SECOND AMENDED AND RESTATED CREDIT AGREEMENT

EXHIBIT 10.1

 

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

Dated as of November 3, 2006,

Among

HEXION LLC,

HEXION SPECIALTY CHEMICALS, INC.,

as U.S. Borrower,

HEXION SPECIALTY CHEMICALS CANADA, INC.,

as Canadian Borrower,

HEXION SPECIALTY CHEMICALS B.V.,

as Dutch Borrower,

HEXION SPECIALTY CHEMICALS UK LIMITED

and

BORDEN CHEMICAL UK LIMITED,

as U.K. Borrowers,

THE LENDERS PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent, and

CREDIT SUISSE,

as Syndication Agent

 

J.P. MORGAN SECURITIES INC.

and

CREDIT SUISSE SECURITIES (USA) LLC,

as Joint Lead Arrangers and Joint Bookrunners

 

TABLE OF CONTENTS

 

 

- i -

 

- ii -

 

- iii -

Exhibits and Schedules

 

 

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 3, 2006 (this “ Agreement ”), among HEXION LLC, a Delaware limited liability company (“ Holdings ”), HEXION SPECIALTY CHEMICALS, INC., a New Jersey corporation (the “ U.S. Borrower ”), HEXION SPECIALTY CHEMICALS CANADA, INC., a Canadian corporation (the “ Canadian Borrower ”), HEXION SPECIALTY CHEMICALS B.V., a company organized under the laws of The Netherlands (the “ Dutch Borrower ”), HEXION SPECIALTY CHEMICALS UK LIMITED, a corporation organized under the laws of England and Wales, and BORDEN CHEMICAL UK LIMITED, a corporation organized under the laws of England and Wales (together, the “ U.K. Borrowers ” and, together with the U.S. Borrower, the Canadian Borrower and the Dutch Borrower, the “ Borrowers ”), the LENDERS party hereto from time to time, JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders, CREDIT SUISSE, as syndication agent (in such capacity, the “ Syndication Agent ”), and J.P. MORGAN SECURITIES INC. and CREDIT SUISSE SECURITIES (USA) LLC as joint lead arrangers and joint bookrunners (in such capacity, the “ Joint Lead Arrangers ”).

Subject to the satisfaction or waiver of the conditions set forth in the Amendment Agreement dated as of November 3, 2006 (the “ Amendment Agreement ”), among Holdings, the Borrowers, the Required Amendment Lenders (as defined therein) and JPMorgan Chase Bank, N.A., as administrative agent, the May 2006 Credit Agreement (as defined below) shall be amended and restated as provided herein.

ARTICLE I

Definitions

SECTION 1.01. Defined Terms . As used in this Agreement, the following terms shall have the meanings specified below:

“ 2005 Credit Agreement ” shall mean the Credit Agreement dated as of May 31, 2005 among Holdings, the Borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Citicorp North America, Inc., as syndication agent, and Credit Suisse, as documentation agent.

“ 2005 Transaction Agreement ” shall mean the Transaction Agreement dated as of April 22, 2005 among the Combination Parties (as defined in the 2005 Credit Agreement).

“ 2005 Transaction Documents ” shall mean the Combination Documents, the PIK Preferred Stock Documents, the Bakelite Acquisition Agreement and the Loan Documents (as defined in the 2005 Credit Agreement).

“ 2005 Transactions ” shall mean, collectively, the transactions to occur pursuant to the 2005 Transaction Documents, including (a) the Combination; (b) the execution and delivery of the Loan Documents (as defined in the 2005 Credit Agreement) and the initial borrowings thereunder; (c) the Equity Financing; (d) the repayment of the Bakelite Bridge Facility; and (e) the payment of all fees and expenses in connection therewith to be paid on, prior to or subsequent to the Closing Date and owing in connection with the foregoing.

“ ABR ” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus  ¹ / 2 of 1%. For purposes hereof: “ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors). Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

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

“ ABR Loan ” shall mean any ABR Term Loan, any ABR Revolving Loan or any Swingline Loan to the U.S. Borrower.

“ ABR Revolving Borrowing ” shall mean a Borrowing comprised of ABR Revolving Loans.

“ ABR Revolving Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.

“ ABR Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.

“ Acquired Assets ” shall mean, for any fiscal year, the total purchase price of assets acquired pursuant to Permitted Business Acquisitions after the Closing Date through the end of such fiscal year determined in accordance with GAAP; provided that if a Permitted Business Acquisition is not consummated during the first quarter of a fiscal year, Acquired Assets for such fiscal year shall be determined by multiplying the amount attributable to such Permitted Business Acquisition by (i) 0.75 if such Permitted Business Acquisition is consummated during the second quarter of such fiscal year, (ii) 0.50 if such Permitted Business Acquisition is consummated during the third quarter of such fiscal year and (iii) 0.25 if such Permitted Business Acquisition is consummated during the fourth quarter of such fiscal year.

“ Acquired Assets Amount ” shall have the meaning assigned to such term in Section 6.10(a).

“ Additional Mortgage ” shall have the meaning assigned to such term in Section 5.10(c).

 

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“ Adjusted Eurocurrency Rate ” shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) (i) for any Eurocurrency Borrowing denominated in U.S. Dollars or Sterling, the LIBO Rate, or (ii) for any Eurocurrency Borrowing denominated in euros, the EURO LIBO Rate, in each case in effect for such Interest Period divided by (b) one minus the Statutory Reserves applicable to such Eurocurrency Borrowing, if any.

“ Adjustment Date ” shall have the meaning assigned to such term in the definition of the term “Applicable Margin.”

“ Administrative Agent ” shall mean JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder, or, as applicable, such Affiliates thereof as it shall from time to time designate for the purpose of performing its obligations hereunder in such capacity, including initially (a) with respect to a Loan or Borrowing made to the Dutch Borrower or a U.K. Borrower, J.P. Morgan Europe Limited, and (b) with respect to a Loan or Borrowing made to, or a B/A Drawing drawn by, the Canadian Borrower, JPMorgan Chase Bank, N.A., Toronto Branch. References to the “ Administrative Agent ” shall also include J.P. Morgan Europe Limited or any other Affiliate of JPMorgan Chase Bank, N.A. or any other person designated by JPMorgan Chase Bank, N.A., in each case acting in its capacity as “ Security Trustee ”, “ Trustee ” or “ Agent ” under any Security Document relating to collateral provided under the laws of any United Kingdom jurisdiction, or acting in any similar capacity under any other Security Document under the laws of the United States or any other jurisdiction. Notwithstanding the foregoing, for purposes of Section 9.20, the term “Administrative Agent” shall mean JPMorgan Chase Bank, N.A. and any successor agent appointed pursuant to Section 8.09.

“ Administrative Agent Fees ” shall have the meaning assigned to such term in Section 2.13(e).

“ Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit B or in such other form as may be supplied by the Administrative Agent.

“ Affiliate ” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.

“ Affiliate Authorization ” means each Affiliate Authorization delivered by any Affiliate of a Lender to the Administrative Agent substantially in the form of Exhibit C.

“ AFS ” shall mean the Act on the Financial Supervision ( Wet op het financieel toezicht ).

“ Agent Parties ” shall have the meaning assigned to such term in Section 9.18(c).

“ Agents ” shall mean the Administrative Agent and the Syndication Agent.

“ Agreement ” shall have the meaning assigned to such term in the preamble hereto.

 

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“ Alternative Currency ” shall mean Sterling, Kronor, euros, Canadian Dollars, Japanese Yen or any other foreign currency reasonably acceptable to the applicable Issuing Bank that is freely available, freely transferable and freely convertible into U.S. Dollars, provided that the aggregate amount of L/C Exposure in all such foreign currencies (other than Sterling, Kronor, euros, Japanese Yen and Canadian Dollars) shall not exceed $25,000,000.

“ Alternative Currency Letter of Credit ” shall mean a Letter of Credit denominated in an Alternative Currency.

“ Alternative Currency Revolving L/C Exposure ” shall mean Revolving L/C Exposure related to Alternative Currency Letters of Credit.

“ Amendment Agreement ” shall have the meaning assigned to such term in the preamble to this Agreement.

“ Amendment Effective Date ” shall have the meaning assigned to such term in the Amendment Agreement.

“ Applicable Margin ” shall mean for any day, (i) with respect to any Term Loan, 2.50% per annum in the case of any Eurocurrency Loan and 1.00% per annum in the case of any ABR Loan or Base Rate Loan and (ii) with respect to any Revolving Facility Loan or Swingline Loan, as the case may be, the applicable margin per annum set forth below under the caption “Applicable Margin for ABR/Base Rate Revolving Loans and ABR Swingline Loans” or “Applicable Margin for Eurocurrency Revolving Loans and Base Rate Swingline Loans”, as applicable, based upon the Consolidated Leverage Ratio as of the most recent determination date.

Applicable Margins for Revolving Loans and Swingline Loans

 

For the purposes of the foregoing relating to Revolving Loans and Swingline Loans, changes in the Applicable Margin resulting from changes in the Consolidated Leverage Ratio shall become effective on the date (the “ Adjustment Date ”) that is three Business Days after the date on which financial statements are delivered to the Lenders pursuant to Section 5.04, and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 5.04, then, until the date that is three Business Days after the date on which such financial statements are

 

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delivered, the highest rate set forth in each column of the pricing grid shall apply. In addition, at all times while a Default or an Event of Default shall have occurred and be continuing, the highest rate set forth in each column of the pricing grid shall apply.

“ Approved Fund ” shall have the meaning assigned to such term in Section 9.04(b).

“ Asset Disposition ” shall mean any sale, transfer or other disposition by Holdings (prior to a Qualified IPO), the U.S. Borrower or any of the Subsidiaries to any person other than Holdings (prior to a Qualified IPO), the U.S. Borrower or any Subsidiary to the extent otherwise permitted hereunder of any asset or group of related assets (other than inventory or other assets sold, transferred or otherwise disposed of in the ordinary course of business) in one or a series of related transactions, the Net Proceeds from which exceed $1.0 million.

“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent and the U.S. Borrower (if required by Section 9.04), in the form of Exhibit A or such other form as shall be approved by the Administrative Agent.

“ Availability Period ” shall mean (a) with respect to the Canadian Tranche Commitments, the period from and including the Closing Date to but excluding the earlier of the Revolving Facility Maturity Date and in the case of each of the Canadian Tranche Revolving Facility Loans, Canadian Tranche Revolving Borrowings and Canadian Tranche Letters of Credit, the date of termination of the Canadian Tranche Commitments, (b) with respect to the European Tranche Commitments, the period from and including the Closing Date to but excluding the earlier of the Revolving Facility Maturity Date and in the case of each of the European Tranche Revolving Facility Loans, European Tranche Revolving Borrowings, Swingline Loans, Swingline Borrowings and European Tranche Letters of Credit, the date of termination of the European Tranche Commitments, (c) with respect to the U.S. Tranche Commitments, the period from and including the Closing Date to but excluding the earlier of the Revolving Facility Maturity Date and in the case of each of the U.S. Tranche Revolving Facility Loans and U.S. Tranche Revolving Borrowings, the date of termination of the U.S. Tranche Commitments and (d) with respect to the Tranche C-3 Credit-Linked Deposits, the period from and including the Closing Date to but excluding the earlier of the Tranche C-3 Maturity Date and the date on which all of the Tranche C-3 Credit-Linked Deposits are returned to the Tranche C-3 Lenders.

“ Available Investment Basket Amount ” shall mean, on any date of determination, an amount equal to (a) the Cumulative Retained Excess Cash Flow Amount on such date of determination plus (b) the aggregate amount of proceeds received after the Closing Date and prior to such date of determination that would have constituted Net Proceeds pursuant to clause (a) of the definition thereof except for the operation of clause (x) or (y) of the second proviso thereof (the “ Below-Threshold Asset Sale Proceeds ”), plus (c) the cumulative amount of proceeds (including cash and the fair market value of property other than cash) from the sale or issuance of Equity Interests of Holdings (after the Closing Date and prior to a Qualified IPO) (which proceeds have been contributed as common equity to the capital of the U.S. Borrower) or of the U.S. Borrower (other than any such proceeds that are (i) received pursuant to the exercise

 

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of a Cure Right pursuant to Section 7.03, (ii) received pursuant to (A) sales of Equity Interests financed as contemplated by 6.04(e) or (B) contributions made pursuant to 6.06(m) (other than contributions in excess of the amount of the dividends and distributions made by the U.S. Borrower to fund the applicable Investment pursuant to 6.06(m)) or (iii) used for Dividends pursuant to Section 6.06(e)), plus (d) 100% of the aggregate amount of contributions to the common capital of the U.S. Borrower received in cash (and the fair market value of property other than cash) after the Closing Date (subject to the same exclusions as are applicable to clause (c) above, and without duplication of any amounts included in the Available Investment Basket Amount pursuant to clause (c) above); provided that the U.S. Borrower and its Subsidiaries shall be in Pro Forma Compliance, plus (e) the principal amount of any Indebtedness (including the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock) of the U.S. Borrower or any Subsidiary thereof issued after the Closing Date (other than Indebtedness issued to the U.S. Borrower or any Subsidiary), which has been converted into or exchanged for Equity Interests (other than Disqualified Stock) in the U.S. Borrower or Holdings (prior to a Qualified IPO), plus (f) without duplication of any amounts included in the Cumulative Retained Excess Cash Flow Amount pursuant to clause (a) above, 100% of the aggregate amount received by the U.S. Borrower or any Subsidiary in cash (and the fair market value of property other than cash received by the U.S. Borrower or any Subsidiary) after the Closing Date from: (A) the sale (other than to the U.S. Borrower or any Subsidiary) of the Equity Interests of an Unrestricted Subsidiary, or (B) any dividend or other distribution by an Unrestricted Subsidiary, minus (g) any amounts thereof used to make Investments pursuant to Section 6.04(b)(y) after the Closing Date and on or prior to such date, minus (h) any amounts thereof used to make Investments pursuant to Section 6.04(j)(ii) after the Closing Date and on or prior to such date, minus (i) the aggregate amount of Capital Expenditures made after the Closing Date and on or prior to such date pursuant to Section 6.10(c), minus (j) the cumulative amount of dividends paid and distributions made pursuant to Section 6.06(f)(iii) after the Closing Date and on or prior to such date; provided , however , for purposes of Section 6.06(f)(iii), the calculation of the Available Investment Basket Amount shall not include any Below-Threshold Asset Sale Proceeds except to the extent they are used as contemplated in clauses (g), (h) and (i) above.

“ Available Unused Commitment ” shall mean, with respect to a Revolving Facility Lender at any time, an amount equal to the amount by which (a) the aggregate amount of the Revolving Facility Commitment of such Revolving Facility Lender at such time exceeds (b) the Revolving Facility Exposure of such Revolving Facility Lender at such time.

“ B/A ” shall mean a bill of exchange governed by the Bills of Exchange Act (Canada) or a depository bill issued in accordance with the Depository Bills and Notes Act (Canada), denominated in Canadian Dollars, drawn by the Canadian Borrower and accepted by a Canadian Tranche Lender in accordance with the terms of this Agreement.

“ B/A Drawing ” shall mean B/As accepted and purchased on the same date and as to which a single Contract Period is in effect, including any B/A Equivalent Loans made on the same date and as to which a single Contract Period is in effect. For greater certainty, all provisions of this Agreement that are applicable to B/As are also applicable, mutatis mutandis , to B/A Equivalent Loans.

 

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“ B/A Equivalent Loan ” has the meaning assigned to such term in Section 2.06(j).

“ Bakelite Acquisition ” shall mean the acquisition by a Wholly Owned Subsidiary of the U.S. Borrower of all the issued share capital of the German Guarantor consummated on April 29, 2005, pursuant to the Bakelite Acquisition Agreement.

“ Bakelite Acquisition Agreement ” shall mean the Share Purchase Agreement dated as of October 6, 2004, all material exhibits and schedules thereto and all agreements expressly contemplated thereby, in each case as amended, supplemented or modified from time to time (without giving effect to any waiver, amendment, supplement or other modification thereto after the Closing Date in a manner materially adverse to the Lenders unless otherwise consented to by the Required Lenders).

“ Bakelite Bridge Facility ” shall mean a bridge loan facility in an aggregate principal amount of $250.0 million to finance the Bakelite Acquisition pursuant to the Bridge Loan Agreement dated as of April 29, 2005, among Borden U.S. Finance Corp., Borden Nova Scotia Finance ULC, the U.S. Borrower, the subsidiary guarantors party thereto, the lenders party thereto and the agents, arrangers and bookrunners party thereto.

“ Base Rate ” shall mean (a) with respect to European Tranche Revolving Facility Loans denominated in Sterling or euros, and European Tranche Revolving Facility Loans denominated in U.S. Dollars and made to a U.K. Borrower, the rate of interest per annum quoted by the Administrative Agent as its base rate for loans made by it in U.S. Dollars, Sterling or euros, as applicable, whether or not such rate is the lowest rate charged by the Administrative Agent to its most preferred borrowers, and, if such base rate is discontinued by the Administrative Agent as a standard, a comparable reference rate designated by the Administrative Agent as a substitute therefor shall be the Base Rate with respect to such European Tranche Revolving Facility Loans, (b) with respect to Canadian Tranche Revolving Facility Loans denominated in U.S. Dollars made to the Canadian Borrower, the U.S. Base Rate, (c) with respect to Canadian Tranche Revolving Facility Loans denominated in Canadian Dollars made to the Canadian Borrower, the Canadian Base Rate and (d) with respect to Swingline Loans to a U.K. Borrower or the Dutch Borrower, the rate of interest offered by the London office of JPMorgan Chase Bank, N.A..

“ Base Rate Borrowing ” shall mean a Borrowing consisting of Base Rate Loans.

“ Base Rate Loan ” shall mean any Base Rate Revolving Loan, Base Rate Term Loan or any Swingline Loan to the Dutch Borrower or a U.K. Borrower.

“ Base Rate Revolving Borrowing ” shall mean a Borrowing comprised of Base Rate Revolving Loans.

“ Base Rate Revolving Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the Base Rate in accordance with the provisions of Article II.

“ Base Rate Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the Base Rate in accordance with the provisions of Article II.

 

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“ Benchmark LIBOR Rate ” shall have the meaning assigned to such term in Section 2.23(b).

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

“ Board of Directors ” shall mean, 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.

“ Borden Nova Scotia Finance ULC ” shall mean a collective reference to Borden Nova Scotia Finance, ULC, Borden 2 Nova Scotia Finance, ULC and any successor entity or entities formed as a result of the merger, amalgamation or other combination of such entities.

“ Borrowers ” shall have the meaning assigned to such term in the preamble hereto.

“ Borrowing ” shall mean a group of Loans of a single Type, Class and currency and made on a single date to a single Borrower and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect.

“ Borrowing Minimum ” shall mean (a) in the case of a Borrowing denominated in U.S. Dollars, $5.0 million, (b) in the case of a Borrowing denominated in euro, €1.0 million, (c) in the case of a Borrowing denominated in Sterling, £1.0 million and (d) in the case of a Borrowing denominated in Canadian Dollars, C$1.0 million.

“ Borrowing Multiple ” shall mean (a) in the case of a Borrowing denominated in U.S. Dollars, $1.0 million, (b) in the case of a Borrowing denominated in euro, €1.0 million, (c) in the case of a Borrowing denominated in Sterling, £1.0 million and (d) in the case of a Borrowing denominated in Canadian Dollars, C$1.0 million.

“ Borrowing Request ” shall mean a request by a Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit D-1 .

“ Budget ” shall have the meaning assigned to such term in Section 5.04(f).

“ Business Day ” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that (a) when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in the applicable currency in the London interbank market, (b) when used in connection with a Loan denominated in euro, the term “Business Day” shall also exclude any day on which the Trans-European Automated Real Time Gross Settlement Express Transfer (TARGET) payment system is not open for the settlement of payments in euro, (c) when used in connection with any Loan to the Canadian Borrower or B/A, the term “Business Day” shall also (i) exclude any day on which banks are not open for dealings in deposits in Toronto but (ii) include, with respect to any Loan denominated in Canadian Dollars or any B/A, any day on which banks are open for dealings in deposits in Toronto and (d) when used in connection with any Loan to the Dutch Borrower or a

 

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U.K. Borrower, the term “Business Day” shall also include any day on which banks are open for dealings in deposits in euro, Sterling and U.S. Dollars in London and, with respect to any Loan to the Dutch Borrower, any day on which banks are open for dealings in deposits in euro in Amsterdam.

“ CAM ” shall mean the mechanism for the allocation and exchange of interests in Loans, participations in Letters of Credit and Swingline Loans and other extensions of credit under the several Tranches and collections thereunder established under Article X.

“ CAM Exchange ” shall mean the exchange of the Lender’s interests provided for in Section 10.01.

“ CAM Exchange Date ” shall mean the first date on which there shall occur (a) any event referred to in paragraph (h) or (i) of Section 7.01 in respect of any Borrower or (b) an acceleration of Loans pursuant to Section 7.01.

“ CAM Percentage ” shall mean, as to each Lender, a fraction, expressed as a decimal, of which (a) the numerator shall be the aggregate U.S. Dollar Equivalent (determined on the basis of Exchange Rates prevailing on the CAM Exchange Date) of the sum, without duplication, of (i) the Obligations owed to such Lender (whether or not at the time due and payable), (ii) the L/C Exposure of such Lender and (iii) the Swingline Exposure of such Lender, in each case immediately prior to the occurrence of the CAM Exchange Date, and (b) the denominator shall be the aggregate U.S. Dollar Equivalent (as so determined) of the sum, without duplication, of (A) the Obligations owed to all the Lenders (whether or not at the time due and payable), (B) the L/C Exposure and (iii) the Swingline Exposure, in each case immediately prior to the occurrence of the CAM Exchange Date; provided that, for purposes of clause (a) above, the Obligations owed to the Swingline Lender will be deemed not to include any Swingline Loans except to the extent provided in clause (a)(iii) above.

“ Canadian Base Rate ” shall mean, for any day, the rate of interest per annum equal to the greater of (a) the interest rate per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect on such day at its principal office in Toronto for determining interest rates applicable to commercial loans denominated in Canadian Dollars in Canada (each change in such reference rate being effective from and including the date such change is publicly announced as being effective) and (b) the interest rate per annum equal to the sum of (i) the CDOR Rate applicable to bankers’ acceptances with a term of 30 days on such day and (ii) 0.50% per annum.

“ Canadian Base Rate Borrowing ” shall mean a Borrowing consisting of Canadian Base Rate Loans.

“ Canadian Base Rate Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the Canadian Base Rate in accordance with the provisions of Article II.

“ Canadian Borrower ” shall have the meaning assigned to such term in the preamble hereto.

 

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“ Canadian Dollars ” or “ C$ ” shall mean the lawful money of Canada.

“ Canadian Lending Office ” shall mean, as to any Canadian Tranche Lender, the applicable branch, office or Affiliate of such Canadian Tranche Lender designated by such Canadian Tranche Lender to make Canadian Tranche Loans to the Canadian Borrower and to accept and purchase or arrange for the purchase of B/As.

“ Canadian Security Documents ” shall mean all security agreements delivered pursuant to this Agreement and granted by any Foreign Subsidiary Loan Party incorporated under the laws of Canada or any province thereof and all confirmations and acknowledgements thereof, including (a) general security agreements, (b) debentures, (c) intellectual property security agreements and (d) the Quebec Documents.

“ Canadian Tranche ” has the meaning assigned to such term under the definition of “ Tranche ”.

“ Canadian Tranche Commitment ” shall mean, with respect to each Canadian Tranche Lender, the commitment of such Canadian Tranche Lender to make Canadian Tranche Revolving Facility Loans pursuant to Section 2.01, to acquire participations in Letters of Credit under the Canadian Tranche and to accept and purchase or arrange for the purchase of B/As pursuant to Section 2.06, expressed as an amount representing the maximum aggregate permitted amount of such Lender’s Canadian Tranche Revolving Facility Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.21 or Section 9.04. The initial amount of each Lender’s Canadian Tranche Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Canadian Tranche Commitment, as applicable. The aggregate amount of the Lenders’ Canadian Tranche Commitments as of the Amendment Effective Date is $50.0 million.

“ Canadian Tranche L/C Exposure ” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Canadian Tranche Letters of Credit denominated in U.S. Dollars at such time, (b) the U.S. Dollar Equivalent of the aggregate undrawn amount of all outstanding Canadian Tranche Letters of Credit denominated in Canadian Dollars at such time and (c) the U.S. Dollar Equivalent of the aggregate amount of all L/C Disbursements in respect of Canadian Tranche Letters of Credit that have not yet been reimbursed by or on behalf of the applicable Borrower at such time. The Canadian Tranche L/C Exposure of any Revolving Lender at any time shall be its Canadian Tranche Percentage of the total Canadian Tranche L/C Exposure at such time.

“ Canadian Tranche Lender ” shall mean a Lender with a Canadian Tranche Commitment or with outstanding Canadian Tranche Revolving Facility Exposure.

“ Canadian Tranche Letters of Credit ” shall mean Letters of Credit issued under the Canadian Tranche.

“ Canadian Tranche Percentage ” shall mean, with respect to any Canadian Tranche Lender, the percentage of the total Canadian Tranche Commitments represented by such

 

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Lender’s Canadian Tranche Commitment. If the Canadian Tranche Commitments have terminated or expired, the Canadian Tranche Percentages shall be determined based upon the Canadian Tranche Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.04.

“ Canadian Tranche Revolving Facility Exposure ” shall mean, at any time, the sum of (a) the aggregate principal amount of the Canadian Tranche Revolving Facility Loans denominated in U.S. Dollars outstanding at such time, (b) the U.S. Dollar Equivalent of the aggregate principal amount of the Canadian Tranche Revolving Facility Loans denominated in Canadian Dollars outstanding at such time, (c) the U.S. Dollar Equivalent of the aggregate face amount of the B/As accepted by the Canadian Tranche Lenders and outstanding at such time and (d) the Canadian Tranche L/C Exposure at such time. The Canadian Tranche Revolving Facility Exposure of any Lender at any time shall be such Lender’s Canadian Tranche Percentage of the total Canadian Tranche Revolving Facility Exposure at such time.

“ Canadian Tranche Revolving Facility Loan ” shall mean a loan made by a Canadian Tranche Lender pursuant to Section 2.01(c). Each Canadian Tranche Revolving Facility Loan denominated in U.S. Dollars and made to the U.S. Borrower shall be a Eurocurrency Loan or an ABR Loan, each Canadian Tranche Revolving Facility Loan denominated in U.S. Dollars and made to the Canadian Borrower shall be a Eurocurrency Loan or a U.S. Base Rate Loan and each Canadian Tranche Revolving Facility Loan denominated in Canadian Dollars shall be a Canadian Base Rate Loan.

“ Capital Expenditures ” shall mean, for any person in respect of any period, the aggregate of all expenditures incurred by such person during such period that, in accordance with GAAP, are or should be included in “additions to property, plant or equipment” or similar items reflected in the statement of cash flows of such person; provided , however , that Capital Expenditures for the U.S. Borrower and the Subsidiaries shall not include:

(a) expenditures to the extent made with proceeds (so long as such proceeds are not included in any determination of the Available Investment Basket Amount) of the issuance of Equity Interests of Holdings (prior to a Qualified IPO) or the U.S. Borrower or funds that would have constituted Net Proceeds under clause (a) of the definition of the term “Net Proceeds” (but that will not constitute Net Proceeds as a result of the first proviso to such clause (a));

(b) expenditures of proceeds of insurance settlements, condemnation awards and other settlements in respect of lost, destroyed, damaged or condemned assets, equipment or other property to the extent such expenditures are made to replace or repair such lost, destroyed, damaged or condemned assets, equipment or other property or otherwise to acquire, maintain, develop, construct, improve, upgrade or repair assets or properties useful in the business of the U.S. Borrower and the Subsidiaries within 12 months of receipt of such proceeds or, if not made within such period of 12 months, are committed to be made during such period;

(c) interest capitalized during such period;

 

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(d) expenditures that are accounted for as capital expenditures of such person and that actually are paid for by a third party (excluding Holdings (prior to a Qualified IPO), the U.S. Borrower or any Subsidiary) and for which none of Holdings (prior to a Qualified IPO), the U.S. Borrower or any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other person (whether before, during or after such period);

(e) the book value of any asset owned by such person prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of such person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; provided that (i) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period that such expenditure actually is made and (ii) such book value shall have been included in Capital Expenditures when such asset was originally acquired;

(f) the purchase price of equipment purchased during such period to the extent that the consideration therefor consists of any combination of (i) used or surplus equipment traded in at the time of such purchase and (ii) the proceeds of a concurrent sale of used or surplus equipment, in each case, in the ordinary course of business;

(g) Investments in respect of a Permitted Business Acquisition;

(h) the 2005 Transactions; or

(i) the purchase of property, plant or equipment made within 12 months of the sale of any asset to the extent purchased with the proceeds of such sale (or, if not made within such 12 months, to the extent committed to be made during such period and actually made within a 15 month period from such sale).

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

“ Cash Interest Expense ” shall mean, with respect to Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries on a consolidated basis for any period, Interest Expense for such period, less the sum of, without duplication, (a) pay-in-kind Interest Expense or other noncash Interest Expense (including as a result of the effects of purchase accounting), (b) to the extent included in Interest Expense, the amortization of any financing fees paid by, or on behalf of, Holdings (prior to a Qualified IPO), the U.S. Borrower or any Subsidiary, including such fees paid in connection with the Transactions, the May 2006 Transactions or the 2005 Transactions, (c) the amortization of debt discounts, if any, or fees in respect of Swap Agreements and (d) cash interest income of Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries for such period; provided that Cash Interest Expense shall exclude

 

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any one-time financing fees paid in connection with the Transactions, the May 2006 Transactions or the 2005 Transactions or any amendment of this Agreement.

“ CDOR Rate ” shall mean, on any date, an interest rate per annum equal to the average discount rate applicable to bankers’ acceptances denominated in Canadian Dollars with a term equal to the Contract Period of the relevant B/As (for purposes of the definition of “Discount B/A Rate”) appearing on the Reuters Screen CDOR Page (“ Screen ”) (or on any successor or substitute page of such Screen, or any successor to or substitute for such Screen, providing rate quotations comparable to those currently provided on such page of such Screen, as determined by the Administrative Agent from time to time) at approximately 10:00 a.m., Toronto time, on such date (or, if such date is not a Business Day, on the next preceding Business Day) or, if such rate is not so reported, the average of the rate quotes for bankers’ acceptances denominated in Canadian Dollars with a term of 30 days received by the Administrative Agent at approximately 10:00 a.m., Toronto time, on such day (or, if such day is not a Business Day, on the next preceding Business Day) from one or more banks of recognized standing selected by it.

A “ Change in Control ” shall be deemed to occur if:

(a) at any time, (i) a majority of the seats (other than vacant seats) on the Board of Directors of (A) prior to a Qualified IPO, Holdings or (B) after a Qualified IPO, the U.S. Borrower, shall at any time be occupied by persons who were neither (a) nominated by the Board of Directors of the U.S. Borrower or a Permitted Holder, (b) appointed by directors so nominated nor (c) appointed by a Permitted Holder or (ii) a “Change in Control” (or similar event) shall occur under (x) the New Second Secured Notes, (y) any Material Indebtedness secured by a Second-Priority Lien or (z) any Permitted Refinancing Indebtedness in respect of any of the foregoing or in respect of Indebtedness created hereunder or under the other Loan Documents (in each case to the extent constituting Material Indebtedness);

(b) at any time prior to a Qualified IPO, (i) Holdings shall fail to own, directly or indirectly, beneficially and of record, 51% of the issued and outstanding common stock of the U.S. Borrower (unless Holdings shall merge into the U.S. Borrower in a transaction in which the U.S. Borrower is the surviving entity, in which case this clause (b)(i) shall not apply), or (ii) any combination of Permitted Holders shall fail to own beneficially (within the meaning of Rule 13d-5 of the Exchange Act as in effect on the Closing Date ), directly or indirectly, in the aggregate Equity Interests representing at least 51% of (A) the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Holdings (or, if Holdings shall merge into the U.S. Borrower in a transaction in which the U.S. Borrower is the surviving entity, the U.S. Borrower) or (B) the common economic interest represented by the issued and outstanding Equity Interests of Holdings (or, if Holdings shall merge into the U.S. Borrower in a transaction in which the U.S. Borrower is the surviving entity, the U.S. Borrower); or

(c) at any time after a Qualified IPO, (a) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as in effect on the Closing Date ), other than any combination of the Permitted Holders, shall have acquired beneficial ownership of 35% or more of the voting and/or economic

 

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interest in the U.S. Borrower’s capital stock and the Permitted Holders shall own, directly or indirectly, less than such Person or “group” of the economic and voting interest in the U.S. Borrower’s capital stock.

“ Change in Law ” shall mean (a) the adoption of any law, rule or regulation after the Closing Date , (b) any change in law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.16(b), by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any written request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date .

“ Charges ” shall have the meaning assigned to such term in Section 9.09.

“ CIGNA L/C ” shall mean, collectively, the Original Letters of Credit issued for the account of the U.S. Borrower and for the benefit of various state workers’ compensation boards and surety bond issuers and any extensions, renewals or replacements thereof, so long as the Administrative Agent, for the ratable benefit of the Secured Parties, has been named as a loss payee under the insurance policy that insures the obligations supported by such Original Letters of Credit (or such extensions, renewals or replacements) pursuant to a loss payable clause or endorsement in form and substance reasonably satisfactory to the Administrative Agent; provided that the aggregate face amount of Original Letters of Credit that may constitute the CIGNA L/C at any time shall not exceed $15,280,900.

“ Class ” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are European Tranche Revolving Facility Loans, Canadian Tranche Revolving Facility Loans, U.S. Tranche Revolving Facility Loans, Tranche C-1 Term Loans, Tranche C-2 Term Loans, Tranche C-4 Term Loans, Other Revolving Facility Loans, Other Term Loans or Swingline Loans and (b) when used in reference to any Commitment, refers to whether such Commitment is a European Tranche Commitment, Canadian Tranche Commitment, U.S. Tranche Commitment, Tranche C-1 Term Loan Commitment, Tranche C-2 Term Loan Commitment, Tranche C-3 Credit-Limited Deposit, Tranche C-4 Term Loan Commitment, Incremental Revolving Facility Commitment with respect to Other Revolving Facility Loans or Incremental Term Loan Commitment with respect to Other Term Loans. Other Term Loans (together with the Incremental Term Loan Commitments in respect thereof) and Other Revolving Facility Loans (together with the Incremental Revolving Facility Commitments in respect thereof) that have different terms and conditions shall be construed to be in different Classes.

“ Closing Date ” shall mean May 31, 2005.

“ Closing Date First Lien Intercreditor Agreement ” shall mean the Amended and Restated Intercreditor Agreement, dated as of December 22, 2003, as amended and restated as of May 31, 2005, among the U.S. Borrower and the Administrative Agent, and acknowledged and agreed to by Holdings and the Domestic Subsidiary Loan Parties.

 

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“ Closing Date Second Lien Intercreditor Agreement ” shall mean the Intercreditor Agreement dated as of August 12, 2004, as amended and restated as of May 31, 2005, among the U.S. Borrower, Wilmington Trust Company, the Administrative Agent, Holdings and the Domestic Subsidiary Loan Parties.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated and rulings issued thereunder.

“ Collateral ” shall mean all the “Collateral” as defined in any Security Document and shall also include the Mortgaged Properties.

“ Collateral Agreement ” shall mean the Amended and Restated Collateral Agreement, dated as of the date hereof, as amended, supplemented or otherwise modified from time to time, among Holdings, the U.S. Borrower and each Domestic Subsidiary Loan Party and the Administrative Agent.

“ Collateral and Guarantee Requirement ” shall mean, at any time, the requirement that:

(a) on the Closing Date (except as provided in Section 4.02(e) of the 2005 Credit Agreement), the Administrative Agent shall have received (i) from Holdings, the U.S. Borrower and each Domestic Subsidiary Loan Party, a counterpart of the Collateral Agreement, duly executed and delivered on behalf of such person, (ii) from Holdings, the U.S. Borrower and each Domestic Subsidiary Loan Party, a counterpart of the U.S. Guarantee Agreement duly executed and delivered on behalf of such person, (iii) from the U.S. Borrower, each Domestic Subsidiary Loan Party and the Administrative Agent, a counterpart of the Closing Date First Lien Intercreditor Agreement, duly executed and delivered on behalf of such person, (iv) from the U.S. Borrower, each Domestic Subsidiary Loan Party and the Administrative Agent, a counterpart of the Closing Date Second Lien Intercreditor Agreement, duly executed and delivered on behalf of such person, and (v) from each Domestic Loan Party that directly owns Equity Interests of a Foreign Subsidiary (other than any Foreign Subsidiary organized under the laws of an Excluded Jurisdiction) a counterpart of a Foreign Pledge Agreement, duly executed and delivered on behalf of such person;

(b) on the Closing Date (except as provided in Section 4.02(e) of the 2005 Credit Agreement), the Administrative Agent shall have received from each Foreign Subsidiary Loan Party (other than the German Guarantor and any Foreign Subsidiary Loan Party that is a subsidiary of the German Guarantor), (i) a counterpart of the Foreign Guarantee Agreement, duly executed and delivered on behalf of such person, and (ii) a counterpart of all Foreign Security Documents and Foreign Pledge Agreements that it determines, based on the advice of counsel, to be necessary or advisable in connection with the pledge of, or granting of security interests in, Equity Interests, Collateral or Indebtedness of such Foreign Subsidiary Loan Party, including as contemplated by paragraph (c) or (d) below, duly executed and delivered by such person;

 

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(c) on the Closing Date (except as provided in Section 4.02(e) of the 2005 Credit Agreement), all outstanding Equity Interests of the U.S. Borrower (other than any shares of PIK Preferred Stock, options or management shares), all other outstanding Equity Interests directly owned by the U.S. Borrower or any Subsidiary Loan Party (other than the German Guarantor and any Foreign Subsidiary Loan Party that is a subsidiary of the German Guarantor), and all Indebtedness owing to any Loan Party (other than intercompany indebtedness, which is governed by clause (d) below) shall have been pledged pursuant to the Collateral Agreement (or other applicable Security Document) and the Administrative Agent shall have received certificates or other instruments representing all such Equity Interests (other than (i) uncertificated Equity Interests, (ii) Equity Interests issued by Foreign Subsidiaries organized under the laws of a jurisdiction where receipt of such certificates or other instruments is not required for perfection of security interests in such Equity Interests and (iii) Equity Interests issued by a Foreign Subsidiary organized under the laws of an Excluded Jurisdiction) and any notes or other instruments representing such Indebtedness in excess of $15.0 million, together with stock powers, note powers or other instruments of transfer with respect thereto endorsed in blank, provided that in no event shall more than 65% of the issued and outstanding voting Equity Interests of any Foreign Subsidiary be pledged to secure Obligations of the Domestic Loan Parties;

(d) all Indebtedness of the U.S. Borrower and each Subsidiary (other than intercompany Indebtedness incurred in the ordinary course of business in connection with the cash management operations and intercompany sales of the U.S. Borrower and each Subsidiary) that is owing to any Loan Party shall be evidenced by a promissory note or an instrument in form satisfactory to the Administrative Agent and, except for Indebtedness of any Foreign Subsidiary owing to the U.S. Borrower or a Domestic Subsidiary for so long as the pledge of such Indebtedness would be deemed an incurrence of Indebtedness under any of the Existing Notes Documents or the New Second Secured Notes Documents, shall have been pledged pursuant to the Collateral Agreement (or other applicable Security Document) and the Administrative Agent shall have received all such promissory notes or instruments, together with note powers or other instruments of transfer with respect thereto endorsed in blank (other than with respect to any such intercompany debt the perfection of the pledge of which does not require delivery to the Administrative Agent);

(e) except as otherwise contemplated by any Security Document, all documents and instruments, including Uniform Commercial Code financing statements, filings with the United States Copyright Office and the United States Patent and Trademark Office, filings with the U.K. Patent Office and OHIM, Personal Property Security Act financing statements (and similar documents) and filings with the Canadian Intellectual Property Office, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Documents (in each case, including any supplements thereto) and perfect such Liens to the extent required by, and with the priority required by, the Security Documents, shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or the recording concurrently with, or promptly following, the execution and delivery of each such Security Document;

 

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(f) all documents and particulars, including those required to be filed with the Registrar of Companies in England and Wales under section 395 of the UK Companies Act 1985, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the U.K. Debentures and perfect such Liens to the extent required by, and with the priority required by, the U.K. Debentures, shall within 21 days of the execution of any applicable U.K. Debenture have been filed, registered or recorded;

(g) on the Closing Date (except as provided in Section 4.02(e) of the 2005 Credit Agreement), the Administrative Agent shall have received (i) counterparts of each Foreign Mortgage to be entered into with respect to each Mortgaged Property duly executed and delivered by the record owner of such Mortgaged Property, (ii) such other documents, including such surveys, abstracts, legal opinions, abstracts of title, title deeds and reports of title, as the Administrative Agent may reasonably request with respect to any such Foreign Mortgage or Mortgaged Property, and (iii) a policy or policies or marked up unconditional binder of title insurance or foreign equivalent thereof, as applicable, paid for by the applicable Loan Party, issued by a nationally recognized title insurance company insuring the Lien of each such Foreign Mortgage covering real property located in Canada to be entered into on the Closing Date as a valid first Lien on the Mortgaged Property described therein, free of any other Liens except as expressly permitted by Section 6.02 and Liens arising by operation of law, together with such endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request;

(h) except as set forth pursuant to any Security Document, each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents (or supplements thereto) to which it is a party and the granting by it of the Liens thereunder and (ii) the performance of its obligations thereunder; and

(i) subject to Section 5.10(g), in the case of any person that (i) becomes a Domestic Subsidiary Loan Party after the Closing Date, the Administrative Agent shall have received from such Domestic Subsidiary Loan Party, (x) a supplement to the Collateral Agreement, in the form specified therein, duly executed and delivered on behalf of such person, (y) a supplement to the U.S. Guarantee Agreement, in the form specified therein, duly executed and delivered on behalf of such person, and (z) with respect to any Foreign Pledge Agreement that the Administrative Agent determines, based on the advice of counsel, to be necessary or advisable in connection with the pledge of Equity Interests or Indebtedness of a Foreign Subsidiary that is a Material Subsidiary (other than a pledge of Equity Interests of any Foreign Subsidiary that is not a Loan Party and is organized under the laws of an Excluded Jurisdiction) owned by such Domestic Subsidiary Loan Party, a counterpart thereof, duly executed and delivered on behalf of such person, or (ii) becomes a Foreign Subsidiary Loan Party after the Closing Date, the Administrative Agent shall have received from such Foreign Subsidiary Loan Party a counterpart of (x) the Foreign Guarantee Agreement, duly executed and delivered by such person, and (y) all Foreign Security Documents and Foreign Pledge Agreements that the Administrative Agent determines, based on the advice of counsel, to be necessary

 

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or advisable in connection with the pledge of Equity Interests of a Material Subsidiary, Collateral or Indebtedness of such Foreign Subsidiary Loan Party (other than a pledge of Equity Interests of any Foreign Subsidiary that is not a Loan Party and is organized under the laws of an Excluded Jurisdiction), including as contemplated by paragraph (c) or (d) above (and subject to the materially thresholds therein), duly executed and delivered by such person.

“ Combination ” shall mean the mergers and other transactions contemplated by the 2005 Transaction Agreement.

“ Combination Documents ” shall mean the collective reference to the 2005 Transaction Agreement, all material exhibits and schedules thereto and all agreements expressly contemplated thereby.

“ Combined Group ” shall mean the combination of the U.S. Borrower, RPP and RSM pursuant to EITF 02-5 “ Definition of Common Control in Relation to FASB Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” .

“ Commitment Fee ” shall have the meaning assigned to such term in Section 2.13(a)(i).

“ Commitments ” shall mean (a) with respect to any Lender, such Lender’s Canadian Tranche Commitment, European Tranche Commitment, U.S. Tranche Commitment, Tranche C-1 Term Loan Commitment, Tranche C-2 Term Loan Commitment, Tranche C-3 Credit-Linked Deposit, Tranche C-4 Term Loan Commitment, Incremental Revolving Facility Commitment and/or Incremental Term Loan Commitment and (b) with respect to the Swingline Lender, its Swingline Commitment.

“ Conduit Lender ” shall mean any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender; provided further that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.16, 2.17, 2.18 or 9.05 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

“ Consolidated Debt ” at any date shall mean the sum of (without duplication) all Indebtedness (other than letters of credit, including Tranche C-3 Letters of Credit, to the extent undrawn) consisting of Capital Lease Obligations, bankers’ acceptances, Indebtedness for borrowed money, Disqualified Stock and Indebtedness in respect of the deferred purchase price of property or services of the U.S. Borrower and the Subsidiaries determined on a consolidated basis on such date.

 

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“ Consolidated Leverage Ratio ” shall mean, on any date, the ratio of (a) Consolidated Total Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters of the U.S. Borrower most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided that EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis.

“ Consolidated Net Income ” shall mean, with respect to any person for any period, the aggregate of the Net Income of such person and its subsidiaries for such period, on a consolidated basis; provided , however , that, without duplication,

(a) any net after-tax extraordinary, nonrecurring or unusual gains or losses or income, expenses or charges (less all fees and expenses relating thereto), including any severance expenses, transition expenses incurred in connection with the Combination and fees, expenses or charges related to any offering of Equity Interests of the U.S. Borrower, any Investment, acquisition or Indebtedness permitted to be incurred hereunder (in each case, whether or not successful), including any such fees, expenses, charges or change in control payments related to the 2005 Transactions, the May 2006 Transactions or the Transactions, in each case, shall be excluded; provided that, with respect to each nonrecurring item, the U.S. Borrower shall have delivered to the Administrative Agent an officers’ certificate specifying and quantifying such item and stating that such item is a nonrecurring item;

(b) any net after-tax income or loss from discontinued operations and any net after-tax gain or loss on disposal of discontinued operations shall be excluded;

(c) any net after-tax gains or losses or any subsequent charges or expenses incurred during such period attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of the U.S. Borrower) shall be excluded;

(d) any net after-tax income or loss attributable to the early extinguishment of indebtedness shall be excluded;

(e) (i) the Net Income for such period of any person that is not a subsidiary of such person, or that is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent person or a subsidiary thereof in respect of such period and (ii) the Net Income for such period shall include any ordinary course dividend, distribution or other payment in cash received from any person in excess of the amounts included in clause (i);

(f) the Net Income for such period of any subsidiary of such person shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable

 

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to that subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or in similar distributions has been legally waived ( provided that the net loss of any such subsidiary for such period shall be included);

(g) Consolidated Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period (including the expected change from LIFO to FIFO);

(h) any increase in amortization or depreciation or any one-time non-cash charges (such as purchased in-process research and development or capitalized manufacturing profit in inventory) resulting from purchase accounting in connection with the 2005 Transactions or any acquisition that is consummated after the Closing Date shall be excluded;

(i) accruals and reserves that are established within twelve months after the Closing Date and that are so required to be established in accordance with GAAP shall be excluded;

(j) any non-cash impairment charges resulting from the application of Statement of Financial Accounting Standards No. 142 and 144, and the amortization of intangibles arising pursuant to No. 141, shall be excluded;

(k) any non-cash compensation expense realized from any deferred stock compensation plan or grants of stock appreciation or similar rights, stock options, restricted stock or other rights to officers, directors and employees of such person or any of its subsidiaries shall be excluded;

(l) solely for purposes of calculating EBITDA, the Net Income of any person and its subsidiaries shall be calculated without deducting the income attributable to, or adding the losses attributable to, the minority equity interests of third parties in any non-Wholly Owned Subsidiary except to the extent of dividends declared or paid by such person or its subsidiaries in respect of such period or any prior period on the shares of capital stock of such subsidiary held by such third parties;

(m) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 shall be excluded;

(n) non-cash charges for deferred tax asset valuation allowances shall be excluded; and

(o) any (a) costs or expenses realized in connection with, resulting from or in anticipation of the Transactions or (b) costs or expenses realized in connection with or resulting from stock appreciation or similar rights, stock options or other rights existing on the Amendment Effective Date of officers, directors and employees, in each case of the U.S. Borrower or any of the Subsidiaries, shall be excluded;

 

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provided that any non-cash charge, expense, gain, loss or income referred to in clause (j), (k), (m) or (n) above that consists of or requires an accrual of, or cash reserve for, anticipated cash charges in any future period shall not be excluded.

“ Consolidated Non-cash Charges ” shall mean, with respect to any person for any period, the aggregate depreciation, amortization and other non-cash expenses of such person and its subsidiaries for such period reducing Consolidated Net Income for such period on a consolidated basis and otherwise determined in accordance with GAAP, but excluding any such charge that consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period.

“ Consolidated Taxes ” shall mean, with respect to any person for any period, provision for Taxes based on income, profits or capital of such person and its subsidiaries for such period, including state, franchise and similar taxes, and, without duplication, any Tax Distributions taken into account in calculating Consolidated Net Income.

“ Consolidated Total Assets ” shall mean, as of any date, the total assets of the U.S. Borrower and the Subsidiaries, determined on a consolidated basis in accordance with GAAP, as set forth on the consolidated balance sheet of the U.S. Borrower as of such date.

“ Consolidated Total Debt ” at any date shall mean Consolidated Debt on such date less the lesser of (i) the unrestricted cash and marketable securities (determined in accordance with GAAP) of the U.S. Borrower and its Subsidiaries on such date and (ii) $100.0 million.

“ Constructive Distributions ” shall mean constructive distributions made in cash or otherwise (i) to Holdings relating to reimbursements of certain pension costs and (ii) to Shell Oil Company relating to reimbursements of certain pension costs in accordance with the Master Sales Agreement dated July 10, 2000, as amended as of November 14, 2000, and related ancillary agreements.

“ Contract Period ” shall mean, with respect to any B/A, the period commencing on the date such B/A is issued and accepted and ending on the date 30, 60, 90 or 180 days thereafter, as the Canadian Borrower may elect (in each case subject to availability and provided that there remains a minimum of 30, 60, 90 or 180 days (depending on the Contract Period selected by the Canadian Borrower) prior to the Revolving Facility Maturity Date), or any other number of days from 1 to 180 with the consent of each applicable Lender; provided that if such Contract Period would end on a day other than a Business Day, such Contract Period shall be extended to the next succeeding Business Day.

“ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

“ Credit Event ” shall have the meaning assigned to such term in Article IV.

“ Cumulative Retained Excess Cash Flow Amount ” shall mean, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to the sum of

 

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the Retained Percentage of Excess Cash Flow for each Excess Cash Flow Period commencing after the Closing Date; provided that for purposes of determining the Cumulative Retained Excess Cash Flow Amount, the periods, each taken as a single accounting period, (i) beginning on January 1, 2006, and ending on December 31, 2006 and (ii) beginning on January 1, 2007 and ending on December 31, 2007 shall each be deemed to be an Excess Cash Flow Period.

“ Cure Amount ” shall have the meaning assigned to such term in Section 7.03(a).

“ Cure Right ” shall have the meaning assigned to such term in Section 7.03(a).

“ Current Assets ” shall mean, with respect to Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries on a consolidated basis at any date of determination, all assets (other than cash and Permitted Investments or other cash equivalents) that would, in accordance with GAAP, be classified on a consolidated balance sheet of Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries as current assets at such date of determination, other than amounts related to current or deferred Taxes based on income or profits.

“ Current Liabilities ” shall mean, with respect to Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries on a consolidated basis at any date of determination, all liabilities that would, in accordance with GAAP, be classified on a consolidated balance sheet of Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries as current liabilities at such date of determination, other than (a) the current portion of any Indebtedness, (b) accruals of Interest Expense (excluding Interest Expense that is due and unpaid), (c) accruals for current or deferred Taxes based on income or profits, (d) accruals, if any, of transaction costs resulting from the 2005 Transactions, the May 2006 Transactions or the Transactions, and (e) accruals of any costs or expenses related to (i) severance or termination of employees prior to the Closing Date or (ii) bonuses, pension and other post-retirement benefit obligations, and (f) accruals for add-backs to EBITDA included in clauses (a)(iv) through (a)(vi) of the definition of such term.

“ Debenture Indentures ” shall mean the Indenture of the U.S. Borrower dated as of January 15, 1983, governing the Debentures due 2016, and the Indenture of the U.S. Borrower dated as of December 15, 1987, governing the Debentures due 2021 and 2023, in each case as amended, modified or supplemented from time to time.

“ Debentures ” shall mean the 8.375% Debentures of the U.S. Borrower due 2016, the 9.200% Debentures of the U.S. Borrower due 2021 and the 7.875% Debentures of the U.S. Borrower due 2023.

“ Debt Service ” shall mean, with respect to Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries on a consolidated basis for any period, Cash Interest Expense for such period plus scheduled principal amortization of Consolidated Debt for such period.

“ Debt Tender Offer ” shall mean the offer to purchase and consent solicitation made by the U.S. Borrower on October 12, 2006, with respect to all its outstanding Existing Borden Second Secured Notes, pursuant to which the U.S. Borrower subject to the satisfaction or

 

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waiver of the conditions thereto (a) will purchase all the Existing Borden Second Secured Notes validly tendered and not withdrawn pursuant to such offer to purchase (the “ Tendered Notes ”), (b) will enter into a supplemental indenture that amends the indenture under which the Existing 2004 Borden Floating Rate Notes and the Existing Borden Fixed Rate Notes are issued to eliminate all the material restrictive covenants and default provisions contained therein, (c) will enter into a supplemental indenture that amends the indenture under which the Existing 2005 Borden Floating Rate Notes are issued to eliminate all the material restrictive covenants and default provisions contained therein, (d) if more than 66-2/3% of the Existing 2004 Borden Floating Rate Notes and the Existing Borden Fixed Rate Notes (taken together) are validly tendered and not withdrawn pursuant to such offer to purchase, will enter into a supplemental indenture that will release all the Liens securing the Existing 2004 Borden Floating Rate Notes and the Existing Borden Fixed Rate Notes, (e) if more than 66-2/3% of the Existing 2005 Borden Floating Rate Notes are validly tendered and not withdrawn pursuant to such offer to purchase, will enter into a supplemental indenture that will release all the Liens securing the Existing 2005 Borden Floating Rate Notes and (f) will pay tender premiums, accrued interest and consent fees in connection with the purchase of the Tendered Notes, in each case in accordance with the Debt Tender Offer Documents.

“ Debt Tender Offer Documents ” shall mean the U.S. Borrower’s Offer to Purchase and Consent Solicitation Statement dated October 12, 2006, and all other documents executed and delivered with respect to the Debt Tender Offer.

“ Default ” shall mean any event or condition that upon notice, lapse of time or both would constitute an Event of Default.

“ Defaulting Lender ” shall mean any Lender with respect to which a Lender Default is in effect.

“ Delayed Draw Expiration Date ” shall mean the date that is 60 days after the date of initial drawing of the Tranche C-4 Initial Term Loans.

“ Designated Non-Cash Consideration ” shall mean the fair market value of non-cash consideration received by the U.S. Borrower or one of the Subsidiaries in connection with an asset disposition that is so designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer, setting forth the basis of such valuation, less the amount of cash or cash equivalents received in connection with a subsequent sale of such Designated Non-Cash Consideration.

“ Discount B/A Rate ” shall mean, with respect to a B/A being accepted and purchased on any day, (a) for a Lender that is a Schedule I Lender, (i) the CDOR Rate applicable to such B/A or (ii) if the discount rate for a particular Contract Period is not quoted on the Reuters Screen CDOR Page, the arithmetic average (as determined by the Administrative Agent) of the percentage discount rates (expressed as a decimal and rounded upward, if necessary, to the nearest 1/100 of 1%) quoted to the Administrative Agent by the Schedule I Reference Lenders as the percentage discount rate at which each such bank would, in accordance with its normal practices, at approximately 10:00 a.m., Toronto time, on such day, be prepared to purchase bankers’ acceptances accepted by such bank having a face amount and term comparable to the

 

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face amount and Contract Period of such B/A, and (b) for a Lender that is not a Schedule I Lender, the lesser of (i) the CDOR Rate applicable to such B/A plus 0.10% per annum and (ii) the arithmetic average (as determined by the Administrative Agent) of the percentage discount rates (expressed as a decimal and rounded upward, if necessary, to the nearest 1/100 of 1%) quoted to the Administrative Agent by the Schedule II/III Reference Lenders as the percentage discount rate at which such bank would, in accordance with its normal practices, at approximately 10:00 a.m., Toronto time, on such day, be prepared to purchase bankers’ acceptances accepted by such bank having a face amount and term comparable to the face amount and Contract Period of such B/A.

“ Discount Proceeds ” shall mean, with respect to any B/A, an amount (rounded upward, if necessary, to the nearest C$.01) calculated by multiplying (a) the face amount of such B/A by (b) the quotient obtained by dividing (i) one by (ii) the sum of (A) one and (B) the product of (x) the Discount B/A Rate (expressed as a decimal) applicable to such B/A and (y) a fraction of which the numerator is the Contract Period applicable to such B/A and the denominator is 365, with such quotient being rounded upward or downward to the fifth decimal place and .000005 being rounded upward.

“ Disqualified Stock ” shall mean, with respect to any person, any Equity Interests of such person that, by their terms (or by the terms of any security into which such Equity Interests are convertible or for which such Equity Interests are redeemable or exchangeable), or upon the happening of any event, (i) mature or are mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale), (ii) are convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) are redeemable at the option of the holder thereof, in whole or in part, in each case prior to 91 days after the latest to mature of any Tranche, Other Term Loan, if any, and Other Revolving Facility Loan, if any (without regard to the proviso to the definition of “Term Facility Maturity Date” or “Revolving Facility Maturity Date” or any similar qualification to the maturity date of any such Other Term Loan or Other Revolving Facility Loan); provided , however , that only the portion of the Equity Interests that so mature or are mandatorily redeemable, are so convertible or exchangeable or are so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided further , however , that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the U.S. Borrower or the Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the U.S. Borrower in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided further , however , that any class of Equity Interests of such person that by its terms authorizes such person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

“ Dividends ” shall have the meaning assigned to such term in Section 6.06.

“ Domestic Loan Party ” shall mean the U.S. Borrower and any Domestic Subsidiary Loan Party.

“ Domestic Subsidiary ” shall mean any Subsidiary that is not a Foreign Subsidiary.

 

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“ Domestic Subsidiary Loan Party ” shall mean each Wholly-Owned Domestic Subsidiary other than (a) Unrestricted Subsidiaries and (b) Indenture Restricted Subsidiaries.

“ Dutch Banking Act ” shall mean the Dutch Act on the Supervision of Credit Institutions 1992 ( Wet toezicht kredietwezen 1992 ), as amended from time to time.

“ Dutch Borrower ” shall have the meaning assigned to such term in the preamble hereto.

“ Dutch Security Documents ” shall mean (a) Dutch law notarial share pledges over the Equity Interests in each Foreign Subsidiary Loan Party incorporated under Dutch law (including the Dutch Borrower), (b) Dutch law pledges over all receivables owing to any of the Foreign Subsidiary Loan Parties incorporated under Dutch law (which will be notified pledges in respect of intercompany receivables, insurance receivables and bank account receivables and not notified until an Event of Default has occurred in respect of trade receivables), (c) Dutch law pledges over all stock, inventory and other tangible assets located in the Netherlands and all intellectual property rights registered in or in respect of the Netherlands and (d) any other Dutch law security document that may be entered into by any Loan Party.

“ Dutch Term Loan Obligations ” shall mean (a) the obligations of the Dutch Borrower to the Lenders under the Tranche C-2 Term Loans and (b) the obligations of the other Loan Parties guaranteeing the obligations of the Dutch Borrower to the Lenders under the Tranche C-2 Term Loans, as such obligations may exist from time to time.

“ Early Maturity Notes ” shall mean (a) the Existing Notes (other than the Existing Borden Fixed Rate Notes and the Debentures) and (b) any other debt securities and bank Indebtedness issued by the U.S. Borrower or any of the Subsidiaries (other than Indebtedness issued by a Foreign Subsidiary that is not a Foreign Subsidiary Loan Party that is denominated in currencies other than the U.S. Dollar in the form of bank financings or notes offered or arranged outside the United States and not placed with investors that regularly invest in the U.S. financial markets) with a final maturity prior to the date that is 91 days after the last to mature of the Facilities.

“ Early Maturity Test Date ” shall mean each date that is 91 days prior to the final maturity of any of the Early Maturity Notes.

“ EBITDA ” shall mean, with respect to the U.S. Borrower and the Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of the U.S. Borrower and the Subsidiaries for such period plus (a) the sum of (without duplication and to the extent the same was deducted in calculating Consolidated Net Income for such period):

(i) Consolidated Taxes of the U.S. Borrower and the Subsidiaries for such period;

(ii) Interest Expense (and to the extent not included in Interest Expense, any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk and costs of surety bonds in connection with financing activities) of the U.S. Borrower and the Subsidiaries for such period (net of interest income of the U.S. Borrower and the Subsidiaries for such period);

 

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(iii) Consolidated Non-cash Charges of the U.S. Borrower and the Subsidiaries for such period;

(iv) plant closure, severance and other restructuring costs and charges;

(v) business optimization expenses (which, for the avoidance of doubt, shall include, without limitation, the effect of inventory optimization programs, retention, systems establishment costs and excess pension charges); provided , that with respect to each business optimization expense, the U.S. Borrower shall have delivered to the Administrative Agent an officers’ certificate specifying and quantifying such expense;

(vi) impairment charges, including the write-down of investments;

(vii) non-operating expenses;

(viii) the amount of management, monitoring, consulting, transaction and advisory fees and related expenses paid to the Fund or any Fund Affiliate (or any accruals relating to such fees and related expenses) during such period; provided , however , that such amount shall not exceed in any four-quarter period the greater of (x) $3.0 million and (y) 2% of EBITDA of the U.S. Borrower and the Subsidiaries on a consolidated basis for the immediately preceding fiscal year, plus 2% of the value of transactions permitted hereunder and entered into by the U.S. Borrower or any of the Subsidiaries with respect to which the Fund or any Fund Affiliate provides any of the aforementioned types of services; provided , however , any payment not made in any fiscal year may be carried forward and paid in the following fiscal year; plus

(ix) the cost (or amortization of prior service cost) of subsidizing coverage for persons affected by amendments to medical benefit plans implemented prior to the Closing Date; provided , however , that such amount will be included in EBITDA notwithstanding that such amount was not deducted in calculating Consolidated Net Income;

minus (b) the sum of (without duplication and to the extent the amounts described in this clause (b) increased such Consolidated Net Income for the respective period for which EBITDA is being determined) non-cash items increasing Consolidated Net Income of the U.S. Borrower and the Subsidiaries for such period (but excluding any such items (A) in respect of which cash was received in a prior period or will be received in a future period or (B) that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period, including the amortization of employee benefit plan prior service costs).

For purposes of determining EBITDA under this Agreement for any period that includes the fiscal quarter ended September 30, 2005, December 31, 2005, March 31, 2006 or June 30, 2006, EBITDA for such fiscal quarter shall be deemed to be $152 million, $144 million, $163 million or $161 million, respectively.

“ EMU Legislation ” shall mean the legislative measures of the European Union for the introduction of, changeover to or operation of the euro in one or more member states.

 

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“ environment ” shall mean ambient and indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna, the workplace or as otherwise defined in any Environmental Law.

“ Environmental Laws ” shall mean all applicable laws (including common law), rules, regulations, codes, ordinances, orders, decrees, directives, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material or to health and safety matters (to the extent relating to the environment or Hazardous Materials).

“ Equity Financing ” shall mean, in connection with the consummation of the Combination, the issuance by the U.S. Borrower of the PIK Preferred Stock in an aggregate amount of $350.0 million, which amount was distributed by the U.S. Borrower to the holders of its Equity Interests (including Holdings) and by Holdings to the holders of its Equity Interests.

“ Equity Interests ” of any person shall mean any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interests in (however designated) equity of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with Holdings (prior to a Qualified IPO), the U.S. Borrower or a Subsidiary, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ ERISA Event ” shall mean (a) any Reportable Event; (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the incurrence by Holdings (prior to a Qualified IPO), the U.S. Borrower, a Subsidiary or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by Holdings (prior to a Qualified IPO), the U.S. Borrower, a Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention, or the institution by the PBGC of proceedings, to terminate any Plan or to appoint a trustee to administer any Plan; (f) the incurrence by Holdings (prior to a Qualified IPO), the U.S. Borrower, a Subsidiary or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by Holdings (prior to a Qualified IPO), the U.S. Borrower, a Subsidiary or any ERISA

 

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Affiliate of any notice, or the receipt by any Multiemployer Plan from Holdings (prior to a Qualified IPO), the U.S. Borrower, a Subsidiary or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“ euro ” or “ € ” shall mean the currency constituted by the Treaty on the European Union and as referred to in the EMU Legislation.

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

“ Eurocurrency Loan ” shall mean any Eurocurrency Term Loan or Eurocurrency Revolving Loan.

“ Eurocurrency Revolving Borrowing ” shall mean a Borrowing comprised of Eurocurrency Revolving Loans.

“ Eurocurrency Revolving Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the Adjusted Eurocurrency Rate in accordance with the provisions of Article II.

“ Eurocurrency Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted Eurocurrency Rate in accordance with the provisions of Article II.

“ Euro Lending Office ” shall mean, as to any European Tranche Lender or Tranche C-2 Lender, the applicable branch, office or Affiliate of such European Tranche Lender or Tranche C-2 Lender designated (i) by such European Tranche Lender to make Loans to the Dutch Borrower and the U.K. Borrowers or (ii) by such Tranche C-2 Lender to make Loans to the Dutch Borrower.

“ EURO LIBO Rate ” shall mean, with respect to any Eurocurrency Borrowing denominated in euro, for any Interest Period, the offered rate for deposits in euros in the European interbank market for the relevant Interest Period that is determined by the Banking Federation of the European Union, and displayed on the appropriate page of the Telerate Screen, at or about 11:00 am (Brussels time) on the relevant quotation date for the delivery of euros on the first day of the relevant Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “ EURO LIBO Rate ” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in euro are offered for a maturity comparable to such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period.

“ European Tranche ” has the meaning assigned to such term under the definition of “ Tranche ”.

 

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“ European Tranche Commitment ” shall mean, with respect to each European Tranche Lender, the commitment of such European Tranche Lender to make European Tranche Revolving Facility Loans and to acquire participations in Letters of Credit and Swingline Loans under the European Tranche, expressed as an amount representing the maximum aggregate permitted amount of such Lender’s European Tranche Revolving Facility Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.21 or Section 9.04. The initial amount of each Lender’s European Tranche Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its European Tranche Commitment, as applicable. The aggregate amount of the Lenders’ European Tranche Commitments as of the Amendment Effective Date is $125.0 million.

“ European Tranche L/C Exposure ” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding European Tranche Letters of Credit denominated in U.S. Dollars at such time, (b) the U.S. Dollar Equivalent of the aggregate undrawn amount of all outstanding European Tranche Letters of Credit denominated in euro or Sterling at such time and (c) the U.S. Dollar Equivalent of the aggregate amount of all L/C Disbursements in respect of European Tranche Letters of Credit that have not yet been reimbursed by or on behalf of the applicable Borrower at such time. The European Tranche L/C Exposure of any Revolving Lender at any time shall be its European Tranche Percentage of the total European Tranche L/C Exposure at such time.

“ European Tranche Lender ” shall mean a Lender with a European Tranche Commitment or with outstanding European Tranche Revolving Facility Exposure.

“ European Tranche Letters of Credit ” shall mean Letters of Credit issued or deemed outstanding under the European Tranche.

“ European Tranche Percentage ” shall mean, with respect to any European Tranche Lender, the percentage of the total European Tranche Commitments represented by such Lender’s European Tranche Commitment. If the European Tranche Commitments have terminated or expired, the European Tranche Percentages shall be determined based upon the European Tranche Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.04.

“ European Tranche Revolving Facility Exposure ” shall mean, at any time, the sum of (a) the aggregate principal amount of the European Tranche Revolving Facility Loans denominated in U.S. Dollars outstanding at such time, (b) the U.S. Dollar Equivalent of the aggregate principal amount of the European Tranche Revolving Facility Loans denominated in euro outstanding at such time, (c) the U.S. Dollar Equivalent of the aggregate principal amount of European Tranche Revolving Facility Loans denominated in Sterling outstanding at such time, (d) the European Tranche L/C Exposure at such time and (e) the Swingline Exposure at such time. The European Tranche Revolving Facility Exposure of any Lender at any time shall be such Lender’s European Tranche Percentage of the total European Tranche Revolving Facility Exposure at such time.

 

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“ European Tranche Revolving Facility Loan ” shall mean a loan made by a European Tranche Lender pursuant to Section 2.01. Each European Tranche Revolving Facility Loan denominated in U.S. Dollars shall be a Eurocurrency Loan or (a) an ABR Loan (if to the U.S. Borrower) or (b) a Base Rate Loan (if to any other Borrower), and each European Tranche Revolving Facility Loan denominated in Sterling or euro shall be a Eurocurrency Loan or a Base Rate Loan.

“ Event of Default ” shall have the meaning assigned to such term in Section 7.01.

“ Excess Cash Flow ” shall mean, with respect to the U.S. Borrower and the Subsidiaries on a consolidated basis for any Excess Cash Flow Period, EBITDA of the U.S. Borrower and the Subsidiaries on a consolidated basis for such Excess Cash Flow Period, minus , without duplication,

(a) Debt Service for such Excess Cash Flow Period (reduced by the aggregate principal amount of voluntary prepayments of Consolidated Debt that would otherwise constitute scheduled principal amortization during such Excess Cash Flow Period to the extent such scheduled principal amortization has been included in Debt Service);

(b) the amount of any voluntary prepayment permitted hereunder of term Indebtedness (other than any Term Loans) during such Excess Cash Flow Period, in each case to the extent not financed, or intended to be financed, using the proceeds of the incurrence of Indebtedness, so long as the amount of such prepayment is not already reflected in Debt Service;

(c) (i) Capital Expenditures by the U.S. Borrower and the Subsidiaries on a consolidated basis during such Excess Cash Flow Period that are paid in cash and (ii) the aggregate consideration paid in cash during such Excess Cash Flow Period in respect of Permitted Business Acquisitions and other Investments permitted hereunder to the extent not financed with the proceeds of Indebtedness other than Loans that are not Incremental Term Loans (less any amounts received in respect thereof as a return of capital);

(d) Capital Expenditures that the U.S. Borrower or any Subsidiary shall, during such Excess Cash Flow Period, become obligated to make but that are not made during such Excess Cash Flow Period ( provided that any amount so deducted that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period); provided that the U.S. Borrower shall deliver a certificate to the Administrative Agent not later than 90 days after the end of such Excess Cash Flow Period, signed by a Responsible Officer of the U.S. Borrower and certifying that such Capital Expenditures and the delivery of the related equipment will be made in the following Excess Cash Flow Period;

(e) Taxes and Tax Distributions paid in cash by Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries on a consolidated basis during such Excess Cash Flow Period or that will be paid within six months after the close of such Excess Cash Flow Period ( provided that any amount so deducted that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess

 

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Cash Flow Period) and for which reserves have been established, including income tax expense and withholding tax expense incurred in connection with cross-border transactions involving the Foreign Subsidiaries;

(f) an amount equal to any increase in Working Capital of the U.S. Borrower and the Subsidiaries for such Excess Cash Flow Period;

(g) cash expenditures made in respect of Swap Agreements during such Excess Cash Flow Period, to the extent not reflected in the computation of EBITDA or Cash Interest Expense;

(h) permitted dividends or distributions or repurchases of its Equity Interests paid in cash by Holdings (prior to a Qualified IPO) or the U.S. Borrower (after a Qualified IPO) during such Excess Cash Flow Period and permitted dividends paid by any Subsidiary to any person other than the U.S. Borrower or any of the Subsidiaries during such Excess Cash Flow Period, in each case in accordance with Section 6.06 (other than Section 6.06(e), 6.06(f)(ii), 6.06(f)(iii) and 6.06(k));

(i) amounts paid in cash during such Excess Cash Flow Period on account of (x) items that were accounted for as noncash reductions of Net Income in determining Consolidated Net Income or as noncash reductions of Consolidated Net Income in determining EBITDA of the U.S. Borrower and the Subsidiaries in a prior Excess Cash Flow Period and (y) reserves or accruals established in purchase accounting;

(j) to the extent not deducted in the computation of Net Proceeds in respect of any asset disposition or condemnation giving rise thereto, the amount of any mandatory prepayment of Indebtedness (other than Indebtedness created hereunder or under any other Loan Document), together with any interest, premium or penalties required to be paid (and actually paid) in connection therewith, and

(k) the amount related to items that were added to or not deducted from Net Income in calculating Consolidated Net Income or were added to or not deducted from Consolidated Net Income in calculating EBITDA to the extent such items represented a cash payment (which had not reduced Excess Cash Flow upon the accrual thereof in a prior Excess Cash Flow Period), or an accrual for a cash payment, by the U.S. Borrower and the Subsidiaries or did not represent cash received by the U.S. Borrower and the Subsidiaries, in each case on a consolidated basis during such Excess Cash Flow Period,

plus , without duplication,

(a) an amount equal to any decrease in Working Capital for such Excess Cash Flow Period;

(b) all proceeds received during such Excess Cash Flow Period of Capital Lease Obligations, purchase money Indebtedness, Sale and Lease-Back Transactions pursuant to Section 6.03 and any other Indebtedness, in each case to the extent used to finance any Capital Expenditure (other than Indebtedness under this Agreement to the extent there is no corresponding deduction to Excess Cash Flow above in respect of the use of such Borrowings);

 

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(c) all amounts referred to in clause (c) or (d) above to the extent funded with (i) the proceeds of the issuance of Equity Interests of, or capital contributions to, the U.S. Borrower after the Closing Date, (ii) any amount that would have constituted Net Proceeds under clause (a) of the definition of the term “Net Proceeds” if not so spent or (iii) Cumulative Retained Excess Cash Flow Amount, in each case to the extent there is a corresponding deduction from Excess Cash Flow above;

(d) to the extent any permitted Capital Expenditures referred to in clause (d) above and the delivery of the related equipment do not occur in the following Excess Cash Flow Period specified in the certificate of the U.S. Borrower provided pursuant to clause (d) above, the amount of such Capital Expenditures that were not so made in such following Excess Cash Flow Period;

(e) cash payments received in respect of Swap Agreements during such Excess Cash Flow Period to the extent (i) not included in the computation of EBITDA or (ii) such payments do not reduce Cash Interest Expense;

(f) any extraordinary or nonrecurring gain realized in cash during such Excess Cash Flow Period (except to the extent such gain consists of Net Proceeds subject to 2.11(c));

(g) to the extent deducted in the computation of EBITDA, cash interest income; and

(h) the amount related to items that were deducted from or not added to Net Income in connection with calculating Consolidated Net Income or were deducted from or not added to Consolidated Net Income in calculating EBITDA to the extent either (x) such items represented cash received by the U.S. Borrower or any Subsidiary or (y) such items do not represent cash paid by the U.S. Borrower or any Subsidiary, in each case on a consolidated basis during such Excess Cash Flow Period.

“ Excess Cash Flow Period ” shall mean (i) the period taken as one accounting period beginning on January 1, 2008, and ending on December 31, 2008, and (ii) each fiscal year of the U.S. Borrower ended thereafter.

“ Excess Tranche C-3 Credit-Linked Deposits ” shall mean, at any time, the excess, if any, of the Total Tranche C-3 Credit-Linked Deposit over the Tranche C-3 L/C Exposure at such time. The Excess Tranche C-3 Credit-Linked Deposit of any Tranche C-3 Lender at any time shall mean its Tranche C-3 Percentage of the Excess Tranche C-3 Credit-Linked Deposits.

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

“ Exchange Rate ” shall mean, on any day, for purposes of determining the U.S. Dollar Equivalent of any other currency, the rate at which such other currency may be exchanged

 

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into U.S. Dollars at the time of determination on such day on the Reuters WRLD Page for such currency. In the event that such rate does not appear on any Reuters WRLD Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the U.S. Borrower, or, in the absence of such an agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about such time as the Administrative Agent shall elect after determining that such rates shall be the basis for determining the Exchange Rate, on such date for the purchase of U.S. Dollars for delivery two Business Days later; provided that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.

“ Excluded Indebtedness ” shall mean all Indebtedness permitted to be incurred under Section 6.01 (as amended or waived from time to time).

“ Excluded Jurisdictions ” shall mean Hong Kong, Ireland, Luxembourg, Korea, Argentina, South Africa, France, Philippines, Finland, Barbados, People’s Republic of China, Mexico, Sweden, Japan, Switzerland, Singapore, Australia, Malaysia and Thailand.

“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder or, for purposes of Section 2.18 only, by or on account of any obligation of the Administrative Agent pursuant to Section 2.23(b), the following taxes, including interest, penalties or other additions thereto:

(a) income taxes imposed on (or measured by) its net income or franchise taxes imposed on (or measured by) its gross or net income by the country in which the applicable Borrower (or the Administrative Agent) is legally organized or any political subdivision thereof, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, in each case including any political subdivision thereof ( provided that no Foreign Lender shall be deemed to be located in any country solely as a result of taking any action under this Agreement),

(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above,

(c) any withholding tax that is attributable to a Lender’s failure to comply with Section 2.18(f),

(d) in the case of a Lender (other than an assignee pursuant to a request by the U.S. Borrower under Section 2.20(b) or by operation of the CAM), any withholding tax imposed by the Country in which the applicable Borrower (or the Administrative Agent) is legally organized or any political subdivision thereof that is in effect and would apply to amounts payable by such Borrower (or the Administrative Agent) from an office

 

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within such jurisdiction to the applicable Lending Office of such Lender at the time such Lender becomes a party to this Agreement (or designates a new Lending Office) provided that if a Lender is required to complete an application for a reduced withholding tax rate under an applicable income tax treaty with the United Kingdom in order to receive the benefit of such reduced withholding tax rate and such Lender completes such application as soon as practicable following the Closing Date, the rate of withholding in effect on the date on which such application is approved shall be deemed to be the rate in effect on the date on which such Lender becomes a party to this Agreement,

(e) in the case of a European Tranche Lender (other than an assignee pursuant to a request by the U.S. Borrower under Section 2.20(b) or by operation of the CAM), any tax on income of the Lender levied by Germany solely as a result of any real property serving as collateral under this Agreement,

except, in the case of clauses (d) and (e) above, to the extent that (i) such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from a Loan Party with respect to any withholding tax pursuant to Section 2.18(a) or (ii) such withholding tax shall have resulted from the making of any payment to a location other than the office designated by the Administrative Agent or such Lender for the receipt of payments of the applicable type.

“ Exemption Regulation ” shall mean the Exemption Regulation ( Vrijstellingsregeling ) dated 26 June 2002 of the Ministry of Finance of The Netherlands (as amended from time to time), as promulgated in connection with the Dutch Banking Act.

“ Existing 2004 Borden Floating Rate Notes ” shall mean $150.0 million aggregate principal amount of Borden U.S. Finance Corp/Borden Nova Scotia Finance, ULC Second-Priority Senior Secured Floating Rate Notes due 2010 issued under the Indenture dated as of August 12, 2004, by and among Hexion U.S. Finance Corp., each of the guarantors party thereto, Hexion Nova Scotia Finance, ULC and Wilmington Trust Company, as Trustee.

“ Existing 2005 Borden Floating Rate Notes ” shall mean $150.0 million aggregate principal amount of Borden U.S. Finance Corp/Borden Nova Scotia Finance, ULC Second-Priority Senior Secured Floating Rate Notes due 2010 issued under the Indenture dated as of May 20, 2005, by and among Hexion U.S. Finance Corp., each of the guarantors party thereto, Hexion Nova Scotia Finance, ULC and Wilmington Trust Company, as Trustee.

“ Existing Borden Fixed Rate Notes ” shall mean $325.0 million aggregate principal amount of Borden U.S. Finance Corp/Borden Nova Scotia Finance, ULC Second-Priority Senior Secured 9% Notes due 2014.

“ Existing Borden Floating Rate Notes ” shall mean the Existing 2004 Borden Floating Rate Notes and the Existing 2005 Borden Floating Rate Notes.

“ Existing Borden Floating Rate Notes Redemption ” shall mean, following the consummation of the Debt Tender Offer with respect to the Existing Borden Floating Rate Notes, the repurchase, satisfaction and discharge and/or defeasance of all remaining Existing

 

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Borden Floating Rate Notes in accordance with the terms of the indenture governing the Existing Borden Floating Rate Notes.

“ Existing Borden Second Secured Notes ” shall mean the Existing Borden Floating Rate Notes and the Existing Borden Fixed Rate Notes.

“ Existing Notes ” shall mean (a) the Existing Borden Second Secured Notes, (b) the Debentures and (c) the Industrial Revenue Bonds, in each case outstanding on the Closing Date.

“ Existing Notes Documents ” shall mean the indentures under which the Existing Notes are issued and all other instruments, agreements and other documents evidencing or governing the Existing Notes or providing for any security, guarantee or other right in respect thereof.

“ Existing Notes Issuer ” means any subsidiary of the U.S. Borrower that is an issuer or co-issuer of any of the Existing Notes.

“ Existing Borden Second Secured Notes Documents ” shall mean the indentures under which the Existing Borden Second Secured Notes are issued and all other instruments, agreements and other documents evidencing or governing the Existing Borden Second Secured Notes or providing for any security, guarantee or other right in respect thereof.

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

“ Fees ” shall mean the Commitment Fees, the L/C Participation Fees, the Issuing Bank Fees and the Administrative Agent Fees.

“ Financial Officer ” of any person shall mean the Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such person.

“ Flow Through Entity ” means an entity that is treated as a partnership not taxable as a corporation, a grantor trust or a disregarded entity for U.S. federal income tax purposes or subject to treatment on a comparable basis for purposes of state, local or foreign tax law.

“ Foreign Borrowers ” shall mean the Canadian Borrower, the Dutch Borrower, and the U.K. Borrowers.

“ Foreign Guarantee Agreement ” shall mean the Foreign Guarantee Agreement, dated as of May 31, 2005, as amended, supplemented or otherwise modified from time to time, among the Foreign Subsidiary Loan Parties and the Administrative Agent that provides for a Guarantee by such Foreign Subsidiary Loan Parties of the Obligations of Foreign Subsidiary Loan Parties.

 

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“ Foreign Lender ” shall mean, as to any Loan Party, any Lender that is organized under the laws of a jurisdiction other than that in which such Loan Party is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ Foreign Mortgages ” shall mean the mortgages, debentures, hypothecs, deeds of trust, charges, assignments of leases and rents and other security documents delivered pursuant to Section 4.02 of the 2005 Credit Agreement or Section 5.10 with respect to Mortgaged Properties located outside the United States of America, each in form and substance reasonably satisfactory to the Administrative Agent.

“ Foreign Obligations ” means the aggregate of (a) the Guaranteed Obligations (as defined in the Foreign Guarantee Agreement) of each of the Foreign Subsidiary Loan Parties and (b) the Guaranteed Obligations (as defined in the U.S. Guarantee Agreement) of each of the U.S. Borrower and the Domestic Subsidiary Loan Parties but only to the extent they guarantee the Guaranteed Obligations (as defined in the Foreign Guarantee Agreement) of any of the Foreign Subsidiary Loan Parties, each as they may exist from time to time, other than the Parallel Debt Foreign Obligations.

“ Foreign Pledge Agreement ” shall mean a pledge or charge agreement with respect to the Pledged Collateral that constitutes Equity Interests of a Foreign Subsidiary that is a Material Subsidiary, in form and substance reasonably satisfactory to the Administrative Agent; provided that in no event shall more than 65% of the issued and outstanding voting Equity Interests of such Foreign Subsidiary be pledged to secure Obligations of the Domestic Loan Parties.

“ Foreign Security Documents ” shall mean one or more security agreements, charges, mortgages or pledges with respect to Collateral (other than Collateral that is subject to a Foreign Mortgage) of a Foreign Subsidiary Loan Party (including, notwithstanding the foregoing exclusion of Collateral subject to Foreign Mortgages, the Quebec Documents), including the Canadian Security Documents, the U.K. Debentures, the Security Trust Deed, the Dutch Security Documents and the German Security Documents, each in form and substance reasonably satisfactory to the Administrative Agent, that secure the Obligations of any Foreign Subsidiary Loan Party.

“ Foreign Subsidiary ” shall mean any Subsidiary that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any State thereof or the District of Columbia.

“ Foreign Subsidiary Loan Party ” shall mean (a) each Foreign Borrower, (b) each Foreign Subsidiary that is set forth on Schedule 1.01(b) , (c) each other Wholly-Owned Foreign Subsidiary organized under the laws of Canada, the United Kingdom, The Netherlands or Germany (other than the German Guarantor and its subsidiaries until the actions contemplated by Section 5.14 have been consummated) and (d) at the U.S. Borrower’s option, any other Foreign

 

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Subsidiary organized under the laws of any jurisdiction set forth on Schedule 1.01(e) that has satisfied the Collateral and Guarantee Requirement, completed all actions required by Sections 5.10(b) and (c) and delivered to the Administrative Agent a customary written opinion of legal counsel in the United States with respect to applicable United States legal issues and, if applicable, such foreign jurisdiction with respect to the guarantee and security interests granted by such Foreign Subsidiary.

“ Fund ” shall mean Apollo Investment Fund IV, L.P., Apollo Investment Fund V, L.P. and Apollo Overseas Partners IV, L.P.

“ Fund Affiliate ” shall mean (a) each Affiliate of the Fund that is neither a “portfolio company” (which means a company actively engaged in providing goods or services to unaffiliated customers) nor a company controlled by a “portfolio company” and (b) any individual who is a partner or employee of Apollo Management, L.P., Apollo Management IV, L.P. or Apollo Management V, L.P.

“ GAAP ” shall mean generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, subject to the provisions of Section 1.02; provided that any reference to the application of GAAP in Section 3.13(a), 3.13(b), 3.20, 5.03, 5.07 and 6.02(e) to a Foreign Subsidiary (and not as a consolidated Subsidiary of the U.S. Borrower) shall mean generally accepted accounting principles in effect from time to time in the jurisdiction of organization of such Foreign Subsidiary.

“ German Guarantor ” shall mean Hexion Specialty Chemicals GmbH.

“ German Security ” shall mean any security assumed and accepted by or through the Administrative Agent or any Secured Party, as the case may be, pursuant to any German Security Document and held or administered by the Administrative Agent on behalf of or in trust for the Secured Parties and any addition or replacement or substitution thereof.

“ German Security Documents ” shall mean all Security Documents governed by German law and “ German Security Document ” means any of them.

“ Governmental Authority ” shall mean any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body.

“ Guarantee ” of or by any person (the “guarantor”) shall mean (a) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or- pay or otherwise) or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such

 

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Indebtedness or other obligation, (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part) or (v) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other obligation, or (b) any Lien on any assets of the guarantor (other than the Lien permitted pursuant to Section 6.02(hh)) securing any Indebtedness or other obligation (or any existing right, contingent or otherwise, of the holder of Indebtedness or other obligation to be secured by such a Lien) of any other person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided , however, that the term “Guarantee” shall not include endorsements for collection or deposit, in either case in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement.

“ Hazardous Materials ” shall mean all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including explosive or radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas, of any nature subject to regulation or which can give rise to liability under any Environmental Law.

“ Holdings ” shall have the meaning assigned to such term in the preamble hereto.

“ Immaterial Subsidiary ” shall mean any Subsidiary (i) designated by the U.S. Borrower, (ii) that did not, as of the last day of the fiscal quarter of the U.S. Borrower most recently ended, have assets with a value in excess of 5.0% of the Consolidated Total Assets or revenues representing in excess of 5.0% of total revenues of the U.S. Borrower and the Subsidiaries on a consolidated basis as of such date and (iii) that taken together with all Unrestricted Subsidiaries designated pursuant to clause (ii) of the definition thereof and all other Immaterial Subsidiaries as of the last day of the fiscal quarter of the U.S. Borrower most recently ended, did not have assets with a value in excess of 10.0% of the Consolidated Total Assets or revenues representing in excess of 10.0% of total revenues of the U.S. Borrower and the Subsidiaries on a consolidated basis as of such date.

Each Subsidiary to be designated as an Immaterial Subsidiary by the U.S. Borrower hereunder shall be set forth on Schedule 1.01(f) , and the U.S. Borrower may update such Schedule from time to time after the Closing Date as necessary to reflect all Immaterial Subsidiaries at such time (the selection of Subsidiaries to be added to or removed from such Schedule to be made as the U.S. Borrower may determine).

“ Increased Amount Date ” shall have the meaning assigned to such term in Section 2.21.

“ Incremental Amount ” shall mean, at any time, the excess, if any, of (a) $200.0 million over (b) the aggregate amount of all Incremental Term Loan Commitments and Incremental Revolving Facility Commitments established prior to such time pursuant to Section 2.21.

 

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“ Incremental Assumption Agreement ” shall mean an Incremental Assumption Agreement in form and substance reasonably satisfactory to the Administrative Agent, among the U.S. Borrower and/or the Dutch Borrower, the Administrative Agent and one or more Incremental Term Lenders and/or Incremental Revolving Facility Lenders.

“ Incremental Revolving Facility Commitment ” shall mean the commitment of any Lender, established pursuant to Section 2.21, to make Incremental Revolving Facility Loans to the U.S. Borrower or the Dutch Borrower.

“ Incremental Revolving Facility Lender ” shall mean a Lender with an Incremental Revolving Facility Commitment or an outstanding Incremental Revolving Facility Loan.

“ Incremental Revolving Facility Loans ” shall mean Revolving Facility Loans made by one or more Lenders to the U.S. Borrower or the Dutch Borrower pursuant to Section 2.01(e). Incremental Revolving Facility Loans may be made in the form of additional Revolving Facility Loans or, to the extent permitted by Section 2.21 and provided for in the relevant Incremental Assumption Agreement, Other Revolving Facility Loans.

“ Incremental Term Lender ” shall mean a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.

“ Incremental Term Loan Commitment ” shall mean the commitment of any Lender, established pursuant to Section 2.21, to make Incremental Term Loans to the U.S. Borrower or the Dutch Borrower.

“ Incremental Term Loans ” shall mean Term Loans made by one or more Lenders to the U.S. Borrower or the Dutch Borrower pursuant to Section 2.01(e). Incremental Term Loans may be made in the form of additional Tranche C-1 Term Loans, Tranche C-2 Term Loans or Tranche C-4 Term Loans or, to the extent permitted by Section 2.21 and provided for in the relevant Incremental Term Loan Assumption Agreement, Other Term Loans.

“ Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (d) all obligations of such person issued or assumed as the deferred purchase price of property or services (other than current trade liabilities and current intercompany liabilities (but not any refinancings, extensions, renewals or replacements thereof) incurred in the ordinary course of business and maturing within 365 days after the incurrence thereof), (e) all Guarantees by such person of Indebtedness of others, (f) all Capital Lease Obligations of such person, (g) all payments that such person would have to make in the event of an early termination, on the date Indebtedness of such person is being determined, in respect of outstanding Swap Agreements, (h) the principal component of all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit (including Tranche C-3 Letters of Credit), (i) the principal component of all obligations of such person in respect of bankers’ acceptances and (j) the amount of all obligations of such person with respect to the redemption, repayment or

 

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other repurchase of any Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock); provided , that Indebtedness shall not include (A) trade payables, accrued expenses and intercompany liabilities arising in the ordinary course of business (other than, in the case of such intercompany liabilities, for purposes of clause (d) of the definition of the term “Collateral and Guarantee Requirement”), (B) prepaid or deferred revenue arising in the ordinary course of business, (C) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset to satisfy unperformed obligations of the seller of such asset or (D) earn-out obligations until such obligations become a liability on the balance sheet of such person in accordance with GAAP. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such person in respect thereof. For the avoidance of doubt, except as provided in clause (h) above, the Tranche C-3 Credit-Linked Deposits shall not constitute Indebtedness.

“ Indemnified Taxes ” shall mean all Taxes other than Excluded Taxes and Other Taxes.

“ Indemnitee ” shall have the meaning assigned to such term in Section 9.05(b).

“ Indenture Restricted Subsidiary ” shall mean a “Restricted Subsidiary” under and as defined in either of the Debenture Indentures.

“ Industrial Revenue Bonds ” shall mean the Parish of Ascension, Louisiana, Industrial Revenue Bonds guaranteed by the U.S. Borrower outstanding on the Closing Date.

“ Ineligible Institution ” shall mean the persons identified in writing to the Administrative Agent by the U.S. Borrower on the Closing Date , and as may be identified in writing to the Administrative Agent by the U.S. Borrower from time to time thereafter, with the written consent of the Administrative Agent, by delivery of a notice thereof to the Administrative Agent setting forth such person or persons (or the person or persons previously identified to Agent that are to be no longer considered “Ineligible Institutions”).

“ Information Memorandum ” shall mean the Confidential Information Memorandum dated October 17, 2006, as modified or supplemented prior to the Amendment Effective Date.

“ Intercreditor Agreement ” shall mean (a) the New Second Lien Intercreditor Agreement and (b) any additional or replacement intercreditor agreement entered into by the Administrative Agent pursuant to Section 8.11, each as amended, modified or supplemented from time to time in accordance with this Agreement.

“ Interest Election Request ” shall mean a request by the applicable Borrower to convert or continue a Term Borrowing or Revolving Borrowing in accordance with Section 2.08.

“ Interest Expense ” shall mean, with respect to any person for any period, the sum of, without duplication, (a) gross interest expense of such person for such period on a consolidated basis, including (i) the amortization of debt discounts, (ii) the amortization of all

 

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fees (including fees with respect to Swap Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense, (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense and (iv) net payments and receipts (if any) pursuant to interest rate hedging obligations, and excluding amortization of deferred financing fees and expensing of any bridge or other financing fees, (b) capitalized interest of such person, whether paid or accrued, and (c) commissions, discounts, yield and other fees and charges incurred for such period in connection with any receivables financing of such person or any of its subsidiaries that are payable to persons other than Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiaries. For purposes of the foregoing, gross interest expense shall be determined after giving effect to any net payments made or received and costs incurred by the U.S. Borrower and the Subsidiaries with respect to Swap Agreements.

“ Interest Payment Date ” shall mean, (a) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing and, in addition, the date of any refinancing or conversion of such Borrowing with or to a Borrowing of a different Type, (b) with respect to any ABR Loan (other than a Swingline Loan) or Base Rate Loan, the first day of each calendar quarter (being the first day of January, April, July and October of each year) and (c) with respect to any Swingline Loan, the day that such Swingline Loan is required to be repaid pursuant to Section 2.10(a).

“ Interest Period ” shall mean (a) as to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as applicable, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter (or 9 or 12 months, if at the time of the relevant Borrowing, all Lenders make interest periods of such length available), as the applicable Borrower may elect, or the date any Eurocurrency Borrowing is converted to an ABR Borrowing in accordance with Section 2.08 or repaid or prepaid in accordance with Section 2.10, 2.11 or 2.12 and (b) as to any Swingline Borrowing made by the Dutch Borrower or the U.K. Borrower, the period commencing on the date of such Borrowing and ending on the day that is designated in the notice delivered pursuant to Section 2.04 with respect to such Swingline Borrowing, which shall not be later than the first date after such Swingline Loan is to be made that is the 15th or last day of a calendar month and is at least five Business Days after such Swingline Loan is made; provided , that, in the case of each of clause (a) and clause (b), if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

“ Investment ” shall have the meaning set forth in Section 6.04.

 

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“ Issuing Bank ” shall mean (a) with respect to each of the European Tranche, the Canadian Tranche and Tranche C-3, each Issuing Bank set forth with respect to such Tranche on Schedule 2.05 and each other Issuing Bank designated with respect to such Tranche pursuant to Section 2.05(k), in each case in its capacity as an issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i) and (b) with respect to each Original Letter of Credit, the person that issued such Original Letter of Credit and any successor to such person. An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

“ Issuing Bank Fees ” shall have the meaning assigned to such term in Section 2.13(b).

“ Joint Lead Arrangers ” shall have the meaning assigned to such term in the preamble hereto.

“ L/C Disbursement ” shall mean a payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit. The amount of any L/C Disbursement made by an Issuing Bank in an Alternative Currency and not reimbursed by the applicable Borrower shall be determined as set forth in paragraph (e) or (m) of Section 2.05, as applicable.

“ L/C Exposure ” shall mean, at any time, the sum, without duplication, of the Revolving L/C Exposure and the Tranche C-3 L/C Exposure at such time.

“ L/C Participation Fee ” shall have the meaning assigned such term in Section 2.13(b).

“ Lender ” shall mean each financial institution listed on Schedule 2.01 , the persons listed on Schedule 1 to the Amendment Agreement, the persons listed on Schedule 1 to the May 2006 Amendment Agreement as well as any person that becomes a “Lender” hereunder pursuant to Section 9.04 or Section 2.21.

“ Lender Default ” shall mean (a) the refusal (which has not been retracted) of a Lender to make available its portion of any Borrowing or Tranche C-3 Credit-Linked Deposit, to acquire participations in a Swingline Loan pursuant to Section 2.04 or to fund its portion of any unreimbursed payment under Section 2.05(e), or (b) a Lender having notified in writing the U.S. Borrower and/or the Administrative Agent that it does not intend to comply with its obligations under Section 2.04, 2.05, 2.06 or 2.07.

“ Lending Office ” shall mean, as to any Lender, the applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans to the U.S. Borrower, Canadian Borrower, U.K. Borrower, or Dutch Borrower, as the case may be.

“ Letter of Credit ” shall mean any letter of credit issued pursuant to Section 2.05 of this Agreement, including each Original Letter of Credit.

“ LIBO Rate ” shall mean, with respect to any Eurocurrency Borrowing denominated in U.S. Dollars or Sterling for any Interest Period, the rate per annum determined

 

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by the Administrative Agent at approximately 11:00 a.m., London time, on the date that is two Business Days prior to the commencement of such Interest Period (or on the date of the commencement of such Interest Period if such Eurocurrency Borrowing is denominated in Sterling) by reference to the British Bankers’ Association Interest Settlement Rates for deposits in the currency of such Eurocurrency Borrowing (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) with a maturity comparable to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “ LIBO Rate ” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in the currency of such Eurocurrency Borrowing are offered for a maturity comparable to such relevant Interest Period to major banks in the London interbank market in London, England, as selected by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period (or on the date of the commencement of such Interest Period if such Eurocurrency Borrowing is denominated in Sterling).

“ Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, hypothecation, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities (other than securities representing an interest in a joint venture that is not a Subsidiary), any purchase option, call or similar right of a third party with respect to such securities; provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

“ Loan Documents ” shall mean this Agreement, the Amendment Agreement, the Letters of Credit, the Security Documents and any promissory note issued under Section 2.10(e), and solely for the purposes of Section 7.01(c) hereof, the Fee Letter dated October 11, 2006, by and among the U.S. Borrower, the Administrative Agent and the Joint Lead Arrangers.

“ Loan Parties ” shall mean Holdings (prior to a Qualified IPO), the U.S. Borrower and the Subsidiary Loan Parties.

“ Loans ” shall mean the Term Loans, the Revolving Facility Loans and the Swingline Loans (and shall include any Loans under the Incremental Revolving Facility Commitments or Incremental Term Loan Commitments).

“ Local Time ” shall mean (a) with respect to a Loan or Borrowing made to the U.S. Borrower, New York City time, (b) with respect to a Loan or Borrowing made to the Dutch Borrower or a U.K. Borrower, London time, and (c) with respect to a Loan or Borrowing made to the Canadian Borrower or a B/A, Toronto time.

“ Majority Lenders ” of any Tranche shall mean, at any time, Lenders under such Tranche having Loans and unused Commitments representing more than 50% of the sum of all Loans outstanding under such Tranche and unused Commitments under such Tranche at such time.

 

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“ Management Group ” means the group consisting of the directors, executive officers and other management personnel of the U.S. Borrower and Holdings, as the case may be, on the Closing Date together with (a) any new directors of the U.S. Borrower or (prior to a Qualified IPO) Holdings whose election by such Boards of Directors or whose nomination for election by the shareholders of the U.S. Borrower or (prior to a Qualified IPO) Holdings, as the case may be, was approved by a vote of a majority of the directors of the U.S. Borrower or (prior to a Qualified IPO) Holdings, as the case may be, then still in office who were either directors on the Closing Date or whose election or nomination was previously so approved and (b) executive officers and other management personnel of the U.S. Borrower or (prior to a Qualified IPO) Holdings, as the case may be, hired at a time when the directors on the Closing Date together with the directors so approved constituted a majority of the directors of the U.S. Borrower or Holdings, as the case may be.

“ Margin Stock ” shall have the meaning assigned to such term in Regulation U.

“ Material Adverse Effect ” shall mean a material adverse effect on (a) the business, property, operations or condition of the U.S. Borrower and the Subsidiaries, taken as a whole, or (b) the validity or enforceability of any material Loan Document or the rights and remedies of the Administrative Agent and the Lenders thereunder.

“ Material Indebtedness ” shall mean Indebtedness (other than Loans and Letters of Credit) of any one or more of Holdings (prior to a Qualified IPO), the U.S. Borrower or any Subsidiary in an aggregate principal amount exceeding $50.0 million, excluding the Industrial Revenue Bonds and Guarantees thereof.

“ Material Subsidiary ” shall mean any Subsidiary other than Immaterial Subsidiaries.

“ Maximum Rate ” shall have the meaning assigned to such term in Section 9.09.

“ May 2006 Amendment Agreement ” shall mean the Amendment and Restatement Agreement dated as of May 5, 2006 among Holdings, the Borrowers, the Required Restatement Lenders (as defined therein) and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the 2005 Credit Agreement was amended and restated.

“ May 2006 Amendment Effective Date ” shall mean May 5, 2006.

“ May 2006 Credit Agreement ” shall mean the Amended and Restated Credit Agreement dated as of May 5, 2006 among Holdings, the Borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Credit Suisse, as syndication agent, and Citicorp North America, Inc., as documentation agent.

“ May 2006 Debt Repurchase and Redemption ” shall mean the repurchase or redemption, as applicable, by the U.S. Borrower of all outstanding RPP 8% Notes, RPP 9-1/2% Notes and Subordinated Notes and the payment of premiums, accrued interest and fees in connection therewith.

 

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“ May 2006 Transactions ” shall mean, collectively, (a) the consummation of the May 2006 Debt Repurchase and Redemption, (b) the PIK Preferred Stock Redemption, (d) the repayment of all term loans outstanding, and the return of all credit-linked deposits remaining, in each case under the 2005 Credit Agreement on the May 2006 Amendment Effective Date, (e) the entering into of the Loan Documents (as defined in the May 2006 Credit Agreement) and the incurrence of all Loans (as defined in the May 2006 Credit Agreement) under the May 2006 Credit Agreement on the May 2006 Amendment Effective Date and (f) the payment of all fees and expenses in connection therewith to be paid on, prior to or subsequent to the May 2006 Amendment Effective Date.

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

“ Mortgaged Properties ” shall mean the owned real properties of the Loan Parties set forth on Schedule 1.01(c) and each additional real property encumbered by a Mortgage pursuant to Section 5.10.

“ Mortgages ” shall mean the mortgages, debentures, hypothecs, deeds of trust, deeds to secure debt, assignments of leases and rents, and other security documents delivered pursuant to Section 4.02 of the 2005 Credit Agreement or Section 5.10, as amended, supplemented or otherwise modified from time to time, with respect to Mortgaged Properties, each in form and substance reasonably satisfactory to the Administrative Agent.

“ Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which Holdings (prior to a Qualified IPO), the U.S. Borrower or any Subsidiary or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding six plan years made or accrued an obligation to make contributions.

“ Net Income ” shall mean, with respect to any person, the net income (loss) of such person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends.

“ Net Proceeds ” shall mean:

(a) 100% of the cash proceeds actually received by the U.S. Borrower or any Subsidiary Loan Party (or, in the case of any sale, transfer or other disposition of Principal Property, any other Subsidiary) (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise and including casualty insurance settlements and condemnation awards, but only as and when received) from any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets and any mortgage or lease of real property) to any person of any asset or assets of the U.S. Borrower or any Subsidiary Loan Party (other than those pursuant to Section 6.05(a), (b), (c), (e), (f), (g), (i) or (j)), net of (i) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, required debt payments and required payments of other obligations relating to the applicable asset

 

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(other than pursuant hereto (or pursuant to the Existing Notes, any Indebtedness secured by Second-Priority Liens or Permitted Refinancing Indebtedness in respect of any thereof)), other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith and (ii) Taxes paid or payable as a result thereof; provided that, if no Event of Default exists and the U.S. Borrower shall deliver a certificate of a Responsible Officer of the U.S. Borrower to the Administrative Agent promptly following receipt of any such proceeds setting forth the U.S. Borrower’s intention to use, or to commit to use, any portion of such proceeds, to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in the business of the U.S. Borrower and the Subsidiaries or to make investments in Permitted Business Acquisitions or Investments permitted by Section 6.04, in each case within twelve months of such receipt, such portion of such proceeds shall not constitute Net Proceeds except to the extent (A) not so used (or committed to be used) within such twelve-month period or (B) if committed to be used within such twelve-month period, not so used within 18 months of such receipt); provided further that (x) no proceeds realized in a single transaction or series of related transactions shall constitute Net Proceeds unless such proceeds shall exceed $5.0 million and (y) no proceeds shall constitute Net Proceeds in any fiscal year until the aggregate amount of all such proceeds in such fiscal year shall exceed $15.0 million; and

(b) 100% of the cash proceeds from the incurrence, issuance or sale by the U.S. Borrower or any Subsidiary Loan Party of any Indebtedness (other than Excluded Indebtedness), net of all taxes and fees (including investment banking fees), commissions, costs and other expenses, in each case incurred in connection with such issuance or sale.

For purposes of calculating the amount of Net Proceeds, fees, commissions and other costs and expenses payable to Holdings or the U.S. Borrower or any Affiliate of either of them shall be disregarded, except for financial advisory fees customary in type and amount paid to Affiliates of the Fund.

“ New Notes Issuer ” means any subsidiary of the U.S. Borrower that is an issuer or co-issuer of any of the New Second Secured Notes.

“ New Second Lien Intercreditor Agreement ” shall mean the Intercreditor Agreement dated as of November 3, 2006, among the U.S. Borrower, Wilmington Trust Company, as Trustee for the New Second Secured Notes, the Administrative Agent, Holdings and the Domestic Subsidiary Loan Parties.

“ New Second Secured Notes ” shall mean (a) $200 million aggregate principal amount of Hexion U.S. Finance Corp./Hexion Nova Scotia Finance, ULC Second-Priority Senior Secured Floating Rate Notes due 2014 and (b) $625 million aggregate principal amount of Hexion U.S. Finance Corp./Hexion Nova Scotia Finance, ULC Second-Priority Senior Secured 9  ³ / 4 % Notes due 2014.

“ New Second Secured Notes Documents ” shall mean the indentures under which the New Second Secured Notes are issued and all other instruments, agreements and other

 

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documents evidencing or governing the New Second Secured Notes or providing for any security, guarantee or other right in respect thereof.

“ New Second Secured Notes Offering Memorandum ” shall mean the Offering Circular, dated October 27, 2006, in respect of the New Second Secured Notes.

“ Non-Consenting Lender ” shall have the meaning assigned to such term in Section 2.20(c).

“ Note ” shall have the meaning assigned to such term in Section 2.10(e).

“ Notice Date ” shall mean any date on which (a) tenders are accepted for payment pursuant to the Debt Tender Offer or (b) an irrevocable notice of redemption is delivered in respect of Existing 2004 Borden Floating Rate Notes or Existing 2005 Borden Floating Rate Notes, as applicable.

“ Obligations ” shall, unless otherwise indicated, have the meaning assigned to the term “Loan Document Obligations” in the Collateral Agreement.

“ Original Letters of Credit ” shall mean each letter of credit previously issued for the account of, or guaranteed by, the Borrowers or RSM pursuant to the 2005 Credit Agreement or the May 2006 Credit Agreement that is outstanding on the Amendment Effective Date.

“ Other Revolving Facility Loans ” shall have the meaning assigned to such term in Section 2.21(a).

“ Other Taxes ” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, the Loan Documents, and any and all interest and penalties related thereto.

“ Other Term Loans ” shall have the meaning assigned to such term in Section 2.21.

“ Overdraft Line ” shall have the meaning assigned to such term in Section 6.01(v).

“ Parallel Debt Dutch Term Loan Obligations ” shall mean the Parallel Debt Foreign Obligations to the extent consisting of amounts equal to the aggregate amount payable pursuant to the Dutch Term Loan Obligations as they may exist from time to time.

“ Parallel Debt Foreign Obligations ” shall have the meaning assigned to such term in Section 9.20.

“ Parallel Debt U.S. Obligations ” shall have the meaning assigned to such term in Section 9.20.

“ Participant ” shall have the meaning assigned to such term in Section 9.04(c).

 

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“ PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“ Perfection Certificates ” shall mean the Perfection Certificate with respect to each of the U.S. Borrower, the Canadian Borrower, the Dutch Borrower and the U.K. Borrowers, in a form reasonably satisfactory to the Administrative Agent.

“ Permitted Business Acquisition ” shall mean any acquisition, directly or indirectly (including in one transaction or a series of related transactions), of all or substantially all the assets of, or all the Equity Interests (other than directors’ qualifying shares) in, or merger or consolidation with, a person or division or line of business of a person (or any subsequent investment made in a person, division or line of business previously acquired in a Permitted Business Acquisition) if (a) such acquisition was not preceded by, or effected pursuant to, a hostile offer by the acquirer or an Affiliate of the acquirer and (b) immediately after giving effect thereto: (i) no Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions related thereto shall be consummated in accordance with applicable laws; (iii) with respect to any such acquisition with a fair market value in excess of $25 million, the U.S. Borrower and the Subsidiaries shall be in Pro Forma Compliance after giving effect to such acquisition and the U.S. Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the U.S. Borrower to such effect, together with all relevant financial information for such Subsidiary or assets, (iv) any acquired or newly formed Subsidiary shall not be liable for any Indebtedness (except for Indebtedness permitted by Section 6.01); (v) to the extent required by Section 5.10, any person acquired in such acquisition, if acquired by the U.S. Borrower or a Subsidiary Loan Party, shall be merged into the U.S. Borrower or a Subsidiary Loan Party or become upon consummation of such acquisition a Subsidiary Loan Party, and (vi) the aggregate amount of such acquisitions of assets that are not (or do not become) owned by the U.S. Borrower or a Subsidiary Loan Party or in Equity Interests in Persons that do not become Loan Parties upon consummation of such acquisition shall not exceed the greater of (x) 3.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such acquisition for which financial statements have been delivered pursuant to Section 5.04 and (y) $100.0 million.

“ Permitted Cure Security ” shall mean an equity security of Holdings (prior to a Qualified IPO) or the U.S. Borrower (after a Qualified IPO) having no mandatory redemption, repurchase or similar requirements prior to 91 days after the latest to mature of any Tranche, Other Term Loan, if any, and Other Revolving Facility Loan, if any (without regard to the proviso to the definition of “Term Facility Maturity Date” or “Revolving Facility Maturity Date” or any similar qualification to the maturity date of any such Other Term Loan or Other Revolving Facility Loan), and upon which all dividends or distributions (if any) shall, prior to 91 days after the latest to mature of any Tranche, Other Term Loan, if any, and Other Revolving Facility Loan, if any (without regard to the proviso to the definition of “Term Facility Maturity Date” or “Revolving Facility Maturity Date” or any similar qualification to the maturity date of any such Other Term Loan or Other Revolving Facility Loan), be payable solely in additional shares of such equity security.

 

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“ Permitted Holder ” shall mean each of (a) the Fund and the Fund Affiliates and (b) the Management Group, with respect to not more than 10% of the total voting power of the Equity Interests of Holdings (prior to a Qualified IPO) or the U.S. Borrower.

“ Permitted Investments ” shall mean:

(1) U.S. dollars, pounds sterling, euros, or, in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business;

(2) securities issued or directly and fully guaranteed or insured by the government of, or any agency or instrumentality thereof, the United States of America, Australia, Great Britain, Canada, the Netherlands or any other member state of the European Union, in each case with maturities not exceeding two years (or, in the case of any such U.S. securities held by Brazilian subsidiaries, five years) after the date of acquisition;

(3) in the case of any Foreign Subsidiary, securities issued or directly and fully guaranteed or insured by the government of, or any agency or instrumentality thereof, Malaysia or Brazil, in each case with maturities not exceeding 270 days after the date of acquisition and held by it from time to time in the ordinary course of business;

(4) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding one year and overnight bank deposits and demand deposits (in their respective local currencies), in each case with any commercial bank having capital and surplus in excess of $500.0 million or the foreign currency equivalent thereof and whose long-term debt is rated “A” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency);

(5) repurchase obligations for underlying securities of the types described in clauses (2) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above;

(6) commercial paper issued by a corporation (other than an Affiliate of U.S. Borrower) rated at least “A-1” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency) and in each case maturing within one year after the date of acquisition;

(7) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P in each case with maturities not exceeding two years from the date of acquisition;

(8) Indebtedness issued by persons (other than the Fund or any of its Affiliates) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of

 

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another internationally recognized credit rating agency) in each case with maturities not exceeding two years from the date of acquisition; and

(9) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (8) above.

“ Permitted Refinancing Indebtedness ” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “ Refinance ”), the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness); provided that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premium thereon and underwriting discounts, fees, commissions and expenses), (b) the average life to maturity of such Permitted Refinancing Indebtedness is greater than or equal to that of the Indebtedness being Refinanced, (c) if the Indebtedness being Refinanced is subordinated in right of payment to the Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to such Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, (d) no Permitted Refinancing Indebtedness shall have obligors that are not Loan Parties hereunder, or greater guarantees or security, than the Indebtedness being Refinanced and (e) if the Indebtedness being Refinanced is secured by any collateral (whether equally and ratably with, or junior to, the Secured Parties or otherwise), such Permitted Refinancing Indebtedness may be secured by such collateral (including in respect of working capital facilities of Foreign Subsidiaries that are not Loan Parties otherwise permitted under this Agreement only, any collateral pursuant to after-acquired property clauses to the extent any such collateral secured the Indebtedness being Refinanced) on terms no less favorable to the Secured Parties than those contained in the documentation (including any intercreditor agreement) governing the Indebtedness being Refinanced; provided that the New Second Secured Notes or the Existing Borden Second Secured Notes or any Permitted Refinancing Indebtedness in respect thereof (or any portion thereof) may be Refinanced with Indebtedness that is secured by Liens that are senior in priority to the Liens securing the New Second Secured Notes or the Existing Borden Second Secured Notes on the Amendment Effective Date (or any remaining portion thereof), so long as the Liens securing such Indebtedness are subject to intercreditor terms that, vis-à-vis the Loans, are no less favorable to the Lenders than those set forth in the New Second Lien Intercreditor Agreement; provided, further, that any Lien on the Collateral securing Permitted Refinancing Indebtedness incurred under Section 6.01(b) shall be a Second-Priority Lien.

“ person ” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.

“ PIK Preferred Stock ” shall mean the Series A Floating Rate PIK Preferred Stock issued by the U.S. Borrower on May 20, 2005.

 

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“ PIK Preferred Stock Documents ” shall mean the certificate of designation governing the PIK Preferred Stock and all other instruments, agreements and other documents evidencing or governing the PIK Preferred Stock.

“ PIK Preferred Stock Redemption ” shall mean the redemption of all issued and outstanding PIK Preferred Stock in accordance with the terms of the PIK Preferred Stock Documents.

“ Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code and in respect of which Holdings (prior to a Qualified IPO), the U.S. Borrower, any Subsidiary or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“ Platform ” shall have the meaning assigned to such term in Section 9.18(b).

“ Pledged Collateral ” shall have the meaning assigned to such term in the Collateral Agreement or a Foreign Pledge Agreement, as applicable.

“ PMP ” shall (i) until the enactment of the AFS, which is expected to take place on January 1, 2007, mean a professional market party ( professionele marktpartij ) within the meaning of the Exemption Regulation and the Policy Guidelines the current reading of which is set out in Schedule 9.22 part I and (ii) after the enactment of the AFS mean a professional market party ( professionele marktpartij ) within the meaning of the AFS and any regulation promulgated thereunder, the current reading of which is set out in Schedule 9.22 part II, and as amended from time to time.

“ Policy Guidelines ” shall mean the 2005 Dutch Central Bank’s Policy Guidelines (issued in relation to the Exemption Regulation) dated 29 December 2004 ( Beleidsregel 2005 kernbegrippen markttoetreding en handhaving Wtk 1992 ) as amended from time to time.

“ Presumed Tax Rate ” shall mean the highest effective marginal statutory combined U.S. federal, state and local income tax rate prescribed for an individual residing in New York City (taking into account (a) the deductibility of state and local income taxes for U.S. federal income tax purposes, assuming the limitation of Section 68(a)(2) of the Code applies and taking into account any impact of Section 68(f) of the Code, and (b) the character (long-term or short-term capital gain, dividend income or other ordinary income) of the applicable income).

“ primary obligor ” shall have the meaning assigned to such term in the definition of the term “Guarantee.”

“ Principal Property ” shall have the meaning assigned to such term in the Debenture Indentures.

“ Pro Forma Basis ” shall mean, as to any person, for any events as described below that occur subsequent to the commencement of a period for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events

 

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occurred on the first day of the four consecutive fiscal quarter period ended on or before the occurrence of such event (the “ Reference Period ”); provided for purposes of determining adjustments permitted by the second paragraph of this definition for any calculation made on a Pro Forma Basis for any period ending on or prior to June 30, 2007, the 2005 Transactions shall be deemed to have occurred subsequent to the commencement of the relevant four consecutive fiscal quarter period: (i) in making any determination of EBITDA, effect shall be given to any Asset Disposition, any acquisition (or any similar transaction or transactions not otherwise permitted under Section 6.04 or 6.05 that require a waiver or consent of the Required Lenders and such waiver or consent has been obtained), any dividend, distribution or other similar payment, any designation of any Subsidiary as an Unrestricted Subsidiary and any Subsidiary Redesignation, any mergers and consolidations, and any restructurings of the business of the U.S. Borrower or any of the Subsidiaries that are expected to have a continuing impact and are factually supportable, which would include cost savings resulting from head count reduction, closure of facilities and similar operational and other cost savings, which adjustments the U.S. Borrower determines are reasonable (the foregoing, together with any transactions related thereto or in connection therewith, the “relevant transactions” or “relevant pro forma event”), in each case that the U.S. Borrower or any of the Subsidiaries has made during the Reference Period (or, in the case of determinations made pursuant to the definition of the term “Permitted Business Acquisition,” or pursuant to Section 2.12(b), Section 6.01(w), Section 6.02(v) or Section 6.06(f), occurring during the Reference Period or thereafter and through and including the date upon which the respective Permitted Business Acquisition or incurrence of Indebtedness or Liens or Dividend is consummated), (ii) in making any determination on a Pro Forma Basis, (x) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under this Agreement or otherwise, but excluding normal fluctuations in revolving Indebtedness incurred for working capital purposes and not to finance any acquisition) issued, incurred, assumed or permanently repaid during the Reference Period (or, in the case of determinations made pursuant to the definition of the term “Permitted Business Acquisition,” or pursuant to Section 2.12(b), Section 6.01(w), Section 6.02(v) or Section 6.06(f), occurring during the Reference Period or thereafter and through and including the date upon which the respective Permitted Business Acquisition or incurrence of Indebtedness or Liens or Dividend is consummated) shall be deemed to have been issued, incurred, assumed or permanently repaid at the beginning of such period and (y) Interest Expense of such person attributable to interest on any Indebtedness, for which pro forma effect is being given as provided in preceding clause (x), bearing floating interest rates shall be computed on a pro forma basis as if the rates that would have been in effect during the period for which pro forma effect is being given had been actually in effect during such periods and (iii) with respect to (A) any Subsidiary Redesignation then being designated, effect shall be given to such Subsidiary Redesignation and all other Subsidiary Redesignations after the first day of the relevant Reference Period and on or prior to the date of the respective Subsidiary Redesignation then being designated, collectively, and (B) any designation of a Subsidiary as an Unrestricted Subsidiary, effect shall be given to such designation and all other designations of Subsidiaries as Unrestricted Subsidiaries after the first day of the relevant Reference Period and on or prior to the date of the then applicable designation of a Subsidiary as an Unrestricted Subsidiary, collectively.

Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be determined in good faith by a Responsible Officer of the U.S. Borrower.

 

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Notwithstanding anything to the contrary in the first paragraph of this definition, any such pro forma calculation, for any fiscal period ending on or prior to the 24-month anniversary of the end of the fiscal quarter in which such relevant pro forma event occurs, may include adjustments appropriate, in the reasonable good faith determination of the U.S. Borrower, to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from the relevant pro forma event (including, to the extent applicable, from the 2005 Transactions) and (2) all adjustments of the type used in connection with the calculation of “Pro Forma Adjusted EBITDA” as set forth under “Covenant Compliance” in the “Summary Historical and Pro Forma Financial and Other Data” portion of the “Offering Circular Summary” in the New Second Secured Notes Offering Memorandum to the extent reasonably expected to result from the relevant pro forma event, in each case in the 24-month period following the end of the Reference Period in which the applicable pro forma event occurred. The U.S. Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer of the U.S. Borrower setting forth such demonstrable or additional operating expense reductions, other operating improvements or synergies and adjustments and information and calculations supporting them in reasonable detail.

“ Pro Forma Compliance ” shall mean, at any date of determination, that the U.S. Borrower and its Subsidiaries shall be in compliance, on a Pro Forma Basis after giving effect on a Pro Forma Basis to the relevant transactions (including the assumption, the issuance, incurrence and permanent repayment of Indebtedness), with the covenant set forth in Section 6.11 recomputed as at the last day of the most recently ended fiscal quarter of the U.S. Borrower and its Subsidiaries for which the financial statements required pursuant to Section 5.04 have been delivered.

“ Projections ” shall mean the projections of the U.S. Borrower and the Subsidiaries included in the Information Memorandum and any other projections and any forward-looking statements (including statements with respect to booked business) of such entities furnished to the Lenders or the Administrative Agent by or on behalf of Holdings, the U.S. Borrower or any of the Subsidiaries prior to the Closing Date.

“ Qualified IPO ” shall mean an underwritten public offering of the Equity Interests of the U.S. Borrower that generates gross cash proceeds of at least $250.0 million, provided that for purposes of Section 7.15(e) of the Collateral Agreement, “Qualified IPO” shall mean any underwritten initial public offering of Equity Interests of the U.S. Borrower.

“ Quebec Documents ” shall mean (a) a Deed of Hypothec given by the Canadian Borrower in favor of the Administrative Agent, as the person holding the power of attorney (fondé de pouvoir) of the Lenders, (b) a Bond in the principal amount of C$1,200,000,000 issued by the Canadian Borrower in favor of the Administrative Agent, as agent, custodian and depository, and (c) the Bond Pledge Agreement entered into by the Canadian Borrower in favor of the Administrative Agent for the benefit of the Pledgees (as defined therein) in respect of such Bond.

“ Rate ” shall have the meaning assigned to such term in the definition of the term “Type.”

 

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“ Reaffirmation Agreement ” shall mean the reaffirmation agreement dated as of the date hereof among Holdings, the Borrowers and JPMorgan Chase Bank, N.A.

“ Reference Period ” shall have the meaning assigned to such term in the definition of the term “Pro Forma Basis.”

“ Refinance ” shall have the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” and “ Refinanced ” shall have a meaning correlative thereto.

“ Register ” shall have the meaning assigned to such term in Section 9.04(b).

“ Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

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

“ Release ” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the environment.

“ Remaining Present Value ” shall mean, as of any date with respect to any lease, the present value as of such date of the scheduled future lease payments with respect to such lease, determined with a discount rate equal to a market rate of interest for such lease reasonably determined at the time such lease was entered into.

“ Reportable Event ” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).

“ Required Lenders ” shall mean, at any time, Lenders having (a) Loans (other than Swingline Loans) or B/As outstanding, (b) Revolving L/C Exposure, (c) Tranche C-3 L/C Exposure, (d) Swingline Exposure, (e) Available Unused Commitments and (f) Excess Tranche C-3 Credit-Linked Deposits that, taken together, represent more than 50% of the sum of (u) all Loans (other than Swingline Loans) and B/As outstanding, (v) Revolving L/C Exposure, (w) Tranche C-3 L/C Exposure, (x) Swingline Exposure, (y) the total Available Unused Commitments and (z) Excess Tranche C-3 Credit-Linked Deposits at such time. The Loans, B/As Revolving L/C Exposure, Tranche C-3 L/C Exposure, Swingline Exposure, Available Unused Commitment and Excess Tranche C-3 Credit-Linked Deposit of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

 

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“ Required Percentage ” shall mean, with respect to an Excess Cash Flow Period, 50%; provided that if the Senior Secured Bank Leverage Ratio at the end of any Excess Cash Flow Period (i) is less than or equal to 3.25 to 1.00 but greater than 3.00 to 1.0, the Required Percentage shall be 25% or (ii) is less than or equal to 3.00 to 1.00, the Required Percentage shall be 0%; provided that the Required Percentage with respect to each of (i) the period beginning on January 1, 2006 and ending on December 31, 2006 and (ii) the period beginning on January 1, 2007 and ending on December 31, 2007 shall be deemed to be 50% for purposes of the definition of the term “Cumulative Retained Excess Cash Flow Amount”.

“ Responsible Officer ” of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof responsible for the administration of the obligations of such person in respect of this Agreement.

“ Retained Percentage ” shall mean, with respect to any Excess Cash Flow Period, (a) 100% minus (b) the Required Percentage with respect to such Excess Cash Flow Period.

“ Reuters Screen CDOR Page ” means the display designated as page CDOR on the Reuters Monitor Money Rates Service or such other page as may, from time to time, replace that page on that service for the purpose of displaying bid quotations for bankers’ acceptances accepted by leading Canadian banks.

“ Revolving Borrowing ” shall mean a Borrowing comprised of Revolving Facility Loans.

“ Revolving Facility Commitment ” shall mean, with respect to any Revolving Facility Lender, the sum of such Lender’s Canadian Tranche Commitment, such Lender’s European Tranche Commitment and such Lender’s U.S. Tranche Commitment.

“ Revolving Facility Exposure ” shall mean, with respect to any Lender, the sum of such Lender’s Canadian Tranche Revolving Facility Exposure, such Lender’s European Tranche Revolving Facility Exposure and such Lender’s U.S. Tranche Revolving Facility Exposure.

“ Revolving Facility Lender ” shall mean a Canadian Tranche Lender, a European Tranche Lender, a U.S. Tranche Lender or an Incremental Revolving Facility Lender.

“ Revolving Facility Loans ” shall mean Canadian Tranche Revolving Facility Loans, European Tranche Revolving Facility Loans, U.S. Tranche Revolving Facility Loans and Other Revolving Facility Loans.

“ Revolving Facility Maturity Date ” shall mean May 31, 2011; provided that if, on any Early Maturity Test Date, the aggregate principal amount of Early Maturity Notes that mature within 91 days after such Early Maturity Test Date exceeds $200.0 million, the Revolving Facility Maturity Date shall be such Early Maturity Test Date.

“ Revolving L/C Disbursement ” shall mean any L/C Disbursement pursuant to a Canadian Tranche Letter of Credit or a European Tranche Letter of Credit, as applicable.

 

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“ Revolving L/C Exposure ” shall mean at any time the sum of the Canadian Tranche L/C Exposure and the European Tranche L/C Exposure. The Revolving L/C Exposure of any Revolving Facility Lender at any time shall mean the sum of its Canadian Tranche L/C Exposure and its European Tranche L/C Exposure.

“ Revolving Letter of Credit ” shall mean a Canadian Tranche Letter of Credit or a European Tranche Letter of Credit, as applicable.

“ RPP ” shall mean Resolution Performance Products, LLC, a Delaware limited liability company.

“ RPP 8% Notes ” shall mean $140.0 million aggregate principal amount of RPP/RPP Capital Corporation 8% Senior Secured Notes due 2009.

“ RPP 9-1/2% Notes ” shall mean $200.0 million aggregate principal amount of RPP/RPP Capital Corporation 9-1/2% Senior Second Secured Notes due 2010.

“ RSM ” shall mean Resolution Specialty Materials, Inc., a Delaware corporation.

“ S&P ” shall mean Standard & Poor’s Ratings Group, Inc.

“ Sale and Lease-Back Transaction ” shall have the meaning assigned to such term in Section 6.03.

“ Schedule I Lender ” shall mean any Lender named on Schedule I to the Bank Act (Canada).

“ Schedule I Reference Lenders ” shall mean any Schedule I Lender as may be agreed by the Canadian Borrower and the Administrative Agent from time to time.

“ Schedule II/III Reference Lenders ” shall mean JPMorgan Chase Bank, Toronto Branch, Credit Suisse Toronto Branch and Citibank Canada Branch.

“ SEC ” shall mean the Securities and Exchange Commission or any successor thereto.

“ Second-Priority Lien ” shall mean (a) Liens that are “Second-Priority Liens” (as defined in the New Second Lien Intercreditor Agreement) under the agreements that are subject to the terms of the New Second Lien Intercreditor Agreement and (b) other Liens (other than Liens securing the Obligations) that are subordinated to the Liens securing the Obligations pursuant to, and otherwise subject to the terms of, any other Intercreditor Agreement (it being understood that such Liens may be senior in priority to, or pari passu with, or junior in priority to, the Liens securing the New Second Secured Notes or the Existing Borden Second Secured Notes).

“ Secured Parties ” shall mean the “Secured Parties” as defined in the Collateral Agreement.

 

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

“ Security Documents ” shall mean the Mortgages, the Collateral Agreement, the U.S. Guarantee Agreement, the Foreign Guarantee Agreement, the Foreign Security Documents, the Foreign Pledge Agreements, the Reaffirmation Agreement, any Intercreditor Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.10.

“ Security Trust Deed ” shall mean a security trust deed entered into between the Administrative Agent, as security trustee thereunder, and the applicable grantors thereunder, in form and substance reasonably acceptable to the Administrative Agent.

“ Senior Secured Bank Debt ” at any date shall mean the aggregate principal amount of Consolidated Total Debt outstanding at such date that consists of, without duplication, (i) Term Loans, Revolving Facility Exposure, Tranche C-3 L/C Exposure or Other Revolving Facility Loans and (ii) Indebtedness secured by a Lien (other than any Second-Priority Lien and other than Indebtedness of a Subsidiary that is not a Loan Party secured by a Lien on assets of a Subsidiary that is not a Loan Party) under Section 6.02(a), (c), (i), (j), (l) or (v) (in each case of (i) and (ii), other than letters of credit to the extent undrawn and not supporting Indebtedness of the type included in Consolidated Debt).

“ Senior Secured Bank Leverage Ratio ” shall mean, on any date, the ratio of (a) Senior Secured Bank Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters of the U.S. Borrower most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided that EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis.

“ Statutory Reserves ” shall mean, with respect to any currency, the aggregate of the maximum reserve, liquid asset, fees or similar requirements (including any marginal, special, emergency or supplemental reserves or other requirements) established by any central bank, monetary authority, the Board, the Financial Services Authority, the European Central Bank or other Governmental Authority for any category of deposits or liabilities customarily used to fund loans in such currency, expressed in the case of each such requirement as a decimal. Such reserve percentages shall, in the case of U.S. Dollar denominated Loans, include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans shall be deemed to be subject to such reserve, liquid asset or similar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under any applicable law, rule or regulation, including Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve, liquid asset or similar requirement.

“ Sterling ” or “ £ ” shall mean the lawful money of the United Kingdom.

“ Subordinated Notes ” shall mean $328.0 million aggregate principal amount of RPP/RPP Capital Corporation 13-1/2% Senior Subordinated Notes due 2010 outstanding on the Closing Date.

 

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“ subsidiary ” shall mean, with respect to any person (herein referred to as the “ parent ”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“ Subsidiary ” shall mean, unless the context otherwise requires, a subsidiary of the U.S. Borrower other than any Unrestricted Subsidiary.

“ Subsidiary Redesignation ” shall have the meaning provided in the definition of “Unrestricted Subsidiary” contained in this Section 1.01.

“ Subsidiary Loan Party ” shall mean each Subsidiary that is (a) a Domestic Subsidiary Loan Party or (b) a Foreign Subsidiary Loan Party.

“ Swap Agreement ” shall mean any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Holdings, the U.S. Borrower or any of the Subsidiaries shall be a Swap Agreement.

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

“ Swingline Borrowing Request ” shall mean a request by a Borrower substantially in the form of Exhibit D-2 .

“ Swingline Commitment ” shall mean, with respect to each Swingline Lender, the commitment of such Swingline Lender to make Swingline Loans pursuant to Section 2.04. The initial aggregate amount of the Swingline Commitments is $30.0 million.

“ Swingline Exposure ” shall mean, at any time, the sum of (a) the aggregate principal amount of all Swingline Loans denominated in U.S. Dollars outstanding at such time and (b) the U.S. Dollar Equivalent of the aggregate principal amount of all Swingline Loans denominated in an Alternative Currency outstanding at such time, in each case under the European Tranche. The Swingline Exposure of any Lender at any time shall be its European Tranche Percentage of the total Swingline Exposure at such time.

“ Swingline Lender ” shall mean JPMorgan Chase Bank, N.A., in its capacity as a lender of Swingline Loans.

“ Swingline Loans ” shall mean the swingline loans made to a Borrower pursuant to Section 2.04.

 

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“ Syndication Agent ” shall have the meaning assigned to such term in the preamble hereto.

“ Tax Distributions ” shall mean (A) with respect to each tax year or portion thereof that any direct or indirect parent of the U.S. Borrower qualifies as a Flow Through Entity, the distribution by the U.S. Borrower to the holders of Equity Interests of such direct or indirect parent of the U.S. Borrower of an amount equal to the product of (i) the amount of aggregate net taxable income of the U.S. Borrower allocated to the holders of Equity Interests of the U.S. Borrower for such period and (ii) the Presumed Tax Rate for such period; and (B) with respect to any tax year or portion thereof that any direct or indirect parent of the U.S. Borrower does not qualify as a Flow Through Entity, the payment of dividends or other distributions to any direct or indirect parent company of the U.S. Borrower that files a consolidated U.S. federal tax return that includes the U.S. Borrower and the Subsidiaries in an amount not to exceed the amount that the U.S. Borrower and the Subsidiaries would have been required to pay in respect of federal, state or local taxes (as the case may be) in respect of such year if the U.S. Borrower and the Subsidiaries paid such taxes directly as a stand-alone taxpayer (or stand-alone group).

“ Taxes ” shall mean any and all present or future taxes, levies, imposts, duties (including stamp duties), deductions, charges (including ad valorem charges) or withholdings imposed by any Governmental Authority and any and all interest and penalties related thereto.

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

“ Term Facility Maturity Date ” shall mean May 5, 2013; provided that if, on any Early Maturity Test Date, the aggregate principal amount of Early Maturity Notes that mature within 91 days after such Early Maturity Test Date exceeds $200.0 million, the Term Facility Maturity Date shall be such Early Maturity Test Date.

“ Term Loan Installment Date ” shall have the meaning assigned to such term in Section 2.11(a).

“ Term Loans ” shall mean Tranche C-1 Term Loans, Tranche C-2 Term Loans, Tranche C-4 Term Loans and Other Term Loans.

“ Test Period ” shall mean, on any date of determination, the period of four consecutive fiscal quarters of the U.S. Borrower then most recently ended (taken as one accounting period).

“ Total Revolving Facility Commitments ” shall mean, on any day, the sum of the Canadian Tranche Commitments, the European Tranche Commitments and the U.S. Tranche Commitments.

“ Total Revolving Facility Exposure ” shall mean, at any time, the sum of the European Tranche Revolving Facility Exposure, the Canadian Tranche Revolving Facility Exposure and the U.S. Tranche Revolving Facility Exposure.

“ Total Tranche C-3 Credit-Linked Deposit ” shall mean, at any time, the sum of all Tranche C-3 Credit-Linked Deposits at such time, as the same may be (i) reduced from time to time pursuant to Section 2.05(e) or Section 2.09 and (ii) increased from time to time pursuant to Section 2.05(e).

 

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“ Tranche ” shall mean a category of Commitments and extensions of credits thereunder. For purposes hereof, each of the following comprises a separate Tranche: (a) the European Tranche Commitments, the European Tranche Revolving Facility Loans, the European Tranche Letters of Credit and Swingline Loans made under the European Tranche Commitments, (b) the Canadian Tranche Commitments, the Canadian Tranche Revolving Facility Loans and the Canadian Tranche Letters of Credit and Obligations in respect of outstanding B/As, (c) the U.S. Tranche Commitments and the U.S. Tranche Revolving Facility Loans, (d) the Tranche C-1 Term Loan Commitments and the Tranche C-1 Term Loans, (e) the Tranche C-2 Term Loan Commitments and the Tranche C-2 Term Loans, (f) the Tranche C-3 Credit-Linked Deposits and Tranche C-3 Letters of Credit and (g) the Tranche C-4 Term Loan Commitments and the Tranche C-4 Term Loans. The categories of Commitments and extensions of credit described under clauses (a), (b), (c) and (f) of the immediately preceding sentence are, respectively, the “ European Tranche ”, the “ Canadian Tranche ”, the “ U.S. Tranche ” and “ Tranche C-3 ”.

“ Tranche C-1 Term Loan Commitment ” shall mean, with respect to each Lender, the commitment, if any, of such Lender under the May 2006 Amendment Agreement to make Tranche C-1 Term Loans under the May 2006 Credit Agreement, expressed as an amount representing the maximum aggregate permitted principal amount of the Tranche C-1 Term Loans to be made by such Lender under the May 2006 Credit Agreement. The initial amount of each Lender’s Tranche C-1 Term Loan Commitment is set forth on Schedule 1 to the May 2006 Amendment Agreement. The initial aggregate amount of the Lenders’ Tranche C-1 Term Loan Commitments is $1,335,000,000.

“ Tranche C-1 Term Loans ” shall mean the term loans made by the Lenders to the U.S. Borrower pursuant to clauses (a)(i), (a)(ii) and (a)(iii) of Section 2.01 of the May 2006 Credit Agreement and the May 2006 Amendment Agreement.

“ Tranche C-2 Lender ” shall mean a Lender with a Tranche C-2 Term Loan Commitment or an outstanding Tranche C-2 Term Loan.

“ Tranche C-2 Term Loan Commitment ” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Tranche C-2 Term Loans under the May 2006 Credit Agreement, expressed as an amount representing the maximum aggregate permitted principal amount of the Tranche C-2 Term Loans to be made by such Lender under the May 2006 Credit Agreement. The initial amount of each Lender’s Tranche C-2 Term Loan Commitment is set forth on Schedule 1 to the May 2006 Amendment Agreement. The initial aggregate amount of the Lenders’ Tranche C-2 Term Loan Commitments is $290,000,000.

“ Tranche C-2 Term Loans ” shall mean the term loans made by the Lenders to the Dutch Borrower pursuant to clause (a)(iv) of Section 2.01 of the May 2006 Credit Agreement and the May 2006 Amendment Agreement.

 

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“ Tranche C-3 Credit-Linked Deposit ” shall mean, as to each Tranche C-3 Lender, the cash deposit made by such Lender pursuant to Section 2.05 and the May 2006 Amendment Agreement, as such deposit may be (a) reduced from time to time pursuant to Section 2.05(e)(ii) or Section 2.09, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04 and (c) increased from time to time pursuant to Section 2.05(e). The amount of each Tranche C-3 Lender’s Tranche C-3 Credit-Linked Deposit on the May 2006 Amendment Effective Date is set forth on Schedule 1 to the May 2006 Amendment Agreement, or in the Assignment and Acceptance pursuant to which such Tranche C-3 Lender shall have acquired its Tranche C-3 Credit-Linked Deposit, as applicable. The initial aggregate amount of the Tranche C-3 Credit-Linked Deposits is $50,000,000.

“ Tranche C-3 Credit-Linked Deposit Account ” shall mean the account established by the Administrative Agent under its sole and exclusive control maintained at the office of JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, NY 10017, designated as the “Hexion Tranche C-3 Credit-Linked Deposit Account” that shall be used solely to hold the Tranche C-3 Credit-Linked Deposits.

“ Tranche C-3 L/C Disbursement ” shall mean any L/C Disbursement pursuant to a Tranche C-3 Letter of Credit.

“ Tranche C-3 L/C Exposure ” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Tranche C-3 Letters of Credit at such time and (b) the aggregate amount of all Tranche C-3 L/C Disbursements that have not yet been reimbursed by or on behalf of the U.S. Borrower at such time. The Tranche C-3 L/C Exposure of any Tranche C-3 Lender at any time shall be its Tranche C-3 Percentage of the total Tranche C-3 L/C Exposure at such time.

“ Tranche C-3 Lender ” shall mean a Lender having a Tranche C-3 Credit-Linked Deposit or a participation in any Tranche C-3 Letter of Credit.

“ Tranche C-3 Letters of Credit ” shall mean, at any time, Letters of Credit in an amount equal to the lesser of (i) the Total Tranche C-3 Credit-Linked Deposit and (ii) the aggregate amount of Letters of Credit (other than Canadian Tranche Letters of Credit) denominated in U.S. Dollars and issued for the account of the U.S. Borrower outstanding at such time. Letters of Credit (other than Canadian Tranche Letters of Credit) will from time to time be deemed to be Tranche C-3 Letters of Credit or European Tranche Letters of Credit in accordance with the provisions of Section 2.05(a).

“ Tranche C-3 Maturity Date ” shall mean the Term Facility Maturity Date.

“ Tranche C-3 Percentage ” shall mean, with respect to any Tranche C-3 Lender, the percentage of the total Tranche C-3 Credit-Linked Deposits represented by such Lender’s Tranche C-3 Credit-Linked Deposit. If the Tranche C-3 Credit-Linked Deposits shall have been applied in full to reimburse Tranche C-3 L/C Disbursements, the Tranche C-3 Percentage with respect to any Tranche C-3 Lender shall be determined based upon the Total Tranche C-3 Credit-Linked Deposit most recently in effect, giving effect to any assignments.

 

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“ Tranche C-4 Delayed Draw Term Loan Commitment ” shall mean, with respect to each Lender, the commitment, if any, of such Lender under the Amendment Agreement to make Tranche C-4 Delayed Draw Term Loans hereunder on or after the Amendment Effective Date, expressed as an amount representing the maximum aggregate permitted principal amount of the Tranche C-4 Delayed Draw Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.21 or Section 9.04. The initial amount of each Lender’s Tranche C-4 Delayed Draw Term Loan Commitment is set forth on Schedule 1 to the Amendment Agreement, or in the Assignment and Assumption or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Tranche C-4 Delayed Draw Term Loan Commitment, as applicable. The initial aggregate amount of the Lenders’ Tranche C-4 Delayed Draw Term Loan Commitments is $0.

“ Tranche C-4 Delayed Draw Term Loans ” shall mean the term loans made by the Lenders to the U.S. Borrower pursuant to clause (a)(ii) of Section 2.01 and the Amendment Agreement.

“ Tranche C-4 Initial Term Loan Commitment ” shall mean, with respect to each Lender, the commitment, if any, of such Lender under the Amendment Agreement to make Tranche C-4 Initial Term Loans hereunder on the Amendment Effective Date, expressed as an amount representing the maximum aggregate permitted principal amount of the Tranche C-4 Initial Term Loans to be made by such Lender hereunder. The initial amount of each Lender’s Tranche C-4 Initial Term Loan Commitment is set forth on Schedule 1 to the Amendment Agreement. The initial aggregate amount of the Lenders’ Tranche C-4 Initial Term Loan Commitments is $375,000,000.

“ Tranche C-4 Initial Term Loans ” shall mean the term loans made by the Lenders to the U.S. Borrower pursuant to clause (a)(i) of Section 2.01 and the Amendment Agreement.

“ Tranche C-4 Lender ” shall mean a Lender with a Tranche C-4 Term Loan Commitment or an outstanding Tranche C-4 Term Loan.

“ Tranche C-4 Term Loan Commitment ” shall mean a Tranche C-4 Delayed Draw Term Loan Commitment or a Tranche C-4 Initial Term Loan Commitment.

“ Tranche C-4 Term Loans ” shall mean the Tranche C-4 Initial Term Loans and the Tranche C-4 Delayed Draw Term Loans.

“ Tranche Percentage ” shall mean (a) with respect to any Revolving Lender holding any Commitment or Loan under the European Tranche or the Canadian Tranche, such Lender’s European Tranche Percentage or Canadian Tranche Percentage, as applicable and (b) with respect to any Tranche C-3 Lender, such Lender’s Tranche C-3 Percentage.

“ Transactions ” shall mean, collectively, (a) the consummation of the Debt Tender Offer, (b) the Existing Borden Floating Rate Notes Redemption, (c) the sale and issuance of the New Second Secured Notes and the execution and delivery of the New Second Secured Notes Documents, (d) the entering into of the Amendment Agreement and the other Loan Documents

 

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and the incurrence of all Tranche C-4 Initial Term Loans hereunder on the Amendment Effective Date and the incurrence of all Tranche C-1 Delayed Draw Term Loans on and after the Amendment Effective Date, (e) the declaration and payment of a dividend or other distribution on or after the Amendment Effective Date in an amount not to exceed $500.0 million to shareholders of the U.S. Borrower and its direct and indirect parents and (f) the payment of all fees and expenses in connection therewith to be paid on, prior to or subsequent to the Amendment Effective Date.

“ Type ”, when used in respect of any Loan, Borrowing or B/A Drawing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing, or on such B/A Drawing, is determined. For purposes hereof, the term “ Rate ” shall include the Adjusted Eurocurrency Rate, ABR, any Base Rate and the Discount B/A Rate.

“ U.K. Borrowers ” shall have the meaning assigned to such term in the preamble hereto.

“ U.K. Debenture ” shall mean a fixed and floating charge over substantially all of the applicable grantors’ assets from time to time in form and substance acceptable to the Administrative Agent.

“ Unrestricted Subsidiary ” shall mean (i) any subsidiary of the U.S. Borrower identified on Schedule 1.01(d) hereto and (ii) any additional subsidiary of the U.S. Borrower designated as such by the U.S. Borrower that, together with all other Unrestricted Subsidiaries designated pursuant to this clause (ii), constitutes in the aggregate less than 5% of (1) aggregate net sales on a trailing twelve months’ basis and (2) Consolidated Total Assets at such date of determination; provided that, at any time an Unrestricted Subsidiary designation pursuant to this clause (ii) causes the aggregate sales or aggregate assets test set forth above to no longer be satisfied, the Unrestricted Subsidiary or Unrestricted Subsidiaries, as applicable, that has or have either the highest sales or the largest book value of assets, as applicable, of all such Unrestricted Subsidiaries as of the date of the most recent financial statements delivered pursuant to Section 5.04(a) or (b) shall automatically constitute a Subsidiary and cease to constitute an Unrestricted Subsidiary and the U.S. Borrower shall promptly cause the U.S. Guarantee Agreement or the Foreign Guarantee Agreement, as applicable, and appropriate Security Documents to be executed and delivered to the Administrative Agent (such that, following such conversion of each such Unrestricted Subsidiary to a Subsidiary, the Collateral and Guarantee Requirement shall be satisfied and the remaining Unrestricted Subsidiaries shall satisfy this definition); provided , further , that no Existing Notes Issuer or New Notes Issuer shall be an Unrestricted Subsidiary. The U.S. Borrower may designate any Unrestricted Subsidiary to be a Subsidiary for purposes of this Agreement (each, a “ Subsidiary Redesignation ”); provided , that (i) such Unrestricted Subsidiary, both before and after giving effect to such designation, shall be a Wholly Owned Subsidiary of the U.S. Borrower, (ii) no Default or Event of Default has occurred and is continuing or would result therefrom, (iii) immediately after giving effect to such Subsidiary Redesignation (as well as all other Subsidiary Redesignations theretofore consummated after the first day of such Reference Period), the U.S. Borrower shall be in Pro Forma Compliance, (iv) all representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Subsidiary

 

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Redesignation (both before and after giving effect thereto), unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date, and (v) the U.S. Borrower shall have delivered to the Administrative Agent an officer’s certificate executed by a Responsible Officer of the U.S. Borrower, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i) through (iv), inclusive, and containing the calculations and information required by the preceding clause (iii).

“ U.S.A. Patriot Act ” shall mean the U.S.A. Patriot Act, Title III of Pub.L. 107-56 (signed into law October 26, 2001).

“ U.S. Base Rate ” shall mean, for any day, the rate of interest per annum equal to the greater of (a) the interest rate per annum publicly announced from time to time by the Administrative Agent as its reference rate in effect on such day at its principal office in Toronto for determining interest rates applicable to commercial loans denominated in U.S. Dollars in Canada (each change in such reference rate being effective from and including the date such change is publicly announced as being effective) and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.

“ U.S. Base Rate Borrowing ” shall mean a Borrowing consisting of U.S. Base Rate Loans.

“ U.S. Base Rate Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the U.S. Base Rate in accordance with the provisions of Article II.

“ U.S. Borrower ” shall have the meaning assigned to such term in the preamble hereto.

“ U.S. Dollar Equivalent ” shall mean, on any date of determination, (a) with respect to any amount in U.S. Dollars, such amount, and (b) with respect to any amount in any other currency, the equivalent in U.S. Dollars of such amount, determined by the Administrative Agent pursuant to Section 1.04 using the Exchange Rate with respect to such currency at the time in effect under the provisions of such Section.

“ U.S. Dollars ” or “ $ ” shall mean lawful money of the United States of America.

“ U.S. Guarantee Agreement ” shall mean the U.S. Guarantee Agreement dated as of May 31, 2005, as amended, supplemented or otherwise modified from time to time, among Holdings, the U.S. Borrower, the Domestic Subsidiary Loan Parties and the Administrative Agent.

“ U.S. Lending Office ” shall mean, as to any Lender, the applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans to the U.S. Borrower.

“ U.S. Obligations ” shall mean the Obligations (as defined in the Collateral Agreement) of each of the U.S. Borrower and the Domestic Subsidiary Loan Parties as they may

 

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exist from time to time other than (a) the Parallel Debt U.S. Obligations, (b) the Parallel Debt Foreign Obligations and (c) the Foreign Obligations.

“ U.S. Tranche ” has the meaning assigned to such term under the definition of “Tranche”.

“ U.S. Tranche Commitment ” shall mean, with respect to each U.S. Tranche Lender, the commitment of such U.S. Tranche Lender to make U.S. Tranche Revolving Facility Loans pursuant to Section 2.01, expressed as an amount representing the maximum aggregate permitted amount of such Lender’s U.S. Tranche Revolving Facility Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.21 or Section 9.04. The initial amount of each Lender’s U.S. Tranche Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its U.S. Tranche Commitment, as applicable. The aggregate amount of the Lenders’ U.S. Tranche Commitments as of the Amendment Effective Date is $50.0 million.

“ U.S. Tranche Lender ” shall mean a Lender with a U.S. Tranche Commitment or with outstanding U.S. Tranche Revolving Facility Exposure.

“ U.S. Tranche Percentage ” shall mean, with respect to any U.S. Tranche Lender, the percentage of the total U.S. Tranche Commitments represented by such Lender’s U.S. Tranche Commitment. If the U.S. Tranche Commitments have terminated or expired, the U.S. Tranche Percentages shall be determined based upon the U.S. Tranche Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.04.

“ U.S. Tranche Revolving Facility Exposure ” shall mean, at any time, the aggregate principal amount of the U.S. Tranche Revolving Facility Loans outstanding at such time. The U.S. Tranche Revolving Facility Exposure of any Lender at any time shall be such Lender’s U.S. Tranche Percentage of the total U.S. Tranche Revolving Facility Exposure at such time.

“ U.S. Tranche Revolving Facility Loan ” shall mean a loan made by a U.S. Tranche Lender pursuant to Section 2.01(d). Each U.S. Tranche Revolving Facility Loan shall be a Eurocurrency Loan or an ABR Loan.

“ Wholly Owned Subsidiary ” of any person shall mean a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly Owned Subsidiary of such person.

“ Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“ Working Capital ” shall mean, with respect to the U.S. Borrower and the Subsidiaries on a consolidated basis at any date of determination, Current Assets at such date of

 

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determination minus Current Liabilities at such date of determination; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in Working Capital shall be calculated without regard to any changes in Current Assets or Current Liabilities as a result of (a) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (b) the effects of purchase accounting.

SECTION 1.02. Terms Generally . The definitions set forth or referred to in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the U.S. Borrower notifies the Administrative Agent that the U.S. Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the U.S. Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

SECTION 1.03. Effectuation of Transfers . Each of the representations and warranties of Holdings and the Borrowers contained in this Agreement (and all corresponding definitions) are made after giving effect to the Transactions (or such portion thereof as shall be consummated as of the date of the applicable representation or warranty), unless the context otherwise requires.

SECTION 1.04. Currency Translation . (a) For purposes of determining compliance as of any date with Section 6.01, 6.02, 6.03, 6.04, 6.05, 6.06, 6.07 or 6.10 (other than for purposes of calculating the Consolidated Leverage Ratio or the Senior Secured Bank Leverage Ratio, as used in any such Section, which shall be calculated in accordance with the definitions thereof), amounts incurred or outstanding in currencies other than U.S. Dollars shall be translated into U.S. Dollars at the exchange rates in effect on the first Business Day of the fiscal quarter in which such determination occurs or in respect of which such determination is being made, as such exchange rates shall be determined in good faith by the U.S. Borrower. No Default or Event of Default shall arise as a result of any limitation or threshold set forth in U.S. Dollars in Section 6.01, 6.02, 6.03, 6.04, 6.05, 6.06, 6.07 or 6.10 or paragraph (f) or (j) of Section 7.01 being exceeded solely as a result of changes in currency exchange rates from those rates applicable on the first day of the fiscal quarter in which such determination occurs or in respect of which such determination is being made.

 

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(b) (i) The Administrative Agent shall determine the U.S. Dollar Equivalent of any Letter of Credit denominated in any Alternative Currency as of each date (with such date to be reasonably determined by the Administrative Agent) that is on or about the date of each request for the issuance, amendment, renewal or extension of such Alternative Currency Letter of Credit, using the Exchange Rate for the applicable currency in relation to U.S. Dollars in effect on the date of determination, and each such amount shall be the U.S. Dollar Equivalent of such Letter of Credit until the next required calculation thereof pursuant to this Section 1.04(b)(i). The Administrative Agent shall in addition determine the U.S. Dollar Equivalent of any Letter of Credit denominated in any Alternative Currency as of the CAM Exchange Date as set forth in Section 10.02.

(ii) The Administrative Agent shall determine the U.S. Dollar Equivalent of any Borrowing denominated in any Alternative Currency or any B/A accepted and purchased under Section 2.06 as of each date (with such date to be reasonably determined by the Administrative Agent) that is on or about the date of a Borrowing Request, Interest Election Request or request for an acceptance and purchase of B/As with respect to such Borrowing or B/A, in each case using the Exchange Rate for the applicable currency in relation to U.S. Dollars in effect on the date of determination, and each such amount shall be the U.S. Dollar Equivalent of such Borrowing or B/A until the next required calculation thereof pursuant to this Section 1.04(b)(ii). The Administrative Agent shall in addition determine the U.S. Dollar Equivalent of any Borrowing denominated in any Alternative Currency or any B/A accepted and purchased under Section 2.06 as of the CAM Exchange Date as set forth in Section 10.01.

(iii) The U.S. Dollar Equivalent of any L/C Disbursement made by any Issuing Bank in any Alternative Currency and not reimbursed by the applicable Borrower shall be determined as set forth in paragraphs (e) or (m) of Section 2.05, as applicable. In addition, the U.S. Dollar Equivalent of the Revolving L/C Exposure shall be determined as set forth in paragraph (j) of Section 2.05, at the time and in the circumstances specified therein.

(iv) The Administrative Agent shall notify the Borrowers, the applicable Lenders and the applicable Issuing Bank of each calculation of the U.S. Dollar Equivalent of each Letter of Credit, Borrowing, B/A accepted and purchased hereunder and L/C Disbursement.

ARTICLE II

The Credits

SECTION 2.01. Commitments . Subject to the terms and conditions set forth herein and in the Amendment Agreement:

(a) each Lender listed on Schedule 1 to the Amendment Agreement agrees to make (i) Tranche C-4 Initial Term Loans to the U.S. Borrower in U.S. Dollars on the Amendment Effective Date from its U.S. Lending Office in a principal amount not to exceed its Tranche C-4 Initial Term Loan

 

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Commitment and (ii) Tranche C-4 Delayed Draw Term Loans to the U.S. Borrower on or prior to the Delayed Draw Expiration Date; provided that the U.S. Borrower shall make no more than three Borrowings of Tranche C-4 Delayed Draw Term Loans on or prior to the Delayed Draw Expiration Date;

(b) each European Tranche Lender agrees from time to time during the Availability Period with respect to the European Tranche Commitments (i) to make European Tranche Revolving Facility Loans (A) in euro, U.S. Dollars or Sterling to each U.K. Borrower and (B) in euro to the Dutch Borrower, in each case from its Euro Lending Office and (ii) to make European Tranche Revolving Facility Loans in U.S. Dollars to the U.S. Borrower from its U.S. Lending Office, in an aggregate principal amount that will not result in (w) such Lender’s European Tranche Revolving Facility Exposure exceeding such Lender’s European Tranche Commitment, (x) the European Tranche Revolving Facility Exposure exceeding the total European Tranche Commitments, (y) the portion of the European Tranche Revolving Facility Exposure represented by Loans to or Revolving L/C Exposure in respect of (1) the Dutch Borrower exceeding $125.0 million, or (2) the U.K. Borrowers exceeding $75.0 million or (z) the Total Revolving Facility Exposure exceeding the Total Revolving Facility Commitments; and

(c) each Canadian Tranche Lender agrees from time to time during the Availability Period with respect to the Canadian Tranche Commitments (i) to make Canadian Tranche Revolving Facility Loans in Canadian Dollars or U.S. Dollars to the Canadian Borrower from its Canadian Lending Office and/or to cause its Canadian Lending Office to accept and purchase or arrange for the acceptance and purchase of drafts drawn by the Canadian Borrower in Canadian Dollars as B/As and (ii) to make Canadian Tranche Revolving Facility Loans in U.S. Dollars to the U.S. Borrower from its U.S. Lending Office, in an aggregate principal amount that will not result in (A) such Lender’s Canadian Tranche Revolving Facility Exposure exceeding such Lender’s Canadian Tranche Commitment, (B) the Canadian Tranche Revolving Facility Exposure exceeding the total Canadian Tranche Commitments or (C) the Total Revolving Facility Exposure exceeding the Total Revolving Facility Commitments;

(d) each U.S. Tranche Lender agrees from time to time during the Availability Period with respect to the U.S. Tranche Commitments to make U.S. Tranche Revolving Facility Loans in U.S. Dollars to the U.S. Borrower from its U.S. Lending Office in an aggregate principal amount that will not result in (A) such Lender’s U.S. Tranche Revolving Facility Exposure exceeding such Lender’s U.S. Tranche Commitment, (B) the U.S. Tranche Revolving Facility Exposure exceeding the total U.S. Tranche Commitments or (C) the Total Revolving Facility Exposure exceeding the Total Revolving Facility Commitments;

 

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(e) each Lender having an Incremental Term Loan Commitment or an Incremental Revolving Facility Commitment agrees, subject to the terms and conditions set forth in the applicable Incremental Assumption Agreement, to make Incremental Term Loans to the U.S. Borrower or the Dutch Borrower, as applicable, and/or Incremental Revolving Facility Loans to any Borrower, in an aggregate principal amount not to exceed its Incremental Term Loan Commitment or Incremental Revolving Facility Commitment, as the case may be; and

(f) within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Facility Loans. Amounts repaid in respect of Term Loans may not be reborrowed.

All Revolving Loans, Tranche C-1 Term Loans and Tranche C-2 Term Loans outstanding, and all Tranche C-3 Credit Linked Deposits funded, under the May 2006 Credit Agreement on and as of the Amendment Effective Date shall remain outstanding or funded, as applicable, hereunder on the terms set forth herein, except as otherwise provided herein.

SECTION 2.02. Loans and Borrowings . (a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class (or, in the case of Swingline Loans, in accordance with their respective Swingline Commitments); provided , however, that Revolving Facility Loans of any Tranche shall be made by the Revolving Facility Lenders ratably in accordance with their respective Tranche Percentages in respect of such Tranche on the date such Loans are made hereunder. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Subject to Section 2.15, (i) in the case of the U.S. Borrower, each Borrowing (other than a Swingline Borrowing) shall be comprised entirely of ABR Loans or Eurocurrency Loans as the U.S. Borrower may request in accordance herewith; (ii) in the case of the Canadian Borrower, each Borrowing (A) denominated in U.S. Dollars shall be comprised entirely of U.S. Base Rate Loans or Eurocurrency Loans as the Canadian Borrower may request in accordance herewith and (B) denominated in Canadian Dollars shall be comprised entirely of Canadian Base Rate Loans; and (iii) in the case of the Dutch Borrower and the U.K. Borrowers, each Borrowing shall be comprised entirely of Base Rate Loans or Eurocurrency Loans as the applicable Borrower may request in accordance herewith. Each Swingline Borrowing made by the U.S. Borrower shall be an ABR Borrowing. Each Swingline Borrowing made by the Dutch Borrower or a U.K. Borrower shall be a Base Rate Borrowing. Each Lender at its option may make any ABR Loan, Base Rate Loan or Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of any Borrower to repay such Loan in accordance with the terms of this Agreement and such Lender shall not be entitled to any amounts payable under Section 2.16 or 2.18 solely in respect of increased costs or taxes resulting from such exercise and existing at the time of such exercise.

 

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(c) At the commencement of each Interest Period for any Eurocurrency Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. At the time that (i) each ABR Revolving Borrowing or Base Rate Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that an ABR Revolving Borrowing or Base Rate Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Canadian Tranche Commitments, the European Tranche Commitments or the U.S. Tranche Commitments, as applicable, or that is required to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e). Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of (i) ten Eurocurrency Borrowings outstanding under each of the Tranche C-1 Term Loans, the Tranche C-2 Term Loans, the Tranche C-4 Term Loans or any Other Term Loans and (ii) ten Eurocurrency Borrowings outstanding under each of the European Tranche, the Canadian Tranche, the U.S. Tranche or any Other Revolving Facility Loans.

(d) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request, or to elect to convert or continue, any Borrowing or B/A Drawing if the Interest Period or Contract Period requested with respect thereto would end after the Revolving Facility Maturity Date or the Term Facility Maturity Date, as applicable.

SECTION 2.03. Requests for Borrowings . To request a Revolving Borrowing and/or a Term Borrowing, the applicable Borrower shall notify the Administrative Agent of such request (as provided in Section 9.01 and, unless otherwise agreed upon by the Administrative Agent, in Schedule 2.03) by telephone (a)(i) in the case of a Eurocurrency Borrowing (other than any Eurocurrency Borrowing on the Amendment Effective Date), not later than 11:00 a.m., Local Time, three Business Days before the date of the proposed Borrowing or (ii) in the case of any Eurocurrency Borrowing on the Amendment Effective Date, not later than 11:00 a.m., Local Time, one Business Day before the proposed Borrowing, or (b) in the case of an ABR Borrowing or Base Rate Borrowing, not later than 12:00 p.m., Local Time, one Business Day before the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing or a Base Rate Borrowing to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e) may be given not later than 11:00 a.m., Local Time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the applicable Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) the Borrower requesting such Borrowing;

(ii) the Class of such Borrowing;

 

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(iii) the currency and aggregate amount of the requested Borrowing;

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

(v) whether such Borrowing is to be an ABR Borrowing, a Base Rate Borrowing or a Eurocurrency Borrowing;

(vi) in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

(vii) the location and