SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION REVOLVING CREDIT AND GUARANTY AGREEMENT

Exhibit 99.1

$200,000,000

SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION REVOLVING CREDIT
AND GUARANTY AGREEMENT

Among

KAISER ALUMINUM & CHEMICAL CORPORATION,
KAISER ALUMINUM CORPORATION,
AND EACH OF THEIR RESPECTIVE SUBSIDIARIES LISTED AS BORROWERS ON
THE SIGNATURE PAGES HERETO
each a Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code,

as Borrowers

and

THE SUBSIDIARIES OF THE BORROWERS LISTED AS GUARANTORS ON THE
SIGNATURE PAGES HERETO

as Guarantors

and

THE LENDERS PARTY HERETO,

and

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

as Administrative Agent and Documentation Agent

J.P. MORGAN SECURITIES INC.,
as Lead Arranger, Sole Bookrunner
and
Syndication Agent

and

THE CIT GROUP/BUSINESS CREDIT, INC.
as Co-Arranger

Dated as of February 11, 2005

TABLE OF CONTENTS

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SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION REVOLVING CREDIT AND GUARANTY AGREEMENT

     SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of February 11, 2005, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation as a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (the “ Company ”), KAISER ALUMINUM CORPORATION, a Delaware corporation and a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (the “ Parent ”) and each of their respective subsidiaries listed as “ Borrowers ” on the signature pages hereto (the “ Subsidiary Borrowers ”, and together with the Company and the Parent, each a “ Borrower ” and collectively, the “ Borrowers ”), certain of the direct or indirect subsidiaries of the Borrowers listed as “ Guarantors ” on the signature pages hereto (each a “ Guarantor ” and collectively, the “ Guarantors ”), each of the Borrowers and the Guarantors referred to in this paragraph is a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (the cases of the Borrowers and the Guarantors, each a “ Case ” and collectively, the “ Cases ”), JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“ JPMorgan Chase ”), THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation (“ CIT ”) and each of the other financial institutions from time to time party hereto (together with JPMorgan Chase, the “ Lenders ”) and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as administrative agent (in such capacity, the “ Agent ”) for the Lenders.

INTRODUCTORY STATEMENT

     On February 12, 2002, certain of the Borrowers and certain of the Guarantors filed voluntary petitions for relief with the Bankruptcy Court initiating the Cases. On March 15, 2002 certain of the other Borrowers and Guarantors filed voluntary petitions for relief under the Bankruptcy Code. On January 14, 2003 the remaining Borrowers and Guarantors filed petitions for relief under the Bankruptcy Code. The Borrowers’ and the Guarantors’ Cases have been consolidated for procedural purposes only and are being administered jointly.

     The Borrowers, the Guarantors, certain other subsidiaries of the Borrowers, the Existing Lenders and Bank of America, N.A. are parties to the Post-Petition Credit Agreement, dated as of February 12, 2002 (as amended, restated or otherwise modified, the “ Existing Credit Agreement ”) pursuant to which the Borrowers and the Guarantors obtained extensions of credit.

     The Borrowers have applied to the Lenders for a revolving credit, letter of credit and swingline loan facility in an aggregate principal amount not to exceed $200,000,000, all of the Borrowers’ Obligations hereunder are to be guaranteed by the Guarantors.

     The proceeds of the Loans will be used for (i) refinancing of the outstanding Obligations under the Existing Credit Agreement, (ii) working capital, letters of credit and capital expenditures; (iii) other general corporate purposes of the Borrowers and the Guarantors; (iv) payment of any related transaction costs, fees and expenses; and (v) the costs of administration of the Cases.

     To provide guarantees and security for the repayment of the Loans, the reimbursement of any draft drawn under a Letter of Credit and the payment of the other Obligations of the Borrowers and the Guarantors hereunder and under the other Loan Documents (including, without limitation, Banking Services Obligations and Swap Obligations owing to any Lender to the extent included in Obligations) the Borrowers and the Guarantors will provide to the Agent and the Lenders the following (each as more fully described herein):

          (a) a guaranty from each of the Guarantors of the due and punctual payment and performance of the Obligations of the Borrowers hereunder;

          (b) with respect to the Obligations, a joint and several allowed administrative expense claim in each of the Cases pursuant to Section 364(c)(1) of the Bankruptcy Code having priority over all administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code;

          (c) a perfected first-priority Lien, pursuant to Section 364(c)(2) of the Bankruptcy Code, upon all tangible and intangible property of each Borrower’s and Guarantor’s estate in the Cases that was not subject to valid, perfected and non-avoidable Liens as of the applicable Filing Date of each such Borrower or Guarantor and on all cash and cash equivalents in the Letter of Credit Account provided that following the Termination Date, amounts in the Letter of Credit Account shall not be subject to the Carve-Out hereinafter referred to;

          (d) a perfected junior Lien, pursuant to Section 364(c)(3) of the Bankruptcy Code, upon all tangible and intangible property of each Borrower’s and Guarantor’s estate in the Cases that was subject to valid, perfected and non-avoidable Liens in existence on the applicable Filing Date of each such Borrower or Guarantor or that was subject to valid Liens in existence on such Filing Date that were perfected subsequent to such Filing Date as permitted by Section 546(b) of the Bankruptcy Code, junior to all such valid, perfected and non-avoidable Liens; and

     All of the claims and the Liens granted hereunder in the Cases to the Agent and the Lenders shall be subject to the Carve-Out to the extent provided in Section 2.22 .

     Accordingly, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

      SECTION 1.01. Defined Terms.

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

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

     “ Account ” shall mean “account” as defined in Article 9 of the Uniform Commercial Code as in effect from time to time in the State of New York, or when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction.

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     “ Account Debtor ” shall mean any Person obligated on an Account.

     “ Adjusted LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the LIBO Rate for such interest period multiplied by the Statutory Reserve Rate.

     “ Affiliate ” shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan).

     “ Agent ” shall have the meaning set forth in the first paragraph of this Agreement.

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

     “ Agreement ” shall mean this Secured Super-priority Debtor-in-Possession Revolving Credit and Guaranty Agreement, as the same may be amended, restated, modified or supplemented from time to time.

     “ Alternate Base Rate ” shall mean, for any day, a rate per annum (rounded, if necessary, to the nearest 1/100 of 1%) 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 0.50%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

     “ Applicable Commitment Fee Rate ” means, at any time, with respect to the Commitment Fees payable hereunder, the applicable rate per annum set forth below under the caption “Commitment Fee Rate” based upon the Borrowers’ average daily Aggregate Credit Exposure for the most recently ended calendar month:

provided , however , that for the period commencing on the Closing Date and ending one month thereafter, the Applicable Commitment Fee Rate shall be 0.35%.

     Adjustments, if any, to the Applicable Commitment Fee Rate shall be effective as of the first day of each calendar month based upon the Borrowers’ average daily Aggregate Credit Exposure for the most recently ended calendar month.

     “ Applicable Margin ” shall mean (a) 0.50%, in the case of ABR Loans and (b) 2.25%, in the case of Eurodollar Loans.

     “ Assignment and Assumption ” shall mean an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by

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Section 11.03(b) ), and accepted by the Agent, substantially in the form of Exhibit D or any other form approved by the Agent.

     “ Availability ” shall mean, at any time, an amount equal to (a) the lesser of (i) the Total Commitment minus the Liquidity Reserve from and after the occurrence and during the continuance of a Liquidity Trigger Event and (ii) the Borrowing Base, minus (b) the Aggregate Credit Exposure of all Lenders.

     “ Availability Period ” shall mean the period from and including the Closing Date to but excluding the Termination Date.

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

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

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

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

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

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

     “ Borrowers ” shall have its meaning as set forth in the first paragraph of this Agreement.

     “ Borrowers’ Agent ” shall mean the Company, in its capacity as agent for the Borrowers and the Guarantors, as more fully described in Section 1.03 .

     “ Borrowing ” shall mean (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, (b) a Swingline Loan or (c) a Protective Advance.

     “ Borrowing Base ” shall mean, at any time, an amount that is equal to the sum of:

   (i) 85% of Eligible Accounts Receivable; plus

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   (ii) the lesser of (a) 65% of Eligible Inventory (valued at the lower of cost or market value, determined on a first-in, first-out basis), and (b) 85% of the Net Recovery Percentage (based upon the most recent Inventory appraisal delivered to the Agent in accordance with the terms hereof) of Eligible Inventory (valued at the lower of cost or market value, determined on a first-in, first-out basis); plus

   (iii) the Real Property Percentage multiplied by 65% of the appraised Fair Market Value of Eligible Real Estate; plus

   (iv) the Equipment Percentage multiplied by 80% of the appraised Net Orderly Liquidation Value of Eligible Equipment; minus

   (v) the Carve-Out Reserve; minus

   (vi) immediately upon the occurrence and at all times during the continuance of a Liquidity Trigger Event, the Liquidity Reserve; minus

   (vii) Reserves (other than the Carve-Out Reserve and the Liquidity Reserve).

     The maximum amount of Eligible Equipment and Eligible Real Estate that may be included in the Borrowing Base is $50,000,000. The Agent retains the right to, from time to time, in its Permitted Discretion, establish additional standards of eligibility and reserves against eligibility and to reduce advance rates, with any changes in such standards to be effective upon delivery of notice thereof to the Borrowers’ Agent.

     “ Borrowing Base Certificate ” shall mean a certificate substantially in the form of Exhibit E together with all supporting documentation required to be delivered as specified in Schedule 1 to Exhibit E (with such changes therein from time to time as may be required by the Agent in its Permitted Discretion to reflect the components of and reserves against the Borrowing Base as provided for hereunder from time to time), executed and certified by a Financial Officer of the Borrowers’ Agent.

     “ 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, when used in connection with a Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

     “ Canadian Subsidiaries ” shall mean Texada Mines, Kaiser Canada Investment Limited, Kaiser Canada and Refractories Engineering.

     “ Capital Expenditures ” shall mean, without duplication, any actual cash expenditure for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP.

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     “ Capital Lease ” shall mean, with respect to any Person, any agreement pursuant to which such Person obtains the right to use any real or personal property which is required to be classified and accounted for as a capital lease on the balance sheet of such Person under GAAP.

     “ Capital Lease Obligations ” shall mean, with respect to any Person, the obligations of such Person to pay rent or other amounts under any Capital Lease and, for purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

     “ Carve-Out ” shall have the meaning set forth in Section 2.22 .

     “ Carve-Out Reserve ” shall mean an amount at all times equal to $4,000,000.

     “ Cases ” shall have the meaning set forth in the first paragraph of this Agreement.

     “ Cash Collateralization ” shall have the meaning given such term in Section 2.07(j) .

     “ Cash Management Accounts ” shall mean those bank accounts of each Borrower, each Guarantor, and their Significant Subsidiaries (excluding any foreign Subsidiary and all Excluded Subsidiaries) listed on Schedule 3.19 that are maintained at one or more Cash Management Banks listed on Schedule 3.19 .

     “ Cash Management Bank ” shall have the meaning given such term in Section 10.01(a) .

     “ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended or otherwise modified from time to time.

     “ CERCLIS ” shall mean the Comprehensive Environmental Response Compensation Liability Information System List.

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

     “ Change of Control ” shall mean (i) the acquisition after the date hereof of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of shares representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Parent; (ii) the occupation of a majority of the seats (other than vacant seats) on the Board of Directors of any Borrower by Persons who were neither (A) nominated by the Board of Directors

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of the Parent nor (B) appointed by directors so nominated or (iii) the acquisition of direct or indirect Control of any of the Borrowers by any Person or group.

     “ Closing Date ” shall mean the date on which this Agreement has been executed and the conditions precedent to the making of the initial Loans set forth in Section 4.01 have been satisfied or waived, which date shall occur as soon as practical following the of entry of the Order but in no event later than February 11, 2005.

     “ 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 any and all property owned, leased or operated by a Person granted as security for the Obligations pursuant to any other Loan Document and any and all other property of any Borrower or any Guarantor, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of the Agent, on behalf of itself and the Lenders, to secure the Obligations.

     “ Collateral Access Agreement ” shall mean any landlord waiver or other agreement, in form and substance reasonably satisfactory to the Agent, between the Agent, for the benefit of the Agent and the Lenders, and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any Borrower or Guarantor for any real Property where any Collateral is located and pursuant to which such third party, among other things, waives or subordinates any Lien such third party may have in respect of the Collateral, as such landlord waiver or other agreement may be amended, restated, supplemented or otherwise modified from time to time.

     “ Collateral Monitoring Fees ” shall have the meaning set forth in Section 5.08 .

     “ Commitment ” shall mean, with respect to any Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, as such commitment may be (a) reduced from time to time pursuant to the terms hereof and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.03(b) . The initial amount of each Lender’s Commitment is set forth on the Annex A – Commitment Schedule or, if applicable, in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment. The initial aggregate amount of all of the Lenders’ Commitments is $200,000,000.

     “ Commitment Fee ” shall have the meaning set forth in Section 2.13 .

     “ Commitment Letter ” shall mean that certain Commitment Letter, dated January 14, 2005, among the Agent, JPMSI, CIT, the Parent and the Company.

     “ Commitment Percentage ” shall mean, with respect to any Lender, (a) with respect to Revolving Loans, Letter of Credit Exposure or Swingline Loans, a portion thereof equal to a fraction the numerator of which is such Lender’s Commitment and the denominator of which is the Total Commitment (if the Commitments have terminated or expired, the Commitment Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments), (b) with respect to Protective Advances or with respect

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to the Aggregate Credit Exposure prior to the Termination Date, a portion thereof equal to a fraction the numerator of which is such Lender’s Commitment and the denominator of which is the Total Commitment, and (c) with respect to Protective Advances or with respect to the Aggregate Credit Exposure after the Termination Date, a portion thereof equal to a fraction the numerator of which is such Lender’s Revolving Credit Exposure and the denominator of which is the Aggregate Credit Exposure.

     “ Commodity Swap Agreement ” shall mean any Swap Agreement involving or settled by reference to one or more commodities.

     “ Consummation Date ” shall mean the date of the substantial consummation (as defined in Section 1101 of the Bankruptcy Code and which for purposes of this Agreement shall be no later than the effective date of a Reorganization Plan) of a Reorganization Plan that is confirmed pursuant to an order of the Bankruptcy Court.

     “ 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 ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

     “ Default ” shall mean any event or condition which constitutes an Event of Default or which upon notice, lapse of time, or both would, unless cured or waived, constitute an Event of Default.

     “ Default Notice Period ” shall have the meaning given to such term in Section 7.01 .

     “ Defaulting Lender ” shall have the meaning given to such term in Section 2.08(b) .

     “ Departing Lender ” shall have the meaning given to such term in Section 2.20(b) .

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

     “ Dominion Period ” shall have the meaning given to such term in Section 10.02 .

     “ Dominion Release Event ” shall mean, as of any date following the occurrence of a Dominion Trigger Event, the first date upon which both of the following conditions have been satisfied: (i) Availability has exceeded $65,000,000 for each day during the ninety (90) consecutive calendar day period ending on such date after the immediately preceding Dominion Trigger Event and (ii) at least 365 days have elapsed since the date of the last Dominion Release Event, if any.

     “ Dominion Trigger Event ” shall mean any date on which Availability has been less than $50,000,000 for any period of five (5) consecutive Business Days ending on such date.

     “ Eligible Accounts Receivable ” shall mean, at any time, all Accounts of the Company, KAII and Kaiser Bellwood unless such Account is excluded from “Eligible Accounts

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Receivable” in accordance with the following provisions of this definition. Without limiting the Agent’s Permitted Discretion provided herein, Eligible Accounts Receivable shall not include any Account: (i) which is not subject to a perfected first-priority security interest in favor of the Agent, (ii) which is subject to any Lien other than (a) a Lien in favor of the Agent and (b) a Permitted Lien or other Lien permitted under this Agreement in each case, which does not have priority over the Lien in favor of the Agent; (iii) with respect to which more than ninety (90) days have elapsed since the date of the original invoice therefor; (iv) owing by an Account Debtor as to which 25% or more of the dollar amount of all accounts owing by such Account Debtor are more than ninety (90) days past the date of the original invoice for such accounts; (v) to any one Account Debtor or group of affiliated Account Debtors that are in excess of 15% of total Eligible Accounts Receivable; (vi) with respect to which any covenant, representation, or warranty contained in this Agreement or in the Security Agreement has been breached in any material respect or is not true in all material respects; (vii) which does not arise from the sale of goods or performance of services in the ordinary course of the applicable Borrower’s business; (viii) which is not evidenced by an invoice or other documentation reasonably satisfactory to the Agent which has been sent to the Account Debtor; (ix) which is contingent upon the completion of any further performance by any Borrower, Guarantor, or Affiliate of any Borrower or Guarantor (other than alumina purchase or sales agreements and product returns in the ordinary course of business); (x) owing by a director, officer, employee or Affiliate of any Borrower or Guarantor; (xi) for which the goods giving rise to such Account have not been shipped to the Account Debtor or for which the services giving rise to such Account have not been performed by the applicable Borrower (other than bill and hold Accounts which satisfy the requirements set forth in clause (xxiii) below); (xii) which is owed by an Account Debtor which has (a) applied for, suffered, or consented to the appointment of any receiver, custodian, trustee, or liquidator of its assets, (b) had possession of all or a material part of its property taken by any receiver, custodian, trustee or liquidator, (c) filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case under any state or federal bankruptcy laws, (d) admitted in writing its inability, or is generally unable to, pay its debts as they become due, (e) become insolvent, or (f) ceased operation of its business, provided , however , that in each case of clauses (a) through (f) above the Agent may determine, in its Permitted Discretion, that post-petition Accounts owning by a debtor-in-possession under Chapter 11 of the Bankruptcy Code shall not be deemed ineligible; (xiii) which is owed by any Account Debtor which has sold all or substantially all of its assets; (xiv) which is owed by (a) the government (or any department, agency, public corporation, or instrumentality thereof) of any country other than the U.S. unless such Account is backed by a Letter of Credit acceptable to the Agent which is in the possession of the Agent, or (b) the government of the United States of America, or any department, agency, public corporation, or instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq . and 41 U.S.C. § 15 et seq .), and any other steps necessary to perfect the Lien of the Agent in such Account have been complied with to the Agent’s satisfaction; (xv) which is owed by an Account Debtor which (a) does not maintain its chief executive office in the U.S., the United Kingdom or Canada (other than the Canadian province of Quebec) or (b) is not organized under applicable law of the U.S., any state of the U.S., the United Kingdom, Canada, or any province of Canada (other than the Canadian province of Quebec) unless such Account is either (x) backed by a Letter of Credit acceptable to the Agent which is in the possession of the Agent or (y) owed by an Account Debtor (not otherwise

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described in (a) or (b) above) specified by the Agent in its Permitted Discretion, provided , however , such Accounts of Account Debtors under this clause (y) shall not exceed 20% of the total Eligible Accounts Receivable; (xvi) which is or is reasonably likely to be subject to any counterclaim, deduction, defense, setoff or dispute and then only to the extent of such counterclaim, deduction, defense, setoff or dispute; (xvii) which is evidenced by any promissory note, chattel paper or instrument; (xviii) which is owed by an Account Debtor located in any jurisdiction which requires filing of a “Notice of Business Activities Report” or other similar report in order to permit the applicable Borrower to seek judicial enforcement in such jurisdiction of payment of such Account, unless such Borrower has filed such report or is qualified to do business in such jurisdiction; (xix) with respect to which any Borrower, Guarantor, or Affiliate of any Borrower or Guarantor has made any agreement with the Account Debtor for any reduction thereof, other than discounts and adjustments given in the ordinary course of business; (xx) which the Agent determines in its Permitted Discretion may not be paid by reason of the Account Debtor’s inability to pay or which the Agent otherwise determines in its Permitted Discretion is unacceptable for any reason whatsoever; (xxi) that is payable in any currency other than Dollars; (xxii) which is a guaranteed sale, sale and return, sale on approval, consignment, cash-on-delivery or other repurchase or return basis (excluding Accounts that are subject to returns in the ordinary course of business); (xxiii) that is the subject of a bill and hold or for which the goods have not been shipped ( provided that such Account will be deemed eligible if the Account Debtor with respect to such Account has delivered an agreement (in form and substance acceptable to the Agent) between the Account Debtor, the applicable Borrower and the Agent pursuant to which such Account Debtor unconditionally agrees to accept delivery of such goods and waives any rights of off-set with respect to such Account or such Account Debtor unconditionally agrees to pay in cash for such Account in the event such Account Debtor elects not to take delivery); (xxiv) which represents a progress billing; (xxv) with respect to which an invoice has not been sent to the applicable Account Debtor; and (xvi) such other categories as may be established by the Agent in its Permitted Discretion. Notwithstanding the foregoing, any domestic Account which would otherwise be deemed ineligible may be deemed eligible by the Agent in its Permitted Discretion if such Account is supported by a letter of credit in form and substance acceptable to the Agent.

     “ Eligible Assignee ” shall mean (i) a commercial bank having total assets in excess of $1,000,000,000; (ii) a finance company, insurance company or other financial institution or fund, in each case reasonably acceptable to the Agent and, so long as no Default has occurred and is continuing, the Borrowers’ Agent (such consent by the Borrowers’ Agent not to be unreasonably withheld, conditioned or delayed), which in the ordinary course of business extends credit of the type contemplated herein and has total assets in excess of $200,000,000 and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of ERISA; (iii) a Lender Affiliate of the assignor Lender; and (iv) any other financial institution satisfactory to the Agent and, so long as no Default has occurred and is continuing, the Borrowers’ Agent (such consent by the Borrowers’ Agent not to be unreasonably withheld, conditioned or delayed).

     “ Eligible Equipment ” shall mean machinery, equipment and rolling stock (collectively, “ Equipment ”) owned by the Company, KAII and Kaiser Bellwood and located in the United States, which satisfies each of the following requirements: (i) the applicable Borrower has good and marketable title to the Equipment; (ii) the full purchase price for the Equipment has

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been paid by the applicable Borrower; (iii) the Equipment is located on premises owned or leased by the applicable Borrower ( provided that with respect to Equipment that is located at a leased facility, the Agent shall have received a Collateral Access Agreement in form and substance acceptable to the Agent or the Agent shall have implemented Reserves in an amount equal to three (3) months rent for such leased facility, but without duplication of any Reserves for rent pursuant to any other provision of this Agreement); (iv) the Equipment is in good repair and working order; (v) the Equipment is not subject to any agreement which restricts the ability of the applicable Borrower to use, sell, transport or dispose of the Equipment or which restricts the Agent’s ability to take possession of, sell or otherwise dispose of the Equipment; (vi) the Equipment does not constitute “fixtures” under the applicable laws of the jurisdiction in which the Equipment is located; (vii) the Agent has received an appraisal report with respect to the Equipment from an independent appraiser reasonably satisfactory to the Agent setting forth the Net Orderly Liquidation Value of the Equipment; (viii) the Agent has a perfected first-priority Lien on the Equipment subject to no other Liens, except Liens permitted under Section 6.01 hereof that are subordinate and junior to the Lien in favor of the Agent; and (ix) the Agent has not determined, in its Permitted Discretion that such Equipment is ineligible.

     “ Eligible Inventory ” means, at any time, the Inventory of the Company, KAII, and Kaiser Bellwood unless such Inventory is excluded from the definition of Eligible Inventory in accordance with the following provisions of this definition. Without limiting the Agent’s Permitted Discretion provided herein, Eligible Inventory shall not include any Inventory: (i) which is not subject to a first-priority perfected security interest in favor of the Agent, (ii) which is subject to any Lien other than (a) a Lien in favor of the Agent and (b) a Lien permitted under Section 6.01 hereof which Lien is subordinate and junior to the Lien in favor of the Agent; (iii) which is, in the Agent’s opinion, applying its Permitted Discretion, slow moving, obsolete, unmerchantable, defective, unfit for sale, not salable at prices approximating at least the cost of such Inventory in the ordinary course of business or unacceptable due to age, type, category and/or quantity; (iv) with respect to which any covenant, representation, or warranty contained in this Agreement or the Security Agreement has been breached in any material respect or is not true in all material respects; (v) which does not conform in all material respects to all standards imposed by any governmental authority; (vi) located outside of the United States and Canada or located in the Canadian province of Quebec; (vii) that is in transit except for Inventory in transit between locations controlled by a Borrower or a Guarantor; (viii) which is located in any location not owned or operated by a Borrower or a Guarantor or is in the possession of a bailee unless the owner of such property, the bailee, and any other applicable party has delivered to the Agent a Collateral Access Agreement and such other documentation as the Agent may in its Permitted Discretion require ( provided , however , that $4,000,000 of such Inventory may be included in the Borrowing Base even if Collateral Access Agreements and such other documentation as the Agent may require have not been obtained for such Inventory); (ix) which is located in any location not owned by a Borrower or a Guarantor but is operated by such Borrower or such Guarantor, unless the owner of such property and any other applicable party has delivered to the Agent a Collateral Access Agreement and such other documentation as the Agent may in its Permitted Discretion require or the Agent shall have implemented Reserves equal to three months rent for such facility, but without duplication of any Reserves for rent pursuant to any other provision of this Agreement; (x) which contains or bears any intellectual property rights licensed from any party other than a Borrower or a Guarantor unless the Agent is satisfied, in its Permitted Discretion, that it may sell or otherwise dispose of such Inventory

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without (a) infringing the rights of such licensor, (b) violating any contract with such licensor, or (c) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to sale of such Inventory under the current licensing agreement; (xi) which is not reflected in the books and records of the applicable Borrower; (xii) that is held by any Borrower on consignment or which any Borrower has placed on consignment with another Person (other than a Person that is a third party processor of such Inventory (in which case such Inventory shall be included as Eligible Inventory to the extent provided in clause (viii) above)); (xiii) that consists of display items or packing or shipping materials or stores, provided that such stores may be deemed eligible in the Agent’s Permitted Discretion upon receipt of an inventory appraisal with respect to such stores, which appraisal shall be done in a manner acceptable to the Agent by an appraiser acceptable to the Agent; (xiv) which is bill-and-hold goods, returned or repossessed goods, or goods which are not of a type held for sale in the ordinary course of the applicable Borrower’s business; (xv) which is perishable; (xvi) such other categories as may be established by the Agent in its Permitted Discretion.

     “ Eligible Real Estate ” shall mean any real Property which meets all of the following specifications:

          (a) the applicable Borrower is the record owner of and has good fee title to such real Property;

          (b) the applicable Borrower has the right to subject such real Property to a Lien in favor of the Agent for the ratable benefit of the Lenders; such real Property is subject to a perfected first-priority Lien in favor of the Agent for the ratable benefit of the Lenders and is free and clear of all other Liens (except for Permitted Liens acceptable to the Agent in its Permitted Discretion), unless such real Property is otherwise acceptable to the Agent and a Mortgage has been recorded in the appropriate jurisdiction and filing office to perfect such Lien;

          (c) such real Property is not subject to any contractual restriction on the Agent’s ability to sell or otherwise dispose of such real Property;

          (d) the Agent shall have received Phase I (and, if necessary, Phase II) environmental reports delivered with respect to such real Property together with letters from the environmental engineering firms reasonably satisfactory to Agent providing that Agent and the Lenders may rely upon such reports, each in form and substance reasonably acceptable to Agent.

          (e) with respect to such real Property, such surveys or surveyor certificates as the Agent may reasonably require;

          (f) the Agent shall have received evidence reasonably acceptable to the Agent as to whether such real Property is located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards and requiring either the applicable Borrower or Guarantor that is the owner of the real Property or the Agent to purchase special flood insurance and, if so required, evidence that the applicable Borrower or Guarantor that owns such real Property has obtained flood hazard insurance as required by law and as reasonably acceptable to Agent;

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          (g) the Agent shall have received an ALTA loan title insurance policies or an unconditional commitments therefor with extended coverage, including insurance over matters that would be disclosed by an accurate survey, issued by a title company reasonably satisfactory to Agent insuring the Agent, for the benefit of the Agent and the Lenders, that the applicable Mortgage insured thereby creates a valid first lien on such real Property, in an amount not less than the appraised fair market value of such real Property and insuring that fee simple title to such Property is vested in the applicable Borrower or Guarantor, subject only to any exceptions as may be reasonably acceptable to the Agent and which appear as exceptions on Schedule B to the applicable title insurance loan policy, which policy shall include endorsements, including a comprehensive lender’s endorsement and any other legally available endorsements, assurances or affirmative coverage reasonably requested by the Agent;

          (h) the Agent shall have received copies of all recorded documents listed as exceptions to title or otherwise referred to in such title insurance loan policy and any other such documents as Agent shall reasonably request;

          (i) the Agent shall have received appraisals, together with reliance letters where applicable, concerning such real Property from one or more independent real estate appraisers reasonably satisfactory to the Agent, which appraisals shall set forth the Fair Market Value of such real Property and be in form, scope and substance reasonably satisfactory to the Agent and shall satisfy the requirements of any applicable laws and regulation; and

          (j) the Agent has not determined, in its Permitted Discretion, that such real Property is ineligible.

     “ Environmental Compliance Reserve ” shall mean any reserve which the Agent establishes in its Permitted Discretion from time to time for amounts that are reasonably likely to be expended by the Borrowers, the Guarantors and their Subsidiaries in order for the Borrowers, the Guarantors and their Subsidiaries and their respective operations and property (a) to comply with Environmental Laws in all material respects, (b) to correct in all material respects any such non-compliance with Environmental Laws or (c) to satisfy any Environmental Liability.

     “ Environmental Laws ” shall mean all applicable federal, state, local or foreign statutes, laws, regulations, ordinances, codes, rules, requirements and guidelines (including consent decrees and administrative orders to which any Borrower, any Guarantor, or any of their Subsidiaries, is subject) relating to protection of human health or the environment or imposing liability or standards of conduct concerning any Hazardous Material, as any of the foregoing may be from time to time amended or supplemented.

     “ Environmental Liability ” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrowers, the Guarantors or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual

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arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

     “ Environmental Lien ” shall mean a Lien in favor of any Governmental Authority for (i) any liability under Environmental Laws, or (ii) damages arising from or costs incurred by such Governmental Authority in response to a release or threatened release of a hazardous or toxic waste, substance or constituent, or other substance into the environment.

     “ Equipment ” shall mean (a) any machinery or equipment and (b) any other Property classified as “equipment” under the UCC.

     “ Equipment Percentage ” shall mean, as of any date, the percentage equal to one hundred percent (100%) minus the percentage obtained by dividing the number of full calendar months elapsed since the Closing Date by eighty-four (84).

     “ Equity Interests ” shall mean shares of capital stock in a corporation, partnership interests in a partnership, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.

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

     “ ERISA Affiliate ” shall mean each person (as defined in Section 3(9) of ERISA) which together with any Borrower or Guarantor or any Subsidiary of any Borrower or Guarantor would be deemed to be a single employer within the meaning of Section 414(b), (c), (m), or (o) of the Code.

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

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

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

     “ Excluded Subsidiaries ” shall mean Alpart Jamaica Inc., a Delaware corporation, Kaiser Jamaica Corporation, a Delaware corporation, Kaiser Alumina Australia Corporation, a Delaware corporation, Kaiser Bauxite Company, a Nevada corporation, and Kaiser Finance Corporation, a Delaware corporation. Under no circumstances will an Excluded Subsidiary be, or be deemed to be, a Significant Subsidiary or a Subsidiary hereunder.

     “ Excluded Taxes ” shall mean, with respect to the Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) Taxes imposed on or measured by its overall net income or its overall gross income (other than withholding taxes) and franchise Taxes imposed in lieu thereof by the United States of America or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its lending office or principal executive office is located, (b) any branch profits Taxes imposed by the United States of America or any

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similar Tax imposed by any other jurisdiction in which such lending office or principal executive office is located and (c) in the case of a Lender, any withholding Tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Lender’s failure to comply with Section 2.18(e) , except to the extent that 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 the Borrower with respect to such withholding Tax pursuant to Section 2.18(a) .

     “ Existing Credit Agreement ” shall have meaning given such term in Introductory Statement.

     “ Existing Lenders ” shall mean the financial institutions from time to time party to the Existing Credit Agreement.

     “ Extraordinary Receipts ” means any Net Proceeds received by any Borrower or Guarantor not in the ordinary course of business, including, without limitation, (i) foreign, United States, state or local tax refunds, (ii) pension plan reversions, (iii) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (iv) indemnity payments, (v) any purchase price adjustment received in connection with any purchase agreement, and (vi) any proceeds from any escrow; provided , however , that such indemnity payments or proceeds shall not include proceeds from any insurance for asbestos claims and demands, silica claims and demands, coal tar pitch volatile claims and demands and noise induced hearing loss claims in escrow as of the date hereof or later received.

     “ Fair Market Value ” shall mean, with respect to real Property of any Person, the fair market value thereof as determined in the most recent appraisal received by the Agent in accordance with the terms hereof, which appraisal shall be done in a manner acceptable to the Agent by an appraiser acceptable to the Agent.

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

     “ Fees ” shall collectively mean the Commitment Fees, Letter of Credit Fees, the Collateral Monitoring Fees, other fees referred to in Section 2.13 , and all other fees referred to in any Loan Document.

     “ Filing Date ” shall mean with respect to each Borrower and each Guarantor, the date set forth opposite such Person’s name on Schedule 1.01(a) .

     “ Financial Officer ” shall mean, with respect to any Person, the chief financial officer, principal accounting officer, treasurer, assistant treasurer or controller of such Person or any other Person who performs a function similar to any of the foregoing and has been identified in writing to the Agent as a “Financial Officer” hereunder.

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     “ Fiscal Month ” means any of the monthly accounting periods of the Borrower and its Subsidiaries.

     “ Fiscal Quarter ” means any of the quarterly accounting periods of the Borrower and its Subsidiaries, ending on March 31, June 30, September 30 and December 31 of each year.

     “ Fiscal Year ” means any of the annual accounting periods of the Borrower and its Subsidiaries ending on December 31 of each year.

     “ Fixtures ” shall mean any Property classified as “fixtures” under the UCC.

     “ Funding Account ” shall have the meaning set forth in Section 4.01(q) .

     “ GAAP ” shall mean generally accepted accounting principles in the United States of America as in effect from time to time applied in accordance with Section 1.02 .

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

     “ Guarantee ” shall mean, with respect to any Person (such Person, a “ guarantor ”), 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 or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (ii) to purchase or lease property, securities or services for the primary purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to advance funds 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 Indebtedness or other obligation or (iv) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided , that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

     “ Guarantor ” shall have the meaning set forth in the first paragraph of this Agreement.

     “ Hazardous Materials ” shall mean any “hazardous substance,” as defined by CERCLA; any “hazardous waste,” as defined by the Resource Conservation and Recovery Act, as amended; any petroleum product; or any pollutant or contaminant or hazardous, dangerous, or toxic chemical, material, or substance regulated under or within the meaning of any other Environmental Law.

     “ Indebtedness ” shall mean, at any time and with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or with respect to deposits

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or advances of any kind; (ii) all indebtedness of such Person for the deferred purchase price of property or services (other than property, including inventory, and services purchased, and expense accruals and deferred compensation items arising, in the ordinary course of business); (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business); (iv) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (v) all Capital Lease Obligations of such Person; (vi) all reimbursement, payment or similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or similar facilities; (vii) all Swap Obligations (and the amount of Indebtedness under any Swap Obligation shall be deemed the Net Mark-to-Market Exposure thereunder); (viii) all Guarantees by such Person of Indebtedness of others; (ix) all Indebtedness referred to in clauses (i) through (viii) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; (x) obligations under any liquidated earn-out and (xi) obligations of such Person to purchase securities or other property arising out of or in connection with the sale of the same or substantially similar securities or property or any other Off-Balance Sheet Liability. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

     “ Indemnified Party ” shall have the meaning given to such term in Section 11.06 .

     “ Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

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

     “ Interest Election Request ” shall mean a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.09 .

     “ Interest Expense ” shall mean, with reference to any period, the interest expense of the Borrowers and its their Subsidiaries calculated on a consolidated basis in conformity with GAAP for such period.

     “ Interest Payment Date ” shall mean (i) as to any Eurodollar Loan, the last day of each applicable Interest Period, and, in the case of any Interest Period longer than three months, on each successive date three months after the first day of such Interest Period and (ii) as to all ABR Loans, the last calendar day of each month in arrears and the date on which any ABR Loans are refinanced with Eurodollar Loans pursuant to Section 2.09 .

     “ Interest Period ” shall mean, as to any Borrowing of Eurodollar Loans, the period commencing on the date of such Borrowing (including as a result of a refinancing of ABR

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Loans) or on the last day of the preceding Interest Period applicable to such Borrowing and ending on the numerically corresponding day (or if there is no corresponding day, the last day) in the calendar month that is one, two, three or six months thereafter, as the Borrowers’ Agent may elect in the related notice delivered pursuant to Sections 2.04 or 2.09 ; provided , however , that (i) if any Interest Period would end on a day which shall not be a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day, and (ii) no Interest Period shall end later than the Maturity Date.

     “ Inventory ” shall mean “inventory” as defined in Article 9 of the Uniform Commercial Code as in effect from time to time in the State of New York, or when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction.

     “ Investments ” shall have the meaning given such term in Section 6.08 .

     “ Issuing Bank ” means (i) JPMorgan Chase, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.07 . The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

     “ JPMorgan Chase ” shall have the meaning set forth in the first paragraph of this Agreement.

     “ JPMSI ” shall mean J.P. Morgan Securities Inc.

     “ KAII ” shall mean Kaiser Aluminium International, Inc., a Delaware corporation, as debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code.

     “ Kaiser Bellwood ” shall mean Kaiser Bellwood Corporation, a Delaware corporation, as debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code.

     “ Kaiser Canada ” shall mean Kaiser Aluminum & Chemical of Canada Limited, an Ontario corporation as debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code.

     “ Kaiser Canada Investment Limited ” shall mean Kaiser Aluminum & Chemical Canada Investment Limited, an Ontario corporation, as debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code.

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

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loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

     “ Lenders ” shall have the meaning set forth in the first paragraph of this Agreement.

     “ Letter of Credit ” shall mean any irrevocable letter of credit issued pursuant to Section 2.07 , which letter of credit shall be (i) a letter of credit, (ii) issued for purposes that are consistent with the ordinary course of business of any Borrower, or for such other purposes as are reasonably acceptable to the Agent, (iii) denominated in Dollars and (iv) otherwise in such form as may be reasonably approved from time to time by the Agent and the applicable Issuing Bank.

     “ Letter of Credit Account ” shall mean the account established by the Borrowers under the sole and exclusive control of the Agent maintained at the office of the Agent at 270 Park Avenue, New York, New York 10017 designated as the “Kaiser Letter of Credit Account” that shall be used solely for the purposes set forth in Section 2.07(j) .

     “ Letter of Credit Disbursement ” shall mean a payment made by the Issuing Bank pursuant to a Letter of Credit.

     “ Letter of Credit Exposure ” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time and (b) the aggregate amount of all Letter of Credit Disbursements that have not yet been reimbursed by or on behalf of the Borrowers at such time. The Letter of Credit Exposure of any Lender at any time shall be its Commitment Percentage of the total Letter of Credit Exposure at such time.

     “ Letter of Credit Fees ” shall mean the fees payable in respect of Letters of Credit pursuant to Section 2.13 .

     “ Letter of Credit Shortfall Amount ” shall mean an amount equal to the difference of (x) the amount of Letter of Credit Exposure at such time, less (y) the amount on deposit in the Letter of Credit Account at such time which is free and clear of all rights and claims of third parties and has not been applied against the Obligations.

     “ LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor page or any successor to such service or any substitute page or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits (for delivery on the first day of such period) with a term equivalent to such Interest Period. In the event that such rate is not available at such time for any reason, then the “ LIBO Rate ” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of comparable size and for a maturity comparable to such Interest Period are offered by the principal London office of the Agent in immediately

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available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period.

     “ Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest of any kind whatsoever in, on or of 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 having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

     “ Liquidity Release Event ” shall mean, as of any date following the occurrence of a Liquidity Trigger Event, the first date upon which both of the following conditions have been satisfied: (i) Availability has exceeded $50,000,000 for each day during the ninety (90) consecutive calendar day period ending on such date and after the immediately preceding Liquidity Trigger Event and (ii) at least 365 days have elapsed since the date of the last Liquidity Trigger Event, if any.

     “ Liquidity Reserve ” shall mean an amount at all times equal to $20,000,000.

     “ Liquidity Trigger Event ” shall mean, any date on which, either before or after giving effect to Borrowings requested or deemed requested on such date, Availability is less than $40,000,000. A Liquidity Trigger Event shall be deemed to have occurred and be continuing from the occurrence of such Liquidity Trigger Event up to but not including the first date upon which a Liquidity Release Event occurs following such Liquidity Trigger Event.

     “ Loan ” shall mean any loan or advance made by the Lenders pursuant to this Agreement including, without limitation, Revolving Loans, unreimbursed Letter of Credit Disbursements, Swingline Loans and Protective Advances.

     “ Loan Documents ” shall mean this Agreement, the Letters of Credit, the Security and Pledge Agreement, the Mortgages, the Order and any other instrument or agreement executed and delivered to the Agent or any Lender in connection herewith (including, without limitation, applications for Letters of Credit and related reimbursement agreements), in each case, as the same may be amended, modified, supplemented, extended or restated from time to time.

     “ Material Adverse Effect ” shall mean a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrowers and the Guarantors taken as a whole, (b) the ability of any Borrower or any Guarantor to perform any of its obligations under the Loan Documents to which it is a party, (c) the Collateral, or the Agent’s Liens (on behalf of itself and the Lenders) on the Collateral or the priority of such Liens, or (d) the rights of or benefits available to the Agent or the Lenders hereunder or under any other Loan Document.

     “ Material Indebtedness ” means any Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements either arising after the applicable Filing Date, if any, or that is secured, of any one or more of the Borrowers, Guarantors, and the Subsidiaries of any Borrower or Guarantor in an aggregate principal amount

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exceeding $10,000,000. For purposes of determining Material Indebtedness, the “obligations” of any Borrower, Guarantor, or Subsidiary of any Borrower or Guarantor in respect of any Swap Agreement at any time shall be the Net Mark-to-Market Exposure that such Borrower, Guarantor or Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

     “ Maturity Date ” shall mean February 11, 2006.

     “ Mortgage ” shall mean any mortgage, deed of trust or other agreement which conveys or evidences a Lien in favor of the Agent, for the benefit of the Agent and the Lenders, on any real Property owned or leased by a Borrower or Guarantor, including any amendment, modification or supplement thereto.

     “ Multiemployer Plan ” shall mean a “ multiemployer plan ” as defined in Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) any Borrower or Guarantor or a Subsidiary of any Borrower or Guarantor or an ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which any Borrower, Guarantor or a Subsidiary of any Borrower or Guarantor or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.

     “ Multiple Employer Plan ” shall mean a Single Employer Plan, which (i) is maintained for employees of any Borrower or Guarantor or an ERISA Affiliate and at least one person (as defined in Section 3(9) of ERISA) other than any Borrower or Guarantor and its ERISA Affiliates or (ii) was so maintained and in respect of which any Borrower Guarantor or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such Plan has been or were to be terminated.

     “ National Priorities List ” shall mean the list established pursuant to Section 105 of CERCLA, as amended, modified, supplemented, or replaced from time to time.

     “ Net Income ” shall mean, with reference to any period, the net income (or loss) of the Borrowers and their Subsidiaries calculated on a consolidated basis for such period.

     “ Net Mark-to-Market Exposure ” shall mean, with respect to any Person, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from Swap Agreement transactions. As used in this definition, “unrealized losses” means the fair market value of the cost to such Person of replacing such Swap Agreement transactions as of the date of determination (assuming the Swap Agreement transactions were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Swap Agreement transactions as of the date of determination (assuming such Swap Agreement transactions were to be terminated as of that date).

     “ Net Orderly Liquidation Value ” shall mean, with respect to Inventory or Equipment of any Person, the orderly liquidation value thereof as determined in the most recent appraisal received by the Agent in accordance with the terms hereof, which appraisal shall be done in a manner acceptable to the Agent by an appraiser acceptable to the Agent, net of all costs of liquidation thereof.

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     “ Net Proceeds ” shall mean, if in connection with (a) an asset disposition, cash proceeds received by any Borrower or Guarantor net of (i) commissions, attorneys’ fees, accountants’ fees, investment banking fees and other reasonable and customary transaction costs, fees and expenses properly attributable to such transaction and payable by such Borrower or Guarantor in connection therewith (in each case, paid to non-Affiliates of such Borrower or Guarantor), (ii) taxes actually payable in respect thereof and reasonable estimates of taxes actually payable with respect to such transaction in the tax year of such transaction or in the following tax year, (iii) amounts payable to holders of senior Liens on such asset (to the extent such Liens constitute Permitted Liens or other Liens permitted under Section 6.01 hereunder), if any, (iv) an appropriate reserve for income taxes in accordance with GAAP established in connection therewith, and (v) amounts escrowed or reserved against indemnification, obligations or purchase price adjustments, or (b) the issuance or incurrence of Indebtedness, cash proceeds net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith, (c) an equity issuance, cash proceeds net of underwriting discounts and commissions and other reasonable costs paid to non-Affiliates in connection therewith, or (d) Extraordinary Receipts received by any Borrower or Guarantor, the amount of cash proceeds received (directly or indirectly) from time to time by or on behalf of such Borrower or Guarantor or any of their Subsidiaries after deducting therefrom only (i) expenses related thereto incurred by such Person or such Subsidiary in connection therewith, (ii) transfer taxes paid by such Person or such Subsidiary in connection therewith, (iii) net income taxes to be paid in connection therewith (after taking into account any tax credits or deductions and any tax sharing arrangements), and (iv) that portion of the cash proceeds received which the applicable Borrower is legally obligated pursuant to an order of the Bankruptcy Court or any agreement binding on the applicable Borrower entered into prior to the date hereof to pay to another Person.

     “ Net Recovery Percentage ” shall mean the fraction, expressed as a percentage, (a) the numerator of which is the amount estimated to be recoverable in respect of the Net Orderly Liquidation Value of Eligible Inventory and (b) the denominator of which is the aggregate original cost of the Eligible Inventory subject to such appraisal.

     “ Non-Consenting Lender ” shall have the meaning specified in Section 11.10(b) .

     “ Notice Parties ” shall have the meaning specified in Section 11.01 .

     “ Obligations ” shall mean all unpaid principal of and accrued and unpaid interest on the Loans, all Letter of Credit Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrowers and the Guarantors to the Lenders or to any Lender, the Agent, the Issuing Bank or any Indemnified Party arising under the Loan Documents. Obligations shall also include (i) all Banking Services Obligations; and (ii) all Swap Obligations (other than Swap Obligations incurred in connection with, arising out of, or relating to a Commodity Swap Agreement) owing to one or more Lenders or their respective Affiliates; provided , that Swap Obligations entered into with a Lender or any of such Lender’s Affiliates (other than JPMorgan Chase or its Affiliates) shall only constitute an “Obligation” if prior to entering into the transaction giving rise to the Swap Obligation, the Lender (or its Affiliate) party thereto (other than JPMorgan Chase or its Affiliates) shall have delivered written notice to the Agent that such transaction has been entered into and that it constitutes an

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Obligation entitled to the benefits of the Security and Pledge Agreement, the Mortgages and any other security document. Nothing in this definition of Obligations shall permit the Borrowers, the Guarantors or their Significant Subsidiaries to incur or permit to exist any Indebtedness not otherwise permitted pursuant to the terms hereof.

     “ Off-Balance Sheet Liability ” shall mean, with respect to any Person, (a) any repurchase obligation or liability for the principal amount thereof of such Person with respect to accounts or notes receivable sold by such Person, (b) any indebtedness, liability or obligation under any sale and leaseback transaction which is not a Capital Lease Obligation and under which such Person retains ownership of the Property so leased for Federal income tax purposes, other than any lease under which such Person is the lessor, or (c) any indebtedness, liability or obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheets of such Person, but excluding from this clause (c) operating leases and Capital Lease Obligations.

     “ Order ” shall have the meaning given such term in Section 4.01(c) .

     “ 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, any Loan Document.

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

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

     “ Permitted Commodity Swap Agreement ” shall mean any Commodity Swap Agreement that (i) involves or is settled with respect to electricity, natural gas, alumina, bauxite or other mineral or metal used in the business of the Borrowers, the Guarantors or their Significant Subsidiaries, and (ii) is entered into in the ordinary course of business to hedge against fluctuations in the price of alumina, bauxite or other minerals or metals used in the business of the Borrowers, the Guarantors or their Significant Subsidiaries and not for speculative purposes.

     “ Permitted Discretion ” shall mean a determination by the Agent made in good faith and in the exercise of reasonable (from the perspective of a secured asset based lender making a loan to a debtor-in-possession under the Bankruptcy Code) business judgment.

     “ Permitted Investments ” shall mean:

          (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within twelve months from the date of acquisition thereof;

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          (b) without limiting the provisions of paragraph (d) below, investments in commercial paper maturing within six months from the date of acquisition thereof and having, at such date of acquisition, a rating of at least “A-2” or the equivalent thereof from Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. or of at least “P-2” or the equivalent thereof from Moody’s Investors Service, Inc.;

          (c) investments in certificates of deposit, bankers acceptances and time deposits (including Eurodollar time deposits) maturing within six months from the date of acquisition thereof issued or guaranteed by or placed with (i) any domestic office of the Agent or the bank with whom the Borrowers and the Guarantors maintain their cash management system, provided that if such bank is not a Lender hereunder, such Lender shall have entered into an agreement with the Agent pursuant to which such Lender shall have waived all rights of setoff and confirmed that such Lender does not have, nor shall it claim, a security interest therein or (ii) any domestic office of any other commercial bank of recognized standing organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $250,000,000 and is the principal Banking Subsidiary of a bank holding company having a long-term unsecured debt rating of at least “A-2” or the equivalent thereof from Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. or at least “P-2” or the equivalent thereof from Moody’s Investors Service, Inc.;

          (d) investments in commercial paper maturing within six months from the date of acquisition thereof and issued by (i) the holding company of the Agent or (ii) the holding company of any other commercial bank of recognized standing organized under the laws of the United States of America or any State thereof that has (A) a combined capital and surplus in excess of $250,000,000 and (B) commercial paper rated at least “A-2” or the equivalent thereof from Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. or of at least “P-2” or the equivalent thereof from Moody’s Investors Service, Inc.;

          (e) investments in repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (a) above entered into with any office of a bank or trust company meeting the qualifications specified in clause (c) above; and

          (f) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (a) through (e) above.

     “ Permitted Liens ” shall mean (i) Liens imposed by law (other than Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (ii) Liens of landlords and Liens of carriers, warehousemen, workmen, repairmen, vendors, consignors, mechanics, materialmen and other Liens (other than Environmental Liens and any Lien imposed under ERISA) in existence on the applicable Filing Date or thereafter imposed by law and created in the ordinary course of business; (iii) Liens (other than any Lien imposed under ERISA) incurred or deposits made in the ordinary course of business (including, without limitation, surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social

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security benefits or governmental insurance or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts; (iv) easements (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-way, covenants, consents, reservations, mineral leases, encroachments, variations and zoning laws, ordinances, other restrictions and rights reserved to or vested in any municipality or government or proper authority to control or regulate any Property of the Company or its Subsidiaries, charges or encumbrances (whether or not recorded) and interest of ground lessors, minor defects and irregularities in the title to any Property, which do not interfere materially with the ordinary conduct of the business of the Borrowers or any Guarantor, as the case may be, and which do not materially detract from the value of the property to which they attach or materially impair the use thereof to the Borrowers or any Guarantor, as the case may be; (v) purchase money Liens (including capital leases) upon or in any property acquired or held in the ordinary course of business to secure the purchase price of such property solely for the purpose of financing the acquisition of such property to the extent such purchase money Liens secure Indebtedness in accordance with Section 6.03(iv) ; (vi) pledges or deposits in the ordinary course to secure leases entered into in the ordinary course of business; (vii) Liens covering portions of the proceeds of dispositions of assets permitted under this Agreement which are held in escrow in connection with such dispositions; (viii) pledges and deposits of cash and Permitted Investments with a commodity broker or dealer for the purpose of margining or securing the obligations of any Borrower, Guarantor or Significant Subsidiary under a Permitted Commodity Swap Agreement; (ix) any interest of a consignor in goods held by any Borrower, Guarantor or Significant Subsidiary on consignment provided that such goods are held on consignment in the ordinary course of business consistent with past practices; (x) Permitted PBGC Liens; and (xi) extensions, renewals or replacements of any Lien referred to in paragraphs (i) through (x) above, provided that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby.

     “ Permitted PBGC Liens ” shall mean Liens, if any, imposed under ERISA or the Code on assets of the Borrowers or Guarantors (to the extent and for so long as such Lien is unperfected and junior in priority to Liens of the Agent under the Order and the Security and Pledge Agreement) or any ERISA Affiliate which is not a Borrower or Guarantor (whether or not perfected) as a result of (i) the failure to make minimum funding contributions to any pension plan other than a plan that is a Terminated Plan prior to the later of (A) the day that is 31 days after the effective date of the Settlement and Release Agreement and (B) the date when such contributions are due, (ii) the imposition of federal, state or local taxes in connection with the failure described in clause (i) above, or (iii) the termination of any Plan that is a Terminated Plan.

     “ Person ” shall mean any natural person, corporation, division of a corporation, limited liability company, partnership, trust, joint venture, association, company, estate, unincorporated organization, Governmental Authority or other entity.

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

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          “ Pre-Petition Payment ” shall mean a payment (by way of adequate protection or otherwise) of principal or interest or otherwise on account of any pre-petition Indebtedness or trade payables (including, without limitation, in respect of reclamation claims) or other pre-petition claims against the Borrowers or any Guarantor.

          “ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by the Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced.

          “ Projections ” shall have the meaning assigned such to term in Section 5.01(e).

          “ Property ” shall mean any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

          “ Protective Advance ” shall have the meaning assigned to such term in Section 2.05 .

          “ QAL ” shall mean Queensland Alumina Limited, a Queensland, Australia corporation.

          “ QAL Purchase Agreement ” shall mean the Purchase Agreement, dated as of October 28, 2004, among Alumina & Bauxite Company Ltd., a British Virgin Islands company, the Company, and Kaiser Alumina Australia Corporation, a Delaware corporation (“ KAAC ”); provided , however , that if the Purchase Agreement, dated October 28, 2004, among Alumina & Bauxite Company Ltd., the Company, and KAAC is terminated for any reason and the Company and KAAC elect to sell their interests in QAL (the “ QAL Interests ”) to Pegasus Queensland Acquisition Pty Limited (“ Pegasus ”), then the term “QAL Purchase Agreement” shall mean the purchase agreement entered into among Pegasus, the Company and KAAC on substantially the same terms as the purchase agreement submitted by Pegasus as its bid for the QAL Interests at the auction for the QAL Interests held on October 28, 2004 and accepted by the Company and KAAC as the Backup Bid (as defined in the Bidding and Auction Procedures (as defined in the QAL Purchase Agreement)).

          “ Real Property Percentage ” shall mean, as of any date, the percentage equal to one hundred percent (100%) minus the percentage obtained by dividing the number of full calendar months elapsed since the Closing Date by one hundred twenty (120).

          “ Register ” shall have the meaning set forth in Section 11.03(d) .

          “ 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 release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including, without limitation, the abandonment or disposal of any barrels, containers or other closed receptacles containing any

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Hazardous Materials), or into or out of any property, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property.

          “ Reorganization Plan ” shall mean a plan of reorganization in any of the Cases.

          “ Report ” shall mean any report prepared by the Agent or another Person showing the results of appraisals, field examinations or audits pertaining to the assets of any Borrower or any Guarantor from information furnished by or on behalf of the Borrowers and the Guarantors, which Reports may be distributed to the Lenders by the Agent.

          “ Required Lenders ” shall mean, at any time, Lenders holding Loans representing not less than 51% of the aggregate principal amount of such Loans outstanding or, if no Loans are outstanding, Lenders having Commitments representing not less than 51% of the Total Commitment.

          “ Refractories Engineering ” shall mean Refractories Engineering and Supplies Limited, a federal corporation of Canada.

          “ Reserves ” shall mean, collectively, any and all reserves which the Agent deems necessary, in its Permitted Discretion, to maintain (including, without limitation, Banking Services Reserves, Environmental Compliance Reserves, the Carve-out Reserve, the Liquidity Reserve, reserves for rent at locations leased by any Borrower or Guarantor and for consignee’s, warehousemen’s and bailee’s charges, reserves for dilution of Accounts, reserves for Inventory shrinkage, reserves for customs charges and shipping charges related to any Inventory in transit, reserves for Swap Obligations, reserves for contingent liabilities of any Borrower or Guarantor, reserves for uninsured losses of any Borrower or Guarantor, reserves for uninsured, underinsured, unidemnified or underindemnified liabilities or potential liabilities with respect to any litigation and reserves for taxes, fees, assessments, and other governmental charges) with respect to the Collateral or any Borrower or Guarantor.

          “ Revolving Credit Exposure ” shall mean, with respect to any Lender at any time, the sum of (a) the outstanding principal amount of such Lender’s Revolving Loans and its Letter of Credit Exposure plus (b) an amount equal to its Commitment Percentage of the aggregate principal amount of Swingline Loans at such time, plus (c) an amount equal to its Commitment Percentage of the aggregate principal amount of Protective Advances outstanding at such time.

          “ Revolving Loan ” shall mean any Loan made pursuant to Section 2.02 .

          “ Security and Pledge Agreement ” shall have the meaning set forth in Section 4.01(c) .

          “ Settlement ” has the meaning assigned to such term in Section 2.06(c) .

          “ Settlement and Release Agreement ” shall mean that certain Settlement and Release Agreement dated as of October 5, 2004 between the Borrowers, the Guarantors, and their debtor affiliates and the Official Committee of Unsecured Creditors in the Cases, as amended from time to time;

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          “ Settlement Agreement ” shall mean the agreement reached with the PBGC and approved by the Bankruptcy Court on January 24, 2005.

          “ Settlement Date ” shall have the meaning assigned to such term in Section 2.06(c) .

          “ Significant Subsidiary ” shall mean (other than an Excluded Subsidiary) each Subsidiary of the Company that

               (a) is designated with an asterisk in Schedule 3.05 — Subsidiaries;

               (b) accounted for at least 5% of consolidated revenues of the Company and its Subsidiaries from sales to third parties for the four Fiscal Quarters of the Company ending on the last day of the last Fiscal Quarter of the Company immediately preceding the date as of which any such determination is made; or

               (c) has assets (other than assets which are eliminated in consolidation) which represent at least 5% of the consolidated assets of the Company and its Subsidiaries as of the last day of the last Fiscal Quarter of the Company immediately preceding the date as of which any such determination is made,

all of which, with respect to clauses (b) and (c), shall be as included in the consolidated financial statements of the Company for the period, or as of the date, in question.

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

          “ Statutory Reserve Rate ” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal as in effect on any date of determination and established by the Board to which the Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

          “ Subordinated Indenture ” shall mean the indenture dated as of February 1, 1993 between the Company, and the Subsidiaries of the Company parties thereto as Subsidiary Guarantors, and The First National Bank of Boston, as trustee, pursuant to which the Subordinated Notes were issued, as supplemented prior to the date hereof.

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          “ Subordinated Notes ” shall mean the 12-3/4% Senior Subordinated Notes due 2003 in a principal amount not exceeding $400 million issued by the Company pursuant to the Subordinated Indenture, as amended, supplemented, restated, or otherwise modified from time to time prior to the date hereof.

          “ Subsidiary ” shall mean, with respect to any Person (herein referred to as the “ parent ”), any corporation, association or other business entity (whether now existing or hereafter organized) of which at least a majority of the securities or other ownership interests having ordinary voting power for the election of directors is, at the time as of which any determination is being made, owned or controlled by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

          “ Super-majority Lenders ” shall have the meaning given such term in Section 11.10(b) .

          “ Super-priority Claim ” shall mean a claim against any Borrower in any of the Cases which is an administrative expense claim having priority over any or all administrative expenses of the kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code.

          “ Supporting Letter of Credit ” shall mean a standby letter of credit, in form and substance satisfactory to the Agent, issued by an issuer satisfactory to the Agent, in a stated amount equal to 105% of the Letter of Credit Shortfall Amount.

          “ 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 any Borrower, any Guarantor or any of their Subsidiaries shall be a Swap Agreement.

          “ Swap Obligations ” shall mean, with respect to any Person, any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction.

          “ Swingline Lender ” shall mean JPMorgan Chase, in its capacity as lender of Swingline Loans hereunder.

          “ Swingline Loan ” shall have the meaning assigned to such term in Section 2.06(a) .

          “ Tax ” or “ Taxes ” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

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          “ Tax Related Person ” means any Person (including, without limitation, a beneficial owner of an interest in a pass-through entity) whose income is realized through or determined by reference to the Agent, Issuing Bank or any Participant or any Tax Related Person of any of the foregoing.

          “ Texada Mines ” shall mean Texada Mines Ltd., a British Columbia corporation, as debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code.

          “ Terminated Plans ” shall mean (i) the Kaiser Aluminum Salaried Employees Retirement Plan, terminated by the PBGC effective December 17, 2003; (ii) the Kaiser Aluminum Pension Plan, terminated by the PBGC effective April 30, 2004; and (iii) the Kaiser Aluminum Inactive Pension Plan, terminated by the PBGC effective June 30, 2004.

          “ Termination Date ” shall mean the earliest to occur of (i) the Maturity Date, (ii) the Consummation Date and (iii) the acceleration of the Loans and the termination of the Total Commitment in accordance with the terms hereof.

          “ Termination Event ” shall mean (i) a “reportable event”, as such term is described in Section 4043(c) of ERISA (other than a “reportable event” as to which the 30-day notice is waived) or an event described in Section 4068 of ERISA and excluding (a) events which would not be reasonably likely (as reasonably determined by the Agent) to have a material adverse effect on the financial condition, operations, business, properties or assets of the Borrower and the Guarantors taken as a whole; (b) any reportable event or other event related to a missed funding or contribution requirement prior to the day that is 31 days after the effective date of the Settlement and Release Agreement; or (c) any reportable event or other event related to a plan termination of the Terminated Plans; or (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a “substantial employer,” as such term is defined in Section 4001(a)(2) of ERISA, the incurrence of liability by the Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or the imposition of Withdrawal Liability.

          “ Total Commitment ” shall mean, at any time, the sum of the Commitments at such time.

          “ Trochus ” means Trochus Insurance Company, Ltd., a Bermuda entity.

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

          “ Unused Total Commitment ” shall mean, with respect to all Lenders, at any time, (i) the Total Commitment less (ii) the sum of (x) the aggregate outstanding principal amount of all Loans and (y) the aggregate Letter of Credit Exposure.

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

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           SECTION 1.02. Terms Generally . The definitions 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. All references herein to Sections, Exhibits and Schedules shall be deemed references to Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. 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. Terms that are defined in the Uniform Commercial Code as in effect in the State of New York from time to time shall have the same meaning herein unless otherwise defined herein.

           SECTION 1.03. The Company As Agent For Borrowers . Each Borrower and Guarantor hereby irrevocably appoints the Company as the borrowing agent and attorney-in-fact for all Borrowers (the “ Borrowers’ Agent” ) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by each Borrower and each Guarantor that such appointment has been revoked and that another Borrower has been appointed the Borrowers’ Agent. Each Borrower hereby irrevocably appoints and authorizes the Borrowers’ Agent (i) to provide the Agent with all notices with respect to Borrowings and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Borrowers’ Agent deems appropriate on its behalf to obtain Borrowings and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Funding Account, Cash Management Account, Concentration Account and Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that no Lender shall incur any liability to any Borrower as a result hereof.

           SECTION 1.04. The Term “Borrower” or “Borrowers” . Unless otherwise specifically provided herein, all references to “Borrower” or “Borrowers” herein shall refer to and include each Borrower separately and all representations contained herein shall be deemed to be separately made by each of them, and each of the covenants, agreements and obligations set forth herein shall be deemed to be the joint and several covenants, agreements and obligations of them. Any notice, request, consent, report or other information or agreement delivered to the Agent or any other Lender by any Borrower shall be deemed to be ratified by, consented to and also delivered by each other Borrower. Unless otherwise specified in this Agreement, the parties hereto anticipate that any notice, request, consent, report or other information or agreement to be delivered in connection with this Agreement by Borrowers to the Agent will be executed by the Borrowers’ Agent, on behalf of Borrowers, and that any such notice, request, consent, report or other information or agreement delivered to the Agent and executed by the Borrowers’ Agent shall be deemed to be executed by the Borrowers’ Agent on behalf of all the Borrowers. In addition, unless otherwise specified in this Agreement, the parties hereto anticipate that any advances made hereunder by any Lender to Borrowers shall be disbursed directly to the Borrowers’ Agent.

           SECTION 1.05. Obligations Not Affected . The Obligations of the Borrowers hereunder shall not be affected by (i) the failure of the Agent or a Lender to assert any claim or demand or to enforce any right or remedy against any Borrower or any Guarantor under the

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provisions of this Agreement or any other Loan Document or otherwise; (ii) any extension or renewal of any provision hereof or thereof; (iii) any rescission, waiver, compromise, acceleration, amendment or modification of any of the terms or provisions of any of the Loan Documents; (iv) the release, exchange, waiver or foreclosure of any security held by the Agent for the Obligations or any of them; (v) the failure of the Agent or a Lender to exercise any right or remedy against any other Borrower or Guarantor; (vi) the release or substitution of any Borrower or any Guarantor; or (vii) any other circumstance that might otherwise constitute a discharge of a surety, other than, in each case, the indefeasible payment in full in cash of the Obligations .

SECTION 2. AMOUNT AND TERMS OF CREDIT

           SECTION 2.01. The Facility . Subject to the terms and conditions set forth herein, each Lender agrees to make Loans to the Borrowers from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (ii) the Aggregate Credit Exposures exceeding the Total Commitment. The Issuing Bank will issue Letters of Credit hereunder on the terms and conditions set forth below. The Facility shall be composed of Revolving Loans, Swingline Loans, Protective Advances and Letters of Credit as set forth below.

           SECTION 2.02. Revolving Loans . Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrowers from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (ii) the Aggregate Credit Exposure exceeding the lesser of (x) the sum of the Total Commitments minus the Liquidity Reserve from and after the occurrence and during the continuance of a Liquidity Trigger Event or (y) the Borrowing Base, subject to the Agent’s authority, in its sole discretion, to make Protective Advances pursuant to the terms of Section 2.05 . Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.

           SECTION 2.03. Loans and Borrowings .

               (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. Any Protective Advance shall be made in accordance with the procedures set forth in Section 2.05 .

               (b) Subject to Section 2.04 , each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrowers Agent may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Subject to Section 2.15 , each Lender at its option may make any Eurodollar 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 the Borrowers to repay such Loan in accordance with the terms of this Agreement.

               (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of

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$1,000,000 and not less than $5,000,000. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of 10 Eurodollar Borrowings outstanding.

               (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

           SECTION 2.04. Requests for Borrowings . To request a Borrowing, the Borrowers’ Agent shall notify the Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, Central time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 1:00 p.m., Central 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 facsimile to the Agent of a written Borrowing Request in substantially the form of Exhibit G and signed by the Borrowers’ Agent. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.03 :

                    (i) the aggregate amount of the requested Borrowing;

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

                    (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

                    (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period.”

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

           SECTION 2.05. Protective Advances .

               (a) Subject to the limitations set forth below, the Agent is authorized by the Borrowers, the Guarantors and the Lenders, from time to time after the occurrence and during the continuance of an Event of Default in the Agent’s sole discretion (but shall have absolutely no obligation to), to make Loans to the Borrowers, on behalf of all Lenders, which the Agent, in its Permitted Discretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other amount chargeable to or required to be paid by the Borrowers pursuant to the terms of this Agreement, including

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payments of principal, interest, Letter of Credit Disbursements, fees, premiums, reimbursable expenses and other sums payable under the Loan Documents (any of such Loans are herein referred to as “ Protective Advances ”), whether or not such Protective Advances shall cause the Aggregate Credit Exposure to exceed the Total Commitment; provided that, the aggregate amount of Protective Advances outstanding at any time, which were made pursuant to clauses (i) and (ii) above, shall not at any time exceed $10,000,000. Protective Advances may be made even if the conditions precedent set forth in Section 4.02 have not been satisfied. The Protective Advances shall be secured by the Liens in favor of the Agent in and to the Collateral and shall constitute Obligations hereunder. All Protective Advances shall be ABR Borrowings. The Agent’s authorization to make Protective Advances may be revoked at any time by the Required Lenders. Any such revocation must be in writing and shall become effective prospectively upon the Agent’s receipt thereof. At any time that there is sufficient Availability and the conditions precedent set forth in Section 4.02 have been satisfied, the Agent may request the Lenders to make a Revolving Loan to repay a Protective Advance. At any other time the Agent may require the Lenders to fund their risk participations described in Section 2.05(b) .

               (b) Upon the making of a Protective Advance by the Agent (whether before or after the occurrence of a Default), each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Agent without recourse or warranty, an undivided interest and participation in such Protective Advance in proportion to its Commitment Percentage.

           SECTION 2.06. Swingline Loans .

               (a) The Agent, the Swingline Lender and the Revolving Lenders agree that in order to facilitate the administration of this Agreement and the other Loan Documents, promptly after the Borrowers request an ABR Borrowing, the Swingline Lender may elect to have the terms of this Section 2.06(a) apply to such Borrowing Request by advancing, on behalf of the Lenders and in the amount requested, same day funds to the Borrowers on the applicable Borrowing date to the Funding Account (each such Loan made solely by the Swingline Lender pursuant to this Section 2.06(a) is referred to in this Agreement as a “ Swingline Loan ”), with settlement among them as to the Swingline Loans to take place on a periodic basis as set forth in Section 2.06(c) . Each Swingline Loan shall be subject to all the terms and conditions applicable to other ABR Loans funded by the Lenders, except that all payments thereon shall be payable to the Swingline Lender solely for its own account. In addition, the Borrowers hereby authorize the Swingline Lender to, and the Swingline Lender shall, subject to the terms and conditions set forth herein (but without any further written notice required), not later than 3:00 p.m., Central time, on each Business Day, make available to the Borrowers by means of a credit to the Funding Account, the proceeds of a Swingline Loan to the extent necessary to pay items to be drawn on any Cash Management Account that day (as determined based on notice from the Agent). The aggregate amount of Swingline Loans outstanding at any time shall not exceed $17,500,000. The Swingline Lender shall not make any Swingline Loan if the requested Swingline Loan exceeds Availability (immediately before giving effect to such Swingline Loan). Swingline Loans may be made even if a Default exists, but may not be made if the conditions precedent set forth in Section 4.02 (other than the condition set forth in Section 4.02(c)) have not been satisfied. All Swingline Loans shall be ABR Borrowings.

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               (b) Upon the making of a Swingline Loan (whether before or after the occurrence of a Default and regardless of whether a Settlement has been requested with respect to such Swingline Loan), each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Swingline Lender or the Administrative Agent, as the case may be, without recourse or warranty, an undivided interest and participation in such Swingline Loan in proportion to its Commitment Percentage of the Commitment. The Swingline Lender or the Agent may, at any time, require the Lenders to fund their participations. From and after the date, if any, on which any Lender is required to fund its participation in any Swingline Loan purchased hereunder, the Agent shall promptly distribute to such Lender, such Lender’s Commitment Percentage of all payments of principal and interest and all proceeds of Collateral received by the Agent in respect of such Loan.

               (c) The Agent, on behalf of the Swingline Lender, shall request settlement (a “ Settlement ”) with the Lenders on at least a weekly basis on any date that the Agent elects, by notifying the Lenders of such requested Settlement by facsimile, telephone, or e-mail no later than 12:00 noon, Central time on the date of such requested Settlement (the “ Settlement Date ”). Each Lender (other than the Swingline Lender, in the case of the Swingline Loans) shall transfer the amount of such Lender’s Commitment Percentage of the outstanding principal amount of the applicable Loan with respect to which Settlement is requested to the Agent, to such account of the Agent as the Agent may designate, not later than 2:00 p.m., Central time, on such Settlement Date. Settlements may occur during the existence of a Default and whether or not the applicable conditions precedent set forth in Section 4.02 have then been satisfied. Such amounts transferred to the Agent shall be applied against the amounts of the Swingline Lender’s Swingline Loans and, together with Swingline Lender’s Commitment Percentage of such Swingline Loan, shall constitute Revolving Loans of such Lenders, respectively. If any such amount is not transferred to the Agent by any Lender on such Settlement Date, the Swingline Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon as specified in Section 2.08 .

           SECTION 2.07. Letters of Credit .

               (a)  General . Subject to the terms and conditions set forth herein, the Borrowers’ Agent may request the issuance of Letters of Credit for the account of any Borrower, in a form reasonably acceptable to the Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrowers’ Agent, any Borrower or any Guarantor to, or entered into by any such Person with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

               (b)  Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrowers’ Agent shall hand deliver or facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Agent (prior to 1:00 p.m., Central time, at least three (3) Business Days (or such shorter period as may be agreed by the Borrowers’ Agent and the Issuing Bank) prior to the requested date of issuance, amendment, renewal or

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extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the Letter of Credit Exposure shall not exceed $60,000,000, (ii) the total Revolving Credit Exposures shall not exceed the lesser of (x) the Total Commitments minus the Liquidity Reserve from and after the occurrence and during the continuance of a Liquidity Trigger Event and (y) the Borrowing Base and (iii) such requested Letter of Credit is satisfactory to the Issuing Bank and the Agent.

               (c)  Expiration Date . Each Letter of Credit shall expire (the “ Expiration Date ”) at or prior to the close of business on the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension); provided that if the Expiration Date is a date which is on or after the 5 ^th Business Day prior to the Maturity Date, then on or prior to the Maturity Date, the Borrower shall cash collateralize the Obligations with respect to such Letter of Credit in accordance with Section 2.07(j)(ii) .

               (d)  Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Agent, for the account of the Issuing Bank, such Lender’s Commitment Percentage of each Letter of Credit Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

               (e)  Reimbursement . If the Issuing Bank shall make any Letter of Credit Disbursement in respect of a Letter of Credit, the Borrowers shall reimburse such Letter of Credit Disbursement by paying to the Agent an amount equal to such Letter of Credit Disbursement not later than 3:00 p.m., Central time, on the date that such Letter of Credit Disbursement is made, if the Borrower shall have received notice of such Letter of Credit Disbursement prior to 1:00 p.m., Central time, on such date, or, if such notice has not been

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received by the Borrower prior to such time on such date, then not later than 1:00 p.m., Central time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., Chicago time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt. The Borrowers may, subject to the conditions of borrowing set forth herein, request in accordance with Sections 2.04 or 2.06 that such payment be financed with an ABR Borrowing or Swingline Loan in an equivalent amount. Unless the Borrowers otherwise specify, each such payment automatically will be financed with a Swingline Loan in an equivalent amount, subject to the satisfaction of the conditions set forth in Section 4.02 . To the extent any such payment is financed with an ABR Loan or a Swingline Loan, the Borrowers’ obligation to make such payment shall be discharged and replaced by the resulting ABR Loan or Swingline Loan. If the Borrower is ineligible to finance such payment with an ABR Loan or a Swingline Loan due to its inability to satisfy the conditions set forth in Section 4.02 or otherwise fails to make such payment when due, the Agent shall notify each Lender of the applicable Letter of Credit Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Commitment Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Agent its Commitment Percentage of the payment then due from the Borrowers, in the same manner as provided in Section 2.08 with respect to Loans made by such Lender (and Section 2.08 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Agent of any payment from the Borrowers pursuant to this paragraph, the Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any Letter of Credit Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such Letter of Credit Disbursement.

               (f)  Obligations Absolute . The Borrower’s obligation to reimburse Letter of Credit Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrowers’ obligations hereunder. Neither the Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of

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technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrowers to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by any Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and refuse to make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

               (g)  Disbursement Procedures . The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Agent and the Borrowers’ Agent by telephone (confirmed by facsimile) of such demand for payment and whether the Issuing Bank has made or will make an Letter of Credit Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrowers of their obligation to reimburse the Issuing Bank and the Lenders with respect to any such Letter of Credit Disbursement.

               (h)  Interim Interest . If the Issuing Bank shall make any Letter of Credit Disbursement, then, unless the Borrowers shall reimburse such Letter of Credit Disbursement in full on the date such Letter of Credit Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such Letter of Credit Disbursement is made to but excluding the date that the Borrower reimburses such Letter of Credit Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such Letter of Credit Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.14(d) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

               (i)  Replacement of the Issuing Bank . The Issuing Bank may be replaced at any time by written agreement among the Borrowers, the Agent, the replaced Issuing Bank and the successor Issuing Bank. The Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.13(b) . From and after the effective date