Re: U.S. $70,000,000 10.60% Senior Notes, Series C, Due January 15, 2011

CANADIAN PACIFIC FOREST PRODUCTS LIMITED

NOTE AGREEMENT

Dated as of November 1, 1990

Re:

U.S. $70,000,000 10.60% Senior Notes, Series C, Due January 15, 2011

and
U.S. $22,000,000 10.26% Senior Notes, Series D, Due January 15, 2011

TABLE OF CONTENTS

ATTACHMENTS TO NOTE AGREEMENT:

CANADIAN PACIFIC FOREST PRODUCTS LIMITED
1155 Metcalfe Street
Montreal, Quebec
Canada H3B 2X1

NOTE AGREEMENT

Re: U.S. $70,000,000 10.60% Senior Notes, Series C, Due January 15, 2011
and
U.S. $22,000,000 10.26% Senior Notes, Series D, Due January 15, 2011

Dated as of
November 1, 1990

To the Purchaser named in
     Schedule I hereto which is a
     signatory to this Agreement

Gentlemen:

          The undersigned, CANADIAN PACIFIC FOREST PRODUCTS LIMITED, a corporation incorporated under the Canada Business Corporations Act (the “Company”), agrees with you as follows:

SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.

           1.1. Description of Notes. The Company will authorize the issue and sale of:

     (a) U.S. $70,000,000 aggregate principal amount of its 10.60% Senior Notes, Series C, Due January 15, 2011 (the “Series C Notes”) to be dated the date of issue, to bear interest from such date at the rate of 10.60% per annum, payable semiannually on the fifteenth day of each January and July in each year (each such date being referred to as an “Interest Payment Date”) (commencing July 15, 1991) and at maturity and to bear interest on overdue principal (including any overdue optional prepayment of principal) and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest at the rate of 12.60% per annum after the due date thereof, whether by acceleration or otherwise, until paid, to be expressed to mature on January 15, 2011, and to be substantially in the form attached hereto as Exhibit A-1; and

     (b) U.S. $22,000,000 aggregate principal amount of its 10.26% Senior Notes, Series D, Due January 15, 2011 (the “Series D Notes”) to be dated the date of issue, to bear interest from such date at the rate of 10.26% per annum, payable semiannually on each Interest Payment Date (commencing

July 15, 1991) and at maturity and to bear interest on overdue principal (including any overdue required or optional prepayment of principal) and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest at the rate of 12.26% per annum after the due date thereof, whether by acceleration or otherwise, until paid, to be expressed to mature on January 15, 2011, and to be substantially in the form attached hereto as Exhibit A-2.

The Series C Notes and the Series D Notes are hereinafter collectively referred to as the “Notes”. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. Reference is made to the provision of the Notes with respect to the statement of the interest rate for the purposes of compliance with the Interest Act (Canada). The Notes are not subject to prepayment or redemption at the option of the Company prior to their expressed maturity dates except on the terms and conditions and in the amounts and with the premium, if any, set forth in Section 2 of this Agreement. The term “Notes” as used herein shall include each Note delivered pursuant to this Agreement and the separate agreements with the purchasers named in Schedule I hereto. You and the other purchasers named in Schedule I hereto are hereinafter sometimes referred to as the “Purchasers”. The terms which are capitalized herein shall have the meanings set forth in Section 8.1 hereof unless the context shall otherwise require.

           1.2. Commitment, Closing Date. Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Company agrees to issue and sell to you, and you agree to purchase from the Company, the Notes of the Company at a price of 100% of the principal amount thereof set forth opposite your name in Schedule I.

          Delivery of the Notes will be made at the offices of Chapman and Cutler, 111 West Monroe, Chicago, Illinois 60603, against payment therefor in U.S. Federal or other funds current and immediately available at The First National Bank of Chicago, Chicago, Illinois, ABA No. 071000013 for the account of Canadian Pacific Forest Products Limited Concentration Account No. 58-10647 in the amount of the purchase price at 10:00 A.M., Chicago, Illinois time, on November 15, 1990 or such later date (not later than December 31, 1990) as the Company shall specify by not less than five Business Days’ prior written notice to you (the “Closing Date”). The Notes delivered to you on the Closing Date will be delivered to you in the form of a single registered Note for the full amount of your purchase (unless different denominations are specified by you), registered in your name or in the name of such nominee as may be specified in Schedule I and in substantially the form attached hereto as Exhibit A-1 or A-2, as the case may be.

           1.3. Other Agreements. Simultaneously with the execution and delivery of this Agreement, the Company is entering into similar agreements with the other Purchasers under which such other Purchasers agree to purchase from the Company the principal amount of Notes set opposite such Purchasers’ names in Schedule I, and your obligation and the obligations of the Company hereunder are subject to the execution and delivery of the similar agreements by the other Purchasers. This Agreement and said similar agreements with the other Purchasers are herein collectively referred to as the “Agreements”. The obligations of each Purchaser shall be several and not joint and no Purchaser shall be liable or responsible for the acts of any other Purchaser.

SECTION 2. PREPAYMENT OF NOTES.

     No prepayment of the Notes may be made except to the extent and in the manner expressly provided in this Agreement.

      2.1. Required Prepayments.

      (a) Series C Notes. The Series C Notes will not be subject to required prepayment at any time.

      (b) Series D Notes. In addition to paying the entire outstanding principal amount and the interest due on the Series D Notes on the maturity date thereof, the Company agrees that on the fifteenth day of January, in each year commencing January 15, 2002 and ending January 15, 2010, both inclusive (herein called “Fixed Payment Dates”), it will prepay and apply and there shall become due and payable the sum of U.S. $2,200,000 on the principal indebtedness evidenced by the Series D Notes.

     No premium shall be payable in connection with any required prepayment made pursuant to this Section 2.1. Any payment of less than all of the Series D Notes pursuant to the provisions of Section 2.2 shall not relieve the Company of the obligation to make required payments or prepayments on the Series D Notes in accordance with the terms of this Section 2.1 after giving effect to the application of such payments made pursuant to Section 2.2 in accordance with Section 2.4. To the extent that any purchase of Series D Notes by the Company pursuant to the provisions of Section 2.10 does not result in the purchase of all of the Series D Notes, then the principal amount of the prepayments required to be made pursuant to the provisions of this Section 2.1(b) shall, after the occurrence of each such purchase pursuant to Section 2.10, be reduced in the same proportion that the principal amount of the Series D Notes outstanding immediately preceding such partial purchase pursuant to said Section 2.10 has been reduced by such partial purchase, to the end that the remaining prepayments required to be made pursuant to the provisions of this Section 2.1(b) on each of the Series D Notes remaining outstanding will result in the same proportionate rate of prepayment as if the Series D Notes had not been purchased pursuant to Section 2.10.

      2.2. Optional Prepayments. In addition to the prepayments required by Section 2.1, upon compliance with Section 2.3, the Company shall have the privilege at any time and from time to time of prepaying the outstanding Series C Notes and/or the Series D Notes, either in whole or in part (but if in part then only in units in excess of U.S. $1,000,000) by payment of the principal amount of such series of Notes, or portion thereof to be prepaid, and accrued interest thereon to the date of such prepayment, together with a premium equal to the Make Whole Premium, determined 5 Business Days prior to the date of such prepayment.

      2.3. Notice of Prepayments. The Company will give written notice of any prepayment of the Notes pursuant to Section 2.2 to each holder thereof not less than 30 days nor more than 60 days before the date fixed for such optional prepayment specifying (a) such prepayment date, (b) the principal amount of the holder’s Notes to be prepaid on such date, and (c) the estimated premium (including a description of the calculation to be made thereof), if any, and accrued interest applicable to the prepayment. Such notice of prepayment shall also certify all facts which are conditions precedent to any such prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Notes specified in such notice, together with the premium, if any, and accrued

interest thereon shall become due and payable on the prepayment date specified in the written notice described above. In the event that the Company shall elect to prepay only one series of the Notes, the Company shall also give written notice of the prepayment of such series of Notes to each holder of the series of Notes not being prepaid at such time specifying (i) the prepayment date of such other series of Notes, (ii) the principal amount of such other series of Notes being prepaid, and (iii) the outstanding principal amount of such other series of Notes remaining after such proposed prepayment. The Company will also give written notice to each holder of the Notes then being prepaid by telecopy or other same day written communication setting forth the computation and amount of any premium payable in connection with such prepayment at least 3 Business Days prior to the date of such prepayment.

           2.4. Allocation of Prepayments. All partial prepayments shall be allocated pro rata among all of the holders of such series of Notes being prepaid at the time outstanding, and shall be credited, in the case of the Series C Notes, against the final maturities of the Series C Notes being prepaid and, in the case of the Series D Notes, ratably against the payment due at final maturity and the required prepayments provided for by Section 2.1(b) hereof on a pro rata basis.

           2.5. Direct Payment. Notwithstanding anything to the contrary in this Agreement or the Notes, in the case of any Note owned by the Purchaser or its nominee or owned by any other institutional holder who has given written notice to the Company requesting that the provisions of this Section shall apply, the Company will promptly and punctually pay when due the principal thereof and premium, if any, and interest thereon, without any presentment thereof directly to the Purchaser or such subsequent holder at the address of the Purchaser set forth in Schedule 1 or at such other address as the Purchaser or such subsequent holder may from time to time designate in writing to the Company or, if a bank account is designated for the Purchaser on Schedule I hereto or in any written notice to the Company from the Purchaser or any such subsequent holder, the Company will make such payments in immediately available funds to such bank account, marked for attention as indicated, or in such other manner or to such other account of the Purchaser or such holder in any bank in the United States as the Purchaser or any such subsequent holder may from time to time direct in writing. The holder of any Notes to which this Section applies agrees that in the event it shall sell or transfer any such Notes it will, prior to the delivery of such Notes (unless it has already done so), make a notation thereon of all principal, if any, prepaid on such Notes and will also note thereon the date to which interest has been paid on such Notes. With respect to Notes to which this Section applies, the Company shall be entitled to presume conclusively that the original or such subsequent institutional holder as shall have requested the provisions hereof to apply to its Notes remains the holder of such Notes until (1) the Company shall have received notice of the transfer of such Notes, and of the name and address of the transferee, or (2) such Notes shall have been presented to the Company as evidence of the transfer.

           2.6. Amortization Schedules. On the date of any partial prepayment of any Note, the Company shall deliver to each holder of the Notes two copies of an amortization schedule with respect to such Note setting forth, in the case of the Series C Notes, the principal balance of such Series C Note remaining unpaid after the date of such partial prepayment, and in the case of the Series D Notes, the amount of the required payments or prepayments to be made on such Series D Note after the date of such partial prepayment and the unpaid principal balance of such Series D Note after each such required payment or prepayment.

           2.7. No Setoff, Counterclaim or Withholding; Gross-Up. Each payment by the Company under this Agreement or the Notes shall be made without setoff or counterclaim and without withholding for or on account of any present or future taxes imposed by or within Canada or any political subdivision or taxing authority thereof or therein. If any such withholding is so required, the Company shall make the withholding, pay the amount withheld to the appropriate governmental authority before penalties attach thereto or interest accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by the holder or holders of the Notes free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which such holder or holders would have received had such withholding not been made. If any holder or holders shall pay any amount in respect of any such taxes, penalties or interest, the Company shall reimburse said holder or holders in U.S. Dollars for that payment on demand, which reimbursement shall be made in accordance with the preceding sentence of this Section 2.7. If pursuant to this Section 2.7 the Company pays any amount in respect of taxes, or any penalty, or interest which could not have been avoided by the expeditious payment of such taxes, the holder or holders of the Notes shall, at the sole expense of the Company, use their best efforts to provide the Company with such information concerning the nationality, residence or identity of such holder or holders of the Notes and make such declarations or fulfill such reporting requirements as may be required by any statute, treaty or regulation of Canada or the Provinces of Ontario or Quebec as a precondition to exemption from or refund of such tax, penalty or interest. The obligations of the holder or holders of the Notes pursuant to this Section 2.7 shall specifically not include any obligation to provide access to the books, records, personnel, or agents of such holder or holders of the Notes.

          Any payment made by the Company to any holder of the Notes or for the account of any such holder in respect of any amount payable by the Company in lawful currency of the United States of America, which payment is made in any foreign currency, whether pursuant to any judgment or order of the court or tribunal or otherwise, shall constitute a discharge of the obligations of the Company only to the extent of the amount of lawful currency of the United States of America which may be purchased with such foreign currency on the day of payment. The Company covenants and agrees that it shall, as a separate independent obligation which shall not be merged in any such judgment or order, pay or cause to be paid the amount payable in lawful currency of the United States of America and not so discharged in accordance with the foregoing. It is understood and agreed that notwithstanding the provisions of Section 2.9 to the contrary, the obligations of the Company under this Section 2.7 shall survive the Defeasance (as defined in Section 2.9) of the Notes pursuant to and in accordance with the terms and conditions of Section 2.9.

           2.8. Notes to Rank Pari Passu. The Company covenants and agrees that all Notes and all other obligations hereunder are direct and unsecured obligations of the Company ranking pari passu as against the assets of the Company with all other Notes from time to time issued and outstanding hereunder without any preference among themselves and pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Company.

           2.9. Defeasance. The Company shall have the right and option at any time to defease either or both series of the Notes in whole but not in part through the deposit with the Defeasance Trustee of U.S. Dollars or non-callable U.S. Government Obligations (hereinafter referred to as the “Defeasance”). Such deposit shall be made pursuant to a declaration or other appropriate instrument of trust satisfactory in scope, form and

content to the Defeasance Trustee and to the holders of at least 66-2/3% in aggregate principal amount of all outstanding Notes then being defeased; shall be absolute and irrevocable and the instrument of trust shall expressly provide that the Company shall have no further title to or interest in or power to direct the use or application of the obligations so deposited or any of the proceeds arising therefrom; such instrument shall state that the trust created thereby and the obligations deposited pursuant thereto are for the sole and exclusive benefit of the holders from time to time of the outstanding Notes then being defeased and shall expressly provide that the Defeasance Trustee shall apply payments of principal and/or interest on such obligations to, and only to, the punctual payment and prepayment of the principal and interest on the Notes then being defeased as and when such payments become due (such declaration or instrument to contain appropriate provisions for the recording of transfers of such Notes and the names and addresses of the holders from time to time of such Notes). All fees, costs and charges of the Defeasance Trustee under such instrument of trust, including those which may become payable after the date of the making of such deposit, shall be paid by the Company. The Company shall have the option of electing either to fully defease the Notes and thereby, upon satisfaction of the conditions set forth in this Section 2.9, the Company shall on the Defeasance Date described below be discharged from its obligations contained in this Agreement with respect to and only with respect to such series of Notes then being defeased (the “Full Defeasance”) or defease the Notes solely with respect to certain covenants and thereby, upon satisfaction of the conditions set forth in this Section 2.9, the Company shall on the Defeasance Date described below be released from its obligations to comply with Sections 2.10, 5.6, 5.7 and 5.8 hereof with respect to and only with respect to such series of Notes then being defeased (the “Covenant Defeasance”). Upon Defeasance of either or both series of the Notes in whole and not in part, the Company, on and as of the 91st day after the deposit of U.S. Dollars or U.S. Government Obligations herein provided for has been duly made (the “Defeasance Date”), shall, in the case of the Full Defeasance, be discharged from its obligations contained in this Agreement with respect to such series of Notes then being defeased, and, in the case of the Covenant Defeasance, be discharged from its obligations to comply with Sections 2.10, 5.6, 5.7 and 5.8 hereof with respect to such series of Notes then being defeased; provided that, in the event of any such defeasance and after giving effect thereto, the following conditions (together with any such other conditions as may be imposed by such holders of the Notes then being defeased) have been satisfied:

     (a) the Company shall have deposited with the Defeasance Trustee absolutely and irrevocably (irrespective of whether the conditions in paragraphs (b), (c), (d) and (e) below have been satisfied): (i) U.S. Dollars in an amount, or (ii) non-callable U.S. Government Obligations, not payable or redeemable prior to their expressed maturities, which through the payment of principal and interest in respect thereof in accordance with their terms, without any reinvestment or further investment of the principal of or interest earned on such obligations, will absolutely and unconditionally provide in any and all circumstances not later than one day before each date on which any prepayment or payment of principal of or payment of interest on the Notes then being defeased is then due and payable, or (iii) a combination thereof in an amount, to sufficiently pay and discharge the principal of the Notes outstanding then being defeased, together with interest accrued thereon, on each date on which any prepayment or payment of principal and/or interest is due;

     (b) no Default or Event of Default shall have occurred and be continuing on each of the date of the final deposit, and after giving effect thereto, and on the Defeasance Date;

     (c) the Company shall have delivered to the Defeasance Trustee and to the holders of the Notes then being defeased written confirmation by the auditors of the Company provided such auditors are a major Canadian firm of independent chartered accountants or such other firm of independent public accountants of recognized national standing selected by the Company and approved by the holders of at least 66-2/3% in aggregate principal amount of all Notes then outstanding then being defeased that the U.S. Government Obligations deposited for payment of the Notes then being defeased, together with any U.S. Dollars deposited by the Company, are sufficient to satisfy the requirements of the preceding paragraph (a);

     (d) the Company shall have delivered to the Defeasance Trustee and the holders of the Notes an opinion of counsel dated as of the Defeasance Date which counsel shall be reasonably satisfactory to the holders of at least 66-2/3% in aggregate principal amount of each series of the Notes then being defeased to the effect that (i) the trust declaration or other instrument, as the case may be, is legal, valid, binding and enforceable in accordance with its terms for the sole benefit and use of the holders of the Notes then being defeased, is irrevocable and the obligations deposited thereby and the proceeds thereof and therefrom are held by the Defeasance Trustee thereunder in trust solely for the benefit of the holders of the Notes then being defeased and will not be subject to any valid interest, lien, claim or encumbrance of any other Person, including the Company or any Person claiming by, through, under or in the name or on behalf of the Company or any creditor or shareholder of the Company, or by any court or trustee in bankruptcy, (ii) neither the final deposit nor any other deposit will constitute a preferential transfer or a fraudulent conveyance under any bankruptcy or other similar law and (iii) the holders of the Notes then being defeased will not recognize income, gain or loss for United States Federal or Canadian income tax purposes as a result of such deposit and Defeasance and will be subject to United States Federal or Canadian income tax on the same amount and in the same manner and at the same times, as would have been the case if such final deposit and Defeasance had not occurred and such opinion shall cover such other matters as the holders of the Notes then being defeased may reasonably require in connection with such final deposit and matters relating thereto shall be otherwise in form and substance reasonably satisfactory to the Defeasance Trustee and to the holders of at least 66-2/3% in aggregate principal amount of outstanding Notes then being defeased and the opinions described above shall take into account and give effect to the covenant of the holders set forth in the final paragraph of this Section 2.9; and

     (e) the Company shall have delivered to the Defeasance Trustee an Officers’ Certificate stating that all conditions precedent herein provided for relating to the Defeasance of the Notes then being defeased contemplated by this Section 2.9 have been complied with.

          Upon payment in full of all amounts payable on and with respect to the Notes from the sums on deposit described in paragraph (a) above and all amounts payable by the Company under this Agreement, the holders of the Notes hereby agree to direct the Defeasance Trustee to remit any funds remaining on deposit with the Defeasance Trustee after all applications of such funds have been made pursuant to this Section 2.9 to the Company so long as no Default or Event of Default has occurred and is continuing.

           2.10. Interest Rate Adjustment and Repurchase of Notes Upon Occurrence of Certain Events.

                (a) Designated Events. In the event that a Designated Event shall occur, the Company will give written notice (a “Designated Event Notice”) of such fact not more than 5 days after any such Designated Event to all holders of the Notes. The Designated Event Notice shall (i) describe the facts and circumstances of the Designated Event in reasonable detail, (ii) set forth in reasonable detail the computation of the Debt Ratio determined as of the date of the occurrence of the Designated Event, and (iii) refer to this Section 2.10 and state that the holders may acquire the right to require the Company to purchase all of the Notes held by such holder and that the Company may be obligated to adjust the interest rate borne by the Notes if the terms and conditions provided for herein are satisfied.

                (b) Continuing Debt Ratio. In the event that on any date during the period beginning with the occurrence of a Designated Event to and including the 90th day following the occurrence of said Designated Event, the Debt Ratio shall exceed 70% and shall continue to exceed 70% for a period of 90 consecutive days thereafter without being remedied or cured by the Company, then in that event on and as of the first day following the expiration of such 90 consecutive day period ( the “Put Right Acquisition Date”) (i) each holder of Notes shall irrevocably acquire the right (the “Put Right”) to require the Company to purchase all of the Notes held by such holder on the applicable Repayment Date (exercisable as hereinafter provided) and (ii) if the Put Right Acquisition Date occurs prior to November 16, 1995, then as and from the Put Right Acquisition Date to the Repayment Date, the interest rate on the Series C Notes and the Series D Notes shall be automatically adjusted upward to (1) in the event that the Debt Ratio on such Put Right Acquisition Date exceeds 70% but is less than 75%, the rate of 12.50% per annum, and (2) in the event that the Debt Ratio on such Put Right Acquisition Date equals or exceeds 75%, the rate of 14.00% per annum.

                (c) Adjusted Interest Calculation. In the event that the interest rates borne by the Notes are adjusted pursuant to this Section 2.10, such adjustment shall be effective as of the Put Right Acquisition Date and the amount of the payment of interest on and with respect to the Notes shall on any Interest Payment Date occurring after the Put Right Acquisition Date be determined by weighting the average of the applicable rates of interest borne by the Notes during the immediately preceding Interest Period. The rates of interest shall be weighted by multiplying each applicable rate of interest borne by the Notes by the number of days such rate was in effect during each month of such Interest Period, adding the sum of such products and dividing such sum by the actual number of days in such Interest Period. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. Without limiting the foregoing, whether or not the Company gives any notice required by this Section 2.10, the interest rate payable in respect of the Series C Notes and the Series D Notes shall be irrevocably deemed to have been adjusted as and to the extent herein provided.

                (d) Exercise of Put Right . The Put Right of a holder of Notes may be exercised by such holder as follows:

     (i) if the Put Right Acquisition Date occurs prior to November 16, 1995, then a holder of Notes may exercise its Put Right between November 16, 1995 and December 21, 1995 (the “Exercise Period”) and, in such event, the Repayment Date shall be December 28, 1995; or

     (ii) if the Put Right Acquisition Date occurs on or after November 16, 1995, then a holder of Notes may exercise its Put Right within a period of 35 days following the Put Right Acquisition Date (the “Exercise Period”) and, in such event, the Repayment Date shall be the fifth Business Day following the expiry of such Exercise Period.

In order to exercise its Put Right, a holder must give a written notice to that effect to the Company during the applicable Exercise Period. If the holder of any Note gives such a notice, the Company shall, within five Business Days of receipt of such notice, give written notice thereof to all other holders of the Notes.

                (e) Put Right Notice. Not more than five Business Days after the Put Right Acquisition Date, the Company will give to all holders of Notes a written notice (the “Put Right Notice”) of the happening of such date, which notice shall:

     (i) contain a copy of the Designated Event Notice;

     (ii) set forth in reasonable detail the computation of the Debt Ratio determined as of the Put Right Acquisition Date;

     (iii) confirm that the holders of Notes have irrevocably acquired the Put Right and shall set forth in reasonable detail the manner in which such Put Right may be exercised;

     (iv) designate the Repayment Date; and

     (v) if the Put Right Acquisition Date occurs before November 16, 1995, confirm that the interest rate on the Notes has been adjusted and stating the new rate of interest and the period during which such interest rate shall be applicable.

                (f) Reminder Notice . If the Put Right Acquisition Date occurs prior to November 16, 1995, the Company, in addition to delivering the Put Right Notice referred to above, will give to all holders of the Notes a written notice (a “Reminder Notice”) between November 16, 1995 and November 23, 1995 enclosing a copy of the Put Right Notice and reminding all holders of the Notes of their Put Right and of the manner in which such right may be exercised.

                (g) Repayment Date. On the applicable Repayment Date, the Company shall purchase all Notes held by the holders who have exercised their Put Right for a purchase price equal to the outstanding principal amount thereof together with accrued interest thereon to the Repayment Date.

          As used in this Section 3.2, the terms “separate account,” “party-in-interest,” “employer securities,” and “employee benefit plan” shall have the respective meanings assigned to them in ERISA.

               (c) You further represent that you are not a resident of Canada nor are you purchasing the Notes for or on behalf of a resident of Canada.

SECTION 4. CLOSING CONDITIONS.

          Your obligation to purchase the Notes on the Closing Date shall be subject to the performance by the Company of its agreements hereunder which by the terms hereof are to be performed at or prior to the time of delivery of the Notes and to the following further conditions precedent:

           4.1. Closing Certificate. Concurrently with the delivery of Notes to you on the Closing Date, you shall have received a certificate dated the Closing Date, signed by the President or a Vice President of the Company substantially in the form attached hereto as Exhibit B, the truth and accuracy of which shall be a condition to your obligation to purchase the Notes proposed to be sold to you.

           4.2. Legal Opinions. Concurrently with the delivery of Notes to you on the Closing Date, you shall have received from (a) Chapman and Cutler, who are acting as your special counsel in this transaction, (b) Bell, Boyd & Lloyd, United States counsel to the Company, and (c) Ogilvy Renault, Canadian counsel to the Company, their respective opinions dated the Closing Date, in form and substance satisfactory to you, and covering the matters set forth in Exhibits C, D and E, respectively, hereto.

           4.3. Company’s Existence and Authority. On or prior to the Closing Date, you shall have received, in form and substance reasonably satisfactory to you and your special counsel, such documents and evidence with respect to the Company as you may reasonably request in order to establish the existence and good standing of the Company and the authorization of the transactions contemplated by this Agreement.

           4.4. Consent of Holders of Other Securities. Any consents or approvals required to be obtained from any holder or holders of any outstanding Security of the Company and any amendments of agreements pursuant to which any Securities may have been issued which shall be necessary to permit the consummation of the transactions contemplated hereby on the Closing Date shall have been obtained and all such consents or amendments shall be satisfactory in form and substance to you and your special counsel.

           4.5. Legality of Investment. The Notes to be purchased by you shall qualify as a legal investment for you under the laws and regulations of each jurisdiction to which you may be subject (without resort to any so-called “basket” provision which permits the making of an investment without restrictions as to the character of the particular investment being made) and you shall have received such information as you shall reasonably request from the Company to establish such fact.

           4.6. Related Transactions. Concurrently with the issuance and sale of the Notes to you on the Closing Date, the Company shall have consummated the sale of Notes scheduled to be sold to the other Purchasers on such Closing Date; provided that so long as all other conditions precedent set forth in this Section 4 shall have been fulfilled by the

Company or waived by the Purchasers in accordance with Section 4.9, the Company shall not be required to proceed with the sale and purchase of the Notes if the Purchasers of more than $25,000,000 of the principal amount of the Notes scheduled to be sold on the Closing Date shall fail to purchase such Notes.

           4.7. Private Rating. On or prior to the Closing Date, the Company shall have provided to you a copy of the private rating letter delivered by Standard & Poor’s Corporation (“S&P”) which letter shall indicate that S&P has assigned a private rating of “A” to the Notes.

           4.8. Satisfactory Proceedings. All proceedings taken in connection with the transactions contemplated by this Agreement, and all documents necessary to the consummation thereof, shall be satisfactory in form and substance to you and your special counsel, and you shall have received a copy (executed or certified as may be appropriate) of all legal documents or proceedings taken in connection with the consummation of said transactions.

           4.9. Waiver of Conditions. If on the Closing Date the Company fails to tender to you the Notes to be issued to you on such date or if the conditions specified in this Section 4 have not been fulfilled, you may thereupon elect to be relieved of all further obligations under this Agreement. Without limiting the foregoing, if the conditions specified in this Section 4 have not been fulfilled, you may waive compliance by the Company with any such condition to such extent as you may in your sole discretion determine. Nothing in this Section 4.9 shall operate to relieve the Company of any of its obligations hereunder or to waive any of your rights against the Company.

SECTION 5. COMPANY COVENANTS.

          From and after the Closing Date and continuing so long as any amount remains unpaid on any Note:

           5.1. Corporate Existence, Etc. The Company will preserve and keep in force and effect, and will cause each Subsidiary to preserve and keep in force and effect, its corporate existence and all material franchises, licenses, rights, privileges and permits necessary to the proper conduct of its business as are customarily maintained by corporations of established reputation engaged in the same or a similar business and owning and operating similar properties, provided that the foregoing shall not prevent any transaction permitted by Section 5.8.

           5.2. Insurance. The Company will maintain, and will cause each Subsidiary to maintain, self-insurance programs or insurance coverage by financially sound and reputable insurers against such risks the failure to insure against could have a Material Adverse Effect, in such forms and amounts as are customary for corporations of established reputation engaged in the same or a similar business and owning and operating similar properties.

           5.3. Taxes, Claims for Labor and Materials, Compliance with Laws. (a) The Company will promptly pay and discharge, and will cause each Subsidiary promptly to pay and discharge, all lawful taxes, assessments and governmental charges or levies imposed upon the Company or such Subsidiary, respectively, or upon or in respect of all or any part of the property or business of the Company or such Subsidiary, all trade accounts

payable in accordance with usual and customary business terms, and all claims for work, labor or materials, which if unpaid might become a lien or charge upon any property of the Company or such Subsidiary; provided the Company or such Subsidiary shall not be required to pay any such tax, assessment, charge, levy, account payable or claim if (i) the validity, applicability or amount thereof is being contested in good faith by appropriate actions or proceedings which will prevent the forfeiture or sale of any material property of the Company or such Subsidiary or any material interference with the use thereof by the Company or such Subsidiary, and (ii) the Company or such Subsidiary shall set aside on its books, reserves deemed by it to be adequate with respect thereto.

               (b) The Company will promptly comply and will cause each Subsidiary to comply with all laws, ordinances or governmental rules and regulations to which it is subject, the violation of which would have a Material Adverse Effect or would result in any lien or charge upon any material property of the Company or any Subsidiary.

           5.4. Maintenance, Etc. The Company will maintain, preserve and keep, and will cause each Subsidiary to maintain, preserve and keep, its material properties which are used or useful in the conduct of its business (whether owned in fee or a leasehold interest) in good repair and working order in all material respects and from time to time will make all necessary repairs, replacements, renewals and additions as determined in the good faith judgment of the Company to be necessary to enable the Company to conduct its business substantially as currently conducted or as may be conducted hereafter in compliance with this Agreement, provided that nothing in this Section 5.4 shall prevent the Company from discontinuing the operation and maintenance of any of its properties if such discontinuance is in the good faith judgment of the Company no longer useful or desirable in the conduct of the business of the Company.

           5.5. Payment of Principal, Premium and Interest. The Company will duly and punctually pay the principal of, premium, if any, and interest on the Notes in accordance with their terms and this Agreement and will duly and punctually pay all other sums due and payable under and pursuant to this Agreement.

           5.6. Negative Pledge. The Company will not, and will not permit any Subsidiary to, create after the date of this Agreement any Mortgage upon any property of the Company or of any Subsidiary, whether owned at the date of this Agreement or hereafter acquired by the Company or by any Subsidiary, to secure any Indebtedness, without making effective provision concurrently with the creation of any such Mortgage whereby the Notes (together with, if the Company shall so determine, any other Indebtedness of the Company ranking equally with or in priority to the Notes and then existing or thereafter created in the case where the Company is required by contract to do so) shall be secured by a Mortgage equally and ratably with such Indebtedness, so long as such Indebtedness shall be so secured; provided , however , that the foregoing restrictions shall not be applicable to:

     (a) any Mortgage to secure any present or future Indebtedness of or related to the affairs or activities of Ponderay Newsprint Company or of Gold River Newsprint Limited Partnership, being joint ventures in which the Company or a Subsidiary has an interest, or of their respective successors and assigns, to the extent that such Mortgage affects the property or interests in property in said joint ventures;

     (b) any Mortgage (except on fixed assets and on shares of a Subsidiary or Affiliate) given to banks or others to secure any Indebtedness issued, assumed or guaranteed by the Company or a Subsidiary, which is payable on demand or which matures by its terms less than twelve months from the date of issuance, assumption or guarantee thereof;

     (c) any Mortgage to secure a Purchase Money Obligation; provided that (i) in the case of any construction or improvement of property, the Mortgage shall only apply to the property to be constructed or improved, to the real or immovable property which is substantially unimproved for the purposes of the Company or a Subsidiary and on which the property so constructed or the improvement is located, and to any machinery or equipment installed at any time so as to constitute immovable property or a fixture on the real property on which the property so constructed, or the improvement, is located, and (ii) in the case of any acquisition of property, the Mortgage shall only apply to the property to be acquired by the Company or a Subsidiary;

     (d) any Mortgage to secure Indebtedness issued, assumed or guaranteed for the construction of townsites, employees’ housing, warehouses or office premises;

     (e) any Mortgage on any non-producing resource property to secure any Indebtedness issued, assumed or guaranteed for the development or improvement of non-producing resource property;

     (f) any Mortgage in favor of a government in Canada or the United States of America;

     (g) any Mortgage in favor of the Company or any Wholly-owned Subsidiary;

     (h) any Mortgage required to be given or granted by any Subsidiary pursuant to the terms of any trust deed or similar document entered into by such Subsidiary prior to the date it became a Subsidiary;

     (i) any renewal, replacement or extension (or successive renewals, replacements or extensions) of any Mortgage referred to in clauses (a) to (h) inclusive above; provided , however , that the principal amount of the Indebtedness secured thereby shall not exceed the principal amount of the Indebtedness so secured at the time of such renewal, replacement or extension, except that this proviso shall not apply to any Indebtedness referred to in clause (a) or clause (b) above nor to any Indebtedness of or related to the affairs or activities of any joint venture, partnership or similar arrangement in which the Company or a Subsidiary has an interest but does not alone have the power to effect any such renewal, replacement or extension; and

     (j) a Mortgage not excepted by clauses (a) through (i) above; provided that after giving effect thereto the sum of (i) the aggregate amount of Indebtedness secured by such Mortgage and other Mortgages created under this clause (j), and (ii) Attributable Debt, does not exceed 10% of the Consolidated Shareholders’ Equity of the Company as at the end of the then last completed financial quarter of the Company.

           5.7. Limitation on Sale and Leaseback Transactions.

          The Company will not, and will not permit any Subsidiary to enter into any arrangement, directly or indirectly, whereby the Company or any Subsidiary shall in one or more related transactions sell, transfer or otherwise dispose of any property owned by the Company or any Subsidiary to any Person and more than 180 days after the later of the date of initial acquisition of such property or completion or occupancy thereof, as the case may be, by the Company or such Subsidiary, the Company or such Subsidiary shall lease or rent, as lessee, under a lease the term of which (including the initial term and any period for which the lease may be renewed or extended) exceeds thirty-six (36) months, the same property (a “Sale and Leaseback Transaction”), provided that the foregoing restriction shall not apply to any Sale and Leaseback Transaction if the following conditions are met:

     (a) the sale of such property is for cash consideration which (before deduction of any expenses incurred by the Company or such Subsidiary in connection with such Sale and Leaseback Transaction and any other applicable expenses) equals or exceeds the fair market value of the property so sold (as determined in good faith by the Board of Directors); and

     (b) immediately after the consummation of the Sale and Leaseback Transaction and after giving effect thereto, no Default or Event of Default would exist; and

     (c) at least one of the following conditions with respect to such Sale and Leaseback Transaction shall have been satisfied:

     (i) within 90 days after such sale the Company or such Subsidiary applies all, but not less than all, of the net proceeds from the sale relating to such Sale and Leaseback Transaction to the prepayment (including the premium where due and payable upon such prepayment), of the unsubordinated Funded Debt of the Company and its Subsidiaries all in accordance with and pursuant to the provisions of the agreements and instruments under which such Funded Debt was issued; or

     (ii) the Company or such Subsidiary applies the net proceeds from the sale relating to such Sale and Leaseback Transaction to the acquisition (and, in the case of real property, the construction) within 90 days thereafter of capital assets useful and intended to be used in carrying on the business of the Company or such Subsidiary and having a fair market value (as determined in good faith by the Board of Directors of the Company) at least equal to such net sale proceeds, provided such newly acquired assets shall be free from all liens to the extent that the assets which are subject of the Sale and Leaseback Transaction were free from all liens at the time of such sale; or

     (iii) immediately prior to the consummation of such Sale and Leaseback Transaction, the Company would be permitted by the provisions of Section 5.6(j) to create a Mortgage on the property which was the subject of such Sale and Leaseback

Transaction to secure additional Funded Debt in a principal amount equal to the Attributable Debt relating to such Sale and Leaseback Transaction.

           5.8. Consolidation, Amalgamation, Merger or Conveyance, Transfer or Lease of Assets. The Company shall not consolidate or amalgamate with or merge into another Person or convey, transfer or lease all or substantially all of its assets (in a single transaction or a series of transactions) to any Person, nor shall any Person consolidate or amalgamate with or merge into the Company, unless:

     (a) the corporation formed by such consolidation or amalgamation or into which the Company is merged or the Person which acquires by operation of law or by conveyance or transfer or lease all or substantially all of the assets of the Company shall be a corporation organized or existing under the laws of Canada or any Province or Territory thereof or under the laws of the United States or any State thereof, and shall (except in any case where such assumption is deemed to have occurred by the sole operation of law), expressly assume, by written instrument reasonably satisfactory to the holders of at least 66 2/3% in outstanding principal amount of the Notes, provided that if such holders shall not have objected to the form of such written instrument within 15 Business Days of actual receipt of the final draft form thereof from the Company, the form of such instrument shall be deemed to be satisfactory to the holders of the Notes, the due and punctual payment of all Indebtedness, obligations and liabilities of the Company pursuant to this Agreement and the due and punctual performance and observance of every covenant of this Agreement and the Notes on the part of the Company to be performed or observed;

     (b) immediately after giving effect to such transaction, no Default or Event of Default shall have happened and be continuing; and

     (c) the Company shall have delivered to the holders of the Notes an Officers’ Certificate and an opinion of counsel which counsel shall be selected by the Company and satisfactory to the holders of at least 66 2/3% in outstanding principal amount of the Notes each stating that such consolidation, merger, amalgamation, conveyance, transfer or lease and such assumption agreement, comply with this Section 5.8 and that all conditions precedent herein provided for relating to such transaction have been complied with.

           5.9. Repurchase of Notes. Except as permitted under and pursuant to Section 2.10, neither the Company nor any Subsidiary, directly or indirectly, by or through any entity or other means, may repurchase or make any offer to repurchase any Notes of any series unless the offer has been made to repurchase such series of Notes, pro rata, from all holders of the Notes of such series at the same time and upon the same terms. In case the Company or any Subsidiary repurchases any Notes as aforementioned, such Notes shall thereafter be cancelled and no Notes shall be issued in substitution therefor.

           5.10. Transactions with Affiliates. The Company will not, and will not permit any Subsidiary to, enter into or be a party to any transaction or arrangement with any Affiliate (including, without limitation, the purchase from, sale to or exchange of property with, or the rendering of any service by or for, any Affiliate), except in the ordinary course of and pursuant to the reasonable requirements of the Company’s or such

Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would obtain in a comparable arm’s-length transaction with a Person other than an Affiliate.

      5.11. Reports and Rights of Inspection. The Company will keep, and will cause each Subsidiary to keep, proper books of record and account in which full and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Company or such Subsidiary, in accordance with generally accepted Canadian accounting principles consistently maintained (except for changes disclosed in the financial statements furnished to you pursuant to this Section 5.11 and concurred in by the independent public accountants referred to in Section 5.11(b) hereof), and will furnish to you, so long as you are the holder of any Note and to each other institutional holder of the then outstanding Notes (in duplicate if so specified below or otherwise requested), and, in the case of the financial statements delivered pursuant to paragraph (b) of this Section 5.11, to the Securities Valuation Office, National Association of Insurance Commissioners, 67 Wall Street, New York, New York 10005:

      (a) Quarterly Statements. As soon as available and in any event within the applicable time periods prescribed by the Ontario Securities Act following the end of each quarterly fiscal period (except the last) of each fiscal year, duplicate copies of:

     (i) consolidated balance sheets of the Company as of the close of such quarter setting forth in comparative form the consolidated figures for the corresponding period of the preceding fiscal year,

     (ii) consolidated statements of earnings and retained earnings of the Company for such quarterly period, setting forth in comparative form the consolidated figures for the corresponding period of the preceding fiscal year, and

     (iii) consolidated statements of changes in cash position of the Company for the portion of the fiscal year ending with such quarter, setting forth in comparative form the consolidated figures for the corresponding period of the preceding fiscal year,

consolidating the Company and its Subsidiaries all in reasonable detail and certified as complete and correct, by an authorized financial officer of the Company to the effect that such consolidated financial statements present fairly in all material respects the financial position of the Company as of such date and the results of its operations and changes of cash position for such period in accordance with generally accepted Canadian accounting principles; provided , that so long as the Company shall file a Quarterly Report which contains the information set forth in this paragraph (a), the requirements of this paragraph (a) shall be satisfied by forwarding a copy of said Quarterly Report to the holders of the Notes;

      (b) Annual Statements. As soon as available and in any event within the applicable time periods prescribed by the Ontario Securities Act following the close of each fiscal year of the Company, duplicate copies of:

     (i) consolidated balance sheets of the Company as of the close of such fiscal year, and

     (ii) consolidated statements of earnings and retained earnings and changes in cash position of the Company for such fiscal year,

consolidating the Company and its Subsidiaries in each case setting forth in comparative form the consolidated figures for the preceding fiscal year, all in reasonable detail and accompanied by an opinion thereon (unqualified as to scope limitations imposed by the Company) thereon of a major Canadian firm of independent chartered accountants selected by the Company to the effect that the consolidated financial statements have been prepared in accordance with generally accepted Canadian accounting principles applied on a consistent basis and present fairly the financial condition of the Company as of such date and the results of its operations and changes of cash position for such period and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted Canadian auditing standards and, accordingly, includes such tests of the accounting records and such other auditing procedures as were considered necessary to provide a reasonable basis for the opinion expressed in the report; provided , that so long as the Company shall file an Annual Report which contains the information set forth in this paragraph (b), the requirements of this paragraph (b) shall be satisfied by forwarding a copy of said Annual Report to the holders of the Notes;

      (c) Audit Reports. Promptly upon receipt thereof, one copy of each interim or special financial audit made by independent accountants of the books of the Company and its Subsidiaries on a consolidated basis or of the books of any Subsidiary which contributes 25% or more of the consolidated sales of the Company, which audit results in the issuance of an opinion by such accountants;

      (d) Ontario Securities Commission and Other Reports. Promptly upon their becoming publicly available, one copy of each financial statement, report, notice, information circulars or proxy statement sent by the Company to stockholders generally and of each Quarterly Report, Annual Report and each other regular or periodic report, and any registration statement or prospectus filed by the Company or any Subsidiary with any securities exchange including, without limitation, the Securities and Exchange Commission and the Ontario Securities Commission or any successor agencies, and copies of any annual information form filed with provincial securities commissions and any material event or material change reports filed with provincial securities commissions;

      (e) Requested Information. With reasonable promptness, such other data and information as you or any such institutional holder may reasonably request;

      (f) Officer’s Certificates. Within the period provided in paragraph (b) above, a certificate of an authorized financial officer of the Company stating that such officer has reviewed the provisions of this

Agreement and setting forth: (i) the information and computations (in sufficient detail) required in order to establish whether the Company was in compliance with the terms and restrictions of Sections 5.6(j) and 5.7(c)(iii) at the end of the period covered by the financial statements then being furnished, and (ii) whether there existed as of the date of such financial statements and whether, to the best of his knowledge, there exists on the date of the certificate or existed at any time during the period covered by such financial statements any Default or Event of Default and, if any such condition or event exists on the date of the certificate, specifying the nature and period of existence thereof and the action the Company is taking or proposes to take with respect thereto; and

      (g) Notice of Default or Event of Default. Immediately (and in any event within five Business Days) after becoming aware of the existence of any condition or event which constitutes a Default or an Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;

      (h) Notice of Claimed Default. Immediately upon becoming aware that the holder of any Note or any other evidence of Indebtedness or other Security of the Company or any Subsidiary has given notice or taken any other action with respect to a claimed default or Event of Default, a written notice specifying the notice given or action taken by such holder and the nature of the claimed default or Event of Default and what action the Company is taking or proposes to take with respect thereto;

      (i) Loss of Reporting Issue or Status. With reasonable promptness, notice of loss by the Company of its status as a reporting issuer under the Ontario Securities Act and from time to time thereafter notice of any change, loss or sale of any franchise, license, right, privilege or permit otherwise required to be maintained by the Company pursuant to Section 5.1; and

      (j) Notice of Litigation. From and after the date on which the Company shall not be required to file an Annual Report with the Ontario Securities Commission, the Company agrees to give notice within ten Business Days of such event of any litigation, dispute or governmental proceeding that is, in the good faith Judgment of the Company, reasonably likely to have a Material Adverse Effect to all holders of the Notes then outstanding, such notice to be in writing and to be sent in the manner specified in Section 9.7 of this Agreement and thereafter to provide such other information with respect to the status of any such litigation, dispute or governmental proceeding as any holder of the Notes may from time to time reasonably request.

Without limiting the foregoing, the Company will permit you, so long as you are the holder of any Note, and each institutional holder of the then outstanding Notes (or such Persons as either you or such holder may designate), to visit and inspect, under the Company’s guidance, any of the properties of the Company or any Subsidiary, to examine all their books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers, employees, and independent chartered accountants (and by this provision the Company authorizes said accountants to discuss with you the finances and affairs of the Company and its Subsidiaries) all at such reasonable times and as often as

may be reasonably requested (hereinafter referred to as the “Inspection Rights”); provided , that prior to the occurrence of a Default or an Event of Default, the holders of the Notes hereby agree to limit the exercise of their Inspection Rights to an examination of the books of account and records of the Company and its Subsidiaries, to discussions of the respective affairs, finances and accounts with senior officers of the Company designated by the Company for such purpose and the independent chartered accountants of the Company (so long as in connection with any meeting with the independent chartered accountants of the Company, the holders of the Notes shall forward written notice of such proposed meeting to the Company not less than five Business Days prior to the date of such proposed meeting and such notice shall afford the Company the opportunity to attend such meeting (it being understood that the failure of the Company to attend such meeting shall not preclude the holders from proceeding with such meeting)) and that such limited Inspection Rights shall be exercised no more than one time during any calendar year by one or more representatives of the holders of the Notes which representatives shall be appointed by the holders of at least 66-2/3% of the holders of each series of Notes. The Company shall not be required to pay or reimburse you or any such holder for expenses which you or any such holder or your representatives may incur in connection with any such visitation or inspection, provided that the Company hereby agrees to pay and reimburse you or any such holder or your representatives for expenses which may be incurred in connection with any visitation or inspection following the occurrence and during the continuance of a Default or Event of Default hereunder.

SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.

           6.1. Events of Default. Any one or more of the following shall constitute an “Event of Default” as the term is used herein:

     (a) Default shall occur in the payment of interest on any Note when the same shall have become due and such default shall continue for more than 30 days; or

     (b) Default shall occur in the making of any required scheduled prepayment on any of the Series D Notes as provided in Section 2.1 when the same shall have become due; or

     (c) Default shall occur in the making of any other payment or repurchase of the principal of any Note or any Make Whole Premium thereon at the expressed or any accelerated maturity date or at any date fixed for prepayment; or

     (d) Default shall be made in the payment of the principal of or interest on any Indebtedness for borrowed money aggregating in excess of U.S. $10,000,000 of the Company, as and when the same shall become due and payable by the lapse of time, by declaration, by call for redemption or otherwise, and such default shall continue beyond the period of grace, if any, allowed with respect thereto; or

     (e) Default or the happening of any event shall occur or any condition shall exist under any indenture, agreement, or other instrument under which any Indebtedness for borrowed money aggregating in excess of U.S. $10,000,000 of the Company may be issued, and such default, event or

condition shall continue and the Company shall not have remedied or cured such default, such default shall not have been waived by the holders of such Indebtedness and such default shall result in the acceleration of the maturity of at least U.S. $10,000,000 in outstanding principal amount of such Indebtedness of the Company; or

     (f) Default shall occur in the observance or performance of any covenant or agreement contained in Section 5.6 which is not remedied within 30 Business Days after written notice thereof to the Company by the holder of any Note; or

     (g) Default shall occur in the observance or performance of any other provision of this Agreement which is not remedied within 60 Business Days after written notice thereof to the Company by the holder of any Note; or

     (h) Any representation or warranty made by the Company herein, or made by the Company in any statement or certificate furnished by or on behalf of the Company in connection with the consummation of the issuance and delivery of the Notes or furnished by the Company pursuant hereto, is untrue in any material respect as of the date of the issuance or making thereof; or

     (i) Final judgment or judgments for the payment of money aggregating in excess of $10,000,000 is or are outstanding against the Company or against any of its property or assets and any one of such judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of 30 days from the date of its entry; or

     (j) The Company becomes insolvent or bankrupt, is generally not paying its debts as they become due or makes an assignment for the benefit of creditors or shall convey or transfer any of its property with a view to delaying, defeating or hindering creditors, or the Company applies for or consents to the appointment of a custodian, trustee, liquidator or receiver for the Company or for the major part of its property or the Company admits to some or all of its creditors at a meeting or by other means of communication that it is insolvent or the passing of a resolution by the Company or the commencement by the Company of any proceeding relative to the Indebtedness of the Company under any reorganization, arrangement, compromise, adjustment or postponement of debt, dissolution, winding-up, composition or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or

     (k) A custodian, trustee, liquidator, receiver or other similar official is appointed for the Company or for the major part of its property and is not discharged within 60 days after such appointment; or

     (1) Bankruptcy, reorganization, arrangement, liquidation, winding-up, adjustment, protection, relief, composition or insolvency proceedings, or other proceedings for relief under any bankruptcy or similar law or laws for the relief of debtors, are instituted by the Company or are granted by a court, or are instituted against the Company by any other Person and, if instituted against the Company by any Person other than the Company, are consented to

or are not contested vigorously and in good faith by the Company within 30 days after such institution.

           6.2. Acceleration of Maturities. When any Event of Default described in paragraphs (a) through (i), inclusive, of Section 6.1 has happened and is continuing, the holder or holders of 25% or more of the principal amount of Notes at the time outstanding may, by notice in writing sent to the Company by any method authorized by Section 9.7, declare the entire principal of and all interest accrued on all Notes to be, and all Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. When any Event of Default described in paragraph (j), (k) or (l) of Section 6.1 has occurred, then all outstanding Notes shall immediately become due and payable without presentment, demand or notice of any kind. Upon the Notes becoming due and payable as a result of any Event of Default as aforesaid, the Company will forthwith pay to the holders of the Notes the entire principal of and interest accrued on the Notes and if the Event of Default which has occurred is described in any of Sections 6.1(a) through (i), inclusive, at a time when no Event of Default described in Sections 6.1(j), (k) or (l) and constituting involuntary bankruptcy, reorganization or insolvency proceedings has occurred, and is continuing, to the extent permitted by law and as liquidated damages and not as a penalty, an additional amount equal to the then applicable Make Whole Premium. No course of dealing on the part of any Noteholder nor any delay or failure on the part of any Noteholder to exercise any right shall operate as a waiver of such right or otherwise prejudice such holder’s rights, powers and remedies. The Company further agrees, to the extent permitted by law, to pay to the holder or holders of the Notes all costs and expenses incurred by them in the collection of any Notes upon any default hereunder or thereon, including reasonable compensation to such holder’s or holders’ attorneys for all services rendered in connection therewith.

           6.3. Rescission of Acceleration. The provisions of Section 6.2 are subject to the condition that if the principal of and accrued interest on all or any outstanding Notes have been declared immediately due and payable by reason of the occurrence of any Event of Default described in paragraphs (a) through (i), inclusive, of Section 6.1, the holders of at least 66-2/3% in aggregate principal amount of the Notes then outstanding may, by written instrument filed with the Company, rescind and annul such declaration and the consequences thereof, provided that at the time such declaration is annulled and rescinded:

     (a) no judgment or decree has been entered for the payment of any monies due pursuant to the Notes or this Agreement;

     (b) all arrears of interest upon all the Notes and all other sums payable under the Notes and under this Agreement (except any principal, interest or premium on the Notes which has become due and payable solely by reason of such declaration under Section 6.2) shall have been duly paid; and

     (c) each and every other Default and Event of Default shall have been made good, cured or waived pursuant to Section 7.1;

and provided further , that no such rescission and annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereto.

SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.

           7.1 . Consent Required. Any term, covenant, agreement or condition of this Agreement may, with the consent of the Company, be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Company shall have obtained the consent in writing of the holders of at least 66-2/3% in aggregate principal amount of each series of outstanding Notes; provided that without the written consent of the holders of all of the Notes then outstanding, no such waiver, modification, alteration or amendment shall be effective (a) which will change the time of payment (including any prepayment required by Section 2.1) of the principal of or the interest on any Note or reduce the principal amount thereof or change the rate of interest thereon (except in accordance with the provisions of Section 2.10(a)) or premium thereon, or (b) which will change any of the provisions with respect to optional prepayments, or (c) which will change the percentage of holders of the Notes required to consent to any such amendment, alteration or modification or change any of the provisions of Sections 2.10, 6 or 7.

           7.2. Solicitation of Noteholders. The Company will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Agreement or the Notes unless each holder of the Notes (irrespective of the amount of Notes then owned by it) shall be informed thereof in writing by the Company and shall be afforded the opportunity of considering the same and shall be supplied by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or amendment effected pursuant to the provisions of this Section 7 shall be delivered by the Company to each holder of outstanding Notes forthwith following the date on which the same shall have been executed and delivered by the holder or holders of the requisite percentage of outstanding Notes. The Company will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any holder of the Notes as consideration for or as an inducement to the entering into by any holder of the Notes of any waiver or amendment of any of the terms and provisions of this Agreement unless such remuneration is concurrently paid, on the same terms, ratably to the holders of all of the Notes then outstanding.

           7.3. Effect of Amendment or Waiver. Any such amendment or waiver shall apply equally to all of the holders of the Notes and shall be binding upon them, upon each future holder of any Note and upon the Company, whether or not such Note shall have been marked to indicate such amendment or waiver. No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon.

SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.

           8.1. Definitions. Unless the context otherwise requires, the terms hereinafter set forth when used herein shall have the following meanings and the fol