plus

 

(6)            reasonable legal, accounting, financing, consulting, advisory and other out-of-pocket fees and expenses incurred in connection with debt financings, equity financings, acquisitions, Investments and/or divestitures (including, without limitation, the offering of the Initial Securities) whether or not such transactions are consummated; plus

 

(7)            extraordinary costs associated with the restatement of the fiscal year 2008 financial statements in an amount not to exceed $1.0 million; plus

 

9

 

(8)            the amount of any non-recurring restructuring charge or reserve (which, for the avoidance of doubt, shall include retention, severance, systems establishment cost, excess pension charges, contract termination costs, future lease commitments and costs to consolidate facilities and relocate employees or equipment) deducted in accordance with GAAP (and not added back) in calculating such Consolidated Net Income in such period; plus

 

(9)            any non-recurring expenses or charges incurred in connection with any Equity Offering, Permitted Investment, acquisition, recapitalization, any issuance or repayment of Indebtedness, amendment or modification of any debt instrument (in each case, including any such transaction consummated prior to the Issue Date and any such transaction undertaken and not completed) and any non-recurring merger costs incurred during such period as a result of any such transaction, in each case deducted in accordance with GAAP (and not added back) in calculating such Consolidated Net Income and other than any integration costs of the type described in clause (10)(i) below; plus

 

(10)          (i) any integration costs, expenses or reserves deducted in accordance with GAAP (and not added back) in calculating Consolidated Net Income relating to retention, severance, systems establishment cost, excess pension charges, contract termination costs, future lease commitments and costs to consolidate facilities and relocate employees or equipment and similar costs, expenses or reserves and (ii) and the amount of net cost savings projected by the Company in good faith to be realized as a result of specified actions taken or to be taken (calculated on a pro forma basis as though such cost savings had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions, in each case described in clauses (i) and (ii) in connection with any acquisition, recapitalization or Permitted Investment; provided that (w) any such cost savings are reasonably identifiable and factually supportable, (x) any such actions referred to in clause (ii) have been taken or are to be taken within 6 months after the date of determination to take such action, (y) no cost savings shall be added pursuant to clause (10)(ii) to the extent duplicative of any expenses or charges relating to such cost savings that are included in clause (8) or (9) above or in clause (10)(i) with respect to such period and (z) the aggregate amount of integration costs, expenses and reserves and cost savings added pursuant to this clause (10) shall not exceed $10.0 million for any four consecutive quarter period (which adjustments may be incremental to pro forma adjustments made pursuant to the clauses (2), (3) or (4) of the definition of “Consolidated Coverage Ratio”).

 

Notwithstanding the preceding sentence, clauses (2) through (10) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (2) through (10) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not

 

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been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

 

“ Consolidated Income Taxes ” means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), regardless of whether such taxes or payments are required to be remitted to any governmental authority.

 

“ Consolidated Interest Expense ” means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, plus, to the extent not included in such interest expense:

 

(1)            interest expense attributable to Capitalized Lease Obligations and the interest portion of rent expense associated with Attributable Indebtedness in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with GAAP and the interest component of any deferred payment obligations;

 

(2)            amortization of debt discount and debt issuance cost; provided, however, that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense;

 

(3)            non-cash interest expense;

 

(4)            commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

 

(5)            the interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries;

 

(6)            costs associated with Hedging Obligations (including amortization of fees); provided , however , that if Hedging Obligations result in net benefits rather than costs, such benefits shall be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits are otherwise reflected in Consolidated Net Income;

 

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

 

(8)            the product of (a) all dividends paid or payable, in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of such Person or on Preferred Stock of its Restricted Subsidiaries that are not Subsidiary Guarantors payable to a party other than the Company or a Wholly-Owned Subsidiary,

 

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times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP;

 

(9)            Receivables Fees; and

 

(10)          the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company and its Restricted Subsidiaries) in connection with Indebtedness Incurred by such plan or trust.

 

For the purpose of calculating the Consolidated Coverage Ratio, the calculation of Consolidated Interest Expense shall include all interest expense (including any amounts described in clauses (1) through (10) above) relating to any Indebtedness of the Company or any Restricted Subsidiary described in the final paragraph of the definition of “Indebtedness.”

 

For purposes of the foregoing, total interest expense will be determined (i) after giving effect to any net payments made or received by the Company and its Subsidiaries with respect to Interest Rate Agreements and (ii) exclusive of amounts classified as other comprehensive income in the balance sheet of the Company.  Notwithstanding anything to the contrary contained herein, commissions, discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to which the Company or its Restricted Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest Expense.

 

“ Consolidated Net Income ” means, for any period, the net income (loss) of the Company and its consolidated Restricted Subsidiaries determined in accordance with GAAP; provided, however , that there will not be included in such Consolidated Net Income, without duplication:

 

(1)                                   any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that:

 

(a)                                   subject to the limitations contained in clauses (3) through (10) below, the Company’s equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (2) below); and

 

(b)                                  the Company’s equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary;

 

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(2)            solely for the purpose of determining the amount available for Restricted Payments under Section 3.3(a)(c)(i) , any net income (but not loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:

 

(a)                                   subject to the limitations contained in clauses (3) through (10) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and

 

(b)                                  the Company’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;

 

(3)       any net after-tax gain (loss) realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person;

 

(4)       any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights;

 

(5)       any net after-tax gains or losses attributable to the early extinguishment or conversion of Indebtedness;

 

(6)       the effect of any non-cash items resulting from any amortization, write-up, write-down or write-off of assets (including intangible assets, goodwill and deferred financing costs in connection with any acquisition, disposition, merger, consolidation or similar transaction or any other non-cash impairment charges incurred subsequent to the Issue Date resulting from the application of Statement of Financial Accounting Standards Nos. 141, 142 or 144 (excluding any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period except to the extent such item is subsequently reversed));

 

(7)       to the extent covered by insurance and actually reimbursed, or, so long as the Company has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (a) not denied by the applicable carrier in writing within 180 days and (b) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), expenses with respect to liability or casualty events or business interruption;

 

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(8)       any extraordinary gain or loss; and

 

(9)       the cumulative effect of a change in accounting principles.

 

“ Consolidated Net Tangible Assets ” means, with respect to any Person, the consolidated total assets of such Person and its Restricted Subsidiaries less (a) all current liabilities as disclosed on the consolidated balance sheet of such Person and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other similar intangibles properly classified as intangibles in accordance with GAAP, all as shown on the most recent balance sheet for such Person and computed in accordance with GAAP.

 

“ Contingent Payment Distributions ” has the meaning set forth in Section 3.3(b)(16).

 

“ Continuing Directors ” means, as of any date of determination, any member of the Board of Directors of the Company or Holdings, as the case may be, who: (1) was a member of such Board of Directors on the Issue Date; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of the relevant Board at the time of such nomination or election.

 

“ Credit Facility ” means, with respect to the Company or any Subsidiary Guarantor, one or more debt facilities (including, without limitation, the Working Capital Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, supplemented, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (and whether or not with the original administrative agent and lenders or another administrative agent or agents or other lenders and whether provided under the original Working Capital Facility or any other credit or other agreement).

 

“ Currency Agreement ” means in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary.

 

“ Custodian ” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

 

“ Default ” means any event which is, or after notice or passage of time or both would be, an Event of Default.

 

“ Definitive Securities ” means certificated Securities.

 

“ Disqualified Stock ” means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

 

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(1)            matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

 

(2)            is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary); or

 

(3)            is redeemable at the option of the holder of the Capital Stock in whole or in part,

 

in each case on or prior to the date that is 91 days after the earlier of the date (a) of the Stated Maturity of the Securities or (b) on which there are no Securities outstanding, provided that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions in this Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Company with Sections 3.5 and 3.10 and such repurchase or redemption complies with Section 3.3 .

 

“ DTC ” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Company.

 

“ Equity Offering ” means a public offering for cash by the Company or Holdings, as the case may be, of its Common Stock, or options, warrants or rights with respect to its Common Stock, other than (x) public offerings with respect to the Company’s or Holdings’, as the case may be, Common Stock, or options, warrants or rights, registered on Form S-4 or S-8, (y) an issuance to any Subsidiary or (z) any offering of Common Stock issued in connection with a transaction that constitutes a Change of Control.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“ Exchange Securities ” has the meaning ascribed to it in the second introductory paragraph of this Indenture.

 

“ First Priority Collateral ” means the portion of the Collateral as to which the Securities have a first priority Lien.

 

“ First Priority Collateral Account ” has the meaning ascribed to it in the Note Security Agreement.

 

15

 

“ Fiscal Year ” means the fiscal year of the Company ending on February 28 or 29, as applicable, of each year.

 

“ Foreign Subsidiary ” means any Restricted Subsidiary that is not organized under the laws of the United States of America or any state thereof or the District of Columbia and any Subsidiary of such Restricted Subsidiary.

 

“ GAAP ” means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession.  All ratios and computations based on GAAP contained in this Indenture will be computed in conformity with GAAP, except that in the event the Company is acquired in a transaction that is accounted for using purchase accounting, the effects of the application of purchase accounting shall be disregarded in the calculation of such ratios and other computations contained in this Indenture.

 

“ Guarantee ” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

 

(1)            to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, to maintain financial statement conditions or otherwise); or

 

(2)            entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however , that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

 

“ Guarantor Subordinated Obligation ” means, with respect to a Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinated in right of payment to the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee pursuant to a written agreement.

 

“ Hedging Obligations ” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Agreement.

 

“ Holder ” or “ Securityholder ” means a Person in whose name a Security is registered in the Securities Register.

 

16

 

“ Holdings ” means Cellu Paper Holdings, Inc., a Delaware corporation, or any other direct or indirect parent of the Company that owns directly or indirectly 100% of the Capital Stock of the Company.

 

“ IAI ” means an institutional “accredited investor” as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

 

“ Incur ” means issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however , that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.

 

“ Indebtedness ” means, with respect to any Person on any date of determination (without duplication):

 

(1)            the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

 

(2)            the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

 

(3)            the principal component of all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation relates to a trade payable and such obligation is satisfied within 30 days of Incurrence);

 

(4)            the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except trade payables), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto;

 

(5)            Capitalized Lease Obligations and all Attributable Indebtedness of such Person;

 

(6)            the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary that is not a Subsidiary Guarantor, any Preferred Stock;

 

(7)            the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however , that the amount of such Indebtedness will be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Persons;

 

17

 

(8)            the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person;

 

(9)            to the extent not otherwise included in this definition, net obligations of such Person under Hedging Obligations (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time); and

 

(10)          to the extent not otherwise included in this definition, the amount of obligations outstanding under the legal documents entered into as part of a securitization transaction or series of transactions that would be characterized as principal if such transaction were structured as a secured lending transaction rather than as a purchase outstanding relating to a securitization transaction or series of transactions.

 

The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date.

 

In addition, “Indebtedness” of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if:

 

(1)            such Indebtedness is the obligation of a partnership or joint venture that is not a Restricted Subsidiary (a “ Joint Venture ”);

 

(2)            such Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a “ General Partner ”); and

 

(3)            there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary of such Person; and then such Indebtedness shall be included in an amount not to exceed:

 

(a)                                   the lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or

 

(b)                                  if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount.

 

“ Indenture ” means this Indenture as amended or supplemented from time to time.

 

“ Initial Purchasers ” means, collectively, J.P. Morgan Securities Inc. and Goldman, Sachs & Co. with respect to the Initial Securities.

 

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“ Initial Securities ” has the meaning ascribed to it in the second introductory paragraph of this Indenture.

 

“ Intercreditor Agreement ” means that certain Second Amended and Restated Intercreditor Agreement dated as of June 3, 2009 by and among the Company, the Subsidiary Guarantors, the Collateral Agent, on behalf of itself and the Holders, JPMorgan Chase Bank, N.A., as U. S. Administrative Agent (as therein defined), JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent (as therein defined), with respect to the Working Capital Facility, and The Bank of New York Mellon Trust Company, N.A., as Prior Agent (as therein defined), substantially in the form attached hereto as Exhibit F , as the same may be amended, supplemented or otherwise modified from time to time.

 

“ Interest Rate Agreement ” means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

 

“ Investment ” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers, suppliers, licensees or consultants in the ordinary course of business) or other extensions of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that none of the following will be deemed to be an Investment:

 

(1)            Hedging Obligations entered into in the ordinary course of business and in compliance with this Indenture; and

 

(2)            endorsements of negotiable instruments and documents in the ordinary course of business.

 

For purposes of Section 3.3 ,

 

(1)            “Investment” will include the portion (proportionate to the Company’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however , that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company’s aggregate “Investment” in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net

 

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assets (as conclusively determined by the Board of Directors of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary;

 

(2)            any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company; and

 

(3)            if the Company or any Restricted Subsidiary sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such entity is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value (as conclusively determined by the Board of Directors of the Company in good faith) of the Capital Stock of such Subsidiary not sold or disposed of.

 

“ Issue Date ” means June 3, 2009.

 

“ Lien ” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

 

“ Mortgages ” means the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents securing Liens on the Premises, as well as the other Collateral secured by and described in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents, in each case substantially in the form attached hereto as Exhibit E .

 

“ Net Available Cash ” from an Asset Disposition, Recovery Event or Asset Swap means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of:

 

(1)            all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition;

 

(2)            all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition;

 

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(3)            all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition;

 

(4)            the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition; and

 

(5)            all amounts required by the contract to be held in escrow for not more than 60 days pending determination of whether a purchase price adjustment will be made; provided that such amounts shall be included in Net Available Cash upon the earlier of (i) the release of such amounts from escrow and (ii) the date that is 60 days after the closing of the Asset Disposition.

 

“ Net Award ” means any awards or proceeds in respect of any condemnation or other eminent domain proceeding relating to any Collateral deposited in the Collateral Accounts pursuant to the Collateral Documents.

 

“ Net Cash Proceeds ” means, with respect to any issuance or sale of Capital Stock or Additional Securities, the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).

 

“ Net Insurance Proceeds ” means any awards or proceeds in respect of any casualty insurance or title insurance claim relating to any Collateral deposited in the Collateral Account pursuant to the Collateral Documents.

 

“ Non-Guarantor Restricted Subsidiary ” means any Restricted Subsidiary that is not a Subsidiary Guarantor.

 

“ Non-Recourse Debt ” means Indebtedness of a Person:

 

(1)            as to which neither the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise);

 

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

 

(3)            the explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries.

 

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“ Non-U.S. Person ” means a Person who is not a U.S. Person (as defined in Regulation S).

 

“ Note Security Agreement ” means that certain Note Security Agreement, dated as of June 3, 2009, by and among the Company, the Subsidiary Guarantors and the Collateral Agent, substantially in the form attached hereto as Exhibit D , as the same may be amended, supplemented or otherwise modified from time to time.

 

“ Offering Memorandum ” means the offering memorandum, dated May 19, 2009, relating to the offering by the Company of $255.0 million of the 11½% Senior Secured Notes, Series A, due 2014 and any future offering memoranda relating to Additional Securities.

 

“ Officer ” means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company.  Officer of any Subsidiary Guarantor has a correlative meaning.

 

“ Officers’ Certificate ” means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company.

 

“ Opinion of Counsel ” means a written opinion acceptable to the Trustee from legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel to the Company or the Trustee.

 

“ Pari Passu Indebtedness ” means Indebtedness that ranks equally in right of payment to the Securities.

 

“ Permitted Holders ” means Weston Presidio V, L.P. and any Affiliate and Related Person thereof. Any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture (or would result in a Change of Control Offer in the absence of the waiver of such requirement by holders in accordance with this Indenture) will thereafter, together with any of its Affiliates and Related Persons, constitute additional Permitted Holders.

 

“ Permitted Investment ” means an Investment by the Company or any Restricted Subsidiary in:

 

(1)            the Company, a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business;

 

(2)            another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person’s primary business is a Related Business;

 

(3)            cash and Cash Equivalents;

 

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(4)            receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however , that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

 

(5)            payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

 

(6)            loans or advances to employees, officers or directors of the Company or any Restricted Subsidiary of the Company in the ordinary course of business consistent with past practices, in an aggregate amount not in excess of $1.0 million with respect to all loans or advances made since the Issue Date (without giving effect to the forgiveness of any such loan); provided , however, that the Company and its Subsidiaries shall comply in all material respects with the provisions of the Sarbanes Oxley Act of 2002 and the rules and regulations promulgated in connection therewith relating to such loans and advances as if the Company had filed a registration statement with the SEC;

 

(7)            Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

 

(8)            Investments made as a result of the receipt of non-cash consideration from an Asset Disposition that was made pursuant to and in compliance with Section 3.5 ;

 

(9)            Investments in existence on the Issue Date;

 

(10)          Hedging Obligations, which obligations are Incurred in compliance with Section 3.2 ;

 

(11)          Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount at the time of such Investment not to exceed $5.0 million outstanding at any one time (with the fair market value of such Investment being measured at the time made and without giving effect to subsequent changes in value);

 

(12)          Guarantees issued in accordance with Section 3.2 ; and

 

(13)          any Asset Swap made in accordance with Section 3.5 .

 

“ Permitted Liens ” means, with respect to any Person:

 

(1)            Liens on any assets, real or personal, tangible or intangible, securing Indebtedness and other obligations under any Credit Facility and related Hedging Obligations and Liens on any assets, real or personal, tangible or intangible, of Restricted Subsidiaries or the Company securing Guarantees of Indebtedness and other obligations

 

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of the Company under any Credit Facility, in each case permitted to be Incurred under this Indenture pursuant to Section 3.2(b)(1) ; provided that any such Liens on First Priority Collateral shall be subordinated to the Liens securing the Securities;

 

(2)            pledges or deposits by such Person under workers’ compensation laws, unemployment insurance laws, or similar legislation or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

 

(3)            Liens imposed by law, including carriers’, warehousemen’s, mechanics’, materialmen’s and repairmen’s Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof;

 

(4)            Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings; provided that appropriate reserves required pursuant to GAAP have been made in respect thereof;

 

(5)            Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however , that such letters of credit do not constitute Indebtedness;

 

(6)            survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not individually or in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

 

(7)            Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same property securing such Hedging Obligation;

 

(8)            leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; provided that such leases, licenses, subleases and sublicenses are subordinated to the Liens on the Collateral that secure the Securities;

 

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(9)            judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

 

(10)          Liens for the purpose of securing Indebtedness represented by Capitalized Lease Obligations, mortgage financings, purchase money obligations or other payments Incurred to finance all or any part of the purchase price or cost of construction or improvement of assets or property (other than Capital Stock or other Investments) acquired, constructed or improved in the ordinary course of business of the Company and the Subsidiary Guarantors; provided that:

 

(a)                                   the aggregate principal amount of Indebtedness secured by such Liens pursuant to this clause (10) is otherwise permitted to be Incurred under this Indenture, does not exceed at any time outstanding the greater of $20.0 million and 5.0% of Consolidated Net Tangible Assets of the Company and does not exceed the cost of the assets or property so acquired or constructed; and

 

(b)                                  such Liens are created within 180 days of construction, acquisition or improvement of such assets or property and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

 

(11)          Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that:

 

(a)                                   such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board; and

 

(b)                                  such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;

 

(12)          Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

 

(13)          Liens existing on the Issue Date (other than Liens permitted under clause (1));

 

(14)          Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however , that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however , that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary;

 

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(15)          Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided, however , that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however , that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary;

 

(16)          Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary;

 

(17)          Liens securing the Securities (and any Additional Securities issued pursuant to, and in accordance with, the terms of this Indenture) and Subsidiary Guarantees or any obligations owing to the Trustee or the Collateral Agent under this Indenture, the Collateral Documents or the Intercreditor Agreement;

 

(18)          Liens securing Refinancing Indebtedness Incurred to refinance, refund, replace, amend, extend or modify, as a whole or in part, Indebtedness that was previously so secured pursuant to clauses (13), (14), (15), (17) and (18) of this definition; provided that (a) any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder and (b) any such Lien is no less favorable to the Holders of the Securities and is no more favorable to the lienholder with respect to such Lien than the Lien in respect of the Indebtedness being refinanced;

 

(19)          any interest or title of a lessor under any Capitalized Lease Obligation or operating lease;

 

(20)          Liens on property of the Company or any Restricted Subsidiary that are the subject of a Sale/Leaseback Transaction securing Attributable Indebtedness Incurred in connection with such Sale/Leaseback Transaction; provided that the Net Available Cash from such Sale/Leaseback Transaction are applied in accordance with Section 3.5 ;

 

(21)          Liens on the assets and property of Cellu Tissue—CityForest LLC securing industrial revenue bonds in an amount not to exceed $17.2 million; and

 

(22)          Liens securing Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations) in an aggregate principal amount outstanding at any one time not to exceed the greater of $30.0 million and 7.5% of Consolidated Net Tangible Assets of the Company.

 

“ Person ” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity.

 

“ Predecessor Security ” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and,

 

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for the purposes of this definition, any Security authenticated and delivered under Section 2.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

 

“ Preferred Stock ,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

 

“ QIB ” means any “qualified institutional buyer” as such term is defined in Rule 144A.

 

“ Receivable ” means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall include, in any event, any items of property that would be classified as an “account,” “chattel paper,” “payment intangible” or “instrument” under the Uniform Commercial Code as in effect in the State of New York and any “supporting obligations” as so defined.

 

“ Receivables Fees ” means any fees or interest paid to purchasers or lenders providing the financing in connection with a securitization transaction, factoring agreement or other similar agreement, including any such amounts paid by discounting the face amount of Receivables or participations therein transferred in connection with a securitization transaction, factoring agreement or other similar arrangement, regardless of whether any such transaction is structured as on-balance sheet or off-balance sheet or through a Restricted Subsidiary or an Unrestricted Subsidiary.

 

“ Recovery Event ” means any event, occurrence, claim or proceeding that results in any Net Award or Net Insurance Proceeds being deposited into the Collateral Accounts pursuant to the Collateral Documents.

 

“ Redemption Date ” means, with respect to any redemption of Securities, the date of redemption with respect thereto.

 

“ Refinancing Indebtedness ” means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, “refinance,” “refinances” and “refinanced” shall each have a correlative meaning) any Indebtedness existing on the Issue Date or Incurred in compliance with this Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided, however , that:

 

(1)            (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Securities, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if

 

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the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Securities, the Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Securities;

 

(2)            the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced;

 

(3)            such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and fees and expenses Incurred in connection therewith);

 

(4)            if the Indebtedness being refinanced is subordinated in right of payment to the Securities or the Subsidiary Guarantees, such Refinancing Indebtedness is subordinated in right of payment to the Securities or the Subsidiary Guarantees on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being refinanced; and

 

(5)            if the Indebtedness being refinanced is secured, the Lien securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured is not materially less favorable to the Holders of the Securities and is not materially more favorable to the lienholder with respect to such Lien than the Lien in respect of the Indebtedness being refinanced.

 

“ Registration Rights Agreement ” means that certain registration rights agreement dated as of the Issue Date by and among the Company, the Subsidiary Guarantors and the initial purchasers set forth therein and, with respect to any Additional Securities, one or more substantially similar registration rights agreements among the Company and the other parties thereto, as such agreements may be amended from time to time.

 

“ Regulation S ” means Regulation S under the Securities Act.

 

“ Related Business ” means any business which is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the Issue Date.

 

“ Related Business Assets ” means assets used or useful in a Related Business.

 

“ Related Person ” with respect to any Permitted Holder means:

 

(1)            any controlling stockholder or a majority (or more) owned Subsidiary of such Permitted Holder or, in the case of an individual, any spouse or immediate family member of such Permitted Holder, any trust created for the benefit of such individual or such individual’s estate, executor, administrator, committee or beneficiaries; or

 

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(2)                                   any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority (or more) controlling interest of which consist of such Permitted Holder and/or such other Persons referred to in the immediately preceding clause (1).

 

“ Restoration ” has the meaning ascribed to it in the applicable Collateral Document.

 

“ Restricted Investment ” means any Investment other than a Permitted Investment.

 

“ Restricted Securities ” means Initial Securities and Additional Securities bearing one of the restrictive legends described in Section 2.1(d) .

 

“ Restricted Securities Legend ” means the legend set forth in Section 2.1(d)(1)  and, in the case of the Temporary Regulation S Global Note, the legend set forth in Section 2.1(d)(2) .

 

“ Restricted Subsidiary ” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

 

“ Rule 144A ” means Rule 144A under the Securities Act.

 

“ Sale/Leaseback Transaction ” means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.

 

“ SEC ” means the United States Securities and Exchange Commission.

 

“ Second Priority Collateral ” means the portion of the Collateral as to which the Securities have a second-priority Lien.

 

“ Second Priority Collateral Account ” has the meaning ascribed to it in the Note Security Agreement.

 

“ Securities ” has the meaning ascribed to it in the second introductory paragraph of this Indenture.

 

“ Securities Act ” means the Securities Act of 1933 (15 U.S.C. §§ 77a-77aa), as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“ Securities Custodian ” means the custodian with respect to the Global Security (as appointed by DTC), or any successor Person thereto and shall initially be the Trustee.

 

“ Shelf Registration Statement ” shall have the meaning set forth in the Registration Rights Agreement.

 

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“ Significant Subsidiary ” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

 

“ Stated Maturity ” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any date on which the payment of principal of such security is due and payable as a result of any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

 

“ Subordinated Obligation ” means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinated or junior in right of payment to the Securities pursuant to a written agreement.

 

“ Subsidiary ” of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.  Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

 

“ Subsidiary Guarantee ” means, individually, any Guarantee of payment of the Securities and the Exchange Securities issued in a registered exchange offer pursuant to the Registration Rights Agreement by a Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto, and, collectively, all such Guarantees.  Each such Subsidiary Guarantee will be in the form prescribed by this Indenture.

 

“ Subsidiary Guarantor ” means each Restricted Subsidiary in existence on the Issue Date that provides a Subsidiary Guarantee on the Issue Date and any other Restricted Subsidiary that provides a Subsidiary Guarantee in accordance with this Indenture; provided that upon release or discharge of such Restricted Subsidiary from its Subsidiary Guarantee in accordance with this Indenture, such Restricted Subsidiary ceases to be a Subsidiary Guarantor.

 

“ TIA ” or “ Trust Indenture Act ” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as in effect on the date of this Indenture.

 

“ Trustee ” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

 

“ Trust Officer ” shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, secretary, assistant treasurer, trust officer or any other officer of the Trustee who

 

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customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

 

“ Unrestricted Subsidiary ” means:

 

(1)                                   any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

 

(2)                                   any Subsidiary of an Unrestricted Subsidiary.

 

The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if:

 

(1)                                   such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;

 

(2)                                   all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse Debt;

 

(3)                                   such designation and the Investment of the Company in such Subsidiary complies with Section 3.3 ;

 

(4)                                   such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Company and its Subsidiaries;

 

(5)                                   such Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation:

 

(a)                                   to subscribe for additional Capital Stock of such Person; or

 

(b)                                  to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

 

(6)                                   on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms substantially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company.

 

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Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a Board Resolution of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complies with the foregoing conditions.  If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.

 

The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Company could Incur at least $1.00 of additional Indebtedness under Section 3.2(a)  on a pro forma basis taking into account such designation.

 

“ U.S. Government Obligations ” means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.

 

“ Voting Stock ” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors, managers or trustees, as applicable.

 

“ Wholly-Owned Subsidiary ” means a Restricted Subsidiary, all of the Capital Stock of which (other than directors’ qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.

 

“ Working Capital Facility ” means the Credit Agreement, dated as of June 12, 2006, among the Company, as U.S. borrower, Interlake Acquisition Corporation Limited, a subsidiary of the Company, as Canadian borrower, the loan guarantors party thereto, JPMorgan Chase Bank, N.A., as U.S. administrative agent, JPMorgan Chase Bank, N.A. Toronto Branch, as Canadian administrative agent, and the lenders party thereto, as the same may be amended, supplemented, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (and whether or not with the original agent and lenders or another agent or agents or other lenders).

 

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SECTION 1.2.   Other Definitions.

 

Term		Defined in Section
“Additional Amounts”		5.9(a)
“Additional Restricted Securities”		2.1(b)
“Affiliate Transaction”		3.8
“Agent Members”		2.1(e)(iii)
“Asset Disposition Offer Amount”		3.5(c)
“Asset Disposition Offer Period”		3.5(c)
“Asset Disposition Offer”		3.5(b)
“Asset Disposition Purchase Date”		3.5(c)
“Authenticating Agent”		2.2
“Change in Tax Law”		5.9(b)
“Change of Control Offer”		3.10
“Change of Control Payment”		3.10(1)
“Change of Control Payment Date”		3.10(2)
“Clearstream”		2.1(b)
“Collateral Disposition Offer”		3.5(a)
“Company Order”		2.2
“Contingent Payment Distributions”		3.3(b)(16)
“covenant defeasance option”		8.1(b)
“cross acceleration provision”		6.1(6)(b)
“Defaulted Interest”		2.14
“Euroclear”		2.1(b)
“Event of Default”		6.1

 

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Term		Defined in Section
“Excess Collateral Proceeds”		3.5(a)
“Excess Proceeds”		3.5(b)
“Exchange Global Note”		2.1(b)
“General Partner”		1.1
“Global Securities”		2.1(b)
“Institutional Accredited Investor Global Notes”		2.1(b)
“Institutional Accredited Investor Note”		2.1(b)
“Joint Venture”		1.1
“judgment default provision”		6.1(9)
“legal defeasance option”		8.1(b)
“Legal Holiday”		12.8
“Obligations”		10.1
“Paying Agent”		2.3
“Payment Default”		6.1(6)(a)
“Payor”		5.9(a)
“Permanent Regulation S Global Note”		2.1(b)
“Premises”		11.5
“protected purchaser”		2.10
“Registrar”		2.3
“Regulation S Global Note”		2.1(b)
“Regulation S Notes”		2.1(b)
“Relevant Tax Jurisdiction”		5.9(a)
“Resale Restriction Termination Date”		2.6(b)

 

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Term		Defined in Section
“Restricted Global Note”		2.6(e)
“Restricted Payment”		3.3(a)(4)
“Restricted Period”		2.1(b)
“Rule 144A Global Note”		2.1(b)
“Rule 144A Notes”		2.1(b)
“Securities Register”		2.3
“Special Interest Payment Date”		2.14(a)
“Special Record Date”		2.14(a)
“substantially concurrent sale”		3.3(b)
“Successor Company”		4.1(1)
“Temporary Regulation S Global Note”		2.1(b)
“Unrestricted Global Note”		2.6(e)

 

SECTION 1.3.   Incorporation by Reference of Trust Indenture Act .  This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture.  The following TIA terms have the following meanings:

 

“Commission” means the SEC.

 

“indenture securities” means the Securities.

 

“indenture security holder” means a Securityholder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means the Trustee.

 

“obligor” on the indenture securities means the Company and any other obligor on the indenture securities.

 

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

 

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SECTION 1.4.   Rules of Construction .  Unless the context otherwise requires:

 

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

 

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

 

(3)           “or” is not exclusive;

 

(4)           “including” means including without limitation;

 

(5)           words in the singular include the plural and words in the plural include the singular;

 

(6)           the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;

 

(7)           the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater;

 

(8)           all amounts expressed in this Indenture or in any of the Securities in terms of money refer to the lawful currency of the United States of America; and

 

(9)           the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

 

ARTICLE II

 

THE SECURITIES

 

SECTION 2.1.   Form, Dating and Terms .

 

(a)  The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited.  The Initial Securities issued on the date hereof will be in an aggregate principal amount of $255,000,000.  In addition, the Company may issue, from time to time in accordance with the provisions of this Indenture , Additional Securities (as provided herein) and Exchange Securities.  Furthermore, Securities may be authenticated and delivered upon registration of transfer, exchange or in lieu of, other Securities pursuant to Section 2.2 , 2.6 , 2.10 , 2.12 , 5.8 or 9.5 , in connection with a Collateral Disposition Offer or Asset Disposition Offer pursuant to Section 3.5 or in connection with a Change of Control Offer pursuant to Section 3.10 .

 

Notwithstanding anything to the contrary contained herein, the Company may not issue any Additional Securities, unless:

 

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(1)           Immediately after giving effect to such issuance, no Default or Event of Default shall have occurred and be continuing;

 

(2)           Immediately after giving effect to such issuance, the Company would be able to Incur at least an additional $1.00 of Indebtedness pursuant to Section 3.2(a) ; and

 

(3)           The Net Cash Proceeds from any such issuance shall be deposited into the First Priority Collateral Account and invested by the Company in Additional Assets, which Additional Assets are thereupon with their acquisition added to the First Priority Collateral securing the Securities in accordance with Section 11.7(c) ; provided that, prior to such investment (and any related withdrawal from the First Priority Collateral Account), the Company shall have delivered to the Trustee an Officers’ Certificate stating that the funds to be withdrawn from the First Priority Collateral Account are to be invested in Additional Assets in compliance with this clause (3).

 

The Initial Securities shall be known and designated as “11½% Senior Secured Notes, Series A, due 2014” of the Company.  Additional Securities issued as Restricted Securities shall be known and designated as “11½% Senior Secured Notes, Series A, due 2014” of the Company.  Additional Securities issued other than as Restricted Securities shall be known and designated as “11½% Senior Secured Notes, Series B, due 2014” of the Company, and Exchange Securities shall be known and designated as “11½% Senior Secured Notes, Series B, due 2014” of the Company.

 

With respect to any Additional Securities, the Company shall set forth in (a) a Board Resolution and (b) (i) an Officers’ Certificate or (ii) one or more indentures supplemental hereto, the following information:

 

(1)                                   the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture;

 

(2)                                   the issue price and the issue date of such Additional Securities, including the date from which interest shall accrue; and

 

(3)                                   whether such Additional Securities shall be Restricted Securities issued in the form of Exhibit A hereto and/or shall be issued in the form of Exhibit B hereto.

 

In authenticating and delivering Additional Securities, the Trustee shall be entitled to receive and shall be fully protected in relying upon, in addition to the Opinion of Counsel and Officers’ Certificate required by Section 12.4 , an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Securities.

 

The Initial Securities, the Additional Securities and the Exchange Securities shall be considered collectively as a single class for all purposes of this Indenture.  Holders of the Initial Securities, the Additional Securities and the Exchange Securities will vote and consent together on all matters to which such Holders are entitled to vote or consent as one class, and none of the Holders of the Initial Securities, the Additional Securities or the Exchange Securities

 

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shall have the right to vote or consent as a separate class on any matter to which such Holders are entitled to vote or consent.

 

If any of the terms of any Additional Securities are established by action taken pursuant to Board Resolutions of the Company, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers’ Certificate or the indenture supplemental hereto setting forth the terms of the Additional Securities.

 

(b)  The Initial Securities are being offered and sold by the Company pursuant to a Purchase Agreement, dated May 19, 2009, among the Company, the Subsidiary Guarantors, J.P. Morgan Securities Inc. and the other initial purchasers named therein.  The Initial Securities and any Additional Securities (if issued as Restricted Securities) (the “ Additional Restricted Securities ”) will be resold initially only to (A) QIBs in reliance on Rule 144A and (B) Non-U.S. Persons in reliance on Regulation S.  Such Initial Securities and Additional Restricted Securities may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and IAIs in accordance with Rule 501 of the Securities Act, in each case, in accordance with the procedure described herein.  Additional Securities offered after the date hereof may be offered and sold by the Company from time to time pursuant to one or more purchase agreements in accordance with applicable law.

 

Initial Securities and Additional Restricted Securities offered and sold to QIBs in the United States of America in reliance on Rule 144A (the “ Rule 144A Notes ”) shall be issued in the form of a permanent global Security substantially in the form of Exhibit A , which is hereby incorporated by reference and made a part of this Indenture, including appropriate legends as set forth in Section 2.1(d)  (the “ Rule 144A Global Note ”), deposited with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided.  The Rule 144A Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate.  The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

 

Initial Securities and any Additional Restricted Securities offered and sold outside the United States of America (the “ Regulation S Notes ”) in reliance on Regulation S shall initially be issued in the form of a temporary global Security (the “ Temporary Regulation S Global Note ”), without interest coupons.  Beneficial interests in the Temporary Regulation S Global Note will be exchanged for beneficial interests in a corresponding permanent global Security, without interest coupons, substantially in the form of Exhibit A including appropriate legends as set forth in Section 2.1(d)  (the “ Permanent Regulation S Global Note ” and, together with the Temporary Regulation S Global Note, each a “ Regulation S Global Note ”) within a reasonable period after the expiration of the Restricted Period (as defined below) upon delivery of the certification contemplated by Section 2.7 .  Each Regulation S Global Note will be deposited upon issuance with, or on behalf of, the Trustee as custodian for DTC in the manner described in this Article II for credit to the respective accounts of the purchasers (or to such other accounts as they may direct), including, but not limited to, accounts at Euroclear Bank S.A./N.V. (“ Euroclear ”) or Clearstream Banking, société anonyme (“ Clearstream ”).  Prior to the 40th day

 

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after the later of the commencement of the offering of the Initial Securities and the Issue Date (such period through and including such 40th day, the “ Restricted Period ”), interests in the Temporary Regulation S Global Note may only be transferred to non-U.S. persons pursuant to Regulation S, unless exchanged for interests in a Global Security in accordance with the transfer and certification requirements described herein.

 

Investors may hold their interests in the Regulation S Global Note through organizations other than Euroclear or Clearstream that are participants in DTC’s system or directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations which are participants in such systems.  If such interests are held through Euroclear or Clearstream, Euroclear and Clearstream will hold such interests in the applicable Regulation S Global Note on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositaries.  Such depositaries, in turn, will hold such interests in the applicable Regulation S Global Note in customers’ securities accounts in the depositaries’ names on the books of DTC.

 

The Regulation S Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate.  The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

 

Initial Securities and Additional Restricted Securities resold to IAIs (the “ Institutional Accredited Investor Notes ”) in the United States of America shall be issued in the form of a permanent global Security substantially in the form of Exhibit A including appropriate legends as set forth in Section 2.1(d)  (the “ Institutional Accredited Investor Global Note ”) deposited with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided.  The Institutional Accredited Investor Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate.  The aggregate principal amount of the Institutional Accredited Investor Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

 

Exchange Securities exchanged for interests in the Rule 144A Notes, the Regulation S Notes and the Institutional Accredited Investor Notes will be issued in the form of a permanent global Security, substantially in the form of Exhibit B , which is hereby incorporated by reference and made a part of this Indenture, deposited with the Trustee as hereinafter provided, including the appropriate legend set forth in Section 2.1(d)  (the “ Exchange Global Note ”).  The Exchange Global Note will be deposited upon issuance with, or on behalf of, the Trustee as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Exchange Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate.

 

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The Rule 144A Global Note, the Regulation S Global Note, the Institutional Accredited Investor Global Note and the Exchange Global Note are sometimes collectively herein referred to as the “ Global Securities .”

 

The principal of (and premium, if any) and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to Section 2.3 ; provided, however, that, at the option of the Company, each installment of interest may be paid by (i) check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Securities Register or (ii) wire transfer to an account located in the United States maintained by the payee, subject to the last sentence of this paragraph.  Payments in respect of Securities represented by a Global Security (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by DTC.  Payments in respect of Securities represented by Definitive Securities (including principal, premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate principal amount of Securities represented by Definitive Securities will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

 

The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on Exhibit A and Exhibit B and in Section 2.1(d) .  The Company shall approve any notation, endorsement or legend on the Securities.  Each Security shall be dated the date of its authentication.  The terms of the Securities set forth in Exhibit A and Exhibit B are part of the terms of this Indenture and, to the extent applicable, the Company, the Subsidiary Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms.

 

(c)  Denominations .  The Securities shall be issuable only in fully registered form, without coupons, and only in denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

 

(d)  Restrictive Legends .  Unless and until (i) an Initial Security or an Additional Security issued as a Restricted Security is sold under an effective registration statement or (ii) an Initial Security or an Additional Security issued as a Restricted Security is exchanged for an Exchange Security in connection with an effective registration statement, in each case pursuant to the Registration Rights Agreement or a similar agreement:

 

(1) the Rule 144A Global Note, the Regulation S Global Note and the Institutional Accredited Investor Global Note shall bear the following legend on the face thereof:

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,

 

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ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS [ IN THE CASE OF RULE 144A GLOBAL NOTE AND THE INSTITUTIONAL ACCREDITED INVESTOR NOTE: ONE YEAR] [ IN THE CASE OF THE REGULATION S GLOBAL NOTE : 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR (WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF NOTES OF $250,000, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO CLAUSE (E) OR (F) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

 

BY ITS ACQUISITION OF THIS SECURITY THE HOLDER AND ANY SUBSEQUENT TRANSFEREE HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY SUCH HOLDER OR ANY TRANSFEREE TO ACQUIRE AND

 

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HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE ACQUISITION AND HOLDING OF THIS SECURITY BY SUCH HOLDER OR TRANSFEREE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

 

(2)   t