Form 10-K

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BPD7Hd7h74Ih5LcKyBREDZtXD7PVYxki6mrCFit6eSo+QC/DfI/mKZqgZYyYLz9r f2mOibo6pIQTimwJ2VnEtA== 0001193125-10-037738.txt : 20100223 0001193125-10-037738.hdr.sgml : 20100223 20100223171953 ACCESSION NUMBER: 0001193125-10-037738 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100223 DATE AS OF CHANGE: 20100223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEADWESTVACO Corp CENTRAL INDEX KEY: 0001159297 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 311797999 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31215 FILM NUMBER: 10627418 BUSINESS ADDRESS: STREET 1: 501 SOUTH 5TH STREET STREET 2: MWV WORLD HEADQUARTERS CITY: RICHMOND STATE: VA ZIP: 23219-0501 BUSINESS PHONE: 804-327-5200 MAIL ADDRESS: STREET 1: 501 SOUTH 5TH STREET STREET 2: MWV WORLD HEADQUARTERS CITY: RICHMOND STATE: VA ZIP: 23219-0501 FORMER COMPANY: FORMER CONFORMED NAME: MEADWESTVACO CORP DATE OF NAME CHANGE: 20020129 FORMER COMPANY: FORMER CONFORMED NAME: MW HOLDING CORP DATE OF NAME CHANGE: 20010918 10-K 1 d10k.htm FORM 10-K Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE YEAR ENDED DECEMBER 31, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-31215

MeadWestvaco Corporation

(Exact name of registrant as specified in its charter)


Delaware		501 South 5^th Street Richmond, Virginia 23219-0501 Telephone 804-444-1000 (Address and telephone number of Registrant’s principal executive offices)
(State or other jurisdiction of incorporation or organization)
31-1797999
(I.R.S. Employer Identification No.)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title of each class		Name of each exchange on which registered
Common Stock, $0.01 par value		New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer” and “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At June 30, 2009, the aggregate market value of common stock held by non-affiliates was $2,736,091,339. Such determination shall not, however, be deemed to be an admission that any person is an “affiliate” as defined in Rule 405 under the Securities Act of 1933.

At January 31, 2010, the number of shares of the common stock of the Registrant outstanding was 171,277,193.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2010, are incorporated by reference for Part III; definitive copies of said Proxy Statement will be filed with the Securities and Exchange Commission on or before March 26, 2010.

TABLE OF CONTENTS


Item		Page
	PART I

1.	Business	1
1A.	Risk factors	5
1B.	Unresolved staff comments	8
2.	Properties	9
3.	Legal proceedings	11
4.	Submission of matters to a vote of security holders	11

	PART II

5.	Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities	14
6.	Selected financial data	15
7.	Management’s discussion and analysis of financial condition and results of operations	17
7A.	Quantitative and qualitative disclosures about market risk	40
8.	Financial statements and supplementary data	41
9.	Changes in and disagreements with accountants on accounting and financial disclosure	85
9A.	Controls and procedures	85
9B.	Other information	85

	PART III

10.	Directors, executive officers and corporate governance	86
11.	Executive compensation	86
12.	Security ownership of certain beneficial owners and management and related stockholder matters	86
13.	Certain relationships and related transactions, and director independence	86
14.	Principle accounting fees and services	86

	PART IV

15.	Exhibits, financial statement schedules	87
	Signatures	91

Part I

Item 1.

Business

General

MeadWestvaco Corporation (“MeadWestvaco”, “MWV”, or the “company”), a Delaware corporation formed in 2001 following the merger of Westvaco Corporation and The Mead Corporation, is a global packaging company that provides packaging solutions to many of the world’s brands in the healthcare, personal care and beauty, food, beverage, media and entertainment, home and garden, tobacco, and commercial print industries. MWV’s other business operations serve the consumer and office products, specialty chemicals, forestry and real estate markets. MWV’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

Packaging Resources

The Packaging Resources segment produces bleached paperboard (“SBS”), Coated Natural Kraft^® paperboard (“CNK^®”) and linerboard. This segment’s paperboard products are manufactured at three mills located in the U.S. and two mills located in Brazil. SBS is used for packaging high-value consumer products in markets such as pharmaceuticals, personal care, beauty, tobacco, and beverage and food service. CNK^® is used for a range of packaging applications, the largest of which for MWV is multi-pack beverage packaging. Linerboard is used in the manufacture of corrugated boxes and other containers.

Consumer Solutions

The Consumer Solutions segment designs and produces multi-pack cartons and packaging systems primarily for the global beverage take-home market and packaging for the global tobacco market. In addition, this segment offers a full range of converting and consumer packaging solutions including printed plastic packaging and injection-molded products used for personal care, beauty, and pharmaceutical products; dispensing and sprayer systems for personal care, beauty, healthcare, fragrance and home and garden markets; and packaging for media products such as DVDs, CDs, video games and software. Paperboard and plastic are converted into packaging products at plants located in North America, South America, Europe and Asia. In addition, this segment has a pharmaceutical packaging contract with a mass-merchant, and manufactures equipment that is leased or sold to its beverage and dairy customers to package their products.

Consumer & Office Products

The Consumer & Office Products segment manufactures, sources, markets and distributes school and office products, time-management products and envelopes in North America and Brazil through both retail and commercial channels. MWV produces many of the leading brand names in school supplies, time-management and commercial office products, including AMCAL, ^® AT-A-GLANCE, ^® Cambridge, ^® COLUMBIAN, ^® Day Runner, ^® Five Star, ^® Mead ^® and Trapper Keeper. ^®

Specialty Chemicals

The Specialty Chemicals segment manufactures, markets and distributes specialty chemicals derived from sawdust and other byproducts of the papermaking process in North America, South America and Asia. Products include activated carbon used in emission control systems for automobiles and trucks, as well as for water and food purification applications, and performance chemicals used in printing inks, asphalt paving, adhesives and lubricants for the agricultural, paper and petroleum industries.

Community Development and Land Management

primarily for recreational and residential uses, (ii) entitling and improving high-value tracts through joint ventures and other ownership arrangements, and (iii) master planning select landholdings. Forestry operations include growing and harvesting softwood and hardwood on the company’s forestlands for external consumption and for use by the company’s mill-based business. Leasing activities include fees from third parties undertaking mineral extraction operations, as well as fees from recreational leases on the company’s forestlands.

For a more detailed description of our business segments, including financial information, see Note S of Notes to Consolidated Financial Statements included in Part II, Item 8.

Marketing and distribution

The principal markets for our products are in North America, South America, Europe and Asia. We operate in 30 countries and serve customers in more than 100 nations. Our products are sold through a combination of our own sales force and paperboard merchants and distributors. The company has sales offices in key cities throughout the world.

Intellectual property

MeadWestvaco has a large number of foreign and domestic trademarks, trade names, patents, patent rights and licenses relating to its business. While, in the aggregate, intellectual property rights are material to our business, the loss of any one or any related group of such rights would not have a material adverse effect on our business, with the exception of the “Mead ^®” trademark and the “AT-A-GLANCE ^®” trademark for consumer and office products.

Competition

MeadWestvaco operates in a very challenging global marketplace and competes with many large, well-established and highly competitive manufacturers and service providers. In addition, our business is affected by a range of macroeconomic conditions, including industry capacity changes, a trend in the packaging, paperboard and forest products industry toward consolidation, global competition, economic conditions in the U.S. and abroad, and currency exchange rates.

We compete principally through quality, price, value-added products and services such as packaging solutions, customer service, innovation, technology, and product design. Our proprietary trademarks and patents, in the aggregate, are also important to our competitive position in certain markets.

The Packaging Resources segment competes globally with manufacturers of value-added CNK^® and SBS for packaging and graphic applications, as well as specialty paperboards. The Consumer Solutions segment competes globally with numerous packaging service providers in the package design, development, and manufacturing arenas, as well as the manufacture of dispensing and spraying systems. The Consumer & Office Products segment competes with national and regional converters, as well as foreign producers, especially from Asia. The Specialty Chemicals segment competes on a worldwide basis with producers of activated carbons, refined tall oil products, lignin-based chemicals and specialty resins. The Community Development and Land Management segment competes in the real estate sales and development market and the forestry products industry in the U.S.

Research

MeadWestvaco conducts research and development in the areas of packaging and chemicals. Innovative product development and manufacturing process improvement are the main objectives of these efforts. The company also evaluates and adapts for use new and emerging technologies that may enable new product development and manufacturing cost reductions.

Environmental laws and regulations

Our operations are subject to extensive regulation by federal, state and local authorities, as well as regulatory authorities with jurisdiction over foreign operations of the company. Due to changes in environmental laws and regulations, the application of such regulations, and changes in environmental control technology, it is not possible for us to predict with certainty the amount of capital expenditures to be incurred for environmental purposes. Taking these uncertainties into account, we estimate that we will incur $27 million and $32 million in environmental capital expenditures in 2010 and 2011, respectively. Approximately $15 million was spent on environmental capital projects in 2009.

The company has been notified by the U.S. Environmental Protection Agency or by various state or local governments that it may be liable under federal environmental laws or under applicable state or local laws with respect to the cleanup of hazardous substances at sites previously operated or used by the company. The company is currently named as a potentially responsible party (“PRP”), or has received third-party requests for contribution under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and similar state or local laws with respect to numerous sites. Some of these proceedings are described in more detail in Part I, Item 3. There are other sites which may contain contamination or which may be potential Superfund sites, but for which MeadWestvaco has not received any notice or claim. The potential liability for all these sites will depend upon several factors, including the extent of contamination, the method of remediation, insurance coverage and contribution by other PRPs. The company regularly evaluates its potential liability at these various sites. At December 31, 2009, MeadWestvaco had recorded liabilities of approximately $24 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The company believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $10 million. This estimate is less certain than the estimate upon which the environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the company’s results of operations. Additional matters involving environmental proceedings for MeadWestvaco are set forth in Part I, Item 3.

Employees

MeadWestvaco employs approximately 20,000 people worldwide, of whom approximately 10,000 are employed in the U.S. and approximately 10,000 are employed internationally. Approximately 7,500 employees are represented by labor unions under various collective bargaining agreements. MeadWestvaco considers its relationship with employees, including those covered by collective bargaining agreements, to be generally good. The company engages in negotiations with labor unions for new collective bargaining agreements from time to time and at present is in the process of negotiating new agreements at two manufacturing locations covering approximately 1,000 employees. While it is the company’s objective to reach agreements without work stoppages, it cannot predict the outcome of any negotiations.

International operations

MeadWestvaco’s operations outside the U.S. are conducted through subsidiaries located in Canada, Mexico, South America, Europe and Asia. While there are risks inherent in foreign investments, we do not believe at this time that such risks are material to our overall business prospects. MeadWestvaco’s sales that were attributable to U.S. operations, including export sales, were 67%, 66% and 67% for the years ended December 31, 2009, 2008 and 2007, respectively. Export sales from MeadWestvaco’s U.S. operations were 13% for each of the years ended December 31, 2009 and 2008 and 12% for the year ended December 31, 2007. Sales that were attributable to foreign operations were 33%, 34% and 33% for the years ended December 31, 2009, 2008 and 2007, respectively. For more information about the company’s U.S. and foreign operations, see Note S of Notes to Consolidated Financial Statements included in Part II, Item 8.

Available information

Our Internet address is www.mwv.com. Please note that MWV’s Internet address is included in this Annual Report on Form 10-K as an inactive textual reference only. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report. MWV makes available on this website free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (“SEC”). You may access these filings via the hyperlink to the SEC website provided on the Investor Information page of our website. MWV’s Corporate Governance Principles, our charters (Nominating and Governance Committee, Audit Committee, Compensation and Organization Development Committee, Finance Committee, Safety, Health and Environment Committee, and Executive Committee) and our Code of Conduct can be found at our website at the following address: http://www.mwv.com/AboutUs/InvestorRelations/CorporateGovernance/index.htm.

Item 1A.

Risk factors

Risks relating to our business

U.S. and global economic conditions could have an adverse effect on the profitability of some or all of our businesses.

Concerns regarding adverse consumer and business confidence, the availability and cost of credit, reduced consumer spending and business investment, the volatility and strength of the capital and credit markets, and inflation all affect the business and economic environment and, ultimately, the profitability of our business. In an economic downturn characterized by higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending, the demand for our products is adversely affected. Adverse changes in the U.S. or global economy could negatively affect earnings and could have a material adverse effect on our business, results of operations, cash flows and financial position. In a challenging and uncertain economic environment, we cannot predict whether or when such circumstances may occur, or what impact, if any, such circumstances could have on our business, results of operations, cash flows and financial position.

Conditions in the global capital and credit markets and the economy generally may materially adversely affect our business, results of operations and financial position and we do not expect these conditions to improve in the near future.

Our results of operations and financial position could be materially affected by adverse changes in the global capital and credit markets and the economy generally, including declines in consumer and business confidence and spending, both in the U.S. and elsewhere around the world. Conditions in the capital and credit markets and the effects of declines in consumer and business confidence and spending may adversely impact the ability of our lenders, suppliers and customers to conduct their business activities. The consequences of such adverse effects could include the interruption of production at the facilities of our customers, the reduction, delay or cancellation of customer orders, delays in or the inability of customers to obtain financing to purchase our products, and bankruptcy of customers or other creditors.

While we have procedures to monitor and limit exposure to credit risk, there can be no assurance such procedures will effectively limit our credit risk and avoid losses, which could have a material adverse effect on our financial condition and operating results.

Certain of the company’s businesses are affected by cyclical market conditions which can significantly impact operating results and cash flows.

Certain of the company’s businesses are affected by cyclical market conditions that can significantly influence the demand for certain of the company’s products, as well as the pricing we can obtain for these products. The company’s paperboard business is particularly subject to cyclical market conditions. The company may be unable to sustain pricing in the face of weaker demand, and weaker demand may in turn cause us to take production downtime. In addition to lost revenue from lower shipment volumes, production downtime causes unabsorbed fixed manufacturing costs due to lower production levels. As a result, the company’s results of operations and cash flows may be materially impacted in a period of prolonged and significant market weakness. Moreover, the company is not able to predict market conditions or its ability to sustain pricing and production levels during periods of weak demand with any degree of certainty. Market conditions may also impact the company’s ability to achieve its planned or announced price increases.

The company’s businesses are subject to significant cost pressures. Pricing volatility and our ability to pass higher costs on to our customers through price increases or other adjustments is uncertain and dependent on market conditions.

The pricing environment for raw materials used in a number of our businesses continues to be challenging and volatile. Additionally, energy costs remain volatile and unpredictable.

Further unpredictable increases in the cost of raw materials or energy may materially impact our results of operations. Depending on market forces and the terms of customer contracts, our ability to recover these costs through increased pricing may be limited.

Certain of the company’s consumer packaging converting businesses are affected by consumer behavior and new technology which can significantly impact operating results and cash flows.

Changes in consumer behavior and technology for the distribution of consumer products, such as music and video entertainment, can, and is having a dramatic impact on the demand for packaging products produced by the company’s packaging converting businesses.

The company faces intense competition in each of its businesses, and competitive challenges from lower cost manufacturers in overseas markets. If we cannot successfully compete in an increasingly global market place, our operating results may be adversely affected.

The company operates in competitive domestic and international markets and competes with many large, well-established and highly competitive manufacturers and service providers, both domestically and on a global basis. The company’s businesses are facing competition from lower cost manufacturers in Asia and elsewhere. In addition, there is a risk that growth in paperboard capacity could outpace demand. All of these conditions can contribute to substantial pricing and demand pressures, which could adversely affect the company’s operating results.

A key component of the company’s competitive position is MeadWestvaco’s ability to manage expenses successfully. This requires continuous management focus on reducing and improving efficiency through cost controls, productivity enhancements and regular appraisal of our asset portfolio.

The company’s operations are increasingly global in nature, particularly in our consumer packaging businesses. Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business, by fluctuations in currency exchange rates and other factors related to our international operations.

Approximately 46% of the company’s annual revenues in 2009 were derived from export sales and sales from locations outside the U.S. As our international operations and activities expand, we face increasing exposure to the risks of operating in many foreign countries. These factors include:

•

Changes in foreign currency exchange rates which could adversely affect our competitive position, selling prices and manufacturing costs, and therefore the demand for our products in a particular market.

•

Trade protection measures in favor of local producers of competing products, including government subsidies, tax benefits, trade actions (such as anti-dumping proceedings) and other measures giving local producers a competitive advantage over the company.

•

Changes generally in political, regulatory or economic conditions in the countries in which we conduct business.

These risks could affect the cost of manufacturing and selling our products, our pricing, sales volume, and ultimately our financial performance. The likelihood of such occurrences and their potential effect on the company vary from country to country and are unpredictable.

The company continues to realign and restructure its packaging converting businesses. Although the company believes that it will implement and manage the reorganization effectively to achieve substantial savings for the company, these major changes have attendant inherent risks, including the potential for disruption in our packaging businesses and operations as we implement the realignment.

The company’s packaging businesses continue to be transitioned into a focused end market facing commercial organization. The company’s leadership expects to successfully and seamlessly manage these transitions. However, any major reorganization presents challenges and it is possible that there could be disruptions in our business and operations during the transition period. Disruptions in production, quality control, customer service and innovation, as well as in other aspects of our operations, could negatively impact our results of operations.

The company is subject to extensive regulation under various environmental laws and regulations, and is involved in various legal proceedings related to the environment. Environmental regulation and legal proceedings have the potential for involving significant costs and liability for the company.

The company’s operations are subject to a wide range of general and industry-specific environmental laws and regulations. The company has been focused for some time on improving energy efficiency which also reduces its emissions of carbon dioxide. In recent years, acting unilaterally, the company reduced its carbon dioxide emissions even as overall production has increased. Since 2000, MWV reduced the annual emissions at its three currently operating U.S. integrated mills by over 475,000 metric tons. In 2008, total direct emissions from the company’s U.S. manufacturing facilities were 2,377,000 metric tons. In 2008, total indirect emissions from purchased electric power consumed at its U.S. manufacturing facilities were 902,000 metric tons. Indirect emissions in 2008 resulting from transportation are estimated to have been 300,000 metric tons (the bulk of these emissions are related to transportation by third parties of raw materials and finished goods) from the company’s U.S. manufacturing facilities. Data analysis for 2009 has not been developed at this time. The company is committed to obtaining additional reductions in these emissions as the efficient use of various forms of energy is enhanced. MWV’s emissions are calculated using the WRI/WBCSD (World Resources Institute/World Business Council for Sustainable Development) guidance for reporting greenhouse gas emissions.

Legislation recently approved by the House of Representatives would, over time, require sweeping reductions of greenhouse gas emissions in the United States. Although substantial allowances would be provided to energy intensive industries in the early years of this program, the adverse economic impact on certain of the company’s more energy intensive operations could increase substantially in future decades, especially for those most dependent on coal. The possibility of ever increasing, and ever more uncertain, energy costs may influence the company’s investment decisions regarding certain of its energy intensive operations, should such legislation be enacted. Key variables include, but are not limited to, the cost, and the relative predictability of the cost, of any required emissions permits; the availability and affordability of alternative, lower carbon, energy sources; the regulatory treatment of biomass as a fuel source for the forest products industry and other industries; the recognition given to emissions reductions already achieved; the future cost of energy generally and its overall impact on the economy; and the degree to which new regulatory requirements would also be borne by the company’s international competitors. The company has communicated its concerns about provisions of the pending legislation to members of Congress.

The U.S. Environmental Protection Agency has announced its intention to adopt new air emission regulations covering greenhouse gas emissions, new emission standards for industrial boilers and establishment of more stringent ambient air quality standards. Changes in environmental laws and regulations, or their application, could subject the company to significant additional capital expenditures and operating expenses in future years. However, any such changes are uncertain and, therefore, it is not possible for the company to predict with certainty the amount of additional capital expenditures or operating expenses that could be necessary for compliance with respect to any such changes.

The company is also subject to various environmental proceedings and may be subject to additional proceedings in the future. In the case of known potential liabilities, it is management’s judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations. The company could also be subject to new environmental proceedings which could cause the company to incur substantial additional costs with resulting impact on results of operations.

Additional information regarding environmental proceedings involving MeadWestvaco is set forth in Part I, Item 3.

Material disruptions at one of our manufacturing facilities could negatively impact our financial results.

We believe we operate our facilities in compliance with applicable rules and regulations and take measures to minimize the risks of disruption at our facilities. A material operational disruption in one of our major facilities could negatively impact production and our financial results. Such a disruption could occur as a result of any number of events including but not limited to a major equipment failure, labor stoppages, transportation failures affecting the supply and shipment of materials, severe weather conditions, and disruptions in utility services.

The real estate industry is highly competitive and economically cyclical.

The company engages in value-added real estate development activities, including obtaining entitlements and establishing joint ventures and other development-related arrangements. Many of our competitors in this industry have greater resources and experience in real estate development than we have currently. In addition, our ability to execute our plans to divest or otherwise realize the greater value associated with our landholdings may be affected by the following factors, among others:

•

General economic conditions, including credit markets and interest rates.

•

Local real estate market conditions, including competition from sellers of land and real estate developers.

•

Impact of federal, state and local laws and regulations affecting land use, land use entitlements, land protection and zoning.

Changes in tax laws may have a material effect on our future cash flows and results of operations.

Changes in business tax laws being proposed by the President relating to domestic and international taxation could subject the company to significant additional taxes. Future changes in U.S. and foreign tax provisions are uncertain and, therefore, it is not possible for the company to predict with certainty the amount of additional tax expense the company would incur.

Item 1B.

Unresolved staff comments

None.

Item 2.

Properties

MeadWestvaco is headquartered in Richmond, Virginia. MeadWestvaco believes that its facilities have sufficient capacity to meet current production requirements. The locations of MeadWestvaco’s production facilities as of December 31, 2009 were as follows:

Packaging Resources


Blumenau, Santa Catarina, Brazil		Pacajus, Ceara, Brazil
Cottonton, Alabama		Silsbee, Texas
Covington, Virginia		Tres Barras, Santa Catarina, Brazil
Evadale, Texas		Valinhos, Săo Paulo, Brazil
Feira de Santana, Bahia, Brazil		Venlo, The Netherlands
Low Moor, Virginia

Consumer Solutions


Ajax, Ontario, Canada		Melrose Park, Illinois (Leased)
Atlanta, Georgia		Milan, Italy (Leased)
Barcelona, Spain		Moscow, Russian Federation (Leased)
Bilbao, Spain		Piaseczno, Poland
Bristol, United Kingdom		Pittsfield, Massachusetts (Leased)
Buenos Aires, Argentina (Leased)		Preston, United Kingdom
Bydgoszcz, Poland		Roosendaal, The Netherlands
Chateauroux, France		Săo Paulo, Săo Paulo, Brazil (Leased)
Chicago, Illinois		San Luis Potosi, Mexico
Corby, United Kingdom		Santiago de Chile, Chile (Leased)
Deols, France		Shimada, Japan
Dublin, Ireland (Leased)		Slough, United Kingdom (Leased)
Elizabethtown, Kentucky		Smyrna, Georgia
Enschede, The Netherlands		Svitavy, Czech Republic
Freden, Germany		Swindon, United Kingdom (Leased)
Grandview, Missouri		Thalgau, Austria (Leased)
Graz, Austria		Tecate, Mexico (Leased)
Hemer, Germany		Tijuana, Mexico (Leased)
Jacksonville, Illinois		Trier, Germany
Krakow, Poland		Troyes, France
Lanett, Alabama		Valinhos, Săo Paulo, Brazil
London, United Kingdom (Leased)		Winfield, Kansas
Mebane, North Carolina		Wuxi, People’s Republic of China


Consumer & Office Products
Alexandria, Pennsylvania		Los Angeles, California
Bauru, Săo Paulo, Brazil		Santana de Parnaiba, Săo Paulo, Brazil (Leased)
Chamblee, Georgia		Sidney, New York
Dallas, Texas (Leased)		Toronto, Ontario, Canada (Leased)
Indianapolis, Indiana		Williamsburg, Pennsylvania
Kenosha, Wisconsin

Specialty Chemicals


Covington, Virginia		Shaxian, People’s Republic of China
DeRidder, Louisiana		Waynesboro, Georgia
North Charleston, South Carolina		Wickliffe, Kentucky

Community Development and Land Management Group and Forestry Centers


Rupert, West Virginia		Tres Barras, Santa Catarina, Brazil
Summerville, South Carolina		Waverly Hall, Georgia

Research Facilities


Raleigh, North Carolina (Leased)		Shekou Shenzhen, People’s Republic of China
North Charleston, South Carolina		Tres Barras, Santa Catarina, Brazil

Leases

For financial data on MeadWestvaco’s lease commitments, see Note I of Notes to Consolidated Financial Statements included in Part II, Item 8.

Other information

MeadWestvaco owns all of the facilities listed above, except as noted.

A limited number of MeadWestvaco facilities are owned, in whole or in part, by municipal or other public authorities pursuant to standard industrial revenue bond financing arrangements and are accounted for as property owned by MeadWestvaco. MeadWestvaco holds options under which it may purchase each of these facilities from such authorities by paying a nominal purchase price and assuming the indebtedness of the industrial revenue bonds at the time of the purchase.

As of December 31, 2009, MeadWestvaco owned about 755,000 acres of forestlands and other landholdings in the U.S. and about 135,000 acres of forestlands in Brazil (more than 1,200 miles from the Amazon rainforest).

Item 3.

Legal proceedings

On August 28, 2000, an enforcement action in Federal District Court in Maryland was brought by the U.S. Environmental Protection Agency (“EPA”) asserting that Westvaco did not obtain permits under the prevention of significant deterioration regulations under the Clean Air Act or install required pollution controls in connection with capital projects at the Luke, Maryland mill carried out in the 1980s. MeadWestvaco strongly disagrees and is vigorously defending this action. On April 23, 2001, the Court dismissed the EPA’s claims for civil penalties under the major counts of the complaint and the government subsequently abandoned several of its claims. Motions for summary judgment have resulted in dismissal of one of the two remaining claims. Additional motions addressed to the remaining claim have been scheduled by the Court. Based on information currently available, MeadWestvaco does not expect this proceeding will have a material adverse effect on our consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceeding could have a material effect on the results of operations.

MeadWestvaco has established liabilities of $24 million relating to environmental proceedings. Additional information is included in Part I, Item 1, and Note P of Notes to Consolidated Financial Statements included in Part II, Item 8.

MeadWestvaco is involved in various other litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of such matters cannot be predicted with certainty, we do not believe that the currently expected outcome of any proceeding, lawsuit or claim that is pending or threatened, or all of them combined, will have a material adverse effect on its consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

Item 4.

Submission of matters to a vote of security holders

There were no matters submitted to a vote of security holders of MeadWestvaco, through the solicitation of proxies or otherwise, during the fourth quarter of 2009.

Executive officers of the registrant

The following table sets forth certain information concerning the executive officers of MeadWestvaco:


Name	Age *	Present position	Year in which service in present position began
John A. Luke, Jr. **	61	Chairman and Chief Executive Officer	2002
James A. Buzzard	55	President	2003
E. Mark Rajkowski	51	Senior Vice President and Chief Financial Officer	2004
Mark S. Cross	53	Senior Vice President	2006
Linda V. Schreiner	50	Senior Vice President	2002
Bruce V. Thomas	53	Senior Vice President	2007
Mark T. Watkins	56	Senior Vice President	2002
Wendell L. Willkie, II	58	Senior Vice President, General Counsel and Secretary	2002
Donna O. Cox	46	Vice President	2005
Robert E. Birkenholz	49	Treasurer	2004
John E. Banu	62	Vice President and Controller	2002

*	As of February 23, 2010

**	Director of MeadWestvaco

MeadWestvaco’s officers are elected by the Board of Directors annually for one-year terms.

John A. Luke, Jr., President and Chief Executive Officer, 2002-2003, Chairman of the Board, Chief Executive Officer and President of Westvaco, 1996-2002;

James A. Buzzard, Executive Vice President, 2002-2003, Executive Vice President of Westvaco, 2000-2002, Senior Vice President, 1999, Vice President, 1992-1999;

E. Mark Rajkowski, Vice President, Eastman Kodak Company and General Manager Worldwide Operations for Kodak’s Digital and Film Imaging Systems Business, 2003-2004; Chief Operating Officer of Eastman Kodak’s Consumer Digital Business, 2003; Vice President, Finance of Eastman Kodak, 2001-2002; Corporate Controller of Eastman Kodak, 1998-2001;

Mark S. Cross, Senior Vice President and Group President of Europe, Middle East and Africa Region, JohnsonDiversey 2003-2006; President, Kimberly-Clark Professional, 2001-2003;

Linda V. Schreiner, Senior Vice President of Westvaco, 2000-2002, Manager of Strategic Leadership Development, 1999-2000, Senior Manager of Arthur D. Little, Inc., 1998-1999, Vice President of Signet Banking Corporation, 1988-1998;

Bruce V. Thomas, President and Chief Executive Officer, Cadmus Communications Corporation, 2000-2007;

Mark T. Watkins, Vice President of Mead, 2000-2002, Vice President, Human Resources and Organizational Development of the Mead Paper Division, 1999, Vice President, Michigan Operations of Mead Paper Division, 1997;

Wendell L. Willkie, II, Senior Vice President and General Counsel of Westvaco, 1996-2002;

Donna O. Cox, Director, External Communications, 2003-2005, Manager, Integration / Internal Communications, 2002-2003, Public Affairs Manager of Westvaco’s Packaging Resources Group, 1999-2002;

Robert E. Birkenholz, Assistant Treasurer, 2003-2004; Assistant Treasurer, Amerada Hess Corporation, 1997-2002;

John E. Banu, Vice President of Westvaco, 1999-2002; Controller, 1995-1999.

There are no family relationships among executive officers or understandings between any executive officer and any other person pursuant to which the officer was selected as an officer.

Part II

Item 5.

Market for the registrant’s common equity, related stockholder matters and issuer purchases of equity securities

(a)

Market and price range of common stock

MeadWestvaco’s common stock is traded on the New York Stock Exchange under the symbol MWV.


	Year ended December 31, 2009				Year ended December 31, 2008
STOCK PRICES	High		Low		High		Low
First quarter	$	13.33	$	7.53	$	31.44	$	23.92
Second quarter		17.54		11.43		29.40		22.75
Third quarter		23.60		15.37		28.05		21.46
Fourth quarter		29.33		21.21		24.03		9.44

This table reflects the range of market prices of MeadWestvaco common stock as quoted in the New York Stock Exchange Composite Transactions.

(b)

Approximate number of common shareholders

At December 31, 2009, the number of shareholders of record of MeadWestvaco common stock was approximately 22,500. This number includes approximately 12,800 current or former employees of the company who were MeadWestvaco shareholders by virtue of their participation in our savings and investment plans.

(c)

Dividends

The following table reflects historical dividend information for MeadWestvaco for the periods indicated.


DIVIDENDS PER SHARE	Year ended December 31, 2009		Year ended December 31, 2008
First quarter	$	0.23	$	0.23
Second quarter		0.23		0.23
Third quarter		0.23		0.23
Fourth quarter		0.23		0.23

	$	0.92	$	0.92

MeadWestvaco currently expects that comparable cash dividends will continue to be paid in the future.

Item 6.

Selected financial data


	Years ended December 31,
*Dollars in millions, except per share data*	2009			2008			2007			2006			2005
EARNINGS
Net sales	$	6,049		$	6,637		$	6,407		$	6,050		$	5,719
Income from continuing operations		225			80			266			81			118
Income (loss) from discontinued operations		—			10			19			12			(90	)
Net income attributable to the company		225	¹		90	²		285	³		93	⁴		28	⁵
Income from continuing operations:
Per share—basic		1.31			0.46			1.45			0.45			0.61
Per share—diluted		1.30			0.46			1.45			0.45			0.61
Net income per share—basic		1.31			0.52			1.56			0.52			0.14
Net income per share—diluted		1.30			0.52			1.56			0.52			0.14
Depreciation, depletion and amortization		443			472			482			477			451

COMMON STOCK
Number of common shareholders		22,500			23,400			24,700			27,410			29,630
Weighted average number of shares outstanding:
Basic		171			172			183			181			192
Diluted		173			173			184			181			193
Cash dividends	$	157		$	159		$	169		$	167		$	178
Per share:
Dividends declared		0.92			0.92			0.92			0.92			0.92
Book value		19.89			17.37			21.33			19.40			19.20

FINANCIAL POSITION
Working capital	$	1,285		$	887		$	712		$	550		$	988
Current ratio		2.0			1.7			1.5			1.4			1.9
Property, plant, equipment and forestlands, net	$	3,442		$	3,518		$	3,790		$	4,077		$	4,019
Total assets		9,021			8,455			9,837			9,285			8,908
Long-term debt, excluding current maturities		2,153			2,309			2,375			2,372			2,417
Shareholders’ equity		3,406			2,967			3,708			3,533			3,483
Debt to total capital (shareholders’ equity and total debt)		39	%		45	%		40	%		42	%		41	%

OPERATIONS
Primary production paperboard (thousands, in tons)		2,697			3,033			3,106			3,072			3,058
New investment in property, plant, equipment and forestlands	$	224		$	288		$	329		$	285		$	265
Acres of forestlands owned (thousands)		890			932			952			1,251			1,251
Employees		20,000			23,000			23,000			23,000			21,000

2009 results include after-tax income from alternative fuel mixture credits of $242 million, or $1.40 per share, after-tax restructuring charges of $122 million, or $0.70 per share, tax charges of $32 million, or $0.18 per share, related to domestic and foreign tax audits, after-tax charges of $14 million, or $0.08 per share, from early extinguishments of debt, after-tax income of $13 million, or $0.07 per share, from vacation accrual adjustments due to a policy change, an after-tax expense of $12 million, or $0.07 per share, from a contribution to the MeadWestvaco Foundation, after-tax gains of $11 million, or $0.06 per share, related to sales of certain assets, and an after-tax gain of $4 million, or $0.02 per share, related to a pension curtailment.

2008 results include after-tax restructuring charges of $44 million, or $0.26 per share, after-tax gains of $10 million, or $0.05 per share, related to sales of certain assets, and an after-tax gain of $6 million, or $0.04 per share, related to a pension curtailment. 2008 results also include after-tax income from discontinued operations of $10 million, or $0.06 per share.

2007 results include after-tax restructuring charges of $54 million, or $0.29 per share, after-tax one-time costs related to the company’s cost initiative of $15 million, or $0.08 per share, and after-tax gains of $155 million, or $0.84 per share, from sales of large-tract forestlands. 2007 results also include after-tax income from discontinued operations of $19 million, or $0.11 per share.

⁴

2006 results include after-tax restructuring charges of $85 million, or $0.47 per share, after-tax one-time costs related to the company’s cost initiative of $26 million, or $0.14 per share, a gain on the sale of a payable-in-kind (PIK) note of $13 million, or $0.07 per share, and an after-tax gain of $11 million, or $0.06 per share, from the sale of corporate real estate. The 2006 results also include after-tax income from discontinued operations of $12 million, or $0.07 per share.

⁵

2005 results include after-tax charges of $56 million, or $0.29 per share, related to early extinguishment of debt, and after-tax restructuring charges of $20 million, or $0.10 per share. The 2005 results also include an after-tax loss from discontinued operations of $90 million, or $0.47 per share.

Item 7.

Management’s discussion and analysis of financial condition and results of operations

OVERVIEW

For the year ended December 31, 2009, MeadWestvaco Corporation (“MeadWestvaco”, “MWV”, or the “company”) reported net income of $225 million, or $1.30 per share. Net income in 2009 includes after-tax income of $242 million, or $1.40 per share, from an excise tax credit earned under 2007 legislation enacted to provide a tax credit for companies that use alternative fuel mixtures to produce energy to operate their businesses. This item is described below under “Alternative fuel mixture credit.” The results for 2009 also include after-tax restructuring charges of $122 million, or $0.70 per share, related to employee separation costs, asset write-downs and other restructuring actions. Comparable results for prior years are noted later in this discussion.

Sales from continuing operations were $6.05 billion in 2009 compared to $6.64 billion in 2008. Decreased sales in 2009 reflect continued lower demand for packaged goods due to weak global economic conditions, as well as the company’s strategy of exiting lower-return packaging product lines and unfavorable foreign currency exchange compared to 2008. These effects on sales were partially offset by improved pricing and product mix in targeted global packaging markets, including growth from new products and packaging sales in emerging markets, as well as higher land sales compared to 2008.

Earnings in 2009 significantly benefited from the company’s productivity initiatives and overhead reduction actions, as well as from input cost deflation and improved pricing and product mix compared to 2008. Cash flow provided by continuing operations increased to $876 million in 2009 compared to $364 million in 2008, driven by the company’s continued focus of prioritizing cash generation as a key operating principle across its businesses, as well as from the receipt of alternative fuel mixture credits, higher earnings and improved working capital performance.

In January 2009, MWV announced the acceleration of a series of broad cost reduction actions that began in 2008 to further reduce its corporate and business unit overhead cost structure, optimize its manufacturing footprint and realize sourcing savings throughout its supply chain. By the end of 2009, these actions resulted in the cumulative elimination of approximately 3,000 positions, or 13% of MWV’s global workforce, and the closure or restructure of 16 manufacturing facilities. Savings in 2009 from these actions were $154 million, exceeding the company’s target of $125 million. The company continues to target run-rate savings of about $250 million by mid-2010 from facility actions and overhead reductions.

Alternative fuel mixture credit

Through December 31, 2009, the U.S. Internal Revenue Code allowed an excise tax credit for alternative fuel mixtures produced by a taxpayer for sale, or for use as a fuel in a taxpayer’s trade or business. MWV qualified for the alternative fuel mixture credit because it uses an alternative fuel known as black liquor, which is a byproduct of its wood pulping process, to power its paperboard mills. The company submitted claims totaling $375 million, after associated expenses, based on fuel usage at its three U.S. paperboard mills from mid-January 2009 through December 31, 2009. These claims are included in other income, net in the 2009 consolidated statement of operations. The credit expired on December 31, 2009.

RESULTS OF OPERATIONS

The following table summarizes our results for the years ended December 31, 2009, 2008 and 2007, as reported in accordance with accounting principles generally accepted in the U.S. All references to per share amounts are presented on an after-tax basis.


	Years ended December 31,
*In millions, except per share data*	2009			2008			2007
Net sales	$	6,049		$	6,637		$	6,407
Cost of sales		5,030			5,573			5,262
Selling, general and administrative expenses		823			809			870
Interest expense		204			210			205
Other income, net		(383	)		(34	)		(301	)


Income from continuing operations before income taxes		375			79			371
Income tax provision (benefit)		150			(1	)		105


Income from continuing operations		225			80			266
Income from discontinued operations, net of income taxes		—			10			19


Net income attributable to the company	$	225		$	90		$	285

Net income per share—basic:
Income from continuing operations	$	1.31		$	0.46		$	1.45
Income from discontinued operations		—			0.06			0.11

Net income attributable to the company	$	1.31		$	0.52		$	1.56


Net income per share—diluted:
Income from continuing operations	$	1.30		$	0.46		$	1.45
Income from discontinued operations		—			0.06			0.11

Net income attributable to the company	$	1.30		$	0.52		$	1.56

Comparison of Years ended December 31, 2009 and 2008

Sales from continuing operations were $6.05 billion and $6.64 billion for the years ended December 31, 2009 and 2008, respectively. Decreased sales in 2009 were primarily driven by lower demand for packaged goods due to weak global economic conditions, as well as from unfavorable foreign currency exchange compared to 2008. Decreased sales also reflect the company’s strategy of exiting lower-return packaging product lines. These effects on sales were partially offset by improved pricing and product mix in targeted global packaging markets, including growth from new products and packaging sales from emerging markets, as well as higher land sales compared to 2008. Refer to the individual segment discussion that follows for detailed sales information.

Costs of sales were $5.03 billion and $5.57 billion for the years ended December 31, 2009 and 2008, respectively. Decreased cost of sales in 2009 was primarily driven by lower volumes and lower input costs for energy, raw materials and freight compared to 2008. In 2009, input costs for energy, raw materials and freight included in cost of sales were $150 million lower compared to 2008. Restructuring charges included in cost of sales were $151 million and $41 million in 2009 and 2008, respectively.

Selling, general and administrative expenses were $823 million and $809 million for the years ended December 31, 2009 and 2008, respectively. Restructuring charges included in selling, general and administrative expenses were $38 million and $26 million in 2009 and 2008, respectively. Benefits in 2009 from productivity initiatives and overhead reduction actions were partially offset by higher performance-based compensation compared to 2008.

Pension income was $68 million and $93 million for the years ended December 31, 2009 and 2008, respectively. For 2009 and 2008, pension income includes curtailment gains of $6 million and $11 million, respectively, resulting from U.S. employee reductions associated with the company’s 2008 and 2005 strategic cost management programs. Pension income is included in cost of sales and selling, general and administrative expenses, and is included in Corporate and Other for segment reporting purposes.

Interest expense was $204 million for the year ended December 31, 2009 and was comprised of $166 million related to bond and bank debt, $4 million related to a long-term obligation non-recourse to MWV, $20 million related to borrowings under life insurance policies and $14 million related to other borrowings. Interest expense was $210 million for the year ended December 31, 2008 and was comprised of $164 million related to bond and bank debt, $13 million related to a long-term obligation non-recourse to MWV, $17 million related to borrowings under life insurance policies and $16 million related to other borrowings.

Other income, net was $383 million and $34 million for the years ended December 31, 2009 and 2008, respectively, and was comprised of the following:


	Years ended December 31,
*In millions*	2009			2008
Alternative fuel mixture credit	$	(375	)	$	—
Charges from early extinguishments of debt		23			—
Gains on sales of certain assets		(16	)		(16	)
Interest income		(19	)		(39	)
Foreign currency exchange (gains) losses		(3	)		23
Other, net		7			(2	)

	$	(383	)	$	(34	)

The company’s effective tax rate attributable to continuing operations was approximately 40% and (1)% for the years ended December 31, 2009 and 2008, respectively. The increase in the effective tax rate in 2009 compared to 2008 was primarily due to the change in the levels of pre-tax earnings between the company’s domestic and foreign operations, including pre-tax domestic income of $375 million from alternative fuel mixture credits in 2009, as well as from tax charges related to domestic and foreign tax audit items in 2009.

In addition to the information discussed above, the following sections discuss the results of operations for each of the company’s business segments and Corporate and Other. MWV’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, (iv) Specialty Chemicals, and (v) Community Development and Land Management. Refer to Note S of Notes to Consolidated Financial Statements included in Part II, Item 8 for a reconciliation of the sum of the results of the business segments and Corporate and Other to the company’s consolidated income from continuing operations before income taxes. Restructuring charges are included in Corporate and Other for segment reporting purposes. Refer to the discussion included in “Significant Transactions” herein below for restructuring charges attributable to the company’s business segments.

Packaging Resources


	Years ended December 31,
*In millions*	2009		2008
Sales	$	2,446	$	2,667
Segment profit ¹		182		195

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and minority interest income and losses.

Sales for the Packaging Resources segment were $2.45 billion in 2009 compared to $2.67 billion in 2008. Shipments of SBS in 2009 were 1,350,000 tons, down 18% from 2008, reflecting lower demand and a shift by this segment away from lower-value paperboard grades. In connection with this strategy, the segment removed approximately 200,000 tons of annual SBS paperboard capacity pursuant to the permanent shutdown of a paperboard machine at its Evadale, Texas mill during August 2009. Shipments of CNK^® in 2009 were 951,000 tons, down 9% from 2008, primarily reflecting lower demand and higher maintenance-related downtime. In 2009, SBS prices were up 5% and CNK^® prices were up 6% compared to 2008. Sales for the company’s Brazilian packaging operation, Rigesa Ltda., decreased 13% in 2009, due primarily to unfavorable foreign currency exchange, unfavorable product mix and modestly lower volume compared to 2008.

Profit for the Packaging Resources segment was $182 million in 2009 compared to $195 million in 2008. Earnings in 2009 were negatively impacted by $142 million from lower volume, $13 million from unfavorable foreign currency exchange and $11 million from other unfavorable items compared to 2008. Earnings in 2009 benefited by $79 million from productivity initiatives, overhead reduction actions and input cost deflation, and $74 million from improved pricing and product mix compared to 2008.

Consumer Solutions

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and minority interest income and losses.

Sales for the Consumer Solutions segment were $2.25 billion in 2009 compared to $2.51 billion in 2008. In 2009, overall volume was down compared to 2008 due to lower demand for premium products and declines in consumer spending, as well as from the segment exiting lower-margin product lines. These effects on sales were partially offset by continued strong demand for the company’s value-added Shellpak^® solution within the healthcare market and for dispensing solutions for soaps and antibacterial lotions in personal care markets due to the heightened global awareness of the H1N1 virus. In addition, this segment benefited from increased demand in the emerging Asia beverage market and in media packaging market share gains were driven by the continued success of EcoLite DVD packaging.

Profit for the Consumer Solutions segment was $95 million in 2009 compared to $56 million in 2008. Profit improvement in the healthcare, personal care, beverage, and tobacco packaging markets was driven by successful implementation of the company’s transformation strategy, including maximizing production efficiency and exiting lower-return product lines. In 2009, earnings benefited by $125 million from productivity initiatives, overhead reduction actions and input cost deflation compared to 2008. In 2009, earnings were negatively impacted by $43 million from unfavorable pricing and product mix, $17 million from lower volume, $13 million from unfavorable foreign currency exchange and $13 million from other unfavorable items compared to 2008.

Consumer & Office Products


	Years ended December 31,
*In millions*	2009		2008
Sales	$	1,006	$	1,063
Segment profit ¹		133		96

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and minority interest income and losses.

Sales for the Consumer & Office Products segment were $1.01 billion in 2009 compared to $1.06 billion in 2008. During 2009, this segment had a solid back-to-school season in North America, with strong positioning and sell-through of proprietary, branded products at leading retailers. Sales of envelopes and office products were lower due to the weak global economic environment. Envelopes were especially impacted by financial services customers who significantly reduced direct mail offerings in 2009. This segment recently augmented its school and office supplies business with the acquisition of Grafon’s^® during the third quarter of 2009, a provider of branded consumer products in Brazil, and has integrated its products and licensing agreements into the segment’s school offerings in the Southern Hemisphere. This segment continues to be impacted by imports from Asia.

Profit for the Consumer & Office Products segment was $133 million in 2009 compared to $96 million in 2008. In 2009, earnings benefited by $67 million from productivity initiatives and lower overhead and other cost reductions, and $14 million from improved product mix compared to 2008. In 2009, earnings were negatively impacted by $37 million from lower volume and $7 million from other unfavorable items compared to 2008.

Specialty Chemicals

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and minority interest income and losses.

Sales for the Specialty Chemicals segment were $503 million in 2009 compared to $547 million in 2008. In 2009, lower overall volume more than offset improved product mix compared to 2008. While demand in 2009 for pine chemicals and automotive carbons were below 2008 levels, this segment benefited from stronger global demand for its asphalt solutions, increased demand for carbon technologies in water and food purification markets, and share gains in pine chemicals for oilfield and adhesive applications.

Profit for the Specialty Chemicals segment was $56 million in 2009 compared to $48 million in 2008. In 2009, earnings benefited by $46 million from productivity initiatives, overhead reduction actions and input cost deflation, and $2 million from improved product mix compared to 2008. In 2009, earnings were negatively impacted by $33 million from lower volume and $7 million from other unfavorable items compared to 2008.

Community Development and Land Management

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and minority interest income and losses.

The Community Development and Land Management segment is responsible for maximizing the value of the company’s landholdings in North America. Operations of the segment include real estate development, forestry operations and leasing activities. Real estate development includes (i) selling non-core forestlands primarily for recreational and residential uses, (ii) entitling and improving high-value tracts through joint ventures and other ownership arrangements, and (iii) master planning select landholdings. Forestry operations include growing and harvesting softwood and hardwood on the company’s forestlands for external consumption and for use by the company’s mill-based business. Leasing activities include fees from third parties undertaking mineral extraction operations, as well as fees from recreational leases on the company’s forestlands.

Sales for the Community Development and Land Management segment were $193 million in 2009 compared to $135 million in 2008. Profit was $99 million in 2009 compared to $59 million in 2008. Profit from real estate activities was $88 million in 2009 versus $40 million in 2008. In 2009, the company sold approximately 59,700 acres for gross proceeds of $118 million versus approximately 21,200 acres for gross proceeds of $57 million in 2008. Profit from forestry operations and leasing activities was $11 million in 2009 compared to $19 million in 2008.

The real estate and forest products sectors remain challenging due to continued credit tightening and weaker consumer spending. These factors will likely continue to influence near-term results. During this time, the segment will continue to move forward with its near- and long-term real estate value creation plans, including enhancing rural land, and entitling and master planning its highest potential development land. During 2009, the segment finalized a master plan for developing a company-owned 72,000 acre tract in the greater Charleston, South Carolina area.

Corporate and Other


	Years ended December 31,
*In millions*	2009			2008
Sales	$	49		$	105
Corporate and Other loss		(190	)		(375	)

Corporate and Other includes corporate support staff services and related assets and liabilities, including merger-related goodwill, and the company’s specialty papers operation which was sold in the fourth quarter of 2009. The results include income and expense items not directly associated with ongoing segment operations, such as income from alternative fuel mixture credits, restructuring charges, pension income and curtailment gains, interest expense and income, non-controlling interest income and losses, certain legal settlements, gains and losses on certain asset sales, charges on early extinguishments of debt and other items.

Corporate and Other loss was $190 million in 2009 compared to a loss of $375 million in 2008. Contributing to the lower loss in 2009 was income from alternative fuel mixture credits of $375 million in 2009, income from vacation accrual adjustments due to a policy change of $20 million in 2009, and favorable foreign currency exchange of $19 million compared to 2008. The effects of the above items in 2009 were partially offset by higher restructuring charges of $120 million, lower pension income of $25 million, charges from the early extinguishments of debt of $23 million in 2009, an expense of $20 million from a contribution to the MeadWestvaco Foundation in 2009, higher net interest expense of $14 million and other net unfavorable items of $27 million compared to 2008.

Comparison of Years ended December 31, 2008 and 2007

Sales from continuing operations were $6.64 billion and $6.41 billion for the years ended December 31, 2008 and 2007, respectively. Increased sales in 2008 were driven by improved pricing and product mix and favorable foreign currency exchange, partially offset by lower volumes compared to 2007, primarily due to the effects of the global economic contraction in the second half of 2008. Refer to the individual segment discussion that follows for detailed sales information.

Costs of sales were $5.57 billion and $5.26 billion for the years ended December 31, 2008 and 2007, respectively. Increased cost of sales in 2008 was driven by continued significant input cost inflation, partially offset by lower volumes compared to 2007. In 2008, input costs for energy, raw materials and freight included in cost of sales were $260 million higher compared to 2007. Restructuring charges included in cost of sales were $41 million and $57 million in 2008 and 2007, respectively.

Selling, general and administrative expenses were $809 million and $870 million, or 12.2% and 13.6% as a percentage of sales, for the years ended December 31, 2008 and 2007, respectively. Lower expense in 2008 compared to 2007 was due primarily to improved productivity, lower restructuring charges and one-time costs, and lower employee incentive compensation, partially offset by unfavorable foreign currency exchange. In 2008, improved productivity lowered selling, general and administrative expenses by $83 million compared to 2007. Restructuring charges and one-time costs included in selling, general and administrative expenses were $26 million and $48 million in 2008 and 2007, respectively.

Pension income was $93 million and $58 million for the years ended December 31, 2008 and 2007, respectively. For 2008, pension income includes a pre-tax curtailment gain of $11 million resulting from U.S. employee reductions associated with the company’s 2005 strategic cost management program. Pension income is reported in cost of sales and selling, general and administrative expenses, and is included in Corporate and Other for segment reporting purposes.

Interest expense was $210 million for the year ended December 31, 2008 and was comprised of $164 million related to bond and bank debt, $13 million related to a long-term obligation non-recourse to MWV, $17 million from borrowings under life insurance policies and $16 million related to other borrowings. Interest expense was $205 million for the year ended December 31, 2007 and was comprised of $178 million related to bond and bank debt, $19 million related to borrowings under life insurance policies and $8 million related to other borrowings.

Other income, net was $34 million and $301 million for the years ended December 31, 2008 and 2007, respectively, and was comprised of the following:


	Years ended December 31,
*In millions*	2008			2007
Gains on sales of forestlands ¹		—			(274	)
Gains on sales of certain assets		(16	)		—
Interest income		(39	)		(19	)
Foreign currency exchange losses (gains)		23			(12	)
Other, net		(2	)		4

	$	(34	)	$	(301	)

In 2008, sales of landholdings are included in net sales in the consolidated statements of operations to reflect the strategic view and structure of the operations of the Community Development and Land Management segment established in 2008. For periods prior to 2008, gains from sales of landholdings are included in other income, net in the consolidated statements of operations.

The company’s effective tax rate attributable to continuing operations was approximately (1)% and 28% for the years ended December 31, 2008 and 2007, respectively. The decrease in the effective tax rate in 2008 compared to 2007 was primarily due to favorable settlements of certain U.S. federal tax audits in 2008, benefits from changes in federal tax laws and regulations in 2008, and the change in the levels of pre-tax earnings between the company’s domestic and foreign operations, including lower pre-tax domestic gains of $234 million from sales of forestlands in 2008 compared to 2007.

In addition to the information discussed above, the following sections discuss the results of operations for each of our business segments and Corporate and Other.

Packaging Resources


	Years ended December 31,
*In millions*	2008		2007
Sales ¹	$	2,667	$	2,504
Segment profit ^1,2		195		281

¹	Results for 2007 have been recast to exclude the discontinued operations of the Kraft business.

²	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, minority interest income and losses, and discontinued operations.

Sales for the Packaging Resources segment were $2.67 billion in 2008 compared to $2.50 billion in 2007. Increased sales were driven by improved pricing and product mix in key paperboard grades and by volume growth in SBS. Shipments of SBS in 2008 were 1,646,000 tons, up 5% from 2007. Shipments of CNK^® in 2008 were 1,043,000 tons, down 5% from 2007, reflecting declines in beverage and general packaging grades in late 2008 as customers de-stocked inventories in response to weak economic conditions. In 2008, SBS prices were up 5% and CNK^® prices were up 4% compared to 2007. Sales for the company’s Brazilian packaging operation, Rigesa Ltda., increased 19% in 2008 compared to 2007, due primarily to solid demand for corrugated packaging solutions in the Brazilian market.

Profit for the Packaging Resources segment was $195 million in 2008 compared to $281 million in 2007, reflecting record input cost inflation more than offsetting improvements in pricing and product mix and higher volume. Earnings in 2008 were negatively impacted by $162 million from input cost inflation and $51 million from unfavorable productivity due primarily to unscheduled maintenance and hurricane-related downtime. Earnings in 2008 benefited by $98 million from improved pricing and product mix, $12 million from favorable foreign currency exchange, $8 million from higher volume and $9 million from other favorable items compared to 2007.

Consumer Solutions

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, minority interest income and losses.

Sales for the Consumer Solutions segment were $2.51 billion in 2008 compared to $2.43 billion in 2007. In 2008, higher sales were driven by growth in global beverage, home and garden and healthcare markets, and from favorable foreign currency exchange compared to 2007. These positive effects were partially offset by year-over-year volume declines in media and personal care packaging due to weakening economic conditions in the second half of 2008.

Profit for the Consumer Solutions segment was $56 million in 2008 compared to $86 million in 2007. In 2008, earnings were negatively impacted by $40 million from input cost inflation and $9 million from other unfavorable items compared to 2007. In 2008, earnings benefited by $11 million from improved productivity, $5 million from improved pricing and product mix and $3 million from higher volume compared to 2007.

Consumer & Office Products


	Years ended December 31,
*In millions*	2008		2007
Sales	$	1,063	$	1,147
Segment profit ¹		96		139

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, minority interest income and losses.

Sales for the Consumer & Office Products segment were $1.06 billion in 2008 compared to $1.15 billion in 2007. In 2008, volume declines across key product lines due to the weakening U.S. economy offset improvements in product mix compared to 2007, as well as higher year-over-year sales in the Brazilian school products business.

Profit for the Consumer & Office Products segment was $96 million in 2008 compared to $139 million in 2007. In 2008, earnings were negatively impacted by $38 million from lower volume, $28 million from input cost inflation, $5 million from unfavorable foreign currency exchange and $9 million from other unfavorable items compared to 2007. In 2008, earnings benefited by $23 million from improved productivity and $14 million from improved product mix compared to 2007.

Specialty Chemicals

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and minority interest income and losses.

Sales for the Specialty Chemicals segment were $547 million in 2008 compared to $494 million in 2007. In 2008, improved pricing and product mix in most markets were partially offset by volume declines for carbon-based products due to lower automobile production volumes in North America compared to 2007, and volume declines for printing ink resins due to weakness in the publication inks industry.

Profit for the Specialty Chemicals segment was $48 million in 2008 compared to $37 million in 2007. In 2008, earnings benefited by $53 million from improved pricing and product mix and $8 million from other favorable items compared to 2007. In 2008, earnings were negatively impacted by $28 million from input cost inflation and $22 million from unfavorable productivity compared to 2007.

Community Development and Land Management

²	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and minority interest income and losses.

Sales for the Community Development and Land Management segment were $135 million in 2008 compared to $87 million in 2007. Profit was $59 million for the year ended December 31, 2008 compared to $294 million for the year ended December 31, 2007. Profit in 2007 includes pre-tax gains of $250 million related to sales of non-strategic large-tract forestlands. Profit from real estate activities related to small-tract land sales was $40 million in 2008 compared to $24 million in 2007. Profit from forestry operations and leasing activities was $19 million in 2008 compared to $20 million in 2007. The company sold approximately 21,200 small-tract acres for gross proceeds of $57 million in 2008 compared to approximately 7,900 acres for gross proceeds of $26 million in 2007. As the U.S. economy continued to weaken in 2008, the company shifted its marketing focus to smaller recreational properties primarily located in rural Alabama, Georgia and Virginia.

Corporate and Other


	Years ended December 31,
*In millions*	2008			2007
Sales	$	105		$	130
Corporate and Other loss		(375	)		(466	)

Corporate and Other loss was $375 million in 2008 compared to a loss of $466 million in 2007. Contributing to the decreased loss in 2008 were lower restructuring charges of $40 million, higher pension income of $35 million, higher interest income of $20 million, a gain of $15 million from the sale of corporate real estate in 2008, and $8 million from other net favorable items, partially offset by $27 million from unfavorable foreign currency exchange compared to 2007.

2010 OUTLOOK

Overview

While the company believes overall demand may have stabilized at current levels, and is seeing volume growth opportunities in some markets and products, the resiliency and pace of these trends remains uncertain given continued weak economic conditions. The company expects to benefit from its growing positions in developing regions, including China and Brazil, to help offset continued weakened demand in developed markets, in particular the U.S. and Western Europe. The company expects continued benefits from its transformation strategies and ongoing cost reduction actions to be the significant drivers of improved year-over-year performance.

Other items

Capital spending was $224 million in 2009 and is expected to range from $250 million to $300 million in 2010 depending on demand trends across the company’s businesses. Depreciation, depletion and amortization expense was $443 million in 2009 and is expected to be about $425 million in 2010.

Interest expense was $204 million in 2009 and is expected to be approximately $190 million in 2010.

Pension income was $68 million in 2009 and is expected to be approximately $75 million in 2010 before the impact, if any, of a curtailment gain or loss due to a plan re-measurement from actions under the company’s strategic cost management program. In addition, the company’s U.S. qualified retirement plans remain over-funded and we do not anticipate any required regulatory funding contributions to such plans in the foreseeable future.

LIQUIDITY AND CAPITAL RESOURCES

In response to continued economic uncertainty and to enhance MWV’s liquidity, we are successfully executing our strategy of reducing our operating cost structure and improving productivity, as well as aggressively managing working capital usage and matching production with market demand. Cash flow provided by continuing operations increased to $876 million in 2009 compared to $364 million in 2008, driven by the company’s continued focus of prioritizing cash generation as a key operating principle across its businesses, as well as from the receipt of alternative fuel mixture credits, higher earnings and improved working capital performance.

Cash and cash equivalents were $850 million at December 31, 2009 compared to $549 million at December 31, 2008. The credit quality of our portfolio of short-term investments remains strong with the majority of the company’s cash and cash equivalents invested in U.S. government securities. Cash flow from operations and the company’s current cash levels are expected to be adequate to fund scheduled debt payments, dividends to shareholders and capital expenditures in 2010. In addition, the company’s U.S. qualified retirement plans remain over-funded, and we do not anticipate any required regulatory funding contributions to such plans in the foreseeable future.

MWV currently has $600 million of undrawn bank-committed credit capacity. We continuously monitor the credit quality of our credit facility banks, insurance providers and derivative contract counter-parties, in addition to our customers and key suppliers. The company has taken and will take further actions as necessary to mitigate any impact to its liquidity position; however, we cannot predict with any certainty the impact to the company of any further disruption in global credit markets.

Operating activities

Cash provided by operating activities from continuing operations was $876 million in 2009, compared to $364 million in 2008 and $574 million in 2007. The increase in operating cash flow in 2009 compared to 2008 and 2007 was primarily driven by the receipt of alternative fuel mixture credits from the Internal Revenue Service totaling $348 million in 2009, as well as from higher operating earnings and improved working capital performance. Cash generated from working capital improvements increased to $189 million in 2009, compared to $24 million in 2008 and $128 million in 2007, reflecting benefits from the company’s strategy of matching production with market demand and overhead reduction actions. See Note R of Notes to Consolidated Financial Statements included in Part II, Item 8 for information related to changes in working capital. Cash provided by operating activities from discontinued operations was $12 million and $67 million in 2008 and 2007, respectively.

Investing activities

Cash used in investing activities from continuing operations was $209 million in 2009, compared to $264 million in 2008 and $227 million in 2007. Proceeds from dispositions of assets were $58 million in 2009, compared to $67 million in 2008 and $182 million in 2007. Capital spending from continuing operations decreased to $224 million in 2009, compared to $288 million in 2008 and $329 million in 2007, reflecting the company’s continued preservation of its cash position by limiting such expenditures primarily to manufacturing maintenance and environmental and safety compliance. Payments for acquired businesses, net of cash acquired and transaction costs, were $15 million in 2009, compared to $18 million in 2008 and $52 million in 2007. Cash provided by investing activities from discontinued operations was $456 million in 2008, compared to cash used in investing activities from discontinued operations of $9 million in 2007.

Financing activities

Cash used in financing activities from continuing operations was $405 million in 2009, compared to $200 million in 2008 and $332 million in 2007. In 2009, net cash used in financing activities from continuing operations of $405 million was driven by long-term debt payments of $435 million, dividend payments of $157 million, payments of notes payable and short-term borrowings of $34 million and other uses of funds of $31 million, offset in part by proceeds from issuance of long-term debt of $250 million and other sources of funds of

$2 million. In 2008, net cash used in financing activities from continuing operations of $200 million was driven by dividend payments of $159 million, long-term debt payments of $36 million and other uses of funds of $13 million, offset in part by other sources of funds of $8 million. In 2007, net cash used in financing activities from continuing operations of $332 million was driven by stock repurchases of $486 million, dividend payments of $169 million, payments of notes payable and short-term borrowings of $128 million, long-term debt payments of $43 million and other uses of funds of $21 million, offset in part by proceeds from unsecured borrowing (non-recourse to MeadWestvaco) of $338 million, proceeds from issuance of common stock and exercises of stock options of $162 million, proceeds from the issuance of long-term debt of $12 million and other sources of funds of $3 million. Cash used by financing activities from discontinued operations was $7 million in 2007.

On September 16, 2009, the company completed a tender offer to repurchase $314 million of its 6.85% notes due in 2012. The repurchase was funded by net proceeds of $245 million received pursuant to the issuance of $250 million of 7.375% notes due in 2019, as well as from cash-on-hand. Upon settlement of the tender offer, the company reduced its outstanding 2012 notes from $633 million to $319 million.

The company has available a $600 million bank credit facility that expires in October 2012. Borrowings under this agreement can be in unsecured domestic or Eurodollar notes and at rates approximating Prime or the London Interbank Offered Rate (“LIBOR”) at the company’s option. The revolving credit agreement contains a financial covenant limiting the percentage of total debt to total capitalization (including deferred income tax liabilities) to 55%, as well as certain other covenants with which the company is in compliance. The revolving credit facility was undrawn at December 31, 2009. As part of the monitoring activities surrounding the credit quality of our credit facilities, we evaluate credit default activities and bank ratings of our lenders. In addition, we undertake similar measures and evaluate deposit concentrations to monitor the credit quality of the financial institutions that hold our cash and cash equivalents.

The company’s percentage of total debt to total capital (shareholders’ equity and total debt) was 39% at December 31, 2009 and 45% at December 31, 2008.

The company’s Board of Directors declared dividends of $0.92 per share, paying a total of $157 million, $159 million and $169 million of dividends to shareholders for the years ended December 31, 2009, 2008 and 2007, respectively. On January 25, 2010, the company’s Board of Directors declared a regular quarterly dividend of $0.23 per common share.

In 2007, the company entered into an accelerated share repurchase program with a financial institution counterparty to purchase $400 million of the company’s common stock. This program was funded by proceeds from sales of forestlands that closed in 2007. Pursuant to this program, the company received and retired 14.0 million shares. Under a separate share repurchase program, the company repurchased 2.6 million shares for $86 million in 2007.

In 2007, the company received an installment note in the amount of $398 million (the “Timber Note”) as part of the consideration for the sale of certain large-tract forestlands. The Timber Note does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating the LIBOR. In addition, the Timber Note is supported by a bank-issued irrevocable letter of credit obtained by the buyer of the forestlands. Using the Timber Note as collateral, the company received $338 million in proceeds under a secured financing agreement with a bank. Under the terms of the agreement, the liability from this transaction is non-recourse to MeadWestvaco and shall be paid from the Timber Note proceeds upon its maturity. As a result, the Timber Note is not available to satisfy the obligations of MeadWestvaco. The non-recourse liability does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating LIBOR. For further discussion related to this transaction, see Note E of Notes to Consolidated Financial Statements included in Part II, Item 8.

On February 2, 2010, Standard and Poor’s Ratings Services revised its outlook on MeadWestvaco to stable from negative, increased the company’s short-term credit rating to A-2 from A-3, and affirmed the company’s BBB long-term credit rating.

EFFECTS OF INFLATION

Prices for energy, including natural gas, oil and electricity, and raw materials and freight, decreased significantly in 2009 compared to 2008. During 2009, the pre-tax input cost of energy, raw materials and freight was $150 million lower than in 2008. During 2008, the pre-tax input cost of energy, raw materials and freight attributable to continuing operations was $254 million higher than in 2007.

ENVIRONMENTAL AND LEGAL MATTERS

The company has been notified by the U.S. Environmental Protection Agency or by various state or local governments that it may be liable under federal environmental laws or under applicable state or local laws with respect to the cleanup of hazardous substances at sites previously operated or used by the company. The company is currently named as a potentially responsible party (“PRP”), or has received third-party requests for contribution under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and similar state or local laws with respect to numerous sites. There are other sites which may contain contamination or which may be potential Superfund sites, but for which MeadWestvaco has not received any notice or claim. The potential liability for all these sites will depend upon several factors, including the extent of contamination, the method of remediation, insurance coverage and contribution by other PRPs. The company regularly evaluates its potential liability at these various sites. At December 31, 2009, MeadWestvaco had recorded liabilities of approximately $24 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The company believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $10 million. This estimate is less certain than the estimate upon which the environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the company’s results of operations.

As with numerous other large industrial companies, the company has been named a defendant in asbestos-related personal injury litigation. Typically, these suits also name many other corporate defendants. To date, the costs resulting from the litigation, including settlement costs, have not been significant. As of December 31, 2009, there were approximately 560 lawsuits. Management believes that the company has substantial indemnification protection and insurance coverage, subject to applicable deductibles and policy limits, with respect to asbestos claims. The company has valid defenses to these claims and intends to continue to defend them vigorously. Additionally, based on its historical experience in asbestos cases and an analysis of the current cases, the company believes that it has adequate amounts accrued for potential settlements and judgments in asbestos-related litigation. At December 31, 2009, the company had recorded litigation liabilities of approximately $19 million, a significant portion of which relates to asbestos. Should the volume of litigation grow substantially, it is possible that the company could incur significant costs resolving these cases. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the company’s results of operations.

MeadWestvaco is involved in various other litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of such matters cannot be predicted with certainty, management does not believe that the currently expected outcome of any matter, lawsuit or claim that is pending or threatened, or all of them combined, will have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the company’s results of operations.

CONTRACTUAL OBLIGATIONS

The company enters into various contractual obligations throughout the year. Presented below are the contractual obligations of the company as of December 31, 2009, and the time period in which payments under the obligations are due. Disclosures related to long-term debt, capital lease obligations and operating lease obligations are included in Note G and Note I of Notes to Consolidated Financial Statements included in Part II, Item 8. Also included below are disclosures regarding the amounts due under purchase obligations. A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the company and that specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.

The company has included in the disclosure below all normal and recurring purchase orders, take-or-pay contracts, supply arrangements as well as other purchase commitments that management believes meet the definition of purchase obligations above.


	Payments due by period
*In millions*	Total		Less than 1 year 2010		1-3 years 2011 and 2012		3-5 years 2013 and 2014		More than 5 years 2015 and beyond
Contractual obligations:
Debt, excluding capital lease obligations	$	2,018	$	11	$	350	$	30	$	1,627
Interest on debt⁽¹⁾		2,301		155		289		258		1,599
Capital lease obligations⁽²⁾		353		13		23		20		297
Operating leases		374		61		86		57		170
Purchase obligations		1,059		609		181		162		107
Other long-term obligations⁽³⁾⁽⁴⁾		826		103		207		199		317

Total	$	6,931	$	952	$	1,136	$	726	$	4,117

⁽¹⁾	Amounts are based on weighted-average interest rate of 7.7% for the company’s fixed-rate long-term debt for 2010 and thereafter. See related discussion in Note G of Notes to Consolidated Financial Statements included in Part II, Item 8.

⁽²⁾	Amounts include both principal and interest payments.

⁽³⁾	Total excludes a $338 million liability that is non-recourse to MeadWestvaco. See related discussion in Note E of Notes to Consolidated Financial Statements included in Part II, Item 8.

⁽⁴⁾	Total excludes $297 million of unrecognized tax benefits and $83 million of related accrued interest and penalties due to the uncertainty of timing of payment. See Note O of Notes to Consolidated Financial Statements included in Part II, Item 8 for additional information.

SIGNIFICANT TRANSACTIONS

Alternative fuel mixture credit

Restructuring charges

Year ended December 31, 2009

During 2005, the company launched a cost reduction initiative to improve the efficiency of its business model. During 2008, the company commenced a new series of broad cost reduction actions to reduce corporate and business unit overhead expense and close or restructure certain manufacturing locations. Restructuring charges discussed below are pursuant to these programs. Cumulative charges since the inceptions of the 2005 and 2008 programs through December 31, 2009 were $292 million and $213 million, respectively.

For the year ended December 31, 2009, the company incurred pre-tax charges of $189 million in connection with employee separation costs, asset write-downs and other restructuring actions, of which $151 million is included in cost of sales and $38 million is included in selling, general and administrative expenses. The non-cash portion of these charges was $132 million. For the three months ended December 31, 2009, the company incurred pre-tax charges of $26 million, of which $14 million is included in cost of sales and $12 million is included in selling, general and administrative expenses. Although these charges related to individual segments, such amounts are included in Corporate and Other for segment reporting purposes. The following table and discussion present additional detail of the 2009 charges:


*In millions*	Employee costs		Asset write-downs and other costs		Total
Consumer Solutions	$	37	$	46	$	83
Packaging Resources		7		35		42
Consumer & Office Products		7		3		10
All other		6		48		54

	$	57	$	132	$	189


*In millions*	Employee costs		Asset write-downs and other costs		Total
2005 program	$	—	$	5	$	5
2008 program		57		127		184

	$	57	$	132	$	189

Consumer Solutions

approximately 840 employees and $46 million related to asset write-downs and other restructuring actions including the closure or restructure of 11 manufacturing facilities. The affected employees will be separated from the company by mid-2010.

Packaging Resources

During the year ended December 31, 2009, the Packaging Resources segment had restructuring actions in its manufacturing operations primarily in the U.S. and South America. These actions resulted in pre-tax charges of $42 million, of which $7 million related to employee separation costs covering approximately 150 employees and $35 million related to asset write-downs and other actions primarily associated with the permanent shutdown of a paperboard machine at the segment’s Evadale, Texas mill. The affected employees will be separated from the company by mid-2010.

Consumer & Office Products

During the year ended December 31, 2009, the Consumer & Office Products segment had restructuring actions in connection with its operations in the U.S. These actions resulted in pre-tax charges of $10 million, of which $7 million related to employee separation costs covering approximately 330 employees and $3 million related to asset write-downs and other restructuring actions. The affected employees will be separated from the company by mid-2010.

All other

During the year ended December 31, 2009, the company incurred additional charges of $54 million. These charges include employee separation costs of $6 million related to approximately 180 employees. The affected employees will separate from the company by mid-2010. The remaining $48 million was related to asset write-downs and other restructuring actions primarily in connection with the disposition of the company’s specialty papers operation.

Year ended December 31, 2008

For the year ended December 31, 2008, the company incurred pre-tax charges of $69, of which $41 million, $26 million and $2 million is included in cost of sales, selling, general and administrative expenses, and other income, net, respectively. Of these charges, $44 million related to the Consumer Solutions segment, $8 million related to the Consumer & Office Products segment, $4 million related to the Packaging Resources segment, $4 million related to the Specialty Chemicals segment, and $9 million was attributed to Corporate and Other. The non-cash portion of these charges was $43 million. These charges related to various restructuring actions, including asset write-downs and employee separation costs covering approximately 1,885 employees. As of December 31, 2009, all employee separation costs were paid.

Year ended December 31, 2007

For the year ended December 31, 2007, the company incurred pre-tax charges of $85 million, of which $57 million, $24 million and $4 million is included in cost of sales, selling, general and administrative expenses, and other income, net, respectively. Of these charges, $23 million related to the Consumer Solutions segment, $5 million related to the Consumer & Office Products segment, $2 million related to the Packaging Resources segment, and $55 million was attributed to Corporate and Other. The non-cash portion of these charges was $67 million. These charges related to various restructuring actions, including asset write-downs and employee separation costs covering approximately 240 employees. As of December 31, 2008, all employee separation costs were paid. Charges attributed to Corporate and Other include $42 million in connection with asset write-downs and facility closure costs in connection with the company’s specialty papers division.

CRITICAL ACCOUNTING POLICIES

Our principal accounting policies are described in the Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Management believes the accounting policies discussed below represent those accounting policies requiring the exercise of judgment where a different set of judgments could result in the greatest changes to reported results. Management has discussed the development and selection of the critical accounting estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the company’s disclosure.

Environmental and legal liabilities: We record accruals for estimated environmental liabilities when remedial efforts are probable and the costs can be reasonably estimated. These estimates reflect assumptions and judgments as to the probable nature, magnitude and timing of required investigation, remediation and monitoring activities, as well as availability of insurance coverage and contribution by other potentially responsible parties. Due to the numerous uncertainties and variables associated with these assumptions and judgments, and changes in governmental regulations and environmental technologies, accruals are subject to substantial uncertainties, and actual costs could be materially greater or less than the estimated amounts. We record accruals for other legal contingencies, which are also subject to numerous uncertainties and variables associated with assumptions and judgments, when the loss is probable and reasonably estimable. Liabilities recorded for claims are limited to pending cases based on the company’s historical experience, consultation with outside counsel and consultation with an actuarial specialist concerning the feasibility of reasonably estimating liabilities associated with claims that may arise in the future. We recognize insurance recoveries when collection is reasonably assured.

Restructuring and other charges: We periodically record charges for the reduction of our workforce, the closure of manufacturing facilities and other actions related to business improvement and productivity initiatives. These events require estimates of liabilities for employee separation payments and related benefits, demolition, facility closures and other costs, which could differ from actual costs incurred.

Pension and postretirement benefits: Assumptions used in the determination of net pension cost and postretirement benefit expense, including the discount rate, the expected return on plan assets, and increases in future compensation and medical costs, are evaluated by the company, reviewed with the plan actuaries annually and updated as appropriate. Actual asset returns and compensation and medical costs, which are more favorable than assumptions, can have the effect of lowering expense and cash contributions, and, conversely, actual results, which are less favorable than assumptions, could increase expense and cash contributions. In accordance with generally accepted accounting principles, actual results that differ from assumptions are accumulated and amortized over future periods and, therefore, affect expense in such future periods.

In 2009, the company recorded pre-tax pension income from continuing operations of $68 million, compared to $93 million in 2008 and $58 million in 2007. The company currently estimates pre-tax pension income in 2010 to be approximately $75 million. This estimate assumes a long-term rate of return on plan assets of 8.0%, and a discount rate of 5.74%. The company determined the discount rate by referencing the Citigroup Pension Discount Curve. The company believes that using a yield curve approach more accurately reflects changes in the present value of liabilities over time since each cash flow is discounted at the rate at which it could effectively be settled.

If the expected rate of return on plan assets were to change by 0.5%, annual pension income in 2010 would change by approximately $17 million. Similarly, if the discount rate were to change by 0.5%, annual pension income in 2010 would change by approximately $9 million.

At December 31, 2009, the aggregate value of pension fund assets had increased to $3.5 billion from $3.1 billion at December 31, 2008, reflecting overall favorable equity and fixed income market performance during 2009. For further details regarding pension fund assets, see Note L of Notes to Consolidated Financial Statements included in Part II, Item 8.

Prior service cost and actuarial gains and losses in the retirement and postretirement benefit plans subject to amortization are amortized over the average remaining service periods, which are about 9 years and 5 years, respectively, and are a component of accumulated other comprehensive income.

Long-lived assets useful lives: Useful lives of tangible and intangible assets are based on management’s estimates of the periods over which the assets will be productively utilized in the revenue-generation process or for other useful purposes. Factors that affect the determination of lives include prior experience with similar assets, product life expectations and industry practices. The determination of useful lives dictates the period over which tangible and intangible long-lived assets are depreciated or amortized, typically using the straight-line method.

Impairment of long-lived assets: We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to carrying value to determine whether impairment exists. For an asset that is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. Considerable judgment must be exercised as to determining future cash flows and their timing and, possibly, choosing business value comparables or selecting discount rates to use in any value computations.

Intangible assets: Business acquisitions often result in recording intangible assets. Intangible assets are recognized at the time of an acquisition, based upon their fair value. Similar to long-lived tangible assets, intangible assets with finite lives are subject to periodic impairment reviews whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As with tangible assets, considerable judgment must be exercised. Periodic impairment reviews of intangible assets assigned an indefinite life are required, at least annually, as well as when events or circumstances change. As with our review of impairment of tangible assets and goodwill, we employ significant assumptions in assessing our indefinite-lived intangible assets for impairment (primarily Calmar trademarks and trade names). An income approach (the relief from royalty method) is used to determine the fair values of our indefinite-lived intangible assets. Although our estimate of fair values of the company’s indefinite-lived intangible assets under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future. Based on our annual review of our indefinite-lived intangible assets in the fourth quarter of 2009, there was no indication of impairment.

Goodwill: Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. As with tangible and other intangible assets, periodic impairment reviews are required, at least annually, as well as when events or circumstances change. We review the recorded value of our goodwill annually on October 1 or sooner, if events or changes in circumstances indicate that the carrying amount may exceed fair value. As with our review of impairment of tangible and intangible assets, we employ significant assumptions in assessing goodwill for impairment. These assumptions include relevant considerations of market-participant data. An income approach is generally used to determine the fair values of our reporting units.

company’s reporting units under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future. The following assumptions are key to our income approach:

•

Business projections—Projections are based on three-year forecasts that are developed internally by management and reviewed by the company’s Board of Directors. These projections include significant assumptions such as estimates of future revenues, profits, working capital requirements, operating plans, costs of planned restructuring actions and capital expenditures. Assumptions surrounding macro-economic data and estimates include industry projections, inflation, foreign currency exchange rates and costs of energy, raw materials and freight.

•

Growth rates—A growth rate based on market participant data considerations is used to calculate the terminal value of a reporting unit. The growth rate is the expected rate at which a reporting unit’s earnings stream is projected to grow beyond the three-year forecast period.

•

Discount rates—Future cash flows are discounted at a rate that is consistent with a weighted average cost of capital for a potential market participant. The weighted average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. The discount rates selected for the reporting units are based on existing conditions within the respective markets and reflect appropriate adjustments for potential risk premiums in those markets as well as appropriate weighting of the market cost of equity versus debt, which is developed with the assistance of external financial advisors.

•

Tax rates—Tax rates are based on estimates of the tax rates that a market participant would realize in the respective primary markets and geographic areas in which the reporting units operate.

Based on our annual review of the recorded value of goodwill during the fourth quarter of 2009, there was no indication of impairment. However, changes to any of the above assumptions could lead to impairment of goodwill in the future. See Note D and Note Q of Notes to Consolidated Financial Statements included in Part II, Item 8 for further information.

Revenue recognition: We recognize revenue at the point when title and the risk of ownership passes to the customer. Substantially all of our revenues are generated through product sales, and shipping terms generally indicate when title and the risk of ownership have passed. Revenue is recognized at shipment for sales when shipping terms are FOB (free on board) shipping point unless risk of loss is maintained under freight terms. For sales where shipping terms are FOB destination, revenue is recognized when the goods are received by the customer. We provide for all allowances for estimated returns and other customer credits such as discounts and volume rebates, when the revenue is recognized, based on historical experience, current trends and any notification of pending returns. The customer allowances are, in many instances, subjective and are determined with significant management judgment and are reviewed regularly to determine the adequacy of the amounts. Changes in economic conditions, markets and customer relationships may require adjustments to these allowances from period to period. Also included in net sales is service revenue which is recognized as the service is performed. Revenue is recognized for leased equipment to customers on a straight-line basis over the estimated term of the lease and is included in net sales of the company. In 2009 and 2008, sales of landholdings are included in net sales in the consolidated statements of operations to reflect the strategic view and structure of the operations of the Community Development and Land Management segment established in 2008. For periods prior to 2008, gains from sales of landholdings are included in other income, net in the consolidated statements of operations.

Income taxes: Income taxes are accounted for in accordance with the guidelines provided by the Financial Accounting Standards Board, which recognizes deferred tax assets and liabilities based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the enacted tax laws.

We evaluate the need for a deferred tax asset valuation allowance by assessing whether it is more likely than not that the company will realize its deferred tax assets in the future. The assessment of whether or not a valuation allowance is required often requires significant judgment, including the forecast of future taxable income and the valuation of tax planning initiatives. Adjustments to the deferred tax valuation allowance are made to earnings in the period when such assessment is made.

The company has tax jurisdictions located in many areas of the world and is subject to audit in these jurisdictions. Tax audits by their nature are often complex and can require several years to resolve. In the preparation of the company’s financial statements, management exercises judgments in estimating the potential exposure to unresolved tax matters. The company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the position is sustainable. For those tax positions that meet the more likely than not criteria, the company records only the portion of the tax benefit that is greater than 50% likely to be realized upon settlement with the respective taxing authority. Interest and penalties related to unrecognized tax benefits are recorded within income tax expense in the consolidated statements of operations. While actual results could vary, in management’s judgment, the company has adequate tax accruals with respect to the ultimate outcome of such unresolved tax matters.

Each quarter, management must estimate our effective tax rate for the full year. This estimate includes assumptions about the level of income that will be achieved for the full year in both our domestic and international operations. The forecast of full-year earnings includes assumptions about markets in each of our businesses as well as the timing of certain transactions, including forestland sales gains and restructuring charges. Should business performance or the timing of certain transactions change during the year, the level of income achieved may not meet the level of income estimated earlier in the year at interim periods. This change in the income levels and mix of earnings can result in significant adjustments to the tax provision in the quarter in which the estimate is refined.

NEW ACCOUNTING GUIDANCE

During 2009, the company has or will adopt the below new accounting guidance as promulgated by the Financial Accounting Standards Board.

Fair value measurements

The company adopted a new framework for measuring fair value and has provided additional disclosures about fair value measurements. As permitted by transition rules, the new framework for measuring fair value and the related disclosures were adopted for all financial assets and liabilities as of January 1, 2008, and for all non-financial assets and liabilities as of January 1, 2009. Furthermore, on June 30, 2009, the company adopted new accounting guidance that requires disclosures about the fair value of financial instruments for interim reporting periods in addition to the existing requirement for annual financial statements. In addition, on January 1, 2010, the company will adopt new accounting guidance that requires additional disclosures regarding the different classes of assets and liabilities measured at fair value, the valuation techniques employed, the activity in Level 3 fair value measurements, and the transfers between the levels of fair value measurements. See Note A of Notes to Consolidated Financial Statements included in Part II, Item 8 for disclosures of fair value measurements.

Disclosures about defined benefit plan assets

On January 1, 2009, the company adopted new annual disclosure requirements regarding the plan assets of its defined benefit pension plans. The new disclosures are effective for years ending after December 15, 2009, and will provide users of the company’s consolidated financial statements with an understanding of how investment allocation decisions are made, including factors that are pertinent to an understanding of investment policies and strategies, major categories of plan assets, inputs and valuation techniques used to measure fair value of plan assets, effect of fair value measurements using significant unobservable inputs on changes in plan assets

for the period, and significant concentrations of risk within plan assets. See Note A and Note L of Notes to Consolidated Financial Statements included in Part II, Item 8 for disclosures about defined benefit plan assets.

Accounting for business combinations

On January 1, 2009, the company adopted, as required, a revised accounting model for business combinations. Under the revised guidance, an acquirer is required to recognize the assets acquired, liabilities assumed, including those arising from contractual contingencies, any contingent consideration, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. In addition, the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) is required to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values. The requirement to measure the non-controlling interest in the acquiree at fair value will result in recognizing the goodwill attributable to the non-controlling interest in addition to that attributable to the acquirer. The company has applied the revised accounting model prospectively to business combinations for which the acquisition date was on or after January 1, 2009. The impact of adoption did not have a material effect on the company’s consolidated financial statements as of and for the year ended December 31, 2009.

Accounting for non-controlling interests

On January 1, 2009, the company adopted new accounting guidance regarding the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The new guidance clarified that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The guidance also changed the way the consolidated statement of operations is presented by requiring consolidated net income to include the amounts, if material, attributable to both the parent and the non-controlling interest, and requires disclosure on the face of the consolidated statement of operations of the amount of consolidated net income attributable to the parent and to the non-controlling interest. The impact of adoption did not have a material effect on the company’s consolidated financial statements as of and for the year ended December 31, 2009.

Disclosures about derivative instruments and hedging activities

On January 1, 2009, the company adopted new accounting guidance that expanded the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (i) how and why an entity uses derivative instruments, (ii) how an entity accounts for derivative instruments and related hedged items, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. See Note H of Notes to Consolidated Financial Statements included in Part II, Item 8 for disclosures of derivative instruments and hedging activities.

Accounting for and disclosures of subsequent events

On June 30, 2009, the company adopted new accounting guidance that established general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The new guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The impact of adoption did not have a material effect on the company’s consolidated financial statements as of and for the year ended December 31, 2009. The company has considered events or transactions occurring subsequent to the consolidated balance sheet date through February 23, 2010 (issuance date of these consolidated financial statements) for potential recognition or disclosure in the company’s consolidated financial statements.

Accounting for variable interest entities

On January 1, 2010 the company will adopt new accounting guidance related to the accounting and disclosure for variable interest entities. The new guidance provides an improved framework for identifying which enterprise has a controlling financial interest in a variable interest entity and requires additional disclosures of an enterprise’s involvement with variable interest entities.

There were no other accounting standards issued in 2009 that had or are expected to have a material impact on the company’s financial position or results of operations.

Forward-looking Statements

Certain statements in this document and elsewhere by management of the company that are neither reported financial results nor other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such information includes, without limitation, the business outlook, assessment of market conditions, anticipated financial and operating results, strategies, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance or achievements of each company, or industry results, to differ materially from those expressed or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties, and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward-looking statements include, but are not limited to, events or circumstances which affect the ability of MeadWestvaco to realize improvements in operating earnings from the company’s ongoing cost reduction initiatives; the ability of MeadWestvaco to close announced and pending transactions, including divestitures; the reorganization of the company’s packaging business units; competitive pricing for the company’s products; impact from inflation on raw materials, energy and other costs; fluctuations in demand and changes in production capacities; relative growth or decline in the United States and international economies; government policies and regulations, including, but not limited to those affecting the environment, climate change, tax policies and the tobacco industry; the company’s continued ability to reach agreement with its unionized employees on collective bargaining agreements; the company’s ability to execute its plans to divest or otherwise realize the greater value associated with its land holdings; adverse results in current or future litigation; currency movements; volatility and further deterioration of the capital markets; and other risk factors discussed in this Annual Report on Form 10-K and in other filings made from time to time with the SEC. MeadWestvaco undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Investors are advised, however, to consult any further disclosures made on related subjects in the company’s reports filed with the SEC.

Item 7A.

Quantitative and qualitative disclosures about market risk

Interest rates

The company has developed a targeted mix of fixed- and variable-rate debt as part of an overall strategy to maintain an appropriate level of exposure to interest-rate fluctuations. To efficiently manage this mix, the company utilizes interest-rate swap agreements. The total notional amount of interest-rate swap instruments was $250 million at December 31, 2009. There were no outstanding interest-rate swaps at December 31, 2008. See Note H of Notes to Consolidated Financial Statements included in Part II, Item 8 for related discussion.

Foreign currency

The company has foreign-based operations, primarily in South America, Canada, Mexico, Europe and Asia, which accounted for approximately 33% of its 2009 net sales. In addition, certain of the company’s domestic operations have sales to foreign customers. In the conduct of its foreign operations, the company also makes inter-company sales and receives royalties and dividends denominated in many different currencies. All of this exposes the company to the effect of changes in foreign currency exchange rates.

Flows of foreign currencies into and out of the company’s domestic operations are generally stable and regularly occurring and are recorded at fair market value in the company’s financial statements. The company’s foreign currency management policy permits it to enter into foreign currency hedges when these flows exceed a threshold, which is a function of these cash flows and forecasted annual operations. During 2009 and 2008, the company entered into foreign currency hedges to partially offset the foreign currency impact of these flows on operating income. See Note H of Notes to Consolidated Financial Statements included in Part II, Item 8 for related discussion.

The company also issues inter-company loans to its foreign subsidiaries in their local currencies, exposing it to the effect of changes in spot exchange rates between loan issue and loan repayment dates. Generally, management uses foreign-exchange hedge contracts with terms of less than one year to hedge these exposures. When applied to the company’s derivative and other foreign currency sensitive instruments at December 31, 2009, a 10% adverse change in currency rates would have about a $49 million effect on the company’s results. Although the company’s derivative and other foreign currency sensitive instruments expose it to market risk, fluctuations in the value of these instruments are mitigated by expected offsetting fluctuations in the matched exposures.

Natural gas

In order to better predict and control the future cost of natural gas consumed at the company’s mills and plants, the company engages in financial hedging of future gas purchase prices. Gas usage is relatively predictable month-by-month. The company hedges primarily with financial instruments that are priced based on New York Mercantile Exchange (NYMEX) natural gas futures contracts. See Note H of Notes to Consolidated Financial Statements included in Part II, Item 8 for related discussion.

Item 8.

Financial statements and supplementary data

Index


		Page
Report of Independent Registered Public Accounting Firm		42

Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007		43

Consolidated Balance Sheets at December 31, 2009 and 2008		44

Consolidated Statements of Equity for the Years Ended December 31, 2009, 2008 and 2007		45

Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007		46

Notes to Consolidated Financial Statements		47

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of MeadWestvaco Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, shareholders’ equity, and cash flows present fairly, in all material respects, the financial position of MeadWestvaco Corporation and its subsidiaries at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Richmond, Virginia

February 23, 2010

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS


*In millions, except per share data*	Years ended December 31,
*In millions, except per share data*	2009			2008			2007
Net sales	$	6,049		$	6,637		$	6,407

Cost of sales		5,030			5,573			5,262
Selling, general and administrative expenses		823			809			870
Interest expense		204			210			205
Other income, net		(383	)		(34	)		(301	)


Income from continuing operations before income taxes		375			79			371
Income tax provision (benefit)		150			(1	)		105


Income from continuing operations		225			80			266
Income from discontinued operations, net of income taxes		—			10			19


Net income attributable to the company	$	225		$	90		$	285


Net income per share—basic:
Income from continuing operations	$	1.31		$	0.46		$	1.45
Income from discontinued operations		—			0.06			0.11

Net income attributable to the company	$	1.31		$	0.52		$	1.56


Net income per share—diluted:
Income from continuing operations	$	1.30		$	0.46		$	1.45
Income from discontinued operations		—			0.06			0.11

Net income attributable to the company	$	1.30		$	0.52		$	1.56


Shares used to compute net income per share:
Basic		171.3			172.3			182.6
Diluted		173.2			172.7			183.6

The accompanying notes are an integral part of these financial statements.

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS


*In millions, except share and per share data*	December 31,
*In millions, except share and per share data*	2009			2008
ASSETS
Cash and cash equivalents	$	850		$	549
Accounts receivable, net		935			799
Inventories		590			695
Other current assets		155			118

Current assets		2,530			2,161

Property, plant, equipment and forestlands, net		3,442			3,518

Prepaid pension asset		938			634
Goodwill		818			805
Other assets		1,293			1,337

	$	9,021		$	8,455


LIABILITIES AND EQUITY
Accounts payable	$	559		$	567
Accrued expenses		673			618
Notes payable and current maturities of long-term debt		13			89

Current liabilities		1,245			1,274

Long-term debt		2,153			2,309
Other long-term obligations		1,172			972
Deferred income taxes		1,028			919

Commitments and contingencies

Equity:
Shareholders’ equity:
Common stock, $0.01 par
Shares authorized: 600,000,000
Shares issued and outstanding: 2009—171,254,753 (2008—170,813,516)		2			2
Additional paid-in capital		3,130			3,108
Retained earnings		275			207
Accumulated other comprehensive loss		(1	)		(350	)

Total shareholders’ equity		3,406			2,967
Non-controlling interests		17			14

Total equity		3,423			2,981

	$	9,021		$	8,455

The accompanying notes are an integral part of these financial statements.

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF EQUITY


*In millions*	Shareholders’ equity
*In millions*	Outstanding shares		Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Non- controlling interests			Total equity
Balance at December 31, 2006	182.1		$	2	$	3,370		$	168		$	(7	)	$	14		$	3,547
Comprehensive income:
Net income	—			—		—			285			—			—			285
Foreign currency translation	—			—		—			—			187			—			187
Adjustments related to pension and other benefit plans, net of tax	—			—		—			—			171			—			171
Net unrealized loss on derivative instruments, net of tax	—			—		—			—			(1	)		—			(1	)
Adoption of new accounting guidance for income taxes	—			—		—			(8	)		—			—			(8	)


Comprehensive income																		636


Tax benefit on nonqualified stock options	—			—		8			—			—			—			8
Cash dividends	—			—		—			(169	)		—			—			(169	)
Minority interest distributions	—			—		—			—			—			(1	)		(1	)
Stock repurchased	(13.7	)		—		(486	)		—			—			—			(486	)
Share-based compensation	—			—		26			—			—			—			26
Exercise of stock options	5.4			—		162			—			—			—			162


Balance at December 31, 2007	173.8			2		3,080			276			350			13			3,721
Comprehensive loss:
Net income	—			—		—			90			—			—			90
Foreign currency translation	—			—		—			—			(251	)		—			(251	)
Adjustments related to pension and other benefit plans, net of tax	—			—		—			—			(441	)		—			(441	)
Net unrealized loss on derivative instruments, net of tax	—			—		—			—			(8	)		—			(8	)


Comprehensive loss																		(610	)

Sale of non-controlling interest	—			—		—			—			—			(9	)		(9	)
Acquisition of non-controlling interest	—			—		—			—			—			13			13
Cash dividends	—			—		—			(159	)		—			—			(159	)
Minority interest distributions	—			—		—			—			—			(3	)		(3	)
Stock repurchased	(3.0	)		—		—			—			—			—			—
Share-based employee compensation	—			—		28			—			—			—			28


Balance at December 31, 2008	170.8			2		3,108			207			(350	)		14			2,981
Comprehensive income:
Net income	—			—		—			225			—			—			225
Foreign currency translation	—			—		—			—			181			1			182
Adjustments related to pension and other benefit plans, net of tax	—			—		—			—			159			—			159
Net unrealized gain on derivative instruments, net of tax	—			—		—			—			9			—			9


Comprehensive income																		575

Acquisition of non-controlling interest	—			—		—			—			—			3			3

Cash dividends	—			—		—			(157	)		—			—			(157	)
Minority interest distributions	—			—		—			—			—			(1	)		(1	)
Share-based compensation	0.3			—		20			—			—			—			20
Exercise of stock options	0.2			—		2			—			—			—			2


Balance at December 31, 2009	171.3		$	2	$	3,130		$	275		$	(1	)	$	17		$	3,423

The accompanying notes are an integral part of these financial statements.

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS


*In millions*	2009			2008			2007
Cash flows from operating activities
Net income	$	225		$	90		$	285
Discontinued operations		—			(10	)		(19	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		443			472			482
Deferred income taxes		100			(92	)		(8	)
Gains on sales of assets, net		(15	)		(13	)		(270	)
Pension income		(68	)		(93	)		(58	)
Changes in cash surrender value insurance polices		(40	)		9			(33	)
Impairment of long-lived assets		99			16			46
Changes in working capital, excluding the effects of acquisitions and dispositions		189			24			128
Change in alternative fuel mixture credit receivable		(32	)		—			—
Other, net		(25	)		(39	)		21

Net cash provided by operating activities of continuing operations		876			364			574
Discontinued operations		—			12			67

Net cash provided by operating activities		876			376			641

Cash flows from investing activities
Additions to property, plant and equipment		(224	)		(288	)		(329	)
Payments for acquired businesses, net of cash acquired		(15	)		(18	)		(52	)
Proceeds from dispositions of assets		58			67			182
Contributions to joint ventures		(5	)		(15	)		(13	)
Other		(23	)		(10	)		(15	)
Discontinued operations		—			456			(9	)

Net cash (used in) provided by investing activities		(209	)		192			(236	)

Cash flows from financing activities
Proceeds from issuance of long-term debt		250			3			12
Proceeds from secured borrowing (non-recourse to MWV)		—			—			338
Notes payable and other short-term borrowings, net		(34	)		(11	)		(128	)
Repayment of long-term debt		(435	)		(36	)		(43	)
Stock repurchases		—			—			(486	)
Dividends paid		(157	)		(159	)		(169	)
Changes in book overdrafts		(22	)		(2	)		(21	)
Proceeds from issuance of common stock and exercises of stock options		2			—			162
Other financing activities		(9	)		5			3
Discontinued operations		—			—			(7	)

Net cash used in financing activities		(405	)		(200	)		(339	)

Effect of exchange rate changes on cash		39			(64	)		23

Increase in cash and cash equivalents		301			304			89

Cash and cash equivalents:
At beginning of period		549			245			156

At end of period	$	850		$	549		$	245

The accompanying notes are an integral part of these financial statements.

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of significant accounting policies

Basis of consolidation and preparation of financial statements: The consolidated financial statements include all majority-owned or controlled entities of MeadWestvaco Corporation (“MeadWestvaco”, “MWV”, or the “company”), and all significant inter-company transactions are eliminated. MWV’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

Estimates and assumptions: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Translation of foreign currencies: The local currency is the functional currency for substantially all of the company’s significant operations outside the U.S. The assets and liabilities of the company’s foreign subsidiaries are translated into U.S. dollars using period-end exchange rates, and adjustments resulting from these financial statement translations are included in accumulated other comprehensive income or loss in the consolidated balance sheets. Revenues and expenses are translated at average rates prevailing during the period.

Cash equivalents: Highly liquid securities with an original maturity of three months or less are considered to be cash equivalents.

Accounts receivable and allowance for doubtful accounts: Trade accounts receivable are recorded at the invoice amount and generally do not bear interest. The allowance for doubtful accounts is the company’s best estimate of the amount of probable loss in the existing accounts receivable. The company determines the allowance based on historical write-off experience by business. Past due balances over a specified amount are reviewed individually for collectibility. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered.

Inventories: Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out method for substantially all raw materials, finished goods and production materials of U.S. manufacturing operations. Cost of all other inventories, including stores and supplies inventories and inventories of non-U.S. manufacturing operations, is determined by the first-in, first-out or average cost methods.

Property, plant, equipment and forestlands: Owned assets are recorded at cost. Also included in the cost of these assets is interest on funds borrowed during the construction period. When assets are sold, retired or disposed of, their cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in cost of sales. Gains and losses on sales of corporate real estate are recorded in other income, net. Costs of renewals and betterments of properties are capitalized; costs of maintenance and repairs are charged to expense. Costs of reforestation of forestlands are capitalized. Reforestation costs include the costs of seedlings, site preparation, planting of seedlings and early-stage fertilization.

Depreciation and depletion: The cost of plant and equipment is depreciated, utilizing the straight-line method, over the estimated useful lives of the assets, which range from 20 to 40 years for buildings and 5 to 30 years for machinery and equipment. Timber is depleted as timber is cut at rates determined annually based on the relationship of undepleted timber costs to the estimated volume of recoverable timber. Timber volumes used in calculating depletion rates are based upon merchantable timber volumes at a specific point in time. The depletion rates for company-owned land do not include an estimate of either future reforestation costs associated with a stand’s final harvest or future volume in connection with replanting of a stand subsequent to the final harvest.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Impairment of long-lived assets: The company periodically evaluates whether current events or circumstances indicate that the carrying value of its long-lived assets, including intangible assets with finite lives, to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to carrying value to determine whether impairment exists.

If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Intangible assets assigned indefinite lives are to be tested at least annually or more often if events or changes in circumstances indicate that the fair value of an intangible asset is below its carrying value. The fair values of the company’s indefinite-lived intangible assets (primarily Calmar trademarks and trade names) are estimated using an income approach (the relief from royalty method). Although the estimate of the fair values of the company’s indefinite-lived intangible assets under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future. Based on the company’s annual review of the indefinite-lived intangible assets in the fourth quarter of 2009, there was no indication of impairment.

Goodwill: Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. The company reviews the recorded value of goodwill at least annually on October 1, or sooner if events or changes in circumstances indicate that the fair value of a reporting unit is below its carrying value. Goodwill is required to be tested for impairment using a two-step process. The first step is to identify a potential impairment and the second step is to measure the amount of the impairment loss, if any. Goodwill is deemed to be impaired if the carrying amount of a reporting unit’s goodwill exceeds its estimated fair value. Goodwill has been allocated to the company’s respective reporting units based on its nature and synergies expected to be achieved. The fair value of each reporting unit is estimated primarily using an income approach, specifically the discounted cash flow method. The company employs significant assumptions in evaluating its goodwill for impairment. These assumptions include relevant considerations of market-participant data.

In applying the income approach in assessing goodwill for impairment, changes in assumptions could materially affect the determination of fair value for a reporting unit. Although the fair value estimates of the company’s reporting units under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future. The following assumptions are key to the company’s income approach:

•

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

discount rates selected for the reporting units are based on existing conditions within the respective markets and reflect appropriate adjustments for potential risk premiums in those markets as well as appropriate weighting of the market cost of equity versus debt, which is developed with the assistance of external financial advisors.

•

Tax rates—Tax rates are based on estimates of the tax rates that a market participant would realize in the respective primary markets and geographic areas in which the reporting units operate.

Based on management’s annual evaluation of the recorded value of goodwill during the fourth quarter of 2009, there was no indication of impairment. However, changes to any of the above assumptions could lead to impairment of goodwill in the future. See Note D and Note Q for further information.

Other assets: Capitalized software for internal use, equipment leased to customers and other amortizable and indefinite-lived intangible assets are included in other assets. Capitalized software and other amortizable intangibles are amortized using the straight-line and cash flows methods over their estimated useful lives of 3 to 21 years. Equipment leased to customers is amortized using the sum-of-the-years-digits method over the estimated useful life of the machine, generally 10 years. Revenue is recognized for the leased equipment on a straight-line basis over the life of the lease and is included in net sales. The company records software development costs in accordance with the accounting guidance provided by the Financial Accounting Standards Board. See Note D and Note E for further information.

Financial instruments: The company utilizes well-defined financial derivatives in the normal course of its operations as a means to manage some of its interest rate, foreign currency and commodity risks. All derivative instruments are required to be recorded in the consolidated balance sheets as assets or liabilities, measured at fair value. The fair value estimates are based on relevant market information, including market rates and prices. If the derivative is designated as a fair-value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash-flow hedge, the effective portion of the change in the fair value of the derivative is recorded in accumulated other comprehensive income or loss and is recognized in the consolidated statements of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash-flow hedges are recognized in earnings. If a derivative is not designated as a qualifying hedge, changes in fair value are recognized in earnings. See Note H for further information.

Environmental and legal liabilities: Environmental expenditures that increase useful lives of assets are capitalized, while other environmental expenditures are expensed. Liabilities are recorded when remedial efforts are probable and the costs can be reasonably estimated. The company recognizes a liability for other legal contingencies when a loss is probable and reasonably estimable. Liabilities recorded for claims are limited to pending cases based on the company’s historical experience, consultation with outside counsel and consultation with an actuarial specialist concerning the feasibility of reasonably estimating liabilities associated with claims that may arise in the future. The company recognizes insurance recoveries when collection is reasonably assured. See Note P for further information.

Asset retirement obligations: The company has certain conditional and unconditional asset retirement obligations associated with owned or leased property, plant and equipment, including surface impoundments, asbestos, and water supply wells. The company records a liability for the fair value of an asset retirement obligation when incurred if the fair value of the liability can be reasonably estimated. Management does not have sufficient information to estimate the fair value of certain obligations, primarily associated with surface impoundments and asbestos, because the settlement date or range of potential settlement dates have not been specified and information is not available to apply expected present value techniques. Subsequent to initial measurement, the company recognizes changes in the amounts of the obligations, as necessary, resulting from the passage of time and revisions to either the timing or amount of estimated cash flows.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue recognition: The company recognizes revenues at the point when title and the risk of ownership passes to the customer. Substantially all of the company’s revenues are generated through product sales and shipping terms generally indicate when title and the risk of ownership have passed. Revenue is recognized at shipment for sales where shipping terms are FOB (free on board) shipping point unless risk of loss is maintained under freight terms. For sales where shipping terms are FOB destination, revenue is recognized when the goods are received by the customer. The company provides allowances for estimated returns and other customer credits such as discounts and volume rebates, when the revenue is recognized, based on historical experience, current trends and any notification of pending returns. Also included in net sales is service revenue which is recognized as the service is performed. Revenue is recognized for leased equipment to customers on a straight-line basis over the estimated term of the lease and is included in net sales of the company. In 2009 and 2008, sales of landholdings are included in net sales in the consolidated statements of operations to reflect the strategic view and structure of the operations of the Community Development and Land Management segment established in 2008. For periods prior to 2008, gains from sales of landholdings are included in other income, net in the consolidated statements of operations.

Shipping and handling costs: Shipping and handling costs are classified as a component of cost of sales. Amounts billed to a customer in a sales transaction related to shipping and handling are classified as revenue.

Research and development: Included in cost of sales and selling, general and administrative expenses are expenditures for research and development of $44 million, $61 million and $62 million for the years ended December 31, 2009, 2008 and 2007, respectively, which were expensed as incurred.

Income taxes: Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the enacted tax rates in effect for the years the differences are expected to reverse. The company evaluates the need for a deferred tax asset valuation allowance by assessing whether it is more likely than not that it will realize its deferred tax assets in the future.

The company recognizes interest and penalties related to unrecognized tax benefits in income taxes in the consolidated statements of operations.

Share-based compensation: The company records compensation expense for graded and cliff vesting awards on a straight-line basis over the vesting period, which is generally three years. The company uses the “long-haul” method to determine the pool of tax benefits or deficiencies resulting from tax deductions related to awards of equity instruments that exceed or are less than the cumulative compensation cost for those instruments recognized for financial reporting. Substantially all compensation expense related to share-based awards is recorded as a component of selling, general and administrative expenses in the consolidated statements of operations. For stock-settled awards, the company issues previously authorized new shares. See Note J for further detail on share-based compensation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net income per share: Basic net income per share for all the periods presented has been calculated using the company’s weighted average shares outstanding. In computing diluted net income per share, incremental shares issuable upon the assumed exercise of stock options and other share-based compensation awards have been added to weighted average shares outstanding, if dilutive. For the years ended December 31, 2009, 2008, and 2007, 8.0 million, 9.0 million and 2.1 million equity awards, respectively, were excluded from the calculation of weighted average shares outstanding, as the exercise price per share was greater than the average market value, resulting in an anti-dilutive effect on diluted earnings per share.

Related party transactions: The company has certain related party transactions in the ordinary course of business that are insignificant.

Discontinued operations: Certain prior period amounts have been reclassified in the consolidated financial statements to conform to the 2008 presentation of discontinued operations for the company’s North Charleston, South Carolina kraft paper mill and related assets (collectively, the “Kraft business”), previously included in the Packaging Resources segment. On July 1, 2008, the company completed the sale of the Kraft business for net cash proceeds of $466 million. See Note Q for additional information.

New accounting guidance

During 2009, the company has or will adopt the below new accounting guidance as promulgated by the Financial Accounting Standards Board.

Fair value measurements

Disclosures about defined benefit plan assets

Accounting for business combinations

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

addition, the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) is required to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values. The requirement to measure the non-controlling interest in the acquiree at fair value will result in recognizing the goodwill attributable to the non-controlling interest in addition to that attributable to the acquirer. The company has applied the revised accounting model prospectively to business combinations for which the acquisition date was on or after January 1, 2009. The impact of adoption did not have a material effect on the company’s consolidated financial statements as of and for the year ended December 31, 2009.

Accounting for non-controlling interests

Disclosures about derivative instruments and hedging activities

On January 1, 2009, the company adopted new accounting guidance that expanded the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (i) how and why an entity uses derivative instruments, (ii) how an entity accounts for derivative instruments and related hedged items, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. See Note H for disclosures of derivative instruments and hedging activities.

Accounting for and disclosures of subsequent events

Accounting for variable interest entities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A. Fair value measurements

The following information is presented for assets and liabilities that are recorded in the consolidated balance sheet at fair value at December 31, 2009, measured on a recurring and non-recurring basis:


*In millions*	December 31, 2009			Level 1 ⁽¹⁾			Level 2 ⁽²⁾			Level 3 ⁽³⁾
Recurring fair value measurements:
Derivatives-assets	$	1		$	—		$	1		$	—
Derivatives-liabilities		(23	)		—			(23	)		—
Cash equivalents		670			670			—			—

Pension plan assets:
Asset backed securities	$	20		$	—		$	19		$	1
Equity investments		751			707			43			1
Preferred stock		2			2			—			—
Government securities		702			—			702			—
Corporate debt investments		548			—			536			12
Partnerships and joint ventures		104			—			—			104
Real estate		45			—			—			45
Common collective trust		1,125			—			1,125			—
Registered investment companies		55			—			55			—
103-12 investment entities		114			—			114			—
Other pension (payables) receivables		(4	)		(32	)		7			21

Total pension plan assets	$	3,462		$	677		$	2,601		$	184

Non-recurring fair value measurements:
Long-lived assets held and used	$	1		$	—		$	—		$	1
Long-lived assets held for sale		8			—			—			8

⁽¹⁾	Quoted prices in active markets for identical assets.

⁽²⁾	Quoted prices for similar assets and liabilities in active markets.

⁽³⁾	Significant unobservable inputs.

The following information is presented for those assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2009:


*In millions*	Asset backed securities			Equity investments			Government securities			Corporate debt investments			Partnerships and joint ventures			Real estate			Other pension receivables and payables			Total
December 31, 2008	$	1		$	—		$	40		$	49		$	133		$	61		$	282		$	566
Purchases		1			2			—			4			19			6			4			36
Sales		(1	)		(1	)		(11	)		(27	)		(37	)		(1	)		(209	)		(287	)
Realized gains (losses)		—			—			(1	)		(3	)		(10	)		—			208			194
Unrealized gains (losses)		—			—			2			4			(1	)		(21	)		(264	)		(280	)
Transfers in (out) of Level 3		—			—			(30	)		(15	)		—			—			—			(45	)

December 31, 2009	$	1		$	1		$	—		$	12		$	104		$	45		$	21		$	184

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair values of the pension plan assets were determined using a market approach based on quoted prices in active markets for identical or similar assets or where there were no observable market inputs an income approach based on estimated investment returns and cash flows.

Long-lived assets held and used with a carrying value of $81 million were written down to their estimated fair value of $1 million, resulting in an impairment charge of $80 million for the year ended December 31, 2009. In addition, long-lived assets held for sale with a carrying value of $27 million were written down to their estimated fair value of $8 million, resulting in an impairment charge of $19 million for the year ended December 31, 2009. Of these impairment charges totaling $99 million, $96 million is included in cost of sales and $3 million is included in selling, general and administrative expenses. A combination of a market approach based on market participant inputs and an income approach based on estimates of future cash flows was used to determine the fair values of the above long-lived assets.

At December 31, 2009, the book value of financial instruments included in debt is $2.2 billion and the fair value is estimated to be $2.3 billion. The difference between book value and fair value is derived from the difference between the period-end market interest rate and the stated rate for the company’s fixed-rate, long-term debt. The company has estimated the fair value of financial instruments based upon quoted market prices for the same or similar issues or on the current interest rates available to the company for debt of similar terms and maturities.

B. Current assets

Cash equivalents of $670 million and $381 million at December 31, 2009 and 2008, respectively, are valued at cost, which approximates fair value. As of December 31, 2009 and 2008, the majority of the company’s cash equivalents were invested in U.S. government securities. Trade receivables have been reduced by an allowance for doubtful accounts of $27 million and $19 million at December 31, 2009 and 2008, respectively. Receivables also include $138 million and $60 million from sources other than trade at December 31, 2009 and 2008, respectively. Inventories at December 31, 2009 and 2008 are comprised of:


	December 31,
*In millions*	2009		2008
Raw materials	$	144	$	174
Production materials, stores and supplies		83		90
Finished and in-process goods		363		431

	$	590	$	695

Approximately 56% and 58% of inventories at December 31, 2009 and 2008, respectively, are valued using the last-in, first-out (“LIFO”) method. If inventories had been valued at current cost, they would have been $756 million and $841 million at December 31, 2009 and 2008, respectively. The effect of a LIFO layer decrements in 2009 was an increase of $0.03 to earnings per share for the year ended December 31 2009. The effects of LIFO layer decrements were not significant to the company’s consolidated statements of operations for the years ended December 31, 2008 and 2007.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C. Property, plant, equipment and forestlands

Depreciation and depletion expense was $350 million, $381 million and $392 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Property, plant, equipment and forestlands consisted of the following:


	December 31,
*In millions*	2009			2008
Land and land improvements	$	255		$	254
Buildings and leasehold improvements		882			846
Machinery and other		5,475			5,519

		6,612			6,619
Less: accumulated depreciation		(3,672	)		(3,478	)

		2,940			3,141
Forestlands		333			245
Construction-in-progress		169			132

	$	3,442		$	3,518

D. Goodwill and other intangible assets

At December 31, 2009, goodwill allocated to each of the company’s business segments was $68 million to Packaging Resources, $560 million to Consumer Solutions, $181 million to Consumer & Office Products and $9 million to Specialty Chemicals. At December 31, 2008, goodwill allocated to each of the company’s business segments was $68 million to Packaging Resources, $556 million to Consumer Solutions, $172 million to Consumer & Office Products and $9 million to Specialty Chemicals.

There were no accumulated impairment losses as of January 1, 2008. The changes in the carrying amount of goodwill for the years ended December 31, 2009 and 2008 are as follows:


*In millions*	2009		2008
Beginning balance	$	805	$	840
Adjustments¹		13		(35	)

Ending balance	$	818	$	805

¹	Represents foreign currency translations, tax adjustments and purchase price allocations.

The following table summarizes intangible assets subject to amortization included in other assets:


	December 31, 2009				December 31, 2008
*In millions*	Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Trademarks and trade names	$	222	$	105	$	203	$	80
Customer contracts and lists		305		80		301		64
Patents		63		43		63		37
Other—primarily licensing rights		44		33		44		31

	$	634	$	261	$	611	$	212

In connection with the company’s acquisition of Saint-Gobain Calmar in 2006, the company acquired an indefinite-lived intangible asset which had a net book value of $97 million and $96 million at December 31, 2009 and 2008, respectively, with the year-over-year change reflecting the impact of foreign currency exchange.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The company recorded amortization expense of $41 million, $42 million and $43 million for the years ended December 31, 2009, 2008 and 2007, respectively, relating to intangible assets subject to amortization. Intangible assets subject to amortization are amortized over their estimated useful lives which range from 3 to 21 years. Intangible assets that have been determined to have indefinite lives are not subject to amortization and are reviewed at least annually for impairment.

Based on the current carrying values of intangible assets subject to amortization, estimated amortization expense for the next five years is as follows: 2010 -$40 million, 2011 -$36 million, 2012 -$36 million, 2013 -$35 million, and 2014 -$31 million.

E. Other assets

Other assets consisted of the following:


	December 31,
*In millions*	2009		2008
Identifiable intangible assets	$	470	$	495
Restricted asset¹		398		398
Cash surrender value of life insurance, net of borrowings		155		144
Capitalized software, net		59		66
Equipment leased to customers, net		85		81
Other		126		153

	$	1,293	$	1,337

As part of the consideration for the sale of certain large-tract forestlands in 2007, the company received an installment note in the amount of $398 million (the “Timber Note”). The Timber Note does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating the London Interbank Offered Rate (“LIBOR”). In addition, the Timber Note is supported by a bank-issued irrevocable letter of credit obtained by the buyer of the forestlands.

Using the Timber Note as collateral, the company received $338 million in proceeds under a secured financing agreement with a bank. Under the terms of the agreement, the liability from this transaction is non-recourse to MeadWestvaco and shall be paid from the Timber Note proceeds upon its maturity. As a result, the Timber Note is not available to satisfy the obligations of MeadWestvaco. The non-recourse liability does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating LIBOR. The $338 million non-recourse liability is included in other long-term obligations in the consolidated balance sheet at December 31, 2009 and 2008.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

F. Accounts payable and accrued expenses

Accounts payable and accrued expenses consisted of the following:


	December 31,
*In millions*	2009		2008
Accounts payable:
Trade	$	517	$	503
Other		42		64

	$	559	$	567

Accrued expenses:
Taxes, other than income	$	44	$	33
Interest		61		62
Payroll and employee benefit costs		272		197
Accrued rebates and allowances		72		73
Environmental and litigation		32		28
Income taxes payable		23		69
Freight		11		10
Restructuring charges		40		44
Other		118		102

	$	673	$	618

G. Notes payable and long-term debt

Notes payable and current maturities of long-term debt and capital lease obligations consisted of the following:


	December 31,
*In millions*	2009		2008
Short-term bank loans	$	—	$	31
Other short-term borrowings		2		3
Current maturities of long-term debt and capital lease obligations		11		55

	$	13	$	89

MeadWestvaco has a $600 million bank credit agreement that matures in October 2012. Borrowings under the agreement can be unsecured domestic or Eurodollar notes at rates approximating Prime or LIBOR at the company’s option. The $600 million credit agreement contains a financial covenant limiting the percentage of total debt to total capitalization (including deferred taxes) to 55%, as well as certain other covenants with which the company was in compliance at December 31, 2009. The credit facility was undrawn at December 31, 2009.

During 2007, the company obtained access to certain uncommitted credit lines. Short-term borrowings under these agreements were $31 million at December 31, 2008. Interest rates for these agreements ranged from 2.8% to 7.2% for the year ended December 31, 2008. There were no borrowings at December 31, 2009, as such credit lines expired during 2009. Other short-term borrowings of $2 million at December 31, 2009 and $3 million at December 31, 2008 are related to certain foreign operations.

The maximum amount of combined commercial paper borrowings outstanding during the year ended December 31, 2008 was $82 million. The average amount of commercial paper borrowings outstanding during

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the year ended December 31, 2008 was $13 million, with an average interest rate of 3.6 %. There were no commercial paper borrowings outstanding at December 31, 2008, and there were no commercial paper borrowings during the year ended December 31, 2009.

Long-term debt consisted of the following:


	December 31,
*In millions*	2009			2008
Debentures, rates from 6.80% to 9.75%, due 2017-2047	$	1,181		$	1,181
Notes, rates from 6.85% to 7.38%, due 2012-2019		565			697
Sinking fund debentures, rates from 7.50% to 7.65%, due 2010-2027		262			270
Capital lease obligations:
Industrial Development Revenue Bonds, rate 7.67%, due 2027		80			80
Industrial Development Revenue Bonds, rate 6.35%, due 2035		51			51
Industrial Development Revenue Bonds, rate 6.10%, due 2030		7			7
Pollution Control Revenue Bonds, rate 6.375%, due 2026		6			6
Other capital lease obligations		4			5
Other long-term debt		8			67

		2,164			2,364
Less: amounts due within one year		(11	)		(55	)

Long-term debt	$	2,153		$	2,309

During the third quarter of 2009, the company received $245 million of net proceeds from the issuance of $250 million aggregate principal amount of 7.375% notes due September 2019. Pursuant to a tender offer during the third quarter of 2009, the company applied the above net proceeds and cash-on-hand towards the acquisition of $314 million aggregate principal of its 6.85% notes due April 2012 at 107% of face value, or $336 million plus accrued interest of $9 million. In addition, during the fourth quarter of 2009 the company elected to prepay a $58 million note due in 2017. The above transactions resulted in a $23 million pre-tax charge from early extinguishment of debt for the year ended December 31 2009.

As of December 31, 2009, outstanding debt maturing in the next five years is as follows: 2010—$11 million, 2011—$16 million, 2012—$334 million, 2013—$15 million, and 2014—$15 million.

As of December 31, 2009, capital lease obligations maturing in the next five years are as follows: 2010—$3 million, 2011—$2 million, 2012—$-0- million, 2013—$-0- million, and 2014—$-0- million.

The weighted average interest rate on the company’s fixed-rate long-term debt was 7.7% for 2009 and 7.9% for 2008. The weighted average interest rate on the company’s variable-rate long-term debt was 4.1% for 2009 and 5.5% for 2008. The percentage of debt to total capital (shareholders’ equity and total debt) was 38.9% at December 31, 2009 and 44.7 % at December 31, 2008.

H. Financial instruments

The company uses various derivative financial instruments as part of an overall strategy to manage exposure to market risks associated with natural gas price fluctuations, foreign currency exchange rates and interest rates. The company does not hold or issue derivative financial instruments for trading purposes. The risk of loss to the company in the event of non-performance by any counterparty under derivative financial instrument agreements is not considered significant by management. Although the derivative financial instruments expose the company to market risk, fluctuations in the value of the derivatives are mitigated by expected offsetting fluctuations in the matched exposures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

All derivative instruments are recorded in the consolidated balance sheets as assets or liabilities, measured at estimated fair values. Fair value estimates are based on relevant market information, including market rates and prices. For a derivative designated as a cash-flow hedge, the effective portion of the change in the fair value of the derivative is recorded in accumulated other comprehensive loss and is recognized in earnings when the hedged item affects earnings. The ineffective portions of these cash flow hedges are recognized, as incurred, in earnings. For a derivative designated as a fair value hedge, changes in fair value of both the derivative and the hedged item are recognized in earnings. Changes in the fair value of a derivative not designated as a qualifying hedge are recognized in earnings.

The pre-tax effect of derivative instruments in the consolidated statements of operations and accumulated other comprehensive loss for the year ended December 31, 2009 and 2008 is presented in the below table.


	Cash flow hedges												Fair value hedges					Derivatives not designated as hedges
*In millions*	Foreign currency hedges						Natural gas hedges						Interest rate swaps					Foreign currency hedges
	2009			2008			2009			2008			2009			2008		2009		2008
Loss recognized in other comprehensive (income) loss (effective portion)	$	(2	)	$	—		$	(12	)	$	(15	)	$	—		$	—	$	—	$	—

(Loss) gain reclassified to earnings from accumulated other comprehensive loss (effective portion)	$	(3	)	$	(5	)	$	(27	)	$	1		$	—		$	—	$	—	$	—
(Loss) gain recognized in earnings ¹		—			—			—			—			(7	)		2		9		(1	)

Total (loss) gain recognized in earnings	$	(3	)	$	(5	)	$	(27	)	$	1		$	(7	)	$	2	$	9	$	(1	)

¹	Amounts represent the ineffective portion or items excluded from effectiveness testing for all derivatives in cash flow hedging relationships or represent realized and unrealized gains (losses) associated with interest-rate swaps or those derivatives not designated as hedges.

The fair values and the effect of derivative instruments on the consolidated balance sheets are presented in the below table:


	Assets/(Liabilities)
		Fair value ¹
*In millions*	Classification	December 31, 2009			December 31, 2008
Derivatives designated as hedges:
Natural gas	Accounts receivable	$	1		$	—
Natural gas	Accounts payable		(5	)		(15	)
Natural gas	Other long-term obligations		—			(3	)
Interest rate swaps	Other long-term obligations		(7	)		—
Foreign currency	Accounts payable		—			(1	)

			(11	)		(19	)
Derivatives not designated as hedges:
Foreign currency	Accounts payable		(11	)		(2	)

Total derivatives		$	(22	)	$	(21	)

¹	Fair values of derivative instruments are also disclosed in Note A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Natural gas

In order to better predict and manage the cash flows of natural gas consumed at certain of the company’s manufacturing facilities, the company engages in financial hedging of future gas purchase prices. Natural gas usage is relatively predictable month-by-month. The company hedges primarily with financial instruments that are priced based on New York Mercantile Exchange (NYMEX) natural gas futures contracts. The notional value of these contracts at December 31, 2009 and 2008 was $27 million and $61 million, respectively, and hedged consumption of 4 million and 7 million British Thermal Units of natural gas, respectively. The company does not hedge basis (the effect of varying delivery points or locations) or transportation (the cost to transport the natural gas from the delivery point to a company location) under these transactions.

Unrealized gains and losses on contracts maturing in future months are recorded in accumulated other comprehensive loss and are charged or credited to earnings for the ineffective portion of the hedge. Once a contract matures, the company has a realized gain or loss on the contract up to the quantities of natural gas in the forward swap agreements for that particular period, which are charged or credited to earnings when the related hedged item affects earnings. The ineffective portion of these cash flow hedges, as well as realized hedge gains and losses, are recorded within cost of sales. The estimated pre-tax loss to be recognized in earnings during the next twelve months is $4 million. As of December 31, 2009, the maximum remaining term of existing hedges is two years. For the years ended December 31, 2009 and 2008, no gains or losses were recognized in earnings due to the probability that forecasted transactions will not occur.

Foreign currency

The company uses foreign currency forward contracts to manage foreign currency exchange risks associated with certain short-term foreign inter-company loans, certain foreign cash deposits, certain foreign currency sales and purchases of its global operations, and certain foreign sales by its U.S. operations. These contracts are used to hedge the variability of exchange rates on the company’s cash flows and cash deposits.

Forward contracts related to certain inter-company loans and foreign cash deposits are short term in duration and are not designated as hedging instruments. The total notional amount of these foreign currency forward contracts was $427 million and $170 million at December 31, 2009 and 2008, respectively. Gains and losses related to these forward contracts are included in other income, net.

Other forward contracts, which are used to reduce the foreign currency exposure related to certain foreign and inter-company sales and are for terms of up to one year, are designated as cash flow hedges. For these hedges, realized gains and losses are recorded in net sales concurrent with the recognition of the hedged sales. The ineffective portion of these hedges is also recorded in net sales. The total notional amount of these foreign currency forward contracts was $63 million and $78 million at December 31, 2009 and 2008, respectively. The estimated pre-tax loss to be recognized in earnings during the next twelve months is not expected to be significant. As of December 31, 2009, the maximum remaining term of existing hedges is twelve months. For the years ended December 31, 2009 and 2008, no amounts of gains or losses were recognized in earnings due to the probability that forecasted transactions will not occur.

Interest rates

The company has developed a targeted mix of fixed- and variable-rate debt as part of an overall strategy to maintain an appropriate level of exposure to interest-rate fluctuations. To efficiently manage this mix, the company utilizes interest-rate swap agreements. The total notional amount of interest-rate swap instruments was $250 million at December 31, 2009. There were no outstanding interest-rate swaps at December 31, 2008. For the year ended December 31, 2009, the interest-rate swaps were an effective hedge and, therefore, required no charge to earnings due to ineffectiveness. For these fair value hedges, changes in fair value of both the hedge instruments and hedged items are recorded in interest expense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

I. Lease commitments

The company leases a variety of assets for use in its operations. Leases for administrative offices, converting plants and storage facilities generally contain options, which allow the company to extend lease terms for periods up to 25 years or to purchase the properties. Certain leases provide for escalation of the lease payments as maintenance costs and taxes increase. Minimum rental payments pursuant to agreements as of December 31, 2009 under operating leases that have non-cancelable lease terms in excess of 12 months and under capital leases are as follows:


*In millions*	Operating leases		Capital leases
2010	$	61	$	13
2011		50		12
2012		36		11
2013		30		10
2014		27		10
Later years		170		297

Minimum lease payments	$	374		353

Less: amount representing interest				205

Capital lease obligations			$	148

Rental expense under operating leases was $77 million, $88 million and $82 million for the years ended December 31, 2009, 2008 and 2007, respectively.

J. Shareholders’ equity

The value included in common stock at December 31, 2009 and 2008 reflects the outstanding shares of common stock at $0.01 par value per share.

On November 20, 2007, the company entered into an accelerated share repurchase agreement with a financial institution counterparty (the “Counterparty”) to purchase $400 million of MeadWestvaco’s common stock. This program was funded by proceeds from sales of forestlands that closed in 2007. On November 21, 2007 and December 14, 2007, the Counterparty delivered 10 million shares and 1.1 million shares, respectively. Upon the conclusion of the program on June 19, 2008, the company received and retired another 2,933,369 shares resulting in a total number of shares of 14,029,157 received and retired at a volume weighted average price of $28.51 per share. The purchased shares through December 31, 2007 were retired and recorded as a $400 million reduction to additional paid-in capital in the consolidated balance sheet pursuant to regulations of the State of Delaware, the state of incorporation of MeadWestvaco, and the approval of the company’s Board of Directors.

In October of 2005, the company’s Board of Directors authorized the future purchase of up to 5 million shares of MeadWestvaco’s common stock, primarily to avoid dilution of earnings per share relating to the exercise of employee stock options. The number of shares available for purchase under this program at December 31, 2009 was 2.1 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The cumulative components at year end of accumulated other comprehensive loss for 2009 and 2008 are as follows:


*In millions*	December 31,
*In millions*	2009			2008
Foreign currency translation	$	187		$	6
Adjustments related to pension and other benefit plans		(185	)		(344	)
Unrealized loss on derivative instruments		(3	)		(12	)

	$	(1	)	$	(350	)

At December 31, 2009, there were authorized and available for issue 30 million shares of preferred stock, par value $0.01 per share, of which six million shares were designated as Series A Junior Participating Preferred Stock and reserved for issuance upon exercise of the rights.

Dividends declared were $0.92 per share in each of the years ended December 31, 2009, 2008 and 2007. Dividends paid were $157 million, $159 million and $169 million for the years ended December 31, 2009, 2008 and 2007, respectively.

K. Share-based compensation

Officers and key employees have been granted share-based awards under various stock-based compensation plans, all of which have been approved by the company’s shareholders. At December 31, 2009, MeadWestvaco had five such plans under which share-based awards are available for grant. Initially, there was an aggregate of 28 million shares reserved under the 1991 and 1996 Stock Option Plans, the 1995 Salaried Employee Stock Incentive Plan, the 1999 Salaried Employee Stock Incentive Plan and the 2005 Performance Incentive Plan for the granting of stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units to key employees. On August 21, 2009 the company registered an additional 13.5 million shares under the 2005 Performance Incentive Plan. For all of the employee plans, there were approximately 9.0 million shares available for grant at December 31, 2009. The vesting of such awards may be conditioned upon either a specified period of time or the attainment of specific performance goals as determined by the plan. Grants of stock options and other share-based compensation awards are approved by the Compensation and Organization Development Committee of the Board of Directors. The exercise price of all stock options equals the closing price of the company’s stock on the date of grant. Stock options and SARs are exercisable pro-rata over a period of three years and expire no later than 10 years from the date of grant. Under certain employee plans, stock options may be granted with or without SARs or limited SARs, which are exercisable upon the occurrence of certain events related to changes in corporate control. Granting of SARs is generally limited to employees of the company who are located in countries where the issuance of stock options is not advantageous.

The MeadWestvaco Corporation Compensation Plan for Non-Employee Directors provides for the grant of stock awards up to 500,000 shares to outside directors in the form of stock options or restricted stock units. Non-employee members of the Board of Directors are currently granted restricted stock units, which vest immediately and are distributed in the form of stock shares on the date that a director ceases to be a member of the Board of Directors. In 2009, 2008 and 2007, the total annual grants consisted of 65,142, 32,153, and 29,241 restricted stock units, respectively, for non-employee directors. There were 187,725 shares remaining for grant under this plan at December 31, 2009.

Stock options and stock appreciation rights

The company estimates the fair value of its stock option and SAR awards granted after January 1, 2006, using a lattice-based option valuation model. Lattice-based option valuation models utilize ranges of assumptions over the expected term of the options and SARs. Expected volatilities are based on the historical and implied

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

volatility of the company’s stock. The company uses historical data to estimate option and SAR exercises and employee terminations within the valuation model. The expected term of options and SARs granted is derived from the output of the valuation model and represents the period of time that options and SARs granted are expected to be outstanding. The company measures compensation expense related to the SARs at the end of each period.

Changes in the fair value of options (in the event of an award modification) and SARs are reflected as an adjustment to compensation expense in the periods in which the changes occur. The risk-free rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. A summary of the assumptions is as follows:


Lattice-based option valuation assumptions	2009			2008			2007
Weighted average fair value of stock options granted during the period	$	0.95		$	6.67		$	9.01
Weighted average fair value of SARs granted during the period		2.31			6.46			8.07
Expected dividend yield for stock options		10.09	%		3.39	%		2.86	%
Expected dividend yield for SARs		10.13	%		3.38	%		2.98	%
Expected volatility		35.00	%		29.00	%		28.00	%
Average risk-free interest rate for stock options		1.43	%		3.02	%		4.83	%
Average risk-free interest rate for SARs		1.64	%		2.50	%		4.72	%
Average expected term for stock options and SARs (in years)		6.6			7.4			7.4

The following table summarizes stock option and SAR activity in the plans.


*Shares in thousands*	Options		Weighted average exercise price	SARs		Weighted average exercise price	Weighted average remaining contractual term	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2007	12,995		29.49	490		29.55
Granted	1,138		32.21	84		32.11
Exercised	(5,540	)	29.42	(33	)	27.14		21.9
Cancelled	(653	)	31.61	(45	)	29.20


Outstanding at December 31, 2007	7,940		29.75	496		28.91		18.7
Granted	1,758		27.18	113		27.20
Exercised	(8	)	24.00	—		—		—
Cancelled	(894	)	30.79	(73	)	28.52


Outstanding at December 31, 2008	8,796		29.16	536		28.62		—
Granted	4,752		9.15	139
Exercised	(134	)	26.54	(9	)			0.8
Cancelled	(1,654	)	28.67	(23	)


Outstanding at December 31, 2009	11,760		21.14	643		28.79	6.5 years	101.3
Exercisable at December 31, 2009	5,837		29.03	426		24.58	4.1 years	5.2
Exercisable at December 31, 2008	6,180		29.14	325		28.62	3.6 years	—

At December 31, 2009, there was approximately $10 million of unrecognized pre-tax compensation cost related to nonvested stock options and SARs, which is expected to be recognized over a weighted-average period of 1.9 years. Pre-tax compensation expense for stock options and SARs was $12 million, $5 million and $11 million for 2009, 2008 and 2007, respectively, and the tax benefit associated with this expense was $5 million, $1 million and $4 million for 2009, 2008 and 2007, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Total cash received from the exercise of share-based awards in 2009 was $2.7 million.

Restricted stock and restricted stock units

A restricted stock unit is the right to receive a share of company stock. Employee restricted stock and restricted stock units vest over a three-year period. Awards granted in 2009, 2008 and 2007 consisted of both service and performance vesting restricted stock units. Under the employee plans, the owners of the stock are entitled to voting rights and to receive dividends, but will forfeit the accrued stock and accrued dividends if the individual holder separates from the company during the three-year vesting period or if predetermined goals are not accomplished relative to return on invested capital, revenue from new products, total procurement savings and reduction in selling, general and administrative expenses. The fair value of each share of restricted stock and restricted stock unit is the closing market price of the company’s stock on the date of grant, and the compensation expense is charged to operations over the vesting period. There were no performance-based awards granted to employees in 2009. Performance-based awards granted to employees in 2008 and 2007 were 616,320 and 510,000, respectively. None of these grants were vested at December 31, 2009.

The following table summarizes restricted stock and restricted stock unit activity in the employee and director plans.


*Shares in thousands*	Shares		Average grant date fair market value
Outstanding at January 1, 2007	1,333		$	28.88
Granted	909			28.96
Forfeited	(117	)		29.77
Released	(223	)		27.43


Outstanding at December 31, 2007	1,902			30.41
Granted	1,021			26.84
Forfeited	(183	)		29.37
Released	(237	)		30.23


Outstanding at December 31, 2008	2,503			29.51
Granted	913			9.07
Forfeited	(429	)		28.23
Released	(339	)		27.07


Outstanding at December 31, 2009	2,648			23.51

At December 31, 2009, there was approximately $17 million of unrecognized pre-tax compensation cost related to non-vested restricted stock and restricted stock units, which is expected to be recognized over a weighted-average period of 1.3 years. Pre-tax compensation expense for restricted stock and restricted stock units was $12 million, $22 million and $15 million for 2009, 2008 and 2007, respectively, and the tax benefit associated with this expense was $4 million, $7 million and $5 million, respectively. Dividends, which are payable in stock, accrue on the restricted stock unit grants and are subject to the same terms as the original grants.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

L. Employee retirement, postretirement and postemployment benefits

Retirement plans

MeadWestvaco provides retirement benefits for substantially all U.S. and certain non-U.S. employees under several noncontributory trusteed plans and also provides benefits to employees whose retirement benefits exceed maximum amounts permitted by current tax law under unfunded benefit plans. U.S. benefits are based on either a final average pay formula or a cash balance formula for the salaried plans and a unit-benefit formula for the bargained hourly plan. Contributions are made to the U.S. funded plans in accordance with ERISA requirements.

In August 2006, the President signed into law the Pension Protection Act of 2006 (“PPA”). The PPA established new minimum funding rules for defined benefit pension plans beginning in 2008. The company does not anticipate any required funding to the U.S. qualified retirement plans as a result of this legislation in the foreseeable future due to the overfunded status of the plans.

In October 2006, the Board of Directors approved the creation of a cash balance formula within the Company’s existing retirement plans for salaried and non-bargained hourly employees. The formula provides cash balance credits at the rate of 4%-8% of eligible earnings, depending upon age and years of service points, with interest credited annually at the 30-year Treasury rate. Effective January 1, 2007, all newly hired U.S. employees began accruing benefits under this formula. Effective January 1, 2008, all U.S. employees age 40 and over at that time were provided the opportunity to make a one-time choice between the existing final average pay and cash balance formulas and all U.S. employees less than age 40 at that time began accruing cash balance credits under this formula.

Net periodic pension income relating to employee retirement benefits was $68 million, $91 million and $54 million for the years ended December 31, 2009, 2008 and 2007, respectively. As a result of restructuring activities, curtailment gains of $6 million and $11 million were recorded in 2009 and 2008, respectively, and special termination benefits of $1 million, in the form of accelerated vesting, were recorded in 2009. No such items were incurred during 2007. Net periodic pension income reflects cumulative favorable investment returns on plan assets. Prior service cost and actuarial gains and losses subject to amortization are amortized on a straight-line basis over the average remaining service, which is about 9 years.

In July, 2008, the company completed the sale of its Kraft business. The components of net pension income, as presented in the table below for 2008 and 2007 were not adjusted for discontinued operations resulting from the sale. Net pension income from continuing operations was $93 million and $58 million in 2008 and 2007, respectively.


*In millions*	Years ended December 31,
*In millions*	2009			2008			2007
Service cost-benefits earned during the period	$	46		$	44		$	53
Interest cost on projected benefit obligation		155			152			147
Expected return on plan assets		(268	)		(283	)		(265	)
Amortization of prior service cost		2			6			6
Amortization of net actuarial loss		2			1			5

Pension income before settlements, curtailments and termination benefits		(63	)		(80	)		(54	)
Curtailments		(6	)		(11	)		—
Termination benefits		1			—			—

Net periodic pension income	$	(68	)	$	(91	)	$	(54	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):


	2009			2008
Net actuarial (gain) loss	$	(204	)	$	687
Amortization of net actuarial loss		(2	)		(1	)
Prior service benefit		(39	)		—
Amortization of prior service cost		(2	)		(6	)
Curtailments		7			8

Total (gain) loss recognized in other comprehensive income (loss)	$	(240	)	$	688

Total (gain) loss recognized in net periodic pension income and other comprehensive income (loss)	$	(308	)	$	597

The estimated net actuarial loss and prior service cost for the defined benefit retirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2010 is $3 million and $2 million, respectively.

Postretirement benefits

MeadWestvaco provides life insurance for substantially all retirees and medical benefits to certain retirees in the form of cost subsidies until Medicare eligibility is reached and to certain other retirees, medical benefits up to a maximum lifetime amount. The company funds certain medical benefits on a current basis with retirees paying a portion of the costs. Certain retired employees of businesses acquired by the company are covered under other medical plans that differ from current plans in coverage, deductibles and retiree contributions. Prior service cost and actuarial gains and losses subject to amortization are amortized over the average remaining service, which is about 5 years.

The components of net postretirement benefits cost for each of the periods presented are as follows:


*In millions*	Years ended December 31,
*In millions*	2009		2008			2007
Service cost-benefits earned during the period	$	3	$	3		$	3
Interest cost		7		7			7
Net amortization		2		(1	)		(1	)

Net periodic postretirement benefits cost	$	12	$	9		$	9

The components of other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):


	2009			2008
Net actuarial loss (gain)	$	3		$	(3	)
Prior service benefit		(6	)		—
Net amortization		(2	)		1

Total gain recognized in other comprehensive income (loss)	$	(5	)	$	(2	)


Total loss recognized in net periodic postretirement benefits cost and other comprehensive income (loss)	$	7		$	7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The estimated net actuarial gain and prior service benefit for the postretirement plans that will be amortized from accumulated other comprehensive loss into net periodic postretirement benefit cost in 2010 is $1 million and $3 million, respectively.

The following table also sets forth the funded status of the plans and amounts recognized in the consolidated balance sheets at December 31, 2009 and 2008, based on a measurement date of December 31 for each period.

Obligations, assets and funded status


	Qualified U.S. Retirement Plans						Nonqualified U.S. and Non - U.S. Retirement Plans						Postretirement Benefits
	Years ended December 31,						Years ended December 31,						Years ended December 31,

*In millions*	2009			2008			2009			2008			2009			2008
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,404		$	2,324		$	180		$	188		$	116		$	124
Service cost		42			40			4			4			3			3
Interest cost		144			142			11			10			7			7
Actuarial loss (gain)		107			56			14			6			3			(3	)
Plan amendments		(37	)		2			(3	)		—			(6	)		—
Foreign currency exchange rate changes		—			—			7			(18	)		1			—
Employee contributions		—			—			—			—			7			14
Termination benefit costs		25			9			—			—			—			—
Curtailments		1			(2	)		1			—			—			—
Benefits paid (including termination benefits)		(226	)		(167	)		(18	)		(10	)		(24	)		(29	)

Benefit obligation at end of year	$	2,460		$	2,404		$	196		$	180		$	107		$	116


Change in plan assets:
Fair value of plan assets at beginning of year	$	3,038		$	3,538		$	49		$	69		$	—		$	—
Actual return on plan assets		586			(333	)		7			(6	)		—			—
Company contributions		—			—			20			12			17			15
Foreign currency exchange rate changes		—			—			6			(16	)		—			—
Employee contributions		—			—			—			—			7			14
Benefits paid (including termination benefits)		(226	)		(167	)		(18	)		(10	)		(24	)		(29	)

Fair value of plan assets at end of year	$	3,398		$	3,038		$	64		$	49		$	—		$	—


Over (under) funded status at end of year	$	938		$	634		$	(132	)	$	(131	)	$	(107	)	$	(116	)

Amounts recognized in the balance sheet consist of:
Noncurrent assets—prepaid pension asset	$	938		$	634		$	—		$	—		$	—		$	—
Current liabilities		—			—			(10	)		(6	)		(14	)		(14	)
Noncurrent liabilities		—			—			(122	)		(125	)		(93	)		(102	)

Total net pension asset (liability)	$	938		$	634		$	(132	)	$	(131	)	$	(107	)	$	(116	)


Amounts recognized in accumulated other comprehensive income (loss) (pre-tax) consist of:
Net actuarial loss (gain)	$	302		$	516		$	42		$	34		$	(19	)	$	(18	)
Prior service cost (benefit)		4			36			(4	)		(2	)		(35	)		(31	)

Total loss (gain) recognized in accumulated other comprehensive income (loss)	$	306		$	552		$	38		$	32		$	(54	)	$	(49	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The accumulated benefit obligation for all defined benefit plans was $2.58 billion and $2.49 billion at December 31, 2009 and 2008, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31:


*In millions*	2009		2008
Projected benefit obligation	$	155	$	148
Accumulated benefit obligation		142		130
Fair value of plan assets		20		16

Assumptions

The weighted average assumptions used to determine the company’s benefit obligations at December 31:


	2009		2008
Retirement benefits:
Discount rate	5.74	%	6.25	%
Rate of compensation increase	3.98	%	3.98	%

Postretirement benefits:
Discount rate	5.75	%	6.26	%
Healthcare cost increase	7.76	%	7.99	%
Prescription drug cost increase	8.99	%	9.47	%

The weighted average assumptions used to determine net periodic pension cost and net postretirement benefits cost for the years presented:


	Years ended December 31,
	2009		2008		2007
Retirement benefits:
Discount rate	6.25	%	6.35	%	5.71	%
Rate of compensation increase	3.98	%	3.97	%	3.97	%
Expected return on plan assets	7.98	%	8.47	%	8.46	%

Postretirement benefits:
Discount rate	6.26	%	6.23	%	5.74	%
Healthcare cost increase	7.99	%	8.48	%	8.97	%
Prescription drug cost increase	9.47	%	10.21	%	12.92	%

MeadWestvaco’s approach to developing capital market assumptions combines an analysis of historical performance, the drivers of investment performance by asset class and current economic fundamentals. For returns, the company utilizes a building block approach starting with an inflation expectation and adds an expected real return to arrive at a long-term nominal expected return for each asset class. Long-term expected real returns are derived in the context of future expectations for the U.S. Treasury real yield curve. The company derives return assumptions for all other equity and fixed income asset classes by starting with either the U.S. Equity or U.S. Fixed Income return assumption and adding a risk premium, which reflects any additional risk inherent in the asset class.

The company determined the discount rates for 2009, 2008, and 2007 by referencing the Citigroup Pension Discount Curve. The company believes that using a yield curve approach more accurately reflects changes in the present value of liabilities over time since each cash flow is discounted at the rate at which it could effectively be settled.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The annual rate of increase in healthcare and prescription drug costs is assumed to decline ratably each year until reaching 5% in 2018 and thereafter. The effect of a 1% increase in the assumed combined cost trend rate would increase the December 31, 2009 accumulated postretirement benefit obligation by $4 million and the total service and interest cost for 2009 by $0.5 million. The effect of a 1% decrease in the assumed healthcare cost trend rate would decrease the December 31, 2009 accumulated postretirement benefit obligation by $3 million and the total service and interest cost for 2009 by $0.5 million.

The company also has defined contribution plans that cover substantially all U.S. and certain non-U.S. based employees. Expense for company matching contributions under these plans was $23 million, $28 million and $30 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Retirement plan assets

The MeadWestvaco U.S. retirement plan asset allocation at December 31, 2009 and 2008, long-term target allocation, and expected long-term rate of return by asset category are as follows:


	Target allocation		Percentage of plan assets at December 31,				Weighted average expected long-term rate of return
			2009		2008		2009
Asset category:
Equity securities	40	%	47	%	38	%	10.1	%
Debt securities	50	%	48	%	56	%	6.3	%
Real estate and private equity	10	%	5	%	6	%	12.5	%

Total	100	%	100	%	100	%

The MeadWestvaco Master Retirement Trust maintains a well-diversified investment program through both the long-term allocation of trust fund assets among asset classes and the selection of investment managers whose various styles are fundamentally complementary to one another and serve to achieve satisfactory rates of return. Target asset allocation among asset classes is set through periodic asset/liability studies that emphasize protecting the funded status of the plan.

Portfolio risk and return is evaluated based on capital market assumptions for asset class long-term rates of return, volatility, and correlations. Target allocation to asset classes is set so that target expected asset returns modestly outperform expected liability growth while expected portfolio risk is low enough to make it unlikely that the funded status of the plan will drop below 100%. Active management of assets is used in asset classes and strategies where there is the potential to add value over a benchmark. The equity class of securities is expected to provide the long-term growth necessary to cover the growth of the plans’ obligations.

Equity market risk is the most concentrated type of risk in the trust which has significant investments in common stock and in collective trusts with equity exposure. This risk is mitigated by maintaining diversification in geography and market capitalization. Investment manager guidelines limit the amount that can be invested in any one security. Approximately 13% of the trust’s equity portfolio is hedged against equity market risk. The policy also allows allocation of funds to other asset classes that serve to enhance long-term, risk-adjusted return expectations.

Liquidity risk is present in the trust’s investments in partnerships/joint ventures, real estate, registered investment companies, and 103-12 investment entities. The policy limits target allocations to these asset classes to 10%.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Concentrated interest rate risk, credit spread risk, and inflation risk are present in the trust’s investments in government securities, corporate debt instruments, and common collective trusts. These investment risks are meant to offset the risks in the plan liabilities. Long-duration fixed income securities and interest rate swaps are used to better match the interest rate sensitivity of plan assets and liabilities. The portfolio’s interest rate risk is hedged at approximately 75% of the value of the plans’ accumulated benefit obligation. The tabular percentages above exclude the market value of the interest rate hedge used in rebalancing the asset allocation targets. Treasury inflation protected securities are used to better match inflation risk of plan assets and liabilities. Corporate debt instruments mitigate the credit risk in the discount rate used to value the plan liabilities. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews. A portion of the overall fund will remain in short-term fixed income investments in order to meet the ongoing operating cash requirements of the plans.

Cash flows

Contributions:

The company does not anticipate any required contributions to the U.S. qualified retirement plans in the foreseeable future as the plans are not required to make any minimum regulatory funding contributions. However, the company expects to contribute $3 million to the funded non-U.S. pension plans in 2010.

The company expects to pay $24 million in benefits to participants of the nonqualified and unfunded non-U.S. retirement and postretirement plans in 2010. The table below presents estimated future benefits payments, substantially all of which are expected to be funded from plan assets.

Estimated future benefit payments:


*In millions*	Retirement benefits		Postretirement benefits before Medicare		Medicare Part D subsidy
2010	$	183	$	14	$	1
2011		180		13		1
2012		186		13		1
2013		187		12		1
2014		192		12		1
2015 – 2019		997		51		2

Postemployment benefits

MeadWestvaco provides limited postemployment benefits to former or inactive employees, including short-term and long-term disability, workers’ compensation, severance, and health and welfare benefit continuation.

M. Restructuring charges

Year ended December 31, 2009

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


*In millions*	Employee costs		Asset write-downs and other costs		Total
Consumer Solutions	$	37	$	46	$	83
Packaging Resources		7		35		42
Consumer & Office Products		7		3		10
All other		6		48		54

	$	57	$	132	$	189


*In millions*	Employee costs		Asset write-downs and other costs		Total
2005 program	$	—	$	5	$	5
2008 program		57		127		184

	$	57	$	132	$	189

Consumer Solutions

During the year ended December 31, 2009, the Consumer Solutions segment had restructuring actions in connection with its packaging converting operations primarily in the U.S. and Europe. These actions resulted in pre-tax charges of $83 million, of which $37 million related to employee separation costs covering approximately 840 employees and $46 million related to asset write-downs and other restructuring actions including the closure or restructure of 11 manufacturing facilities. The affected employees will be separated from the company by mid-2010.

Packaging Resources

Consumer & Office Products

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

All other

Year ended December 31, 2008

Year ended December 31, 2007

Summary of restructuring accruals

The activity in the accrued restructuring balances was as follows for the year ended December 31, 2007 to the year ended December 31, 2009:


*In millions*	Employee Costs									Other Costs									Total
*In millions*	2005 program			2008 program			Total			2005 program			2008 program			Total			2005 program			2008 program			Total
Balance at December 31, 2006	$	35		$	—		$	35		$	15		$	—		$	15		$	50		$	—		$	50
Current charges		19			—			19			8			—			8			27			—			27
Payments		(38	)		—			(38	)		(10	)		—			(10	)		(48	)		—			(48	)

Balance at December 31, 2007		16			—			16			13			—			13			29			—			29
Current charges		19			25			44			5			—			5			24			25			49
Payments		(21	)		—			(21	)		(13	)		—			(13	)		(34	)		—			(34	)

Balance at December 31, 2008		14			25			39			5			—			5			19			25			44
Current charges		—			57			57			4			11			15			4			68			72
Payments		(14	)		(46	)		(60	)		(5	)		(11	)		(16	)		(19	)		(57	)		(76	)

Balance at December 31, 2009	$	—		$	36		$	36		$	4		$	—		$	4		$	4		$	36		$	40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

N. Other income, net

Components of other income, net are as follows:


*In millions*	Years ended December 31,
*In millions*	2009			2008			2007
Alternative fuel mixture credit ¹	$	(375	)	$	—		$	—
Charges from early extinguishments of debt ²		23			—			—
Gains on sales of forestlands ³		—			—			(274	)
Gains on sales of certain assets ⁴		(16	)		(16	)		—
Interest income		(19	)		(39	)		(19	)
Foreign currency exchange (gains) losses		(3	)		23			(12	)
Other, net		7			(2	)		4

	$	(383	)	$	(34	)	$	(301	)

Through December 31, 2009, the U.S. Internal Revenue Code allowed an excise tax credit for alternative fuel mixtures produced by a taxpayer for sale, or for use as a fuel in a taxpayer’s trade or business. MWV qualified for the alternative fuel mixture credit because it uses an alternative fuel known as black liquor, which is a byproduct of its wood pulping process, to power its paperboard mills. The company submitted claims totaling $375 million, after associated expenses, based on fuel usage at its three U.S. paperboard mills from mid-January 2009 through December 31, 2009, of which $348 million was received from the Internal Revenue Service by December 31, 2009. The credit expired on December 31, 2009.

In 2009 and 2008, sales of landholdings are included in net sales in the consolidated statements of operations to reflect the strategic view and structure of the operations of the Community Development and Land Management segment established in 2008. For periods prior to 2008, gains from sales of landholdings are included in other income, net in the consolidated statements of operations.

⁴	During 2009, gains on sales of certain assets primarily relate to the sale of a corrugated paperboard plant in Brazil. During 2008, gains on sales of certain assets primarily relate to the sale of corporate real estate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

O. Income taxes

Earnings from continuing operations before income taxes are comprised of the following:


*In millions*	Years ended December 31,
*In millions*	2009		2008			2007
U.S. earnings (loss)	$	250	$	(63	)	$	201
Foreign earnings		125		142			170

	$	375	$	79		$	371

The significant components of the income tax provision (benefit) are as follows:


*In millions*	Years ended December 31,
*In millions*	2009			2008			2007
Current:
U.S. federal	$	108		$	(3	)	$	43
State and local		8			1			13
Foreign		52			52			42

		168			50			98

Deferred:
U.S. federal		(9	)		(44	)		18
State and local		(2	)		—			5
Foreign		(7	)		(1	)		(6	)

(Benefit) provision for deferred income taxes		(18	)		(45	)		17


Allocation to discontinued operations		—			6			10

Income tax provision (benefit) attributable to continuing operations	$	150		$	(1	)	$	105

The following table summarizes the major differences between taxes computed at the U.S. federal statutory rate and the actual income tax provision (benefit) attributable to continuing operations:


*In millions*	Years ended December 31,
*In millions*	2009			2008			2007
Income tax provision computed at the U.S. federal statutory rate of 35%	$	131		$	28		$	130
State and local income taxes, net of federal benefit		7			6			5
Foreign income tax rate differential and other items		(16	)		(10	)		(24	)
Valuation allowances		(3	)		(1	)		3
Credits		(6	)		(12	)		(1	)
Tax charge related to Brazilian tax audit		26			—			—
Settlement of tax audits and other		11			(12	)		(8	)

Income tax provision (benefit) attributable to continuing operations	$	150		$	(1	)	$	105

Effective tax rate attributable to continuing operations		40.0	%		(0.9	)%		28.2	%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The principal current and non-current deferred tax assets and liabilities were as follows:


*In millions*	December 31,
*In millions*	2009			2008
Deferred tax assets:
Employee benefits	$	169		$	157
Postretirement benefit accrual		43			39
Other accruals and reserves		101			96
Net operating loss and other credit carry-forwards		159			181
Other		25			13

Total deferred tax assets		497			486
Valuation allowance		(96	)		(123	)

Net deferred tax assets		401			363

Deferred tax liabilities:
Depreciation and depletion		(892	)		(878	)
Nontaxable pension asset		(368	)		(243	)
Amortization of identifiable intangibles		(105	)		(100	)
Other		(8	)		(17	)

Total deferred tax liabilities		(1,373	)		(1,238	)

Net deferred liability	$	(972	)	$	(875	)

Included in the balance sheet:
Current assets—deferred tax asset	$	56		$	44
Noncurrent net deferred tax liability		(1,028	)		(919	)

Net deferred liability	$	(972	)	$	(875	)

The company has U.S. federal, state and foreign tax net operating loss carry-forwards which are available to reduce future taxable income in U.S. federal and various state and foreign jurisdictions. The company’s valuation allowance against deferred tax assets primarily relates to the state and foreign tax net operating losses for which the ultimate realization of future benefits is uncertain.

At December 31, 2009 and 2008, no deferred income taxes have been provided for the company’s share of undistributed net earnings of foreign operations due to management’s intent to reinvest such amounts indefinitely. The determination of the amount of such unrecognized tax liability is not practical. Those earnings, including foreign currency translation adjustments, totaled $1.80 billion and $1.51 billion for the years ended December 31, 2009 and 2008, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As a result of the adoptions of new accounting guidance for unrecognized tax benefits on January 1, 2007, the company reduced opening retained earnings by $8 million. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows for the years ended December 31, 2009, 2008 and 2007 (in millions):


Balance at January 1, 2007	$	186
Additions based on tax positions related to the current year		14
Additions for tax positions of prior years		28
Reductions for tax positions of prior years		(15	)
Reductions for tax positions due to lapse of statute		(2	)
Settlements		(64	)
Foreign currency translation		4

Balance at December 31, 2007		151
Additions based on tax positions related to the current year		11
Additions for tax positions of prior years		21
Reductions for tax positions of prior years		(19	)
Reductions for tax positions due to lapse of statute		(7	)
Settlements		(25	)
Foreign currency translation		(5	)

Balance at December 31, 2008		127
Additions based on tax positions related to the current year		153
Additions for tax positions of prior years		33
Reductions for tax positions of prior years		(7	)
Reductions for tax positions due to lapse of statute		(1	)
Settlements		(21	)
Foreign currency translation		13

Balance at December 31, 2009	$	297

The company has operations in many areas of the world and is subject, at times, to tax audits in these jurisdictions. These tax audits by their nature are complex and can require several years to resolve. The final resolution of any such tax audits could result in either a reduction in the company’s accruals or an increase in its income tax provision, both of which could have an impact on the results of operations in any given period. With a few exceptions, the company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years prior to 2004. The company regularly evaluates, assesses and adjusts these accruals in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate from period to period. Of the total $297 million liability for unrecognized tax benefits at December 31, 2009, $248 million could impact the company’s effective tax rate in future periods. The remaining balance of this liability would be adjusted through the consolidated balance sheet without impacting the company’s effective tax rate.

The Internal Revenue Service examination for tax years 2004-2006 is expected to close in 2010. Management does not anticipate any potential settlement for tax years 2004-2006 to result in a material change to the company’s financial position. In addition, the company is in advanced stages of audits in certain foreign jurisdictions and certain domestic states. Based on the resolution of the various audits mentioned above, it is reasonably possible that the balance of unrecognized tax benefits may change by $13 million to $63 million during 2010.

The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. During the years ended December 31, 2009, 2008 and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2007, the company recognized interest and penalties totaling $27 million, $3 million and $16 million. The company accrued $83 million and $43 million for the payment of interest and penalties at December 31, 2009 and 2008, respectively.

Approximately $96 million of deferred income tax expense and $245 million of deferred income tax benefits were provided for in components of other comprehensive income during the years ended December 31, 2009 and 2008, respectively.

P. Environmental and legal matters

The company has been notified by the U.S. Environmental Protection Agency or by various state or local governments that it may be liable under federal environmental laws or under applicable state or local laws with respect to the cleanup of hazardous substances at sites previously operated or used by the company. The company is currently named as a potentially responsible party (“PRP”), or has received third-party requests for contribution under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and similar state or local laws with respect to numerous sites. There are other sites which may contain contamination or which may be potential Superfund sites, but for which MeadWestvaco has not received any notice or claim. The potential liability for all these sites will depend upon several factors, including the extent of contamination, the method of remediation, insurance coverage and contribution by other PRPs. The company regularly evaluates its potential liability at these various sites. At December 31, 2009, MeadWestvaco had recorded liabilities of approximately $24 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The company believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $10 million. This estimate is less certain than the estimate upon which the environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

MeadWestvaco is involved in various other litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of such matters cannot be predicted with certainty, management does not believe that the currently expected outcome of any matter, lawsuit or claim that is pending or threatened, or all of them combined, will have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Q. Acquisitions and dispositions

2009 acquisitions

During 2009, the company acquired a provider of branded consumer products in Brazil to augment its school and office supplies business. The purchase price of this acquisition including direct transaction costs was $15 million. The total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed. The results of operations for this acquisition are included in the Consumer & Office Products segment. This acquisition did not have a material effect on the company’s consolidated financial statements and as such, pro forma results for this acquisition are not presented.

2008 acquisitions

During 2008, acquisitions were made in North America and India to enhance the company’s performance chemical and consumer and office products businesses, strengthen the company’s capabilities in the pharmaceutical and beverage packaging markets, and expand the company’s presence in emerging markets. The aggregate purchase price of these acquisitions including direct transaction costs was $18 million. These acquisitions resulted in $16 million of identifiable intangible assets that will be amortized over a weighted-average amortization period of 6 years with the remainder allocated to fixed assets and working capital items. For all acquisitions, the total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed. The purchase price allocations associated with these acquisitions were complete at December 31, 2008. Results of operations for these acquisitions are included in the consolidated financial statements periods subsequent to their acquisition dates and are included in the Consumer & Office Products, Consumer Solutions, and Packaging Resources segments. These acquisitions did not have a material effect on the company’s consolidated financial statements and as such, pro forma results for these acquisitions are not presented.

2007 acquisitions

During the third quarter of 2007, the company acquired two manufacturers of high-quality, innovative dispensing and sprayer systems to strengthen the company’s dispensing and spraying systems business. The aggregate purchase price of these acquisitions was $52 million and resulted in $17 million of identifiable intangible assets that will be amortized over their estimated useful lives of 3 to 16 years, and goodwill of $24 million with the remainder allocated to fixed assets and working capital items. For both acquisitions, the total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed. The amount of goodwill was determined by comparing the total cash purchase price to the total fair values of the assets acquired and liabilities assumed. Approximately $2 million of goodwill resulting from these transactions is deductible for tax purposes. The amount paid for these acquisitions that resulted in goodwill was primarily due to these businesses providing the company with new technologies and increased access to customers in growing and important end markets. The technologies from these acquisitions will be integrated with the company’s North American, European and Asian production facilities to extend the company’s growth in critical markets such as personal care and home and garden. Results of operations for these acquisitions are included in the consolidated financial statements periods subsequent to their acquisition dates and are included in the Consumer Solutions segment. These acquisitions did not have a material effect on the company’s consolidated financial statements and as such, pro forma results for these acquisitions are not presented.

Dispositions

On July 1, 2008, the company completed the sale of its Kraft business for net cash proceeds of $466 million. The sale resulted in a pre-tax gain of $13 million ($8 million after-tax) in the third quarter of 2008. For 2008, the after-tax gain on sale, as well as the after-tax operating results of the Kraft business, is being reported as income from discontinued operations in the consolidated statements of operations. Prior period amounts have been recast on a comparable basis. The results of operations and assets and liabilities of the Kraft business were previously included in the Packaging Resources segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table shows the major categories for discontinued operations in the consolidated statements of operations for the years ended December 31, 2008 and 2007:


*In millions, except per share amounts*	Year ended December 31,
*In millions, except per share amounts*	2008			2007
Net sales	$	253		$	499

Cost of sales		238			448
Selling, general and administrative expenses		6			12
Interest expense		7			14
Other income, net		(14	)		(4	)


Income before income taxes		16			29

Income tax provision		6			10

Net income	$	10		$	19


Net income per share	$	0.06		$	0.11

There were no assets and liabilities classified as discontinued operations in the consolidated balance sheet at December 31, 2008. In connection with the sale of the Kraft business in 2008, the sale of certain large-tract landholdings in 2007 and the sale of the printing and writing papers business in 2005, the company provided certain guarantees and indemnities to the respective buyers and other parties. These obligations include both potential environmental matters as well as certain contracts with third parties. The company has evaluated these guarantees and indemnifications, which did not result in a material impact on the company’s consolidated financial statements. The total aggregate exposure to the company for these matters could be up to about $50 million; however, the company currently considers there to be a remote possibility of being required to make any payments related to these guarantees.

R. Cash flows

Changes in current assets and liabilities, net of acquisitions and dispositions, were as follows:


*In millions*	Years ended December 31,
*In millions*	2009			2008			2007
(Increase) decrease in:
Receivables	$	(16	)	$	125		$	44
Inventories		135			2			(39	)
Prepaid expenses		7			(1	)		(2	)

Increase (decrease) in:
Accounts payable and accrued expenses		114			(99	)		53
Income taxes payable		(51	)		(3	)		72

	$	189		$	24		$	128


*In millions*	Years ended December 31,
*In millions*	2009			2008			2007
Cash paid for:
Interest	$	197		$	195		$	205
Less capitalized interest		(3	)		(3	)		(2	)

Interest paid, net	$	194		$	192		$	203


Income taxes paid, net	$	74		$	81		$	19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In connection with the sale of certain large-tract forestlands in 2007, the company received a $398 million long-term installment note which does not require any principal payments until its maturity in May 2027. See Note C and Note E for related discussion.

S. Business segment information

MWV’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

such as income from alternative fuel mixture credits, restructuring charges, pension income and curtailment gains, interest expense and income, non-controlling interest income and losses, certain legal settlements, gains and losses on certain asset sales, charges on early extinguishments of debt and other items.

The segments are measured on operating profits before restructuring charges and one-time costs, interest expense and income, minority interest income and losses and income taxes. The segments follow the same accounting principles described in the Summary of Significant Accounting Policies. Sales between the segments are recorded primarily at market prices.

No single customer or foreign country accounted for 10% or more of consolidated trade sales or assets in the periods presented. The below table reflects amounts on a continuing operations basis.


*In millions*	Years ended December 31,
*In millions*	2009		2008		2007
Total sales outside of the U.S.	$	1,976	$	2,243	$	2,131
Export sales from the U.S.		759		853		790
Long-lived assets located outside the U.S.		942		857		1,022
Long-lived assets located in the U.S.		3,825		3,727		4,466

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial information by business segment follows:


*In millions*	Trade sales		Inter-segment sales			Total sales			Segment profit (loss)			Depreciation, depletion and amortization		Segment assets		Capital expenditures
Year ended December 31, 2009
Packaging Resources	$	2,058	$	388		$	2,446		$	182		$	182	$	2,489	$	82
Consumer Solutions		2,248		—			2,248			95			166		2,383		79
Consumer & Office Products		1,006		—			1,006			133			29		674		5
Specialty Chemicals		499		4			503			56			28		384		28
Community Development and Land Management³		189		4			193			99			8		355		5
Corporate and Other^1,2		49		—			49			(190	)		30		2,736		25

Total		6,049		396			6,445			375			443		9,021		224
Intersegment eliminations		—		(396	)		(396	)		—			—		—		—

Consolidated totals⁶	$	6,049	$	—		$	6,049		$	375		$	443	$	9,021	$	224


Year ended December 31, 2008
Packaging Resources⁵	$	2,285	$	382		$	2,667		$	195		$	186	$	2,496	$	100
Consumer Solutions		2,509		2			2,511			56			186		2,529		111
Consumer & Office Products		1,063		—			1,063			96			32		635		11
Specialty Chemicals		547		—			547			48			27		391		28
Community Development and Land Management^3,5		128		7			135			59			10		318		5
Corporate and Other^1,2,5		105		—			105			(375	)		31		2,086		33

Total		6,637		391			7,028			79			472		8,455		288
Intersegment eliminations		—		(391	)		(391	)		—			—		—		—

Consolidated totals⁶	$	6,637	$	—		$	6,637		$	79		$	472	$	8,455	$	288


Year ended December 31, 2007
Packaging Resources⁵	$	2,134	$	370		$	2,504		$	281		$	183	$	2,706	$	104
Consumer Solutions		2,430		1			2,431			86			180		2,742		144
Consumer & Office Products		1,147		—			1,147			139			35		803		10
Specialty Chemicals		493		1			494			37			23		371		33
Community Development and Land Management^3,5		74		13			87			294			16		287		7
Corporate and Other^1,2,5		129		1			130			(466	)		45		2,426		31

Total		6,407		386			6,793			371			482		9,335		329
Assets of discontinued operations⁴		—		—			—			—			—		502		—
Intersegment eliminations		—		(386	)		(386	)		—			—		—		—

Consolidated totals⁶	$	6,407	$	—		$	6,407		$	371		$	482	$	9,837	$	329

¹	Revenue included in Corporate and Other includes sales from the company’s specialty papers operation, which was sold in the fourth quarter of 2009.

²	Corporate and Other includes minority interest income and losses, restructuring charges, pension income, interest expense and income, and gains and losses on certain asset sales.

³	In 2009 and 2008, sales of landholdings are included in net sales in the consolidated statements of operations to reflect the strategic view and structure of the operations of the Community Development and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Land Management segment established in 2008. For periods prior to 2008, gains from sales of landholdings are included in other income, net in the consolidated statements of operations.

⁴	Assets of discontinued operations represent the assets of the Kraft business, which was sold on July 1, 2008.

⁵	Results for 2007 have been recast pursuant to the discontinued operations of the Kraft business and to conform to the new segment structure adopted in 2008 reflecting the separate presentation of the Community Development and Land Management business.

⁶	Consolidated totals represent results from continuing operations, except as otherwise noted.

T. Selected quarterly information (unaudited)


	Years ended December 31,
*In millions, except per share data*	2009¹			2008²
Sales:
First	$	1,354		$	1,518
Second		1,432			1,709
Third		1,627			1,811
Fourth		1,636			1,599

Year	$	6,049		$	6,637


Gross profit:
First	$	160		$	225
Second		230			303
Third		330			321
Fourth		299			215

Year	$	1,019		$	1,064


Net income (loss) attributable to the company:
First	$	(79	)	$	(4	)
Second		125			56
Third		128			54
Fourth		51			(16	)

Year	$	225		$	90


Net income (loss) per diluted share:
First	$	(0.46	)	$	(0.02	)
Second		0.72			0.33
Third		0.74			0.31
Fourth		0.29			(0.09	)

First quarter 2009 results include after-tax restructuring charges of $51 million, or $0.30 per share. Second quarter 2009 results include after-tax income from alternative fuel mixture credits of $112 million, or $0.65 per share, and after-tax restructuring charges of $25 million, or $0.15 per share. Third quarter 2009 results include after-tax income from alternative fuel mixture credits of $64 million, or $0.37 per share, after-tax restructuring charges of $28 million, or $0.16 per share, after-tax income of $13 million, or $0.07 per share, from vacation accrual adjustments due to a policy change, an after-tax charge of $11 million, or $0.06 per share, from early extinguishment of debt, and an after-tax gain of $4 million, or $0.02 per share, related to a pension curtailment. Fourth quarter 2009 results include after-tax income from alternative fuel mixture credits of $66 million, or $0.38 per share, after-tax restructuring charges of $18 million, or $0.10 per share, tax charges of $32 million, or $0.18 per share, related to domestic and foreign tax audits, an after-tax charge

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of $3 million, or $0.02 per share, from early extinguishment of debt, an after-tax expense of $12 million, or $0.07 per share, from a contribution to the MeadWestvaco Foundation, and after-tax gains of $12 million, or $0.06 per share, related to sales of certain assets.

First quarter 2008 results include after-tax restructuring charges of $5 million, or $0.03 per share, an after-tax gain of $6 million, or $0.04 per share, related to a pension curtailment, and after-tax income from discontinued operations of $4 million, or $0.02 per share. Second quarter 2008 results include after-tax restructuring charges of $6 million, or $0.03 per share, an after-tax gain of $9 million, or $0.05 per share, related to the sale of corporate real estate, and an after-tax loss from discontinued operations of $2 million, or $0.01 per share. Third quarter 2008 results include after-tax income from discontinued operations of $8 million, or $0.05 per share. Fourth quarter 2008 results include after-tax restructuring charges of $33 million, or $0.19 per share.

Item 9.

Changes in and disagreements with accountants on accounting and financial disclosure

None.

Item 9A.

Controls and procedures

Management’s report on internal control over financial reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. In order to evaluate the effectiveness of internal control over financial reporting, management has conducted an assessment, including testing, using the criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The company’s internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 (“Exchange Act”), is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our assessment, under the criteria established in Internal Control—Integrated Framework, issued by the COSO, management has concluded that the company maintained effective internal control over financial reporting as of December 31, 2009. In addition, the effectiveness of the company’s internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Part II, Item 8.

Evaluation of the company’s disclosure controls and procedures.

As of the end of the period covered by this Annual Report on Form 10-K, we evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act). This evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on the evaluation of disclosure controls and procedures, our CEO and CFO have concluded that the disclosure controls and procedures were effective and operating to the reasonable assurance level, as of December 31, 2009, to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 have been accumulated and communicated to management, including our CEO and CFO, and other persons responsible for preparing such reports to allow timely decisions regarding required disclosure and that it is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in internal control over financial reporting.

During the fiscal year ended December 31, 2009, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially effect, our internal control over financial reporting.

Item 9B.

Other information

None.

Part III

Item 10.

Directors, executive officers and corporate governance

Information required by this item for MeadWestvaco’s directors will be contained in MeadWestvaco’s 2010 Proxy Statement, pursuant to Regulation 14A under the sections captioned “Nominees for Election as Directors,” and “Board Committees,” to be filed with the SEC on or before March 26, 2010, and is incorporated herein by reference. A portion of the information required by this item for MeadWestvaco’s executive officers is also contained in Part I of this report under the caption “Executive officers of the registrant.”

Item 11.

Executive compensation

Information required by this item will be contained in MeadWestvaco’s 2010 Proxy Statement, pursuant to Regulation 14A under the sections captioned “Executive Compensation,” “Compensation Discussion and Analysis,” and “Director Compensation,” to be filed with the SEC or before March 26, 2010, and is incorporated herein by reference.

Item 12.

Security ownership of certain beneficial owners and management and related stockholder matters

Information required by this item will be contained in MeadWestvaco’s 2010 Proxy Statement, pursuant to Regulation 14A under the sections captioned “Equity Compensation Plan Information,” “Ownership of Directors and Executive Officers,” and “Ownership of Certain Beneficial Owners,” to be filed with the SEC on or before March 26, 2010, and is incorporated herein by reference.

Item 13.

Certain relationships and related transactions, and director independence

Information required by this item will be contained in MeadWestvaco’s 2010 Proxy Statement, pursuant to Regulation 14A under the section captioned “Board Committees,” to be filed with the SEC on or before March 26, 2010, and is incorporated herein by reference.

Item 14.

Principal accounting fees and services

Information required by this item will be contained in MeadWestvaco’s 2010 Proxy Statement, pursuant to Regulation 14A under the section captioned “Report of the Audit Committee of the Board of Directors,” to be filed with the SEC on or before March 26, 2010, and is incorporated herein by reference.

Part IV

Item 15.

Exhibits, financial statement schedules

(a)	Documents filed as part of this report:

1.	Consolidated financial statements

The consolidated financial statements of MeadWestvaco Corporation and consolidated subsidiaries are listed in the index which is included in Part II, Item 8.

2.	Consolidated financial statement schedules

All financial statement schedules have been omitted because they are inapplicable, not required, or shown in the consolidated financial statements and notes thereto contained herein.

3.	Exhibits


3.1		Amended and Restated Certificate of Incorporation of the Registrant, previously filed as Exhibit 99.1 to the company’s Form 8-K on May 1, 2008, and incorporated herein by reference.

3.2*		Amended and Restated By-laws of the Registrant dated December, 2009.

4.1		Indenture dated as of April 2, 2002 by and among the Registrant, Westvaco Corporation, The Mead Corporation and The Bank of New York, as Trustee, previously filed as Exhibit 4(a) to the company’s Form 8-K on April 2, 2002 (SEC file number 001-31215), and incorporated herein by reference.

4.2		Form of Indenture, dated as of March 1, 1983, between Westvaco Corporation and The Bank of New York (formerly Irving Trust Company), as trustee, previously filed as Exhibit 2 to Westvaco’s Registration Statement on Form 8-A on January 24, 1984 (SEC file number 001-03013), and incorporated herein by reference.

4.3		First Supplemental Indenture by and among Westvaco Corporation, the Registrant, The Mead Corporation and The Bank of New York dated January 31, 2002, previously filed as Exhibit 4.1 to the company’s Form 8-K on February 1, 2002 (SEC file number 001-31215), and incorporated herein by reference.

4.4		Second Supplemental Indenture between the Registrant and The Bank of New York dated December 31, 2002, previously filed as Exhibit 4.1 to the company’s Form 8-K on January 7, 2003 (SEC file number 001-31215), and incorporated herein by reference.

4.5		Indenture dated as of February 1, 1993 between The Mead Corporation and The First National Bank of Chicago, as Trustee, previously filed as Exhibit 4.vv to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

4.6		First Supplemental Indenture between The Mead Corporation, the Registrant, Westvaco Corporation and Bank One Trust Company, NA dated January 31, 2002, previously filed as Exhibit 4.3 to the company’s Form 8-K on February 1, 2002 (SEC file number 001-31215), and incorporated herein by reference.

4.7		Second Supplemental Indenture between MW Custom Papers, Inc. and Bank One Trust Company, NA dated December 31, 2002, previously filed as Exhibit 4.4 to the company’s Form 8-K on January 7, 2003 (SEC file number 001-31215), and incorporated herein by reference.

4.8		Third Supplemental Indenture between the Registrant and Bank One Trust Company, NA dated December 31, 2002, previously filed as Exhibit 4.5 to the company’s Form 8-K on January 7, 2003 (SEC file number 001-31215), and incorporated herein by reference.

4.9		Rights Agreement dated as of January 29, 2002 between the Registrant and The Bank of New York, previously filed as Item 2 to the company’s Form 8-A on January 29, 2002 (SEC file number 001-31215), and incorporated herein by reference.


4.10		Amendment to Rights Agreement dated as of December 21, 2007 between Registrant and the Bank of New York filed as Exhibit 4.2 to the company’s Form 8-A/A on December 26, 2007 (SEC file number 001-31215), and incorporated herein by reference.

4.11*		$600 Million Three-Year Credit Agreement, dated as of October 19, 2009, among the Registrant with a syndicate of commercial banks, including Citibank, N.A., as administrative agent.

4.12		Form of 7.375% Note due in 2019, previously filed as Exhibit 4.1 to the company’s Form 8-K on August 25, 2009, and incorporated herein by reference.

10.1+		The Mead Corporation 1991 Stock Option Plan, as amended through June 24, 1999, previously filed as Exhibit 10.xxvii to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.2+		The Mead Corporation 1996 Stock Option Plan, as amended through June 24, 1999 and amended February 22, 2001, previously filed as Exhibit 10.3 to Mead’s Quarterly Report on Form 10-Q for the period ended July 4, 1999 (SEC file number 001-02267) and Appendix 2 to Mead’s definitive proxy statement for the 2001 Annual Meeting of Shareholders, and incorporated herein by reference.

10.3+		Amendment to The Mead Corporation 1996 Stock Option Plan, effective April 23, 2002, previously filed as Exhibit 10.3 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002, and incorporated herein by reference.

10.4+		Amendment to The Mead Corporation 1996 Stock Option Plan effective January 23, 2007, as previously filed as Exhibit 10.4 to the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.

10.5+		1985 Supplement to The Mead Corporation Incentive Compensation Election Plan, as amended November 17, 1987, and as further amended October 29, 1988; as amended effective June 24, 1998; as amended effective October 26, 2001, previously filed as Exhibit 10.xxix to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.6+		The Mead Corporation Supplemental Executive Retirement Plan effective January 1, 1997; as amended effective June 24, 1998; as amended effective August 28, 2001, previously filed as Exhibit 10.xxxii to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.7+		Third Amendment to The Mead Corporation Supplemental Executive Retirement Plan in which executive officers participate, previously filed as Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q for the period ended March 30, 2002 (SEC file number 001-31215), and incorporated herein by reference.

10.8+		Benefit Trust Agreement dated August 27, 1996 between The Mead Corporation and Key Trust Company of Ohio, N.A.; as amended effective June 24, 1998; as amended effective October 28, 2000; as amended effective June 28, 2001; as amended August 28, 2001, previously filed as Exhibit 10.xxxiv to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.9+		The Mead Corporation Restricted Stock Plan effective December 10, 1987, as amended through June 24, 1999, previously filed as Exhibit 10.xxxv to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.10+		Amendment to The Mead Corporation Restricted Stock Plan effective January 23, 2007, as previously filed as Exhibit 10.10 to the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.

10.11+		Ninth Amendment to The Mead Corporation Restricted Stock Plan, previously filed as Exhibit 10.5 to the company’s Quarterly Report on Form 10-Q for the period ended March 31, 2002 (SEC file number 001-31215), and incorporated herein by reference.


10.12+		The Mead Corporation Deferred Compensation Plan for Directors, as amended through October 29, 1988; as amended effective June 24, 1998; as amended effective October 26, 2001, previously filed as Exhibit 10.xxxvi to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.13+		1985 Supplement to The Mead Corporation Deferred Compensation Plan for Directors, as amended through October 29, 1988; as amended effective June 24, 1998; as amended effective October 26, 2001, previously filed as Exhibit 10.xxxvii to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.14+		The Mead Corporation Directors Capital Accumulation Plan as Amended and Restated effective January 1, 2000; as amended effective October 26, 2001, previously filed as Exhibit 10.xxxviii to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.15+		Westvaco Corporation 1995 Salaried Employee Stock Incentive Plan, effective February 28, 1995, previously filed at Exhibit 99 to Westvaco’s Registration Statement on Form S-8 on February 28, 1995, and incorporated herein by reference.

10.16+		Amendment to Westvaco Corporation 1995 Salaried Employee Stock Incentive Plan, effective April 23, 2002, previously filed as Exhibit 10-2 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002 (SEC file number 001-31215), and incorporated herein by reference.

10.17+		Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan, effective September 17, 1999, previously filed as Appendix A to Westvaco’s definitive proxy statement for the 1999 Annual Meeting of Shareholders (SEC file number 001-03013), and incorporated herein by reference.

10.18+		Amendment to Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan effective as of April 23, 2002, previously filed as Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002 (SEC file number 001-31215), and incorporated herein by reference.

10.19+		Amendment to Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan effective January 23, 2007, as previously filed as Exhibit 10.19 to the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.

10.20+		MeadWestvaco Corporation Compensation Plan for Non-Employee Directors as Amended and Restated effective January 1, 2009 except as otherwise provided, previously filed as Exhibit 10.20 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.22		Equity and Asset Purchase Agreement dated as of January 14, 2005 between the Registrant and Maple Acquisition LLC, previously filed as Exhibit 99.1 on the company’s Form 8-K on January 21, 2005, for the sale of its papers business and associated assets, and incorporated herein by reference.

10.23+		MeadWestvaco Corporation 2005 Performance Incentive Plan effective April 22, 2005 and as amended February 26, 2007 and January 1, 2009 previously filed as Exhibit 10.1 to the company’s Form 8-K on April 30, 2009, and incorporated herein by reference.

10.24+		MeadWestvaco Corporation Executive Retirement Plan, as amended and restated effective January 1, 2009 except as otherwise provided, previously filed as Exhibit 10.24 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.25+		MeadWestvaco Corporation Deferred Income Plan Restatement effective January 1, 2007 except as otherwise provided, previously filed as Exhibit 10.25 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.26+		MeadWestvaco Corporation Retirement Restoration Plan effective January 1, 2009, except as otherwise provided, previously filed as Exhibit 10.26 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.


10.27+*		MeadWestvaco Corporation Compensation Program for Non-Employee Directors effective January 25, 2009.

10.28+		Form of Employment Agreement dated January 1, 2008, for Mark T. Watkins, as previously filed as Exhibit 10.33 to the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.

10.29		Form of Employment Agreement dated January 1, 2008, for John A. Luke, Jr., James A. Buzzard, E. Mark Rajkowski and Wendell L. Willkie, II, as previously filed as Exhibit 10.32 to the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.

10.30+		Amendments to The Mead Corporation Incentive Compensation Election Plan, The Mead Corporation Deferred Compensation Plan for Directors, The Mead Corporation Directors Capital Accumulation Plan, Westvaco Corporation Deferred Compensation Plan, Westvaco Corporation Savings and Investment Restoration Plan, Westvaco Corporation Deferred Compensation Plan for Non-Employee Outside Directors, and Westvaco Corporation Retirement Plan for Outside Directors, previously filed as Exhibit 10.30 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.31+		Westvaco Corporation Retirement Plan for Outside Directors, as previously filed as Exhibit 10.i to the company’s Annual Report on Form 10-K for the year ended October 31, 1996, and incorporated herein by reference.

10.32+		Summary of MeadWestvaco Corporation Long-Term Incentive Plan under 2005 Performance Incentive Plan, as amended, previously filed as Exhibit 10.31 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.33+		Summary of MeadWestvaco Corporation Annual Incentive Plan under 2005 Performance Incentive Plan, as amended, previously filed as Exhibit 10.32 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated by reference.

10.34+*		Summary of MeadWestvaco Corporation 2010 Long-Term Incentive Plan under the 2005 Performance Plan, as amended.

10.35+*		Summary of MeadWestvaco Corporation 2010 Annual Incentive Plan under the 2005 Performance Incentive Plan, as amended.

10.36+		Stock Option Awards in 2009—Terms and Conditions, previously filed as Exhibit 10.3 to the company’s Quarterly Report on Form 10-Q for the period ended March 31, 2009, and incorporated herein by reference.

10.37+		Service Based Restricted Stock Unit Awards in 2009 – Terms and Conditions, previously filed as Exhibit 10.4 to the company’s Quarterly Report on Form 10-Q for the period ended March 31, 2009, and incorporated herein by reference.

21.*		Subsidiaries of the Registrant.

23.1*		Consent of PricewaterhouseCoopers LLP.

31.1*		Rule 13a-14(a) Certification by Chief Executive Officer.

31.2*		Rule 13a-14(a) Certification by Chief Financial Officer.

32.1*		Section 1350 Certification by Chief Executive Officer.

32.2*		Section 1350 Certification by Chief Financial Officer.

*	Filed herewith.

+	Management contract or compensatory plan or arrangement.

We agree to furnish copies of other instruments defining the rights of holders of long-term debt to the Commission upon its request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MEADWESTVACO CORPORATION
	(Registrant)

February 23, 2010
		/s/ E. MARK RAJKOWSKI
	Name:	E. Mark Rajkowski
	Title:	Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signatures	Title	Date

/S/ JOHN A. LUKE, JR. John A. Luke, Jr.	Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer and Director)	February 23, 2010

/S/ E. MARK RAJKOWSKI E. Mark Rajkowski	Senior Vice President (Chief Financial Officer)	February 23, 2010

/S/ JOHN E. BANU John E. Banu	Vice President and Controller (Principal Accounting Officer)	February 23, 2010

/S/ MICHAEL E. CAMPBELL Michael E. Campbell	Director	February 23, 2010

/S/ DR. THOMAS W. COLE, JR. Dr. Thomas W. Cole, Jr.	Director	February 23, 2010

/S/ JAMES G. KAISER James G. Kaiser	Director	February 23, 2010

/S/ RICHARD B. KELSON Richard B. Kelson	Director	February 23, 2010

/S/ JAMES M. KILTS James M. Kilts	Director	February 23, 2010

/S/ SUSAN J. KROPF Susan J. Kropf	Director	February 23, 2010

/S/ DOUGLAS S. LUKE Douglas S. Luke	Director	February 23, 2010

/S/ ROBERT C. MCCORMACK Robert C. McCormack	Director	February 23, 2010

/S/ TIMOTHY H. POWERS Timothy H. Powers	Director	February 23, 2010

/S/ EDWARD M. STRAW Edward M. Straw	Director	February 23, 2010

/S/ JANE L. WARNER Jane L. Warner	Director	February 23, 2010

EX-3.2 2 dex32.htm EXHIBIT 3.2 Exhibit 3.2

Exhibit 3.2

BYLAWS

MEADWESTVACO CORPORATION

INCORPORATED UNDER THE LAWS OF DELAWARE

WORLD HEADQUARTERS

501 South 5^th Street

Richmond, Virginia 23219

TABLE OF CONTENTS


		Page

ARTICLE I	MEETINGS OF STOCKHOLDERS	1-1
Section 1.1.	Place of Meetings	1-1
Section 1.2.	Annual Meetings	1-1
Section 1.3.	Special Meetings	1-1
Section 1.4.	Notice of Meetings	1-1
Section 1.5.	Postponement	1-1
Section 1.6.	Quorum	1-1
Section 1.7.	Chairman; Secretary	1-1
Section 1.8.	Inspectors of Election; Opening and Closing the Polls	1-1
Section 1.9.	Voting	1-2
Section 1.10.	Meeting Required	1-2
Section 1.11.	Notification of Proposals	1-2

ARTICLE II	BOARD OF DIRECTORS	2-1
Section 2.1.	General Powers, Number, Qualifications and Term of Office	2-1
Section 2.2.	Age Limitation	2-1
Section 2.3.	Election of Directors; Vacancies; New Directorships	2-1
Section 2.4.	Removal of Directors	2-1
Section 2.5.	Notification of Nomination	2-1
Section 2.6.	Place of Meetings	2-2
Section 2.7.	Regular Meetings	2-2
Section 2.8.	Special Meetings	2-2
Section 2.9.	Notice of Special Meetings	2-3
Section 2.10.	Quorum and Manner of Acting	2-3
Section 2.11.	Chairman; Secretary	2-3
Section 2.12.	Compensation	2-3
Section 2.13.	Indemnity	2-3

ARTICLE III	COMMITTEES	3-1
Section 3.1.	Committees of Directors	3-1
Section 3.2.	Removal; Vacancies	3-1
Section 3.3.	Compensation	3-1

ARTICLE IV	OFFICERS	4-1
Section 4.1.	Number	4-1
Section 4.2.	Election; Term of Office and Qualifications	4-1
Section 4.3.	Removal	4-1
Section 4.4.	Salaries	4-1
Section 4.5.	The Chairman of the Board	4-1
Section 4.6.	The President	4-1
Section 4.7.	The Vice Presidents	4-1
Section 4.8.	The Assistant Vice Presidents	4-1
Section 4.9.	The Secretary	4-2
Section 4.10.	The Assistant Secretaries	4-2
Section 4.11.	The Treasurer	4-2
Section 4.12.	The Assistant Treasurers	4-2
Section 4.13.	The Controller	4-2
Section 4.14.	The Assistant Controllers	4-2


		Page

ARTICLE V	AUTHORITY TO ACT AND SIGN FOR THE CORPORATION	5-1
Section 5.1.	Contracts, Agreements, Checks and Other Instruments	5-1
Section 5.2.	Bank Accounts; Deposits; Checks, Drafts and Orders Issued in the Corporation’s Name	5-1
Section 5.3.	Delegation of Authority	5-1
Section 5.4.	Stock Certificates	5-1
Section 5.5.	Voting of Stock in Other Corporations	5-1
Section 5.6.	Sale and Transfer of Securities	5-1

ARTICLE VI	STOCK	6-1
Section 6.1.	Certificates of Stock	6-1
Section 6.2.	Transfer of Stock	6-1
Section 6.3.	Transfer Agents and Registrars	6-1
Section 6.4.	Record Dates	6-1
Section 6.5.	Electronic Securities Recordation	6-1

ARTICLE VII	SUNDRY PROVISIONS	7-1
Section 7.1.	Offices	7-1
Section 7.2.	Seal	7-1
Section 7.3.	Books and Records	7-1
Section 7.4.	Fiscal Year	7-1
Section 7.5.	Independent Public Accountants	7-1
Section 7.6.	Waiver of Notice	7-1
Section 7.7.	Amendments	7-1

BYLAWS

MEADWESTVACO CORPORATION

ARTICLE I

MEETINGS OF STOCKHOLDERS

SECTION 1.1. Place of Meetings. The annual meeting of stockholders for the election of directors and all special meetings for that or for any other purpose shall be held at such time and place, either within or without the State of Delaware as may from time to time be designated by the Board of Directors.

SECTION 1.2. Annual Meetings. The annual meeting of stockholders for elections of directors, and for the transaction of such other business as may be required or authorized to be transacted by stockholders, shall be held on such date and time as designated from time to time by the Board of Directors.

SECTION 1.3. Special Meetings. A special meeting of stockholders for any purpose may be called at any time only by order of the Board of Directors pursuant to a resolution approved by a majority of the Board of Directors, by the Chairman of the Board, or by the President. At any such special meeting the only business transacted shall be in accordance with the purposes specified in the notice calling such meeting.

SECTION 1.4. Notice of Meetings. Except as may otherwise be provided by statute or the Certificate of Incorporation, the Secretary or an Assistant Secretary shall cause written notice of the place, date and hour for holding each annual and special meeting of stockholders to be given not less than ten days nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting by mailing the notice, postage prepaid, to the stockholder at his post office address as it appears on the records of the Corporation. Notice of each special meeting shall contain a statement of the purpose or purposes for which the meeting is called. Except as otherwise provided by statute, no notice of an adjourned meeting need be given other than by announcement at the meeting which is being adjourned of the time and place of the adjourned meeting.

SECTION 1.5. Postponement. Any previously scheduled annual or special meeting of stockholders may be postponed by resolution of the Board of Directors, upon public notice given prior to the date scheduled for such meeting.

SECTION 1.6. Quorum. The holders of shares of the outstanding stock of the Corporation representing a majority of the total votes entitled to be cast at any meeting of stockholders, if present in person or by proxy, shall constitute a quorum for the transaction of business unless a larger proportion shall be required by statute or the Certificate of Incorporation. The Chairman of a meeting of stockholders may adjourn such meeting from time to time, whether or not there is a quorum of stockholders at such meeting. In the absence of a quorum at any stockholders’ meeting, the stockholders present in person or by proxy and entitled to vote may, by majority vote, adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting, at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called. The lack of the required quorum at any meeting of stockholders for action upon any particular matter, shall not prevent action at such meeting upon other matters which may properly come before the meeting, if the quorum required for taking action upon such other matters shall be present.

SECTION 1.7. Chairman; Secretary. The Chairman of the Board shall call meetings of the stockholders to order and shall act as Chairman. If there is no Chairman of the Board, or in the event of his absence or disability, the President, or in the event of his absence or disability, one of the Executive Vice Presidents (in order of first designation as an Executive Vice President) present, or in absence of all Executive Vice Presidents, one of the Senior Vice Presidents (in order of first designation as a Senior Vice President) present, or in the absence also of all Senior Vice Presidents, one of the Vice Presidents (in order of first designation as a Vice President) present, shall call meetings of the stockholders to order and shall act as Chairman thereof. The Secretary of the Corporation, or any person appointed by the Chairman, shall act as Secretary of the meeting of stockholders.

SECTION 1.8. Inspectors of Election; Opening and Closing the Polls. The Board of Directors in advance of any meeting of stockholders shall appoint two or more inspectors of election to act at such meeting or any adjournment thereof. In the event of the failure of the Directors to make such appointments, or if any inspector shall for any reason fail to attend or to act at any meeting, or shall for any reason cease to be an inspector before completion of his duties, the appointments shall be made by the Chairman of the meeting.

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The Chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

SECTION 1.9. Voting. At each meeting of the stockholders each stockholder entitled to vote thereat shall, except as otherwise provided in the Certificate of Incorporation, be entitled to one vote in person or by proxy for each share of the stock of the Corporation registered in his name on the books of the Corporation on the date fixed pursuant to Section 6.4 of these Bylaws as the record date fixed for such meeting.

At each meeting of the stockholders at which a quorum is present, all matters (except as otherwise provided in Section 2.4 or Section 7.7 of these Bylaws, in the Certificate of Incorporation, or by statute) shall be decided by the affirmative vote of the majority of the shares present in person or represented by proxy at such meeting and entitled to vote on the subject matter.

The Board of Directors, in its discretion, or the officer of the Corporation presiding at the meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be by written ballot.

SECTION 1.10. Meeting Required. Any action by stockholders of the Corporation shall be taken at a meeting of stockholders and no corporate action may be taken by written consent of stockholders entitled to vote upon such action.

SECTION 1.11. Notification of Proposals. The proposal of business, other than nominations, which are governed by Section 2.5 of these Bylaws, to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 1.11.

For business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of the first paragraph of this Section 1.11, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting, provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the seventh day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth (a) as to the business that the stockholder proposes to bring before the meeting, (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner; if any, on whose behalf the proposal is made and (ii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) (A) the class and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of shares of the Corporation or with a value derived in whole or in part from the value of any class of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Corporation, (D) any short interest in a security of the Corporation (for purposes of this Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (G) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of

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the record date), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated thereunder.

Only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.11. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether any business proposed to be brought before the meeting was proposed in accordance with the procedures set forth in this Section 1.11 and, if any proposed business is not in compliance with this Section 1.11, to declare that such defective proposal shall be disregarded.

For purposes of this Section 1.11 and Section 1.12, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

Notwithstanding the foregoing provisions of this Section 1.11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.11. Nothing in this Section 1.11 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

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ARTICLE II

BOARD OF DIRECTORS

SECTION 2.1. General Powers, Number, Qualifications and Term of Office. The business and property of the Corporation shall be managed and controlled by the Board of Directors. The Board of Directors shall consist of a number of directors to be determined from time to time only by resolution adopted by the Board of Directors.

Until the annual meeting of stockholders to be held in 2009, the directors shall be and are divided into classes. The directors elected at the annual meeting of stockholders held in 2004 shall serve for a term ending on the date of the annual meeting of stockholders to be held in 2007; the directors elected at the annual meeting of stockholders held in 2005 shall serve for a term ending on the date of the annual meeting of stockholders to be held in 2008; and the directors elected at the annual meeting of stockholders held in 2006 shall serve for a term ending on the date of the annual meeting of stockholders to be held in 2009. At each annual meeting of the stockholders of the Corporation commencing with the 2007 annual meeting, directors elected to succeed those directors whose terms then expire shall hold office for a term expiring at the next succeeding annual meeting of stockholders after their election. Each director of the Corporation shall hold office as provided above and until his or her successor shall have been elected and qualified.

SECTION 2.2. Age Limitation. No person shall serve as a director of the Corporation following the annual meeting of stockholders after attaining age 72; provided, that on an exceptional basis, the Board may extend a director’s term for a limited period.

SECTION 2.3. Election of Directors; Vacancies; New Directorships. Subject to Section 2.1 of this Article, directors shall be elected annually in the manner provided in these Bylaws. At each annual or special meeting of the stockholders for the election of directors, at which a quorum is present, each director shall be elected by the vote of the majority of the votes cast, provided that if as of a date that is fourteen (14) days in advance of the date the Corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission the number of nominees exceeds the number of directors to be elected, the directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. For purposes of this Section 2.3, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. The Nominating and Governance Committee has established procedures under which any director who is not elected shall offer to tender his or her resignation to the Chairman of the Board and the Nominating and Governance Committee. Any vacancies on the Board of Directors caused by death, removal, resignation or any other cause and any newly created directorships resulting from any increase in the authorized number of directors, may be filled only by a majority of the directors then in office, even though less than a quorum, at any regular or special meeting of the Board of Directors, and any director so elected shall hold office for the remainder of the term that was being served by the director whose absence creates the vacancy, or, in the case of a vacancy created by an increase in the number of directors, a term expiring at the next annual meeting of stockholders, and in each case until such director’s successor shall have been duly elected and qualified.

SECTION 2.4. Removal of Directors. Any director may be removed without cause, at any time, by the affirmative vote of the holders of at least a majority of the combined voting power of the then-outstanding shares of all classes and series of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, at a special meeting of stockholders duly called and held for the purpose or at an annual meeting of stockholders; provided, however, that, if a director’s term was scheduled at the time of its commencement to extend beyond the next annual meeting of stockholders, such removal may only be for cause and only by the affirmative vote of the holders of at least 75 percent of the combined voting power of the then-outstanding shares of all classes and series of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

SECTION 2.5. Notification of Nomination. Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Any stockholder entitled to vote for the election of directors at a meeting may nominate persons for election as directors only if written notice of such stockholder’s intent to make such nomination is given, either by personal delivery or by the United States mail, postage prepaid, to the Secretary at the principal executive offices of the Corporation, not later than (I) with respect to an election to be held at an annual meeting of stockholders, the close of business on the 90^th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting, provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be delivered not earlier than the close of business on the 120^th day prior to such annual meeting and not later than the close of business on the later of the 90^th day prior to such annual meeting or the seventh day following the day on which public announcement of the date of such meeting is first made by the Corporation, and (II) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a

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stockholder’s notice as described above. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated, (b) (i) the class and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (ii) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of shares of the Corporation or with a value derived in whole or in part from the value of any class of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (iii) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Corporation, (iv) any short interest in a security of the Corporation (for purposes of this Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (v) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (vi) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (vii) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (c) a representation that such stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (d) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant, (e) such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had each nominee been nominated, or intended to be nominated by the Board of Directors, and (e) the consent of each nominee to serve as a director of the Corporation if so elected. The Chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedures. The Corporation may require any proposed nominee to furnish such other information as may be reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

SECTION 2.6. Place of Meetings. The Board of Directors may hold its meetings at such place or places, within or without the State of Delaware, as it may from time to time determine. In the absence of any such determination, such meetings shall be held at the principal business office of the Corporation. Any meeting may be held upon direction to the Secretary by the Chairman of the Board, or, in his absence, by the President at any place, provided that notice of the place of such meeting, whether regular or special, shall be given in the manner provided in Section 2.9 of this Article.

SECTION 2.7. Regular Meetings. Regular meetings of the Board of Directors shall be held in each year on such dates as a resolution of the Board of Directors may designate at the beginning of each year. Any regular meeting of the Board may be dispensed with upon order of the Board of Directors, or by the Chairman of the Board, or, in his absence, the President if notice thereof is given to each director at least one day prior to the date scheduled for the meeting. If any day fixed for a regular meeting shall be a legal holiday, then such meeting shall be held on the next succeeding business day not a legal holiday. No notice shall be required for any regular meeting of the Board, except that notice of the place of such meeting shall be given (as provided in Section 2.9) if such meeting is to be held at a place other than the principal business office of the Corporation or if the meeting is held on a date other than that established at the beginning of each year by a resolution of the Board of Directors.

SECTION 2.8. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by the direction of the Chairman of the Board, the President, an Executive Vice President, or a majority of the Board of Directors then in office.

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SECTION 2.9. Notice of Special Meetings. Notice of the place, day and hour of every special meeting of the Board of Directors shall be given by the Secretary or an Assistant Secretary to each director at least twelve hours before the meeting, by telephone, telegraph or cable, telecopier or e-mail, or by delivery to him personally or to his residence or usual place of business, or by mailing such notice at least three days before the meeting, postage prepaid, to him at his last known post office address according to the records of the Corporation. Except as provided by statute, or by Section 4.3 or Section 7.7 of these Bylaws, such notice need not state the business to be transacted at any special meeting. No notice of any adjourned meeting of the Board of Directors need be given. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 7.6 of these Bylaws.

SECTION 2.10. Quorum and Manner of Acting. A whole number of directors equal to at least a majority of the total number of directors as determined by resolution in accordance with Section 2.1, regardless of any vacancies, shall constitute a quorum for the transaction of business at any meeting except to fill vacancies in accordance with Section 2.1 and Section 2.3 of this Article, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors unless otherwise provided by statute or these Bylaws. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice until a quorum be had. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally scheduled. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

SECTION 2.11. Chairman; Secretary. At each meeting of the Board of Directors, the Chairman of the Board shall act as Chairman. If there is no Chairman of the Board, or in the event of his absence or disability, the President or in his absence or disability, one of the Executive Vice Presidents who is also a director, or in their absence, a director chosen by a majority of the directors present, shall act as Chairman. The Secretary, or in his absence or disability, an Assistant Secretary, or any person appointed by the Chairman of the meeting, shall act as Secretary of the meeting.

SECTION 2.12. Compensation. Each director except a director who is an active employee of the Corporation in receipt of a salary shall be paid such sums as director’s fees as shall be fixed by the Board of Directors. Each director may be reimbursed for all expenses incurred in attending meetings of the Board of Directors and in transacting any business on behalf of the Corporation as a director. Nothing in this Section 2.12 shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor.

SECTION 2.13. Indemnification and Insurance.

(A) Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which these Bylaws are in effect (whether or not such person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in paragraph (C) of this Bylaw, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Bylaw shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director or officer is not entitled to be indemnified for such expenses under this Bylaw or otherwise. The rights conferred upon indemnitees in this Bylaw shall be

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contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

(B) To obtain indemnification under this Bylaw, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this paragraph (B), a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (1) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (2) if no request is made by the claimant for a determination by Independent Counsel, (i) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (ii) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (iii) if a quorum of Disinterested Directors so directs, by the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board of Directors unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a “Change of Control” as defined in the Corporation’s current equity compensation plan, in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination.

(C) If a claim under paragraph (A) of this Bylaw is not paid in full by the Corporation within sixty (60) days after a written claim pursuant to paragraph (B) of this Bylaw has been received by the Corporation (except in the case of a claim for advancement of expenses, for which the applicable period is twenty (20) days), the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standard of conduct which makes it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(D) If a determination shall have been made pursuant to paragraph (B) of this By-Law that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (C) of this Bylaw.

(E) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (C) of this Bylaw that the procedures and presumptions of this Bylaw are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Bylaw.

(F) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Bylaw shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise. Any amendment, modification, alteration or repeal of this Bylaw that in any way diminishes or adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission that took place prior to such amendment or repeal.

(G) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. To the extent that the Corporation maintains any policy or policies providing such insurance, each such director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (H) of this Bylaw, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such director, officer, employee or agent.

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(H) The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any employee or agent of the Corporation to the fullest extent of the provisions of this Bylaw with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

(I) If any provision or provisions of this Bylaw shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Bylaw (including, without limitation, each portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Bylaw (including, without limitation, each such portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

(J) For purposes of this Bylaw:

(1) “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

(2) “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Bylaw.

(K) Any notice, request or other communication required or permitted to be given to the Corporation under this Bylaw shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.

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ARTICLE III

COMMITTEES

SECTION 3.1. Committees of Directors. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Such resolution shall specify a designation by which a committee shall be known, shall fix its powers and authority, and may fix the term of office of its members. Any such committee, to the extent provided in the resolution of the Board of Directors, or in the Bylaws of the Corporation, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; except as otherwise provided by statute.

SECTION 3.2. Removal; Vacancies. The members of committees of directors shall serve at the pleasure of the Board of Directors. Subject to Section 3.1, any member of a committee of directors may be removed at any time and any vacancy in any such committee may be filled by majority vote of the whole Board of Directors.

SECTION 3.3. Compensation. The Board of Directors may by resolution determine from time to time the compensation, if any, including reimbursement for expenses, of members of any committee of directors for services rendered to the Corporation as a member of any such committee.

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ARTICLE IV

OFFICERS

SECTION 4.1. Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. Officers of the Corporation may also include a Controller, Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and Assistant Controllers. One or more persons may hold any two of such offices. The Chairman of the Board shall be chosen from the Board of Directors and the Chairman or the President shall be designated by the Board of Directors as the Chief Executive Officer of the Corporation. Subject to the direction of the Board of Directors, the Chief Executive Officer shall have general supervision of the business and affairs of the Corporation and over its officers, employees and agents with such powers and duties incident to being Chief Executive Officer of a corporation, and as are provided for him in these Bylaws. In addition, the Chief Executive Officer shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors. The Board of Directors may add additional titles to any office to indicate seniority or additional responsibility.

SECTION 4.2. Election; Term of Office and Qualifications. The officers shall be chosen annually by the Board of Directors at its first regular meeting following the annual meeting of stockholders and each shall hold office until the corresponding meeting in the next year and until his successor shall have been elected and shall qualify, or until his earlier death or resignation or until he shall have been removed in the manner provided in Section 4.3. Any vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting.

SECTION 4.3. Removal. Other than the Chairman of the Board, any officer may be removed from office, either with or without cause, by the Chief Executive Officer or, the majority of the whole Board of Directors at a special meeting called for that purpose, or at a regular meeting.

SECTION 4.4. Salaries. The Board of Directors shall have authority to determine any and all salaries of employees of the Corporation. The Board may by resolution authorize a committee of directors (none of whom shall be an officer or employee of the Corporation) to fix any such salaries. Salaries not determined by the Board of Directors, or by a committee of directors, may be fixed by the Chief Executive Officer.

SECTION 4.5. The Chairman of the Board. The Chairman of the Board shall be an officer and employee of the Corporation and shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall have all powers and perform all duties incident to the office of a Chairman of the Board of a corporation, and as are provided for him in these Bylaws, and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors. If there is no President or in the event of his or her death or disability, the Chairman of the Board shall perform the duties and exercise the powers of the President.

SECTION 4.6. The President. The President shall have all powers and perform all duties incident to the office of the President as are provided for him in these Bylaws and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors, the Chairman of the Board or the Chief Executive Officer.

SECTION 4.7. The Vice Presidents. The Vice Presidents shall have such powers and perform such duties as are provided for them in these Bylaws and as may be assigned to them, or any of them, by the Board of Directors or the Chief Executive Officer or the Chairman of the Board. The Executive Vice Presidents (in order of first designation as an Executive Vice President), in the event of the death or disability of the President and the Chairman of the Board, shall perform all the duties of the President and when so acting shall have the powers of the President. In the event of the death or disability of the President, the Chairman of the Board (if such Person is an officer of the Corporation) and all Executive Vice Presidents, the available Senior Vice President (in order of first designation as a Senior Vice President), or in the event of the death or disability also of all Senior Vice Presidents, the Vice President who is available and was first elected a Vice President prior to all other available Vice Presidents shall perform all the duties of the President and when so acting shall have the powers of the President. A Vice President performing the duties and exercising the powers of the President shall perform the duties and exercise the powers of the Chief Executive Officer if there is no Chairman of the Board or in the event of the death or disability of the Chairman of the Board.

SECTION 4.8. The Assistant Vice Presidents. The Assistant Vice Presidents shall have such powers and perform such duties as may be assigned to them, or any of them, by the Board of Directors or the Chief Executive Officer.

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SECTION 4.9. The Secretary. The Secretary shall keep, or cause to be kept in books provided for the purpose, the minutes of the meeting of stockholders and of the Board of Directors and any minutes of Committees of the Board of Directors; shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by statute; shall be custodian of the records and of the corporate seal or seals of the Corporation; and shall cause the corporate seal to be affixed to any document the execution of which, on behalf of the Corporation, under its seal, is duly authorized and when so affixed, may attest the same. The Secretary shall have all powers and perform all duties incident to the office of a secretary of a corporation and as are provided for in these Bylaws and shall exercise such other powers and perform such other duties as may be assigned by the Board of Directors, or, as to matters not related to the Board of Directors, the Chief Executive Officer or, as to matters related to the Board of Directors, the Chairman of the Board.

SECTION 4.10. The Assistant Secretaries. In the absence or disability of the Secretary, the Assistant Secretary designated by the Secretary shall perform all the duties of the Secretary and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. The Assistant Secretaries shall exercise such powers and perform such duties as are provided for them in these Bylaws and as may be assigned to them, or any of them, by the Board of Directors, the Chief Executive Officer or the Secretary.

SECTION 4.11. The Treasurer. The Treasurer shall have general charge of and general responsibility for all funds, securities, and receipts of the Corporation and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall from time to time be designated in accordance with Section 5.2 of these Bylaws. He shall have all powers and perform all duties incident to the office of a treasurer of a corporation and as are provided for him in these Bylaws and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors or the Chief Executive Officer.

SECTION 4.12. The Assistant Treasurers. In the absence or disability of the Treasurer, the Assistant Treasurer designated by the Treasurer shall perform all the duties of the Treasurer and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. The Assistant Treasurers shall exercise such powers and perform such duties as are provided for them in these Bylaws and as may be assigned to them, or any of them, by the Board of Directors, the Chief Executive Officer or the Treasurer.

SECTION 4.13. The Controller. The Controller shall have general charge and supervision of financial reports; he shall maintain adequate records of all assets, liabilities and transactions of the Corporation; he shall keep the books and accounts and cause adequate audits thereof to be made regularly; he shall exercise a general check upon the disbursements of funds of the Corporation; and in general shall perform all duties incident to the office of a controller of a corporation, and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors or the Chief Executive Officer.

SECTION 4.14. The Assistant Controllers. In the absence or disability of the Controller, the Assistant Controller designated by the Controller shall perform all the duties of the Controller and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Controller. The Assistant Controllers shall exercise such other powers and perform such other duties as from time to time may be assigned to them, or any of them, by the Board of Directors, the Chief Executive Officer or the Controller.

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ARTICLE V

AUTHORITY TO ACT AND SIGN FOR THE CORPORATION

SECTION 5.1. Contracts, Agreements, Checks and Other Instruments. Except as may be otherwise provided by statute or by the Board of Directors, the Chairman of the Board, the President, any Vice President, the Secretary, the Treasurer, and each of them, may make, sign, endorse, verify, acknowledge and deliver, in the name and on behalf of the Corporation, all deeds, leases and other conveyances, contracts, agreements, checks, notes, drafts and other commercial paper, bonds, assignments, bills of sale, releases, reports and all other instruments and documents deemed necessary or advisable by the officer or officers executing the same for carrying on the business and affairs of the Corporation, subject, however, to Section 5.4 relating to stock certificates of the Corporation, to Section 5.5 relating to execution of proxies and to Section 5.6 relating to securities held by the Corporation.

SECTION 5.2. Bank Accounts; Deposits; Checks, Drafts and Orders Issued in the Corporation’s Name. Except as otherwise provided by the Board of Directors, any two of the following officers: the Chairman of the Board, the President, any Vice President, and the Treasurer may from time to time, (1) open and keep in the name and on behalf of the Corporation, with such banks, trust companies or other depositories as they may designate, general and special bank accounts for the funds of the Corporation, (2) terminate any such bank accounts and (3) select and contract to rent and maintain safe deposit boxes with depositories as they may designate and terminate such contracts and authorize access to any safe deposit box by any two employees designated for such purposes, at least one of whom shall be an officer, and revoke such authority. Any such action by two of the officers as specified above shall be made by an instrument in writing signed by such two officers.

All funds and securities of the Corporation shall be deposited in such banks, trust companies and other depositories as are designated by the Board of Directors or by the aforesaid officers in the manner hereinabove provided, and for the purpose of such deposits, the Chairman of the Board, the President, any Vice President, the Secretary, the Treasurer or an Assistant Treasurer, and each of them, or any other person or persons authorized by the Board of Directors, may endorse, assign and deliver checks, notes, drafts, and other orders for the payment of money which are payable to the Corporation. Except as otherwise provided by the Board of Directors, all checks, drafts or orders for the payment of money, drawn in the name of the Corporation, may be signed by the Chairman of the Board, the President, any Executive or Senior Vice President, the Secretary or the Treasurer or by any other officers or any employees of the Corporation who shall from time to time be designated to sign checks, drafts, or orders on all accounts or on any specific account of the Corporation by an “instrument of designation” signed by any two of the following officers: the Chairman of the Board, the President, any Executive or Senior Vice President, and the Treasurer.

SECTION 5.3. Delegation of Authority. The Board of Directors, the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary may appoint such managers and attorneys and agents of the Corporation (who also may be employees of the Corporation) as may be deemed desirable who shall serve for such periods, have such powers, bear such titles and perform such duties as the Board of Directors, the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary may from time to time prescribe.

SECTION 5.4. Stock Certificates. All certificates of stock issued by the Corporation shall be executed in accordance with Section 6.1 of these Bylaws.

SECTION 5.5. Voting of Stock in Other Corporations. Stock in other corporations, which may from time to time be held by the Corporation, may be represented and voted at any meeting of stockholders of such other corporation by proxy executed in the name of the Corporation by the Chairman of the Board, the President, any Executive Vice President or the Treasurer, with the corporate seal affixed and attested by the Secretary.

SECTION 5.6. Sale and Transfer of Securities. The Chairman of the Board, the President or any Executive or Senior Vice President, the Treasurer or the Secretary are authorized to sell, transfer, endorse and assign any and all shares of stock, bonds and other securities owned by or standing in the name of the Corporation. The executing officers or officer may execute and deliver in the name and on behalf of the Corporation any instrument deemed necessary or advisable by the executing officers or officer to accomplish such transactions.

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ARTICLE VI

STOCK

SECTION 6.1. Certificates of Stock. Each holder of stock shall be entitled to have a certificate or certificates, certifying the number and kind of shares owned by him in the Corporation signed by the Chairman of the Board, the President or an Executive Vice President and the Secretary and sealed with the seal of the Corporation. Where such certificate is signed by a transfer agent and by a registrar, the signatures of Corporation officers and the corporate seal may be facsimile, engraved or printed. In case any officer who shall have signed, or whose facsimile signature shall have been used on any such certificate, shall cease to be such officer of the Corporation, whether caused by death, resignation or otherwise, before such certificate shall have been delivered by the Corporation, such certificate shall nevertheless be deemed to have been adopted by the Corporation and may be issued and delivered as though the person who signed the same, or whose facsimile signature shall have been used thereon, had not ceased to be such officer of the Corporation. The certificates for shares of the capital stock of the Corporation shall be in such forms as shall be approved by the Board of Directors.

SECTION 6.2. Transfer of Stock. Shares of stock shall be transferable only on the books of the Corporation by the holder thereof, in person or by duly authorized attorney, upon the surrender of the certificate, properly endorsed, representing the shares to be transferred.

SECTION 6.3. Transfer Agents and Registrars. The Corporation may have a transfer agent and a registrar of its stock for different locations appointed by the Board of Directors from time to time. The Board of Directors may direct that the functions of transfer agent and registrar be combined and appoint a single agency to perform both functions at one or more locations. Duties of the transfer agent, registrar and combined agency may be defined from time to time by the Board of Directors. No certificate of stock shall be valid until countersigned by a transfer agent and until registered by a registrar even if both functions are performed by a single agency.

SECTION 6.4. Record Dates. The Board of Directors shall have power to fix in advance a record date to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action and such record date shall not be more than sixty nor less than ten days before the date of any meeting, nor more than sixty days prior to any other action.

SECTION 6.5. Electronic Securities Recordation. Notwithstanding the provisions of Section 6.1 of this Article VI, the Corporation may adopt a system of issuance, recordation and transfer of its shares by electronic or other means not involving any issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.

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ARTICLE VII

SUNDRY PROVISIONS

SECTION 7.1. Offices. The Corporation’s principal office, principal place of business, and principal business office shall be at 501 South 5^th Street, Richmond, Virginia 23219. In the State of Delaware the Corporation’s registered office shall be in the City of Wilmington, County of New Castle. The Corporation may also have other offices at such other places as the business of the Corporation may require.

SECTION 7.2. Seal. The corporate seal of the Corporation shall have inscribed thereon the following words and figures: MeadWestvaco Corporation 2001 Incorporated Delaware. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. A duplicate seal or duplicate seals may be provided and kept for the necessary purposes of the Corporation.

SECTION 7.3. Books and Records. The Board of Directors may determine from time to time whether, and, if allowed, when and under what conditions and regulations, the books and records of the Corporation, or any of them, shall be open to the inspection of stockholders, and the rights of stockholders in this respect are and shall be limited accordingly (except as otherwise provided by statute). Under no circumstances shall any stockholder have the right to inspect any book or record or receive any statement for an improper or illegal purpose. Subject to the provisions of statutes relating thereto, the books and records of the Corporation may be kept outside the State of Delaware at such places as may be from time to time designated by the Board of Directors.

SECTION 7.4. Fiscal Year. Unless otherwise ordered by the Board of Directors, the fiscal year of the Corporation shall be twelve calendar months beginning on the first day of January in each year.

SECTION 7.5. Independent Public Accountants. The Audit Committee of the Board of Directors shall appoint annually an independent public accountant or firm of independent public accountants to audit the books of the Corporation for each fiscal year; this appointment shall be subject to shareholder ratification at the annual meeting next succeeding the appointment.

SECTION 7.6. Waiver of Notice. Any shareholder or director may waive any notice required to be given by law or by the provisions of the Certificate of Incorporation or by these Bylaws; provided that such waiver shall be in writing and signed by such shareholder or director or by the duly authorized attorney of the shareholder, either before or after the meeting, notice of which is being waived.

SECTION 7.7. Amendments. The Board of Directors shall have power to make, alter and amend any Bylaws of the Corporation by a vote of a majority of the whole Board at any regular meeting of the Board of Directors, or any special meeting of the Board if notice of the proposed Bylaw, alteration or amendment be contained in the notice of such special meeting; provided, however, that no Bylaw shall be deemed made, altered or amended, by the Board of Directors unless the resolution authorizing the same shall specifically state that a Bylaw is thereby being made, altered or amended. Except as otherwise provided in these Bylaws or the Certificate of Incorporation, the shareholders of the Corporation may make, alter, amend or repeal any Bylaws of the Corporation by the affirmative vote of the majority of the stock entitled to vote at any annual or special meeting.

Certificate

I certify that this is a true and correct copy of the Bylaws of MeadWestvaco Corporation.


		(Assistant) Secretary
Date
		Corporate Seal

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EX-4.11 3 dex411.htm EXHIBIT 4.11 Exhibit 4.11

EXHIBIT 4.11

CREDIT AGREEMENT

dated as of

October 19, 2009

among

MEADWESTVACO CORPORATION

and the other entities party hereto from time to time,

as Borrowers,

the banks and financial institutions from time to time party hereto,

as Lenders,

CITIBANK, N.A., as Administrative Agent,

BANK OF AMERICA, N.A., as Syndication Agent,

and

BARCLAYS BANK PLC, THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

and UBS LOAN FINANCE LLC, as Documentation Agents

CITIGROUP GLOBAL MARKETS INC. and

BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arrangers and Joint Book Runners

TABLE OF CONTENTS


ARTICLE 1	DEFINITIONS	1

SECTION 1.1	DEFINITIONS	1
SECTION 1.2	ACCOUNTING TERMS AND DETERMINATIONS	17
SECTION 1.3	TYPES OF BORROWING	17
SECTION 1.4	COMPUTATION OF TIME PERIODS	18
SECTION 1.5	CERTAIN TERMS	18

ARTICLE 2	THE CREDITS	19

SECTION 2.1	COMMITMENTS	19
SECTION 2.2	NOTICE OF BORROWING	19
SECTION 2.3	MONEY MARKET BORROWINGS	19
SECTION 2.4	NOTICE TO BANKS; FUNDING OF LOANS	23
SECTION 2.5	EVIDENCE OF DEBT	25
SECTION 2.6	MATURITY OF LOANS	25
SECTION 2.7	INTEREST RATES	25
SECTION 2.8	FEES	26
SECTION 2.9	OPTIONAL TERMINATION, REDUCTION OR INCREASE OF COMMITMENTS	27
SECTION 2.10	MANDATORY TERMINATION OF COMMITMENTS; EFFECT OF TERMINATION OR REDUCTION	29
SECTION 2.11	OPTIONAL AND MANDATORY PREPAYMENTS	29
SECTION 2.12	GENERAL PROVISIONS AS TO PAYMENTS	30
SECTION 2.13	FUNDING LOSSES	30
SECTION 2.14	COMPUTATION OF INTEREST AND FEES	31
SECTION 2.15	SPECIAL MANDATORY PREPAYMENT/COMMITMENT TERMINATION	31
SECTION 2.16	LETTERS OF CREDIT	32
SECTION 2.17	BORROWINGS BY CO-BORROWERS	36

ARTICLE 3	CONDITIONS	37

SECTION 3.1	EFFECTIVENESS	37
SECTION 3.2	EACH CREDIT EXTENSION	38
SECTION 3.3	DEFAULTING LENDERS	38
SECTION 3.4	CO-BORROWER CONDITIONS	39

ARTICLE 4	REPRESENTATIONS AND WARRANTIES	40

SECTION 4.1	CORPORATE EXISTENCE AND POWER	40


SECTION 4.2	CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION	40
SECTION 4.3	BINDING EFFECT	40
SECTION 4.4	FINANCIAL INFORMATION	40
SECTION 4.5	LITIGATION	41
SECTION 4.6	COMPLIANCE WITH ERISA	41
SECTION 4.7	SUBSIDIARIES	42
SECTION 4.8	NOT AN INVESTMENT COMPANY	42
SECTION 4.9	CERTAIN REGULATIONS	42
SECTION 4.10	FULL DISCLOSURE	42

ARTICLE 5	COVENANTS	42

SECTION 5.1	INFORMATION	42
SECTION 5.2	MAINTENANCE OF PROPERTY; INSURANCE	43
SECTION 5.3	PAYMENT OF TAXES AND ASSESSMENTS, CONDUCT OF BUSINESS; MAINTENANCE OF EXISTENCE; ETC	44
SECTION 5.4	COMPLIANCE WITH LAWS	44
SECTION 5.5	RESTRICTIONS ON SALE AND LEASE BACK TRANSACTIONS	45
SECTION 5.6	NEGATIVE PLEDGE	45
SECTION 5.7	CONSOLIDATIONS, MERGERS AND SALES OF ASSETS	47
SECTION 5.8	USE OF PROCEEDS	48
SECTION 5.9	BOOKS AND RECORDS; INSPECTION	49
SECTION 5.10	RECEIVABLES FACILITY ATTRIBUTABLE INDEBTEDNESS	49
SECTION 5.11	TOTAL DEBT TO TOTAL CAPITALIZATION RATIO	49
SECTION 5.12	INTEREST COVERAGE RATIO	50
SECTION 5.13	SUBSIDIARY DEBT	51

ARTICLE 6	DEFAULTS	51

SECTION 6.1	EVENTS OF DEFAULT	51
SECTION 6.2	NOTICE OF DEFAULT	53

ARTICLE 7	THE ADMINISTRATIVE AGENT	53

SECTION 7.1	APPOINTMENT AND AUTHORITY	53
SECTION 7.2	ADMINISTRATIVE AGENT INDIVIDUALLY	53
SECTION 7.3	DUTIES OF ADMINISTRATIVE AGENT; EXCULPATORY PROVISIONS	54
SECTION 7.4	RELIANCE BY ADMINISTRATIVE AGENT	55
SECTION 7.5	DELEGATION OF DUTIES	56
SECTION 7.6	INDEMNIFICATION	56
SECTION 7.7	RESIGNATION OF ADMINISTRATIVE AGENT	56


SECTION 7.8	NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS	57
SECTION 7.9	NO OTHER DUTIES, ETC	58

ARTICLE 8	CHANGE IN CIRCUMSTANCES	58

SECTION 8.1	BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR	58
SECTION 8.2	ILLEGALITY	59
SECTION 8.3	INCREASED COST AND REDUCED RETURN	59
SECTION 8.4	COMMITTED BASE RATE LOANS SUBSTITUTED FOR AFFECTED LOANS	61
SECTION 8.5	SUBSTITUTION OR REMOVAL OF BANK	61
SECTION 8.6	TAXES	62

ARTICLE 9	MISCELLANEOUS	65

SECTION 9.1	NOTICES	65
SECTION 9.2	NO WAIVERS	67
SECTION 9.3	EXPENSES; INDEMNIFICATION	67
SECTION 9.4	SHARING OF SET OFFS AND PAYMENTS	68
SECTION 9.5	AMENDMENTS AND WAIVERS	69
SECTION 9.6	SUCCESSORS AND ASSIGNS	69
SECTION 9.7	[INTENTIONALLY OMITTED]	71
SECTION 9.8	GOVERNING LAW	71
SECTION 9.9	JURISDICTION; CONSENT TO SERVICE OF PROCESS	71
SECTION 9.10	JURY TRIAL	72
SECTION 9.11	COUNTERPARTS; INTEGRATION	72
SECTION 9.12	JUDGMENT CURRENCY	72
SECTION 9.13	PATRIOT ACT	73
SECTION 9.14	RIGHT OF SETOFF	73
SECTION 9.15	SURVIVAL OF AGREEMENT	73
SECTION 9.16	INTEREST RATE LIMITATION	73
SECTION 9.17	SEVERABILITY	74
SECTION 9.18	HEADINGS	74
SECTION 9.19	NO FIDUCIARY RELATIONSHIP	74
SECTION 9.20	CONFIDENTIALITY	74
SECTION 9.21	CURE	75
SECTION 9.22	JOINT AND SEVERAL LIABILITY	75

Exhibit A - Form of Assignment and Acceptance

Exhibit B - Form of Commitment Increase Supplement

Exhibit C - Money Market Quote Request

iii

Exhibit D - Invitation for Money Market Quotes

Exhibit E - Money Market Quote

Exhibit F - Form of Designation Letter

Exhibit G - Form of Termination Letter

Schedule 1 - Administrative Agent Address

CREDIT AGREEMENT, dated as of October 19, 2009, among MEADWESTVACO CORPORATION, each Wholly-Owned Subsidiary of the Borrower which hereafter becomes a Co-Borrower pursuant to the terms hereof, the banks and financial institutions from time to time party hereto as Lenders, CITIBANK, N.A., as Administrative Agent, BANK OF AMERICA, N.A., as Syndication Agent, and BARCLAYS BANK PLC, THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. and UBS LOAN FINANCE LLC, as Documentation Agents.

The parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions. The following terms, as used herein, have the following meanings:

“Absolute Rate Auction” means a solicitation of Money Market Quotes setting forth Money Market Absolute Rates pursuant to Section 2.3.

“Activities” has the meaning set forth in Section 7.2(b).

“Administrative Agent” means Citibank, N.A. in its capacity as Administrative Agent hereunder, and its successors in such capacity.

“Administrative Agent’s Office” shall mean the office address, facsimile number, electronic mail address, telephone number and account information set forth on Schedule 1 with respect to the Administrative Agent or such other address, facsimile number, electronic mail address, telephone number or account information as shall be designated by the Administrative Agent in a notice to the Borrower and the Lenders.

“Administrative Questionnaire” means, with respect to each Lender, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent (with a copy to the Borrower) duly completed by such Lender.

“Affiliate” means, with respect to any Person, any other Person that controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” (including, with correlative meaning, the term “controlled”), as applied to any Person, means the possession, directly or indirectly, of the power to direct the management and policies of that Person, whether through the ownership of voting securities or otherwise.

“Agent” means the Administrative Agent, the Syndication Agent or the Documentation Agents, as the context may require.

“Agent’s Group” has the meaning set forth in Section 7.2(b).

“Agreement Currency” means Dollars or an Alternate Currency.

“Alternate Currency” means Euros or Pounds Sterling.

“Alternate Currency Funding Office” has the meaning set forth in Section 2.4(b).

“Alternate Currency Loan” means a Committed Alternate Currency Loan or a Money Market Alternate Currency Loan.

“Applicable Percentage” means (i) with respect to Committed Euro-Dollar Borrowings, Committed Alternate Currency Borrowings and the facility fee referred to in Section 2.8(b)(i), at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below for such Pricing Level under the heading “Applicable Percentage and LC Fee”, (ii) with respect to the fee referred to in Section 2.8(a), at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below for such Pricing Level under the heading “Facility Fee Rate”, and (iii) with respect to Committed Base Rate Borrowings, at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below for such Pricing Level under the heading “Applicable Base Rate Percentage”:


Pricing Levels	Applicable Percentage and LC Fee	Facility Fee Rate	Applicable Base Rate Percentage
I	2.375%	0.375%	1.375%
II	2.500%	0.500%	1.500%
III	2.750%	0.500%	1.750%
IV	3.000%	0.750%	2.000%
V	3.250%	1.000%	2.250%

Changes in the Applicable Percentage resulting from a change in the Pricing Level shall become effective on the effective date of any change in the Senior Unsecured Debt Rating from S&P or Moody’s, as the case may be. Notwithstanding anything herein to the contrary, in the event that (A) two Pricing Levels would otherwise apply at any one time and (i) such Pricing Levels are adjacent to one another, the higher Pricing Level shall be the applicable Pricing Level, and (ii) such Pricing Levels are not adjacent to one another, the Pricing Level that is one Pricing Level below the higher of such two Pricing Levels shall be the applicable Pricing Level, (B) either S&P or Moody’s (but not both) shall no longer issue a rating for the Borrower’s senior unsecured non-credit enhanced long term debt, the applicable Pricing Level shall be determined by the remaining Senior Unsecured Debt Rating, and (C) in the event that both S&P and Moody’s shall no longer issue a rating for the Borrower’s senior unsecured non-credit enhanced long term debt, unless and until the date, if any, that the Borrower and Required Banks agree on a different arrangement, the existing Pricing Level shall continue in effect for the 60 day period immediately following such event and Pricing Level V shall apply at all times after such period. For purposes hereof, Pricing Level I is the highest Pricing Level and Pricing Level V is the lowest Pricing Level.

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.6), and accepted by the Administrative Agent, substantially in the form of Exhibit A or any other form approved by the Administrative Agent.

“Bank” means each bank or financial institution listed on the signature pages hereof, and its successors and permitted assigns.

“Base Rate” means, for any day, a rate per annum equal to the highest of (i) the Prime Rate for such day, (ii) the sum of 1/2 of 1% plus the Federal Funds Effective Rate for such day and (iii) the rate per annum determined by the Administrative Agent to be the offered rate for deposits in Dollars for a one month interest period announced on such day (or if such day is not a Business Day, the immediately preceding Business Day), plus 1.00%, provided that, for the avoidance of doubt, such rate per annum shall be based on the rate appearing on the Reuters Screen LIBOR 01 Page (or on any successor or substitute page of such page) at approximately 11:00 A.M., London time, on such day.

“Benefit Arrangement” means at any time an employee benefit plan within the meaning of Section 3 (3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of an ERISA Group.

“Borrower” means MeadWestvaco Corporation, a Delaware corporation, and its successors.

“Borrowers” means the Borrower and the Co-Borrowers, collectively.

“Borrowing” has the meaning set forth in Section 1.3.

“Business Day” means any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided, however, that, when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude any day on which banks are not open for international business (including dealings in Dollar deposits) in the London interbank market.

“Cash Collateral Event” has the meaning set forth in Section 2.16(i).

“Change of Control” has the meaning set forth in Section 2.15.

“Charges” has the meaning set forth in Section 9.16.

“Citigroup Parties” has the meaning set forth in Section 9.1(h).

“Co-Borrower” means a Wholly-Owned Subsidiary of the Borrower (i) as to which all of the conditions precedent set forth in Section 3.4 shall have been satisfied or waived in accordance with this Agreement, (ii) which has not been terminated as a Co-Borrower hereunder pursuant to Section 2.17(b), and (iii) which, pursuant to this Agreement and the applicable Designation Letter, shall be jointly and severally liable for the Obligations of the Borrower and each other Co-Borrower hereunder.

“Commitment” means, with respect to each Bank, the amount set forth opposite the name of such Bank on the signature pages to this Agreement as its “Commitment”, as such amount may be changed from time to time pursuant to Sections 2.9, 2.10, 2.15, 8.5 and 9.6. As of the Effective Date, the aggregate amount of the Commitments of the Banks equals $600,000,000.

“Commitment Increase Supplement” means a Commitment increase supplement in the form of Exhibit B.

“Committed Alternate Currency Loan” means a loan made by a Bank pursuant to Section 2.1 in an Alternate Currency.

“Committed Base Rate Loan” means a loan in Dollars to be made by a Bank pursuant to Section 2.1 as a Committed Base Rate Loan in accordance with the applicable Notice of Borrowing or pursuant to Article 8.

“Committed Credit Exposure” means, with respect to any Lender at any time, the Credit Exposure of such Lender at such time less the aggregate outstanding principal balance at such time of its Money Market Loans (determined on the basis of the Dollar Equivalent for each outstanding Alternate Currency Loan).

“Committed Domestic Loan” means a loan made by a Bank pursuant to Section 2.1 in Dollars.

“Committed Euro-Dollar Loan” means a loan in Dollars to be made by a Bank pursuant to Section 2.1 as a Eurocurrency Loan in accordance with the applicable Notice of Borrowing or pursuant to Article 8.

“Committed Loan” means a Committed Domestic Loan or a Committed Alternate Currency Loan.

“Communications” has the meaning set forth in Section 9.1(c).

“Consolidated Net Tangible Assets” means the total of all the assets required to be reflected on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries less the following:

(1) current liabilities, including liabilities for indebtedness maturing more than 12 months from the date of the original creation thereof but maturing, within 12 months from the date of determination;

(2) reserves for depreciation and other asset valuation reserves;

(3) intangible assets such as goodwill, trademarks, trade names, patents, and unamortized debt discount and expense carried as an asset on said balance sheet; and

(4) appropriate adjustments on account of minority interests of other persons holding stock in any Subsidiary of the Borrower.

Consolidated Net Tangible Assets shall be determined, subject to Section 1.2, in accordance with generally accepted accounting principles and practices applicable to the type of business in which the Borrower and its Subsidiaries are engaged and may be determined as of a date not more than sixty days prior to the happening of the event for which such determination is being made.

“Consolidated Subsidiary” means at any date and with respect to the Borrower, any Subsidiary or other entity the accounts of which would be consolidated with those of the Borrower in its consolidated financial statements if such statements were prepared as of such date.

“Corporation” includes corporations, partnerships, associations, companies and business trusts.

“Credit Exposure” means, with respect to any Bank at any time, the sum of (i) the aggregate outstanding principal balance of such Bank’s Loans (determined on the basis of the Dollar Equivalent for each outstanding Alternate Currency Loan), plus (ii) such Bank’s LC Exposure.

“Debt” of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, and (iii) all Debt of others guaranteed directly or indirectly by such Person.

“Default” means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

“Defaulting Lender” means, at any time, a Bank as to which the Administrative Agent has notified the Borrower that (i) such Bank has failed for three or more Business Days to comply with its obligations under this Agreement to make a Loan and/or make a payment to any Issuing Bank in respect of an LC Disbursement (each a “funding obligation”), (ii) such Bank has notified the Administrative Agent, or has stated publicly, that it will not comply with any such funding obligation hereunder, (iii) such Bank has, for three or more Business Days, failed to confirm in writing to the Administrative Agent, in response to a written request of the Administrative Agent, that it will comply with its funding obligations hereunder, or (iv) a Lender Insolvency Event has occurred and is continuing with respect to such Bank. The Administrative Agent will promptly send to all parties hereto a copy of any notice to the Borrower provided for in this definition.

“Defeased Debt” means any Debt which has been defeased (a)(i) in accordance with generally accepted accounting principles or (ii) pursuant to the deposit of cash, or debt securities backed by the full faith and credit of the United States, in either case in an amount sufficient to satisfy all such Debt at maturity or redemption, as applicable, and all payments of interest and premium, if any, in a trust or account created or pledged for the sole benefit of the holders of such Debt, and subject to no other Lien, and (b) in accordance with the other applicable terms of the instrument governing such Debt. For purposes of this Agreement, Defeased Debt shall include the non-recourse principal payment obligations of MeadWestvaco Timber Note Holding LLC under the Timber Note Monetization.

“Designation Letter” has the meaning set forth in Section 2.17(a).

“Documentation Agents” means Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and UBS Loan Finance LLC in their capacity as Documentation Agents hereunder, and their respective successors in such capacity.

“Dollar Equivalent” means, with respect to an amount denominated in any currency other than Dollars, the equivalent in Dollars of such amount determined at the Exchange Rate on the date of determination of such equivalent. In making any determination of the Dollar Equivalent for purposes of calculating both the amount of Loans available to be borrowed, or Letters of Credit available to be issued, on any particular date, the Administrative Agent shall use the relevant Exchange Rate in effect (i) in the case of any Loans being made, on the date on which the interest rate for such Loans is determined pursuant to the provisions of this Agreement, and (ii) in the case of any Letters of Credit being issued, the Business Day immediately preceding the date of issuance thereof.

“Dollars” or “$” refers to lawful currency of the United States of America.

“Domestic Funding Office” has the meaning set forth in Section 2.4(b).

“Domestic Subsidiary” means any Subsidiary which owns a Principal Property.

“Effective Date” means the date this Agreement becomes effective in accordance with Section 3.1.

“EMU” means economic and monetary union as contemplated in the Treaty on European Union.

“EMU Legislation” means legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency (whether known as the euro or otherwise), being in part the implementation of the third stage of EMU.

“Environmental Laws” means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air,

surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.

“ERISA Event” means (a) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations thereunder, other than an event for which the 30 day notice provision has been waived under subsection .21, .22, .27, .28 or .31 thereunder, (b) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, (c) the institution of proceedings by the PBGC to terminate a Plan under Section 4042 of ERISA, to appoint a trustee to administer a Plan or to impose liability in respect of such Plan (other than liability related to premiums under Section 307 of ERISA), (d) the existence of a condition by reason of which the PBGC could obtain a decree adjudicating that a Plan be terminated, (e) the existence of conditions set forth in Section 303(k)(1)(A) or (B) of ERISA to the creation of a lien upon property or rights to property of any member of the ERISA Group for failure to make a required payment to a Plan are satisfied, (f) the adoption of an amendment to a Plan requiring the provision of security to such Plan, pursuant to Section 307 of ERISA, (g) the imposition of partial or complete withdrawal liability upon any member of the ERISA Group, (h) the acquisition by a Multiemployer Plan of endangered, seriously endangered or critical status within the meaning of Section 305 of ERISA or Section 432 of the Code or election to opt out of such status pursuant to the Worker, Retiree and Employer Recovery Act of 2009; or (i) the existence of any reorganization, insolvency or default status within the meaning of ERISA under any Multiemployer Plan.

“ERISA Group” means the Borrower, any Subsidiary and all Persons, trades or businesses which, together with the Borrower or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code or Section 4001(b) of ERISA.

“Eurocurrency Loan” means a Committed Euro-Dollar Loan, a Committed Alternate Currency Loan or a Money Market Margin Auction Loan to be made by a Bank in accordance with the applicable Notice of Borrowing.

“Eurocurrency Base Rate” means:

(a) for any Interest Period for each Eurocurrency Loan in any Agreement Currency (other than Euros) comprising part of the same Borrowing, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of one percent) appearing on the Screen for such Agreement Currency as the British Bankers Association LIBOR Rate (“BBA LIBOR”) for deposits in such Agreement Currency at approximately 11:00 A.M. London time (or as soon thereafter as practicable) two Business Days prior to the first day of the Interest Period for such Eurocurrency Loan with a term equivalent to such Interest Period; provided that if such rate does not appear on such Screen (or, if such Screen shall cease to be publicly available or if the information contained on such Screen, in the

Administrative Agent’s reasonable judgment, shall cease accurately to reflect such BBA LIBOR for deposits in such Agreement Currency, as reported by any publicly available source of similar market data selected by the Administrative Agent that, in the Administrative Agent’s reasonable judgment, accurately reflects such BBA LIBOR for deposits in such Currency), the “Eurocurrency Base Rate” for such Interest Period for such Eurocurrency Loan in such Agreement Currency shall be the rate per annum at which deposits in such Agreement Currency are offered by the Administrative Agent in London, England to prime banks in the London interbank market at approximately 11:00 A.M. (London time) two Business Days before the first day of the Interest Period for such Loan with a term equivalent to such Interest Period; and

(b) for any Interest Period for each Eurocurrency Loan in Euros comprising part of the same Borrowing, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of one percent) appearing on the Screen for Euros as the BBA LIBOR for deposits in Euros within the member states of the European Union which are Participating Member States at approximately 11:00 A.M. London time (or as soon thereafter as practicable) two Business Days prior to the first day of the Interest Period for such Eurocurrency Loan with a term equivalent to such Interest Period; provided that if such rate does not appear on such Screen (or, if such Screen shall cease to be publicly available or if the information contained on such Screen, in the Administrative Agent’s reasonable judgment, shall cease accurately to reflect such BBA LIBOR for deposits in Euros within the member states of the European Union which are Participating Member States, as reported by any publicly available source of similar market data selected by the Administrative Agent that, in the Administrative Agent’s reasonable judgment, accurately reflects such BBA LIBOR for deposits in Euros within the member states of the European Union which are Participating Member States), the “Eurocurrency Base Rate” for such Interest Period for such Eurocurrency Loan shall be the arithmetic average (rounded to the nearest 1/100 of one percent) of the rates per annum at which deposits in Euros are offered by the Administrative Agent in London, England to prime banks in the London interbank market at approximately 10:00 A.M. (London time) two Business Days before the first day of the Interest Period for such Eurocurrency Loan with a term equivalent to such Interest Period.

“Eurocurrency Rate” means, with respect to each day during each Interest Period pertaining to a Eurocurrency Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

Eurocurrency Base Rate

1.00 - Eurocurrency Reserve Requirements

“Eurocurrency Reserve Requirements” means, for any day as applied to a Eurocurrency Loan, the aggregate (without duplication) of the rates (expressed as a decimal) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal

and emergency reserves) under any regulations of the Board of Governors of the Federal Reserve System or other governmental authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of such Board) maintained by a member bank of such System.

“Euros” refers to the single currency of participating member states of the European Union.

“Event of Default” has the meaning set forth in Section 6.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Rate” means, with respect to any Alternate Currency on any date, the rate at which such Alternate Currency may be exchanged into Dollars, as set forth on such date on the relevant Reuters currency page at or about 11:00 A.M., London time, on such date. In the event that such rate does not appear on any Reuters currency page, the “Exchange Rate” with respect to such Alternate Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower or, in the absence of such agreement, such “Exchange Rate” shall instead be the Administrative Agent’s spot rate of exchange in the interbank market where its foreign currency exchange operations in respect of such Alternate Currency are then being conducted, at or about 11:00 A.M., local time, on such date for the purchase of Dollars with such Alternate Currency, for delivery two Business Days later; provided, that if at the time of any such determination, no such spot rate can reasonably be quoted, the Administrative Agent may use any reasonable method as it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower under the Loan Documents, (a) Taxes imposed on (or measured by) net income and franchise taxes imposed on it (including, without limitation, branch profits or similar taxes) by any jurisdiction under the laws of which such recipient is organized or by any jurisdiction with which it has a present or former connection (other than a connection which would not have arisen but for its having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document) and, in the case of each Lender, taxes imposed on its net income (and franchise taxes imposed on it) by the jurisdiction of such Lender’s applicable lending office, (b) any withholding taxes imposed on amounts payable to a Lender at the time the Lender became a party to this Agreement (or designated a new lending office), except to the extent that such Lender (or its assignor) was entitled, at the time of the designation of a new lending office (or assignment), to receive additional amounts at the former lending office from any of the Borrowers pursuant to this Agreement and (c) any withholding taxes that are attributable to the failure of a Lender to comply with Section 8.6(b) or (c), except as a result of a change in applicable law after the date such Lender became a party to this Agreement, or in the case of a participant, after the date the participant purchases the related participation interest.

“Existing Agreement” means that certain Credit Agreement dated as of December 1, 2004 among the Borrower, the banks and financial institutions party thereto, and The Bank of New York, as administrative agent, as amended, supplemented or otherwise modified.

“Existing Bank Debt” means all Debt under the Existing Agreement and all accrued and unpaid monetary obligations of the Borrower under the Existing Agreement and all documents, instruments and other agreements executed and delivered in connection therewith.

“Federal Funds Effective Rate” means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate quoted to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

“Federal Reserve Board” means the Board of Governors of the United States Federal Reserve System or any successor thereto.

“Fixed Rate Loans” means Committed Euro-Dollar Loans, Committed Alternate Currency Loans or Money Market Loans (excluding Money Market Loans bearing interest at the Base Rate pursuant to Section 8.1(a)) or any combination of the foregoing.

“Information” has the meaning set forth in Section 9.20.

“Interest Period” means: (1) with respect to each Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable Notice of Borrowing; provided that:

(a) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls (i) after the Maturity Date, or (ii) in another calendar month, in either of which case such Interest Period shall end on the next preceding Business Day;

(b) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Business Day of a calendar month; and

(2) with respect to each Committed Base Rate Borrowing, the period commencing on the date of such Borrowing and ending 30 days thereafter; provided that:

(a) any Interest Period (other than an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; and

(b) any Interest Period which would otherwise end after the Maturity Date shall end on the Maturity Date; and

(3) with respect to each Money Market Absolute Rate Borrowing, the period commencing on the date of such Borrowing and ending such number of days thereafter (but not less than 7 nor more than 180 days) as the Borrower may elect in accordance with Section 2.3; provided that:

(a) any Interest Period (other than an Interest period defined pursuant to clause (b) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; and

(b) any Interest Period which would otherwise end after the Maturity Date shall end on the Maturity Date.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, or any successor statute.

“Issuing Bank” means (i) Bank of America, N.A. and (ii) each other Bank identified by the Borrower whose identity has been disclosed to the Administrative Agent, and which Bank has, pursuant to a written notice to the Borrower (a copy of which is provided to the Administrative Agent), agreed to issue Letters of Credit under this Agreement, each in its capacity as an issuer of Letters of Credit.

“Issuing Bank LC Exposure” means, at any time, with respect to an Issuing Bank, the sum, without duplication, of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time issued by such Issuing Bank plus (b) the aggregate amount of all LC Disbursements made by such Issuing Bank that have not yet been reimbursed by or on behalf of the Borrower at such time.

“LC Commitment” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit hereunder. The aggregate amount of the LC Commitments of the Issuing Banks shall in no event exceed $150,000,000.

“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit issued by such Issuing Bank.

“LC Exposure” means, at any time, (i) with respect to all of the Banks, the sum, without duplication, of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time and (ii) with respect to each Bank, its Lender Percentage of the amount determined under clause (i). At no time shall the aggregate LC Exposure of the Banks exceed $150,000,000.

“Lender” means a Bank or an Issuing Bank.

“Lender Appointment Period” has the meaning set forth in Section 7.7.

“Lender Insolvency Event” means that (i) a Bank or its Parent Company has been adjudicated as, or determined by any governmental authority having regulatory authority over such Person or its assets to be, insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, or (ii) such Bank or its Parent Company is the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Bank or its Parent Company, or such Bank or its Parent Company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment; provided, that a Lender Insolvency Event shall not have occurred with respect to a Lender solely as the result of the acquisition or maintenance of an ownership interest in such Lender or its Parent Company or the exercise of control over a Lender or its Parent Company by a Governmental Authority or an instrumentality thereof.

“Lender Percentage” means, with respect to any Bank at any time, a percentage equal to a fraction, the numerator of which is such Bank’s Commitment, and the denominator of which is the aggregate Commitments of all Banks.

“Letter of Credit” means any standby letter of credit (and any successive renewals thereof) issued pursuant to this Agreement.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

“Loan” means a Committed Loan or a Money Market Loan and “Loans” means Committed Loans or Money Market Loans, or any combination of the foregoing.

“Loan Documents” means this Agreement, the documentation in respect of each Letter of Credit, each Designation Letter and each Termination Letter, and “Loan Document” means any one of them.

“Margin Auction” means a solicitation of Money Market Quotes setting forth Money Market Margins based on the Eurocurrency Rate pursuant to Section 2.3.

“Material Debt” means Debt (other than the Obligations) of the Borrower, any Co-Borrower and/or one or more of the Borrower’s Domestic Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $75,000,000.

“Maturity Date” means October 19, 2012, or, if such day is not a Business Day, the next preceding Business Day.

“Maximum Rate” has the meaning set forth in Section 9.16.

“Money Market Absolute Rate” has the meaning set forth in Section 2.3(d).

“Money Market Absolute Rate Loan” means a Money Market Domestic Absolute Rate Loan or a Money Market Alternate Currency Absolute Rate Loan.

“Money Market Alternate Currency Absolute Rate Loan” has the meaning set forth in Section 2.3(b).

“Money Market Alternate Currency Loan” means a Money Market Alternate Currency Absolute Rate Loan or a Money Market Alternate Currency Margin Auction Loan.

“Money Market Alternate Currency Margin Auction Loan” has the meaning set forth in Section 2.3(b).

“Money Market Domestic Absolute Rate Loan” has the meaning set forth in Section 2.3(b).

“Money Market Domestic Loan” means a Money Market Domestic Margin Auction Loan or a Money Market Domestic Absolute Rate Loan.

“Money Market Domestic Margin Auction Loan” has the meaning set forth in Section 2.3(b).

“Money Market Margin Auction Loan” means a Money Market Domestic Margin Auction Loan or a Money Market Alternate Currency Margin Auction Loan (including such a loan bearing interest at the Base Rate pursuant to Section 8.1(a)).

“Money Market Loan” means a Money Market Domestic Loan or a Money Market Alternate Currency Loan.

“Money Market Margin” has the meaning set forth in Section 2.3(d).

“Money Market Quote” means an offer by a Bank to make a Money Market Loan in accordance with Section 2.3.

“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.

“mortgage” has the meaning set forth in Section 5.6.

“Multiemployer Plan” means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of an ERISA Group has an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of such ERISA Group during such five year period.

“Non-Defaulting Lender” means, at any time, a Bank that is not a Defaulting Lender.

“Non-Excluded Taxes” means all Taxes, other than Excluded Taxes.

“Notice of Borrowing” means a Notice of Committed Borrowing (as defined in Section 2.2) or a Notice of Money Market Borrowing (as defined in Section 2.3(f)).

“Obligations” means the obligations of the Borrowers hereunder, including in respect of the principal of and interest on the Loans, in respect of the Letters of Credit, and in respect of the fees and other amounts owing hereunder.

“Other Taxes” has the meaning set forth in Section 8.6(d).

“Parent Company” means, with respect to a Bank, the bank holding company (as defined in Regulation Y of the Federal Reserve Board), if any, of such Bank, and/or any Person owning, beneficially or of record, directly or indirectly, a majority of the shares of such Bank.

“Participant” has the meaning set forth in Section 9.6(e).

“Participating Member State” means each state so described in any EMU Legislation.

“Patriot Act” has the meaning set forth in Section 9.13.

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Plan” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of any ERISA Group for employees of any member of such ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of such ERISA Group for employees of any Person which was at such time a member of such ERISA Group.

“Platform” has the meaning set forth in Section 9.1(d).

“Pounds Sterling” refers to the lawful currency of the United Kingdom.

“Pricing Level I” will be applicable for so long as the Senior Unsecured Debt Rating is BBB+ or higher by S&P or Baa1 or higher by Moody’s.

“Pricing Level II” will be applicable for so long as the Senior Unsecured Debt Rating is BBB by S&P or Baa2 by Moody’s.

“Pricing Level III” will be applicable for so long as the Senior Unsecured Debt Rating is BBB- by S&P or Baa3 by Moody’s.

“Pricing Level IV” will be applicable for so long as the Senior Unsecured Debt Rating is BB+ by S&P or Ba1 by Moody’s.

“Pricing Level V” will be applicable for so long as the Senior Unsecured Debt Rating is lower than BB+ by S&P or lower than Ba1 by Moody’s.

“Prime Rate” means the rate of interest publicly announced by the Administrative Agent in New York City from time to time as its prime commercial lending rate.

“Principal Property” means any mill, converting plant, manufacturing plant, manufacturing facility, including, in each case, the equipment therein, or timberlands, located within the continental United States of America (other than any of the foregoing acquired principally for the control or abatement of atmospheric pollutants or contaminants or water, noise, odor or other pollution, or any facility financed from the proceeds of pollution control or revenue bonds), having a gross book value (without deductions of any applicable depreciation reserves) on the date as of which the determination is being made of more than two percent (2%) of Consolidated Net Tangible Assets, but shall not include any minerals or mineral rights, or any timberlands designated by the Board of Directors of the Borrower or of a Domestic Subsidiary thereof, as the case may be, as being held primarily for development and/or sale.

“Public Lender” has the meaning set forth in Section 9.1(e).

“Receivables Facility Attributed Indebtedness” means the amount of obligations outstanding under a receivables purchase facility on any date of determination that would be characterized as principal if such facility were structured as a secured lending transaction rather than as a purchase.

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and such Person’s and such Person’s Affiliates’ respective managers, administrators, trustees, partners, directors, officers, employees, agents, fund managers and advisors.

“Required Banks” means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, having an aggregate Credit Exposure of more than 50% of the aggregate Credit Exposure of all Banks. For purposes of determining “Required Banks” on any date of determination, Credit Exposure shall be calculated using the Exchange Rates in effect on such date of determination or, in the event such date of determination is not a Test Date, on the immediately preceding Test Date.

“Responsible Officer” means the chief executive officer, the chief financial officer, the chief accounting officer, the treasurer or the general counsel of the Borrower.

“Revolving Credit Period” means the period from and including the Effective Date to but excluding the Maturity Date.

“S&P” means Standard & Poor’s Rating Group, a division of the McGraw-Hill Companies, or any successor thereto.

“Screen” means:

(i) in relation to any interest rate determined pursuant to clause (a) of the definition of Eurocurrency Base Rate, Reuters Screen LIBOR01, Page: BBA LIBOR (or any successor or substitute page, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for the purposes of providing quotations of interest rates applicable to the relevant Agreement Currency in the London interbank market); and

(ii) in relation to any interest rate determined pursuant to clause (b) of the definition of Eurocurrency Base Rate, Reuters Screen LIBOR01, Page: BBA LIBOR (or any successor or substitute page, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for the purposes of providing quotations of interest rates applicable to Euros within the member states of the European Union which are Participating Member States).

“Senior Unsecured Debt Ratings” means the Borrower’s senior unsecured non-credit enhanced long-term debt ratings designated from time to time by S&P and Moody’s.

“Significant Subsidiary” means any Subsidiary which is a “significant subsidiary” of the Borrower as defined in Rule 1-02 of Regulation S-X under the Securities Exchange Act of 1934.

“Spread Loan” means a Committed Euro-Dollar Loan, a Committed Alternate Currency Loan or a Money Market Margin Auction Loan.

“Subsidiary” means a Corporation more than 50% of the Voting Stock of which is owned or controlled, directly or indirectly, by the Borrower or by one or more other Subsidiaries of the Borrower, or by the Borrower and one or more other Subsidiaries of the Borrower.

“Syndication Agent” means Bank of America, N.A. in its capacity as Syndication Agent hereunder, and its successors in such capacity.

“Tax” means any present or future income, stamp or other tax, assessment, levy, impost, duty, fee, deduction, withholding or other charge of whatever nature now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority, and any liabilities with respect thereto including any interest, additions to tax or penalties applicable thereto.

“Termination Letter” has the meaning set forth in Section 2.17(b).

“Test Date” means the last Business Day of each calendar quarter.

“Timber Note Monetization” means the secured financing governed by the terms of that certain Credit Agreement dated as of November 16, 2007 among MeadWestvaco Timber Note Holding LLC, the lenders from time to time party thereto, and Sumitomo Mitsui Banking Corporation, as administrative agent, as the same may be amended, modified, restated or refinanced (in any case, so long as the obligations of MeadWestvaco Timber Note Holding LLC thereunder (i) are not increased, (ii) remain non-recourse to the Borrower and any Subsidiary of the Borrower and (iii) otherwise qualify as Defeased Debt under clauses (a) and (b) of the definition thereof).

“Treaty on European Union” means the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on February 7, 1992, and came into force on November 1, 1993), as amended from time to time.

“Voting Stock” means stock of the class or classes having general power under ordinary circumstances to vote in the election of the board of directors, managers or trustees of a Corporation (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

“Wholly-Owned Subsidiary” means a Corporation 100% of the Voting Stock of which is owned or controlled, directly or indirectly, by the Borrower or by one or more other Wholly-Owned Subsidiaries of the Borrower, or by the Borrower and one or more other Wholly-Owned Subsidiaries of the Borrower.

Section 1.2 Accounting Terms and Determinations. (a)Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect on the Effective Date.

(b) If any change in the accounting principles used in the preparation of the consolidated financial statements of the Borrower referred to in Section 5.1(a) or (b) is hereafter required by the rules, regulations, pronouncements and opinions contained in the Financial Accounting Standards Board Codification, and such change is adopted by the Borrower with the agreement of the Borrower’s accountants and results in a change in any of the calculations required by Section 5.11, 5.12 or 5.13 that would not have resulted had such accounting change not occurred, then, to the extent a reconciliation of such change is not reflected by the Borrower in its consolidated financial statements so as to reflect what the applicable calculation would have been had such change not occurred, the Borrower shall provide such reconciliation in the compliance certificate to be delivered pursuant to Section 5.1(c) for so long as such accounting change remains in effect.

Section 1.3 Types of Borrowing. The term “Borrowing” denotes the aggregation of Loans of one or more Banks to be made to the Borrower pursuant to Article 2 on a single date and for a single Interest Period. Borrowings are classified for purposes of this Agreement by reference to the pricing of Loans comprising such Borrowing (e.g., a “Eurocurrency Borrowing” is a Borrowing comprised of Eurocurrency Loans), by reference to the type of currency of the

Loans comprising such Borrowing (e.g., a “Domestic Borrowing” is a Borrowing comprised of Committed Domestic Loans or Money Market Domestic Loans) or by reference to the provisions of Article 2 under which participation therein is determined (e.g., a “Committed Domestic Borrowing” is a Borrowing under Section 2.1 in Dollars in which all Banks participate in proportion to their Commitments, while a “Money Market Borrowing” is a Borrowing under Section 2.3 in which the Bank participants are determined on the basis of their bids in accordance therewith).

Section 1.4 Computation of Time Periods. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”

Section 1.5 Certain Terms. (a) The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms refer to this Agreement as a whole and not to any particular Article, Section, subsection or clause in, this Agreement.

(b) Unless otherwise expressly included herein, (i) references in this Agreement to an Exhibit, Schedule, Article, Section, clause or sub-clause refer to the appropriate Exhibit or Schedule to, or Article, Section, clause or sub-clause in, this Agreement and (ii) the words “above” and “below,” when following a reference to a clause or a sub-clause of any Loan Document, refer to a clause or a sub-clause within, respectively, the same Section or clause.

(c) Each agreement defined in this Article 1 shall include all appendices, exhibits and schedules thereto. Unless the prior written consent of the Required Banks (or any greater number of Lenders, as applicable) is required hereunder for an amendment, restatement, supplement or other modification to any such agreement and such consent is not obtained, references in this Agreement to such agreement shall be to such agreement as so amended, restated, supplemented or modified.

(d) References in this Agreement to any statute shall be to such statute as amended or modified from time to time and to any successor legislation thereto, in each case as in effect at the time any such reference is operative.

(e) The term “including” when used in any Loan Document means “including without limitation” except when used in the computation of time periods.

(f) The terms “Lender” and “Administrative Agent” include, without limitation, their respective successors.

(g) Upon the appointment of any successor Administrative Agent pursuant to Section 7.7, references to Citibank in Section 7.2 and in the definition of Base Rate shall be deemed to refer to the financial institution then acting as the Administrative Agent or one of its Affiliates if it so designates.

ARTICLE 2

THE CREDITS

Section 2.1 Commitments. During the Revolving Credit Period each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans in one or more Agreement Currencies to the Borrowers pursuant to this Section from time to time in amounts such that the Committed Credit Exposure of such Bank shall not exceed the amount of its Commitment. Each Borrowing under this Section shall be in an aggregate principal amount of (a) $10,000,000 or any larger multiple of $1,000,000, or (a) if such Borrowing is denominated in a currency other than Dollars, the Dollar Equivalent amount of the amount determined under clause (a) (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.2(b)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrowers may borrow under this Section, repay, or to the extent permitted by Section 2.11, prepay Committed Loans and reborrow at any time during the Revolving Credit Period under this Section.

Section 2.2 Notice of Borrowing. The Borrower shall, on behalf of itself or the applicable Co-Borrower, give the Administrative Agent notice of a proposed Borrowing under Section 2.1 (a “Notice of Committed Borrowing”), signed by a Responsible Officer, not later than 12:00 Noon (New York City time) (i) on the date of each proposed Committed Base Rate Borrowing, (ii) on the third Business Day before each proposed Committed Euro-Dollar Borrowing, and (iii) on the fourth Business Day before each Committed Alternate Currency Borrowing, in each case specifying:

(a) the currency for such Borrowing, which shall be either Dollars or an Alternate Currency,

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

(c) which of the Borrowers is to receive the proceeds of such Borrowing and the aggregate amount of such Borrowing (which aggregate amount shall be in compliance with Section 2.1),

(d) whether the Loans comprising such Borrowing are to be Committed Base Rate Loans, Committed Euro-Dollar Loans or Committed Alternate Currency Loans, and

(e) in the case of a Committed Euro-Dollar Borrowing or a Committed Alternate Currency Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period.

Section 2.3 Money Market Borrowings.

(a) The Money Market Option. In addition to Borrowings pursuant to Section 2.1, the Borrower may, as set forth in this Section, (on behalf of itself or the applicable Co-Borrower) request the Banks during the Revolving Credit Period to make offers to make Money Market Loans in Dollars or any Alternate Currency to the Borrower or the applicable Co-Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may (on behalf of itself or the applicable Co-Borrower), but shall have no obligation to, accept any such offers in the manner set forth in this Section.

(b) Money Market Quote Request. When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Administrative Agent by telex or facsimile transmission a Money Market Quote Request substantially in the form of Exhibit C hereto, together with any fee payable by the Borrower to the Administrative Agent pursuant to Section 2.8(d). Each Money Market Quote Request shall be transmitted so as to be received by the Administrative Agent no later than 12:00 Noon (New York City time) on (x) the sixth Business Day prior to the date of Borrowing proposed therein, in the case of any such Money Market Loan in an Alternate Currency pursuant to a Margin Auction (each a “Money Market Alternate Currency Margin Auction Loan”) or pursuant to an Absolute Rate Auction (each a “Money Market Alternate Currency Absolute Rate Loan”), (y) the fifth Business Day prior to the date of Borrowing proposed therein, in the case of any such Money Market Loan in Dollars pursuant to a Margin Auction (each a “Money Market Domestic Margin Auction Loan”), or (z) the Business Day next preceding the date of Borrowing proposed therein, in the case of any such Money Market Loan in Dollars pursuant to an Absolute Rate Auction (each a “Money Market Domestic Absolute Rate Loan”) (or, in any case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified the Banks not later than the date of the Money Market Quote Request for the first Margin Auction or Absolute Rate Auction for which such change is to be effective) specifying:

(i) the currency for such Borrowing, which shall be either Dollars or an Alternate Currency,

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

(iii) which of the Borrowers is to receive the proceeds of such Borrowing and the aggregate amount of such Borrowing, which shall be (1) $10,000,000 or a larger multiple of $1,000,000, or (2) if such Borrowing is denominated in a currency other than Dollars, the Dollar Equivalent amount of the amount determined under clause (1),

(iv) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and

(v) whether the Money Market Quotes requested are to set forth a Money Market Margin or a Money Market Absolute Rate.

The Borrower may request offers to make Money Market Loans pursuant to this Section for more than one Interest Period in a single Money Market Quote Request. The Borrower may not request offers to make Money Market Loans for more than one currency in a single Money Market Quote Request. No more than four Money Market Quote Requests shall be given in any one calendar month.

(c) Invitation for Money Market Quotes. Promptly upon receipt of a Money Market Quote Request, the Administrative Agent shall send to the Banks by telex or facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit D hereto, which shall constitute an invitation by the Borrower (on behalf of itself or the applicable Co-Borrower) to each Bank to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section.

(d) Submission and Contents of Money Market Quotes. (i) Each Bank may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes. Each Money Market Quote must comply with the requirements of this subsection (d) and must be submitted to the Administrative Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 9.1 not later than (x) 2:00 P.M. (New York City time) on the fifth Business Day prior to the proposed date of Borrowing, in the case of any Money Market Alternate Currency Borrowing, (y) 2:00 P.M. (New York City time) on the fourth Business Day prior to the proposed date of Borrowing, in the case of any Money Market Domestic Margin Auction Borrowing, or (z) 9:15 A.M. (New York City time) on the proposed date of Borrowing, in the case of any Money Market Domestic Absolute Rate Borrowing (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified the Banks not later than the date of the Money Market Quote Request for the first Margin Auction or Absolute Rate Auction for which such change is to be effective); provided that Money Market Quotes submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) 1:00 P.M. (New York City time) on the fifth Business Day prior to the proposed date of Borrowing, in the case of any Money Market Alternate Currency Borrowing, (y) 1:00 P.M. (New York City time) on the fourth Business Day prior to the proposed date of Borrowing, in the case of any Money Market Domestic Margin Auction Borrowing, or (z) 9:00 A.M. (New York City time) on the proposed date of Borrowing in the case of any Money Market Domestic Absolute Rate Borrowing. Subject to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except with the written consent of the Administrative Agent given on the instructions of the Borrower.

(ii) Each Money Market Quote shall be in substantially the form of Exhibit E hereto, may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Money Market Quotes, and shall in any case specify:

(A) the proposed date of Borrowing,

(B) the principal amount of the Money Market Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be (1) $5,000,000 or a larger multiple of $1,000,000, or (2) if such Money Market Loan is denominated in a currency other than Dollars, the Dollar Equivalent amount of the amounts determined under clause (1), (y) may not exceed the principal amount of Money Market Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Money Market Loans for which offers being made by such quoting Bank may be accepted,

(C) in the case of a Margin Auction, the margin above or below the applicable Eurocurrency Rate (the “Money Market Margin”) offered for each such Money Market Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate,

(D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the “Money Market Absolute Rate”) offered for each such Money Market Loan, and

(E) the identity of the quoting Bank.

(iii) Any Money Market Quote shall be disregarded if it:

(A) is not substantially in conformity with Exhibit E hereto or does not specify all of the information required by subsection (d)(ii);

(B) contains qualifying, conditional or similar language;

(D) arrives after the time set forth in subsection (d)(i).

(e) Notice to Borrower. The Administrative Agent shall promptly notify the Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is in accordance with subsection (d), and (y) of any Money Market Quote that amends, modifies or is otherwise inconsistent with a previous Money Market Quote submitted by such Bank with respect to the same Money Market Quote Request. Any such subsequent Money Market Quote shall be disregarded by the Administrative Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Administrative Agent’s notice to the Borrower shall specify (A) the aggregate principal amount of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (B) the respective principal amounts and Money Market Margins or Money Market Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted.

(f) Acceptance and Notice by Borrower. Not later than 10:00 A.M. (New York City time) on (x) the fourth Business Day prior to the proposed date of Borrowing, in the case of a Money Market Alternate Currency Borrowing, (y) the third Business Day prior to the proposed date of Borrowing, in the case of a Money Market Domestic Margin Auction Borrowing, or (z) the proposed date of Borrowing, in the case of a Money Market Domestic

Absolute Rate Borrowing (or, in any case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified the Banks not later than the date of the Money Market Quote Request for the first Margin Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall (on behalf of itself or the applicable Co-Borrower) notify the Administrative Agent of its acceptance or non acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a “Notice of Money Market Borrowing”) shall specify the aggregate principal amount (in the applicable currency) of offers for each Interest Period that are accepted. The Borrower (on behalf of itself or the applicable Co-Borrower) may accept any Money Market Quote in whole or in part; provided that:

(i) the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request,

(ii) the principal amount of each Money Market Borrowing must be (1) $10,000,000 or a larger multiple of $1,000,000, or (2) if such Money Market Loan is denominated in a currency other than Dollars, the Dollar Equivalent amount of the amounts determined under clause (1),

(iii) acceptance of offers may only be made on the basis of ascending Money Market Margins or Money Market Absolute Rates, as the case may be,

(iv) the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement, and

(v) after giving effect to each Money Market Borrowing, the aggregate Credit Exposure of the Lenders shall not exceed the aggregate Commitments.

(g) Allocation by Administrative Agent. If offers are made by two or more Banks with the same Money Market Margins or Money Market Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Money Market Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Banks as nearly as possible (in multiples of $1,000,000 (or the Dollar Equivalent), as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative Agent of the amounts of Money Market Loans shall be conclusive in the absence of manifest error.

Section 2.4 Notice to Banks; Funding of Loans.

(a) Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank’s share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower.

(b) Not later than (x) 2:00 p.m. (New York City time) on the date of each Domestic Borrowing, or (y) 11:00 a.m. (New York City time) on the date of each Alternate Currency Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing to the Administrative Agent (i) in the case of each Domestic Borrowing, at such location in New York City as specified on Schedule 1 or otherwise specified from time to time by the Administrative Agent (the “Domestic Funding Office”), or (ii) in the case of each Alternate Currency Borrowing, at such location in London as specified on Schedule 1 or otherwise specified from time to time by the Administrative Agent (the “Alternate Currency Funding Office”), in each case in funds immediately available at such location. Unless the Administrative Agent determines that any applicable condition specified in Article 3 has not been satisfied, the Administrative Agent will make the funds so received from the Banks available to the Borrower or the applicable Co-Borrower at the Administrative Agent’s aforesaid location. Notwithstanding anything to the contrary herein contained, any Bank may cause its Alternate Currency Loans to be made by any branch affiliate or international banking facility of such Bank, provided, that such Bank shall remain responsible for all of its obligations hereunder and no additional taxes, costs or other burdens shall be imposed upon the Borrowers or the Administrative Agent as a result thereof.

(c) If any Bank makes a new Loan to the Borrower or any Co-Borrower in a particular currency on a day on which the Borrower or such Co-Borrower, as the case may be, is to repay all or any part of an outstanding Loan from such Bank in the same currency, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed by the Borrower or such Co-Borrower, as the case may be, and the amount being repaid by the same Person shall be made available by such Bank to the Administrative Agent as provided in subsection (b), or remitted by the Borrower or such Co-Borrower, as the case may be, to the Administrative Agent as provided in Section 2.12, as the case may be.

(d) Unless the Administrative Agent shall have received notice from a Bank prior to the time of any Borrowing that such Bank will not make available to the Administrative Agent such Bank’s share of such Borrowing, the Administrative Agent may assume that such Bank has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsections (b) and (c) of this Section 2.4 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower or the applicable Co-Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Administrative Agent within three (3) Business Days of the Borrowing, such Bank and the Borrower or the applicable Co-Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount (in the applicable currency) together with interest (in the applicable currency) thereon, for each day from the date such amount is made available to the applicable Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower or the applicable Co-Borrower, a rate per annum equal to (x) in the case of Domestic Borrowings, the higher of the Federal Funds Effective Rate and the interest rate applicable thereto pursuant to Section 2.7, or (y) in the case of Alternate Currency Borrowings the interest rate applicable thereto pursuant to Section 2.7, and (ii) in the case of such Bank (x) in the case of Domestic Borrowings, the Federal Funds Effective Rate, or (y) in the case of Alternate Currency Borrowings, the interest rate applicable thereto

pursuant to Section 2.7. If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank’s Loan included in such Borrowing for purposes of this Agreement. The provisions of this Section 2.4(d) shall not relieve any Bank of responsibility for its obligations under this Agreement or any default in the performance thereof.

Section 2.5 Evidence of Debt.

(a) Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to the appropriate lending office of such Bank resulting from each Loan made by such lending office of such Bank from time to time, including the amounts of principal and interest payable and paid to such lending office of such Bank from time to time under this Agreement.

(b) The Administrative Agent shall maintain the Register pursuant to subsection 9.6(c), and a subaccount for each Bank, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder, the type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Bank hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrowers and each Bank’s share thereof.

(c) The entries made in the Register and accounts maintained pursuant to paragraphs (a) and (b) of this subsection 2.5 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrowers therein recorded; provided, however, that the failure of any Bank or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrowers to repay (with applicable interest) the Loans made to the Borrowers by such Bank in accordance with the terms of this Agreement.

Section 2.6 Maturity of Loans. Each Loan shall mature, and the principal amount thereof shall be due and payable, on the last day of the Interest Period applicable to thereto.

Section 2.7 Interest Rates. (a) Committed Base Rate Loans. Each Committed Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the sum of the Applicable Percentage plus Base Rate for such day. Such interest shall be payable for each Interest Period on the last day thereof.

(b) Committed Eurocurrency Loans. Subject to Section 8.1(a), each Eurocurrency Loan made pursuant to Section 2.1 shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Applicable Percentage plus the applicable Eurocurrency Rate. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof.

(c) Money Market Loans. Subject to Section 8.1(a), each Money Market Margin Auction Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Eurocurrency Rate for such Interest Period (determined in accordance with Section 2.7(b) as if the related Money Market Margin Auction Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Bank making such Loan in accordance with Section 2.3). Each Money Market Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market Absolute Rate quoted by the Bank making such Loan in accordance with Section 2.3. All such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof.

(d) Limitation on Eurocurrency Borrowings. Upon the occurrence and during the continuance of an Event of Default, the Borrower shall not be permitted to request (on behalf of itself or any Co-Borrower) Eurocurrency Loans pursuant to any Notice of Committed Borrowing, and any then pending Notice of Committed Borrowing for Eurocurrency Loans shall automatically, and without further action by any party hereto, constitute a Notice of Committed Borrowing for Committed Base Rate Loans.

(e) Default Interest. Notwithstanding the rates of interest specified in clauses (a), (b) and (c) of this Section or elsewhere in this Agreement, effective immediately upon the occurrence of an Event of Default and for as long thereafter as such Event of Default shall be continuing, the principal balance of all Loans and the amount of all other Obligations then due and payable shall bear interest at a rate that is 2% per annum in excess of the interest applicable to such Loans or other Obligations from time to time. Such interest shall be payable on the date that would otherwise be applicable to such interest pursuant to clause (a), (b) or (c) of this Section 2.7, as applicable, or otherwise on demand.

(f) Determination of Rates. The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.

Section 2.8 Fees.

(a) Facility Fee. The Borrower shall pay to the Administrative Agent for the account of the Banks ratably a facility fee at a rate per annum equal to the Applicable Percentage. Such facility fee shall accrue (i) from and including the Effective Date to but excluding the Maturity Date, on the daily average aggregate amount of the Commitments (whether used or unused) and (ii) from and including the Maturity Date to but excluding the date that there shall no longer be any Credit Exposure, on the daily average aggregate Credit Exposure of all Banks.

(b) LC Fees. The Borrower agrees to pay (i) to the Administrative Agent for the account of each Bank a participation fee with respect to its participations in Letters of Credit,

which shall accrue at a rate per annum equal to the Applicable Percentage on the average daily amount of such Bank’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Bank’s Commitment terminates and the date on which such Bank ceases to have any LC Exposure and (ii) to each Issuing Bank for its own account (1) a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the Borrower and such Issuing Bank on the average daily aggregate undrawn amount of such Issuing Bank’s Letters of Credit (excluding any portion thereof attributable to unreimbursed LC Disbursements in respect thereof) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, and (2) such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit issued by it or processing of drawings thereunder.

(c) Payments. Accrued fees under this Section (other than fees payable under Section 2.8(b)(ii)(2) and Section 2.8(d)), shall be payable quarterly on each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the date hereof and upon each reduction of the Commitments; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any fees payable under Section 2.8(b)(ii)(2) shall be payable within ten days after demand and any fees payable under Section 2.8(d) shall be payable pursuant to such separate agreement between the Administrative Agent and the Borrower.

(d) Other Fees. The Borrower agrees to pay to the Administrative Agent such fees as from time to time may be separately agreed between the Borrower and the Administrative Agent.

(e) Defaulting Lenders. Anything herein to the contrary notwithstanding, during such period that a Bank is a Defaulting Lender, such Defaulting Lender will not be entitled to any fees accruing during such period pursuant to Section 2.8(a) in respect of such Defaulting Lender’s unfunded Commitment (without prejudice to the rights of the Lenders other than Defaulting Lenders in respect of such fees).

Section 2.9 Optional Termination, Reduction or Increase of Commitments. (a) During the Revolving Credit Period, the Borrower may, upon at least three Business Days’ notice to the Administrative Agent, on behalf of itself and each Co-Borrower (i) terminate the Commitments at any time, if there is no Credit Exposure at such time or (ii) ratably reduce from time to time by an aggregate amount of $10,000,000 or in an integral multiple of $1,000,000 in excess thereof, the aggregate amount of the Commitments in excess of the aggregate Credit Exposure. In addition, the Borrower may (on behalf of itself or any Co-Borrower) terminate the unused amount of the Commitment of a Defaulting Lender upon not less than ten (10) Business Days’ prior notice to the Administrative Agent (which will promptly notify the Lenders thereof), provided that such termination will not be deemed to be a waiver or release of any claim any of the Borrowers, the Administrative Agent, any Issuing Bank or any Lender may have against such Defaulting Lender.

(b) The Borrower may at any time and from time to time on or prior to the Business Day immediately preceding the Maturity Date and so long as no Default or Event of Default is then continuing, at its sole cost and expense, request (on behalf of itself and each Co-Borrower) any one or more of the Banks that is reasonably satisfactory to each Issuing Bank to increase its Commitment (the decision to increase the Commitment of a Bank to be within the sole and absolute discretion of such Bank), or any Person (other than a Bank) that is reasonably satisfactory to the Administrative Agent and each Issuing Bank to provide a new Commitment, by submitting to the Administrative Agent a Commitment Increase Supplement duly executed by the Borrower and each such Bank or other Person, as the case may be. If such Commitment Increase Supplement is in the specified form, the Administrative Agent shall execute such Commitment Increase Supplement and deliver a copy thereof to the Borrower and each such Bank or other Person, as the case may be. Upon execution and delivery of such Commitment Increase Supplement by the Administrative Agent, (i) in the case of each such Bank, such Bank’s Commitment shall be increased to the amount set forth in such Commitment Increase Supplement, (ii) in the case of each such other Person, such other Person shall become a party hereto and shall for all purposes of the Loan Documents be deemed a “Bank” having a Commitment as set forth in such Commitment Increase Supplement, and (iii) in each case, the Commitment of such Bank or such other Person, as the case may be, shall be as set forth in the applicable Commitment Increase Supplement; provided, however, that:

(A) each such increase shall be in an aggregate amount not less than $25,000,000 or an integral multiple of $5,000,000 in excess thereof,

(B) immediately after giving effect to each such increase, the aggregate amount of all Commitments shall not exceed $750,000,000;

(C) if Loans would be outstanding immediately after giving effect to each such increase, then simultaneously with such increase (1) each such Bank, each such other Person and each other Bank having a Commitment (upon appropriate notice thereof) shall be deemed to have entered into a master assignment and acceptance agreement, in form and substance substantially similar to Exhibit A, pursuant to which each such other Bank shall have assigned to each such Bank and each such other Person a portion of its Committed Loans and LC Exposure necessary to reflect proportionately the Commitments as adjusted in accordance with this subsection (b), and (2) in connection with such assignment, each such Bank and each such other Person shall pay to the Administrative Agent, for the account of the other Banks, such amount as shall be necessary to appropriately reflect the assignment to it of Committed Loans and LC Exposure and in connection with such master assignment each such other Bank may treat the assignment of Committed Borrowings (other than Committed Base Rate Borrowings) as a prepayment for purposes of Section 2.13;

(D) a Responsible Officer of the Borrower shall have delivered to the Administrative Agent an officer’s certificate, dated the date such

increase becomes effective, pursuant to which such Responsible Officer certifies that (x) the representations and warranties set forth in Article 4 are true and correct on and as of such date and (y) no Default or Event of Default has occurred and is continuing on such date;

(E) the Administrative Agent shall have received other such certificates, legal opinions and other items as it shall reasonably request in connection with such increase; and

(F) the Commitments may not be increased more than two times per year.

Section 2.10 Mandatory Termination of Commitments; Effect of Termination or Reduction. The Commitments shall terminate on the Maturity Date, and any Loans and LC Disbursements then outstanding (together with accrued interest thereon) shall be due and payable on such date. Each termination or reduction of the Commitments (including pursuant to Section 2.9) in accordance with this Agreement shall be permanent.

Section 2.11 Optional and Mandatory Prepayments.

(a) Optional Prepayments. The Borrower or the applicable Co-Borrower may, upon (i) the same Business Day’s notice to the Administrative Agent, prepay any Committed Base Rate Borrowing (or any Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.1(a)) or (ii) three Business Days’ notice to the Administrative Agent, prepay any Committed Euro-Dollar Loan or any Committed Alternate Currency Borrowing, in whole at any time, or from time to time in part in amounts aggregating $5,000,000 (or, if less, the aggregate amount of the Borrowing then outstanding) or any larger multiple of $1,000,000 (or, such Dollar Equivalent if such Borrowing is denominated in a currency other than Dollars). Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Borrowing.

(b) Mandatory Prepayments. If, at any time during the Revolving Credit Period, for any reason the aggregate Credit Exposure of all Banks exceeds the aggregate sum of the Commitments then in effect, the Borrowers shall without notice or demand immediately prepay the Loans and, to the extent necessary, make a deposit in an account with the Administrative Agent pursuant to Section 2.16(i), in the aggregate amount necessary to eliminate such excess. Notwithstanding anything to the contrary contained in this Section 2.11(b), such mandatory prepayments or deposits that would otherwise be required pursuant to this Section 2.11(b) solely as a result of fluctuations in Exchange Rates from time to time shall only be required to be made in the event that on any date the aggregate Credit Exposure of all Banks exceeds 105% of the aggregate sum of the Commitments then in effect on such date, on the basis of the Exchange Rates in effect on such date.

(c) Generally. Each prepayment whether optional or mandatory shall consist of the principal amount to be prepaid together with accrued interest thereon to the date of prepayment and in the case of a prepayment of a Fixed Rate Borrowing, together with compensation therefor pursuant to Section 2.13. Upon receipt of a notice of prepayment

pursuant to this Section, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank’s share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower.

Section 2.12 General Provisions as to Payments. (a) The Borrowers shall make each payment of principal of, and interest on, the Loans and fees hereunder, and (except to the extent otherwise provided in Section 2.16) LC Disbursements, without set-off, counterclaim or other deduction, (a) with respect to each such payment in Dollars, not later than 12:00 Noon (New York City time) on the date when due, in funds immediately available in New York City, to the Administrative Agent at the Domestic Funding Office, and (b) with respect to each such payment in an Alternate Currency, not later than 11:00 A.M. (London time) on the date when due, in funds immediately available in London, to the Administrative Agent at the Alternate Currency Funding Office. Except as otherwise provided in Section 8.5, the Administrative Agent will promptly distribute (i) to each Bank its ratable share of each such payment received by the Administrative Agent for the account of the Banks and (ii) to each Issuing Bank each payment received by the Administrative Agent for the account of such Issuing Bank. Whenever any payment hereunder (other than payments in respect of any Committed Euro-Dollar Loan, any Committed Alternate Currency Loan, or any Money Market Margin Auction Loan) shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. Whenever any payments in respect of any Committed Euro-Dollar Loan, any Committed Alternate Currency Loan, or any Money Market Margin Auction Loan shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. Each payment of the principal of, or interest on, a Loan or an LC Disbursement shall be payable in the Agreement Currency in which such Loan or LC Disbursement is denominated, and all such payments of fees pursuant to Section 2.8 shall be payable in Dollars.

(b) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower or the applicable Co-Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower or the applicable Co-Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower or the applicable Co-Borrower shall not have so made such payment, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Effective Rate.

Section 2.13 Funding Losses. If any of the Borrowers makes any payment of principal with respect to any Fixed Rate Loan (pursuant to Article 6 or 8 or otherwise) on any day other than the last day of the Interest Period applicable thereto, or if any of the Borrowers fails to borrow any Fixed Rate Loans after notice has been given to any Bank in accordance with

Section 2.4(a), or if any of the Borrowers fails to repay any Loan (other than a Committed Base Rate Loan) on the due date therefor in accordance with Section 2.11(a), the Borrower or the applicable Co-Borrower shall reimburse each Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or failure to borrow, provided that such Bank shall have delivered to the Borrower a certificate as to the amount of such loss or expense, setting forth in reasonable detail the calculation thereof, which certificate shall be conclusive if prepared in good faith and on a reasonable basis.

Section 2.14 Computation of Interest and Fees. (a) Interest on Committed Base Rate Loans and LC Disbursements shall be computed on the basis of a 365 or 366 day year for the actual number of days elapsed. Interest on all Loans other than Committed Base Rate Loans shall be computed on the basis of a 360 day year for the actual number of days elapsed.

(b) All fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).

Section 2.15 Special Mandatory Prepayment/Commitment Termination. If either of the events described in Sections 2.15(a) and 2.15(b) below (each a “Change in Control”) occur, then on the 30th day following a Change in Control, the Borrowers shall be required to make a special mandatory prepayment of all Loans outstanding hereunder and the Commitments of all of the Banks shall automatically terminate. Promptly after a Responsible Officer obtains knowledge of a Change of Control, the Borrower shall deliver to the Administrative Agent and each Bank written notice thereof, provided that with respect to a Change of Control referred to in Section 2.15(b), the knowledge of each Responsible Officer shall be limited to information pursuant to formal written notices delivered to the Borrower of which such Responsible Officer is aware and information in public securities law filings. The events which give rise to such special mandatory prepayment and Commitment termination are:

(a) During any period of three consecutive years individuals who at the beginning of such period constituted the board of directors of the Borrower, together with any directors whose election or nomination for election by the Borrower’s stockholders was approved by a vote of at least majority of the directors then still in office who were directors at the beginning of the period, cease for any reason to constitute a majority of the board of directors of the Borrower.

(b) Any person or group of persons (within the meaning of Section 13 and 14 of the Exchange Act) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Exchange Act) of Voting Securities of the Borrower representing in excess of 35% of the votes entitled to vote for the election of directors of the Borrower.

For purposes of this Section 2.15:

“Voting Securities” means all capital stock of the Borrower which is ordinarily entitled to vote for the election of directors.

Section 2.16 Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit denominated in Dollars for its own account or for the account of a Co-Borrower, in a form acceptable to the Administrative Agent and an Issuing Bank selected by the Borrower, at any time and from time to time during the period from the Effective Date to the fifteenth Business Day immediately preceding the last day of the Revolving Credit 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 Borrower to, or entered into by the Borrower or a Co-Borrower, as applicable with, such Issuing Bank relating to any Letter of Credit issued by such Issuing Bank, 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 by an Issuing Bank (or the amendment, renewal or extension of an outstanding Letter of Credit of an Issuing Bank), the Borrower shall hand deliver or transmit by facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by such Issuing Bank) to such Issuing Bank and the Administrative Agent (not later than three Business Days before the requested date of issuance, amendment, renewal or 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 such Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. Subject to the terms and conditions hereof, 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 LC Exposure shall not exceed $150,000,000, (ii) the aggregate Credit Exposure of all Banks shall not exceed the total Commitments and (iii) the Issuing Bank LC Exposure of such Issuing Bank shall not exceed the LC Commitment of such Issuing Bank. In addition to the requirements set forth in this Section 2.16(b), an Issuing Bank shall be prohibited from issuing Letters of Credit hereunder upon the occurrence and during the continuance of a Default (provided that such Issuing Bank shall have received notice of such Default from the Administrative Agent, the Borrower or any Bank and provided further that such notice shall be received at least 24 hours prior to the date on which any Letter of Credit is to be issued). The Administrative Agent will, upon request of any Issuing Bank, confirm the total amount of LC Exposure and the aggregate Credit Exposure (in accordance with the defined term “Dollar Equivalent”) of all Banks.

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is 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) and (ii) the date that is ten Business Days prior to the Maturity Date, provided that any Letter of Credit may provide for the renewal thereof for additional one year periods (which shall in no event extend beyond the date that is ten Business Days prior to the Maturity Date).

(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 any Lender, each Issuing Bank issuing such Letter of Credit hereby grants to each Bank, and each such Bank hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Bank’s Lender Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each such Bank hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of such Issuing Bank, such Bank’s Lender Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Borrower or the applicable Co-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 or the applicable Co-Borrower for any reason. Each Bank 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 an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit issued thereby, then such Issuing Bank shall notify the Administrative Agent of such LC Disbursement. Upon such notification, the Administrative Agent shall either (i) notify the Borrower or the applicable Co-Borrower to reimburse such Issuing Bank therefor, in which case the Borrower or the applicable Co-Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement and any accrued interest thereon not later than 1:00 p.m., New York City time, on (A) the Business Day that the Borrower receives such notice, if such notice is received prior to 12:00 Noon, New York City time, or (B) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time, provided that the Borrower may, subject to the conditions of borrowing set forth herein, if the LC Disbursement is equal to or greater than $10,000,000, request in accordance with this Section 2.16 and Section 2.2 that such payment be financed with a Committed Domestic Borrowing, in either case in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Committed Domestic Borrowing, or (ii) require that the Banks make a loan in an amount equal to such LC Disbursement and any accrued interest thereon, in which case (A) the Administrative Agent shall notify each Bank of the details thereof and of the amount of such Bank’s loan, and (B) each Bank shall, whether or not any Default shall have occurred and be continuing, any representation or warranty shall be accurate, any condition to the making of any Loan hereunder shall have been fulfilled, or any other matter whatsoever, make the loan to be made by it under this paragraph by wire transfer of immediately available funds to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Banks on (1) the Business Day that such Bank receives such notice, if such notice is received prior to 12:00 Noon, New York City time, on the day of receipt or (2) the Business Day immediately following the day that such Bank receives such notice, if such notice is not received prior to such time on the day of receipt. Each such loan shall, for all purposes hereof, be deemed to be a Committed Base Rate Loan made pursuant to Section 2.2, and the Banks obligations to make such loans shall be

absolute and unconditional. The Administrative Agent will make such Committed Base Rate Loans available to such Issuing Bank by promptly crediting or otherwise transferring the amounts so received, in like funds, to such Issuing Bank for the purpose of repaying in full such LC Disbursement and all accrued interest thereon.

(f) Obligations Absolute. The obligations of the Borrower and each applicable Co-Borrower to reimburse LC 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 or herein, (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 an 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 Borrower’s or the applicable Co-Borrower’s obligations hereunder. No Issuing Bank 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 technical terms or any consequence arising from causes beyond the control of such Issuing Bank; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to the applicable Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by each of the Borrowers to the extent permitted by applicable law) suffered by the Borrower or the applicable Co-Borrower that are caused by such Issuing Bank’s failure to exercise due 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 an Issuing Bank (as finally determined by a court of competent jurisdiction), such Issuing Bank shall be deemed to have exercised due 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 thereof 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 make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit issued thereby. Each Issuing Bank shall promptly notify (which may include telephonic notice, promptly confirmed by facsimile) the Administrative Agent and the Borrower of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower or the applicable Co-Borrower of its obligation to reimburse such Issuing Bank and the Banks with respect to any such LC Disbursement.

(h) Interim Interest. If an Issuing Bank shall make any LC Disbursement, then, unless the Borrower or the applicable Co-Borrower shall reimburse such LC Disbursement, or convert such LC Disbursement into a Borrowing in accordance with the terms hereof, in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower or the applicable Co-Borrower reimburses such LC Disbursement, at the rate per annum equal to 1% plus the rate then applicable to Committed Base Rate Loans. Interest accrued pursuant to this paragraph shall be for the account of such Issuing Bank, except that interest accrued on and after the date of payment by any Bank pursuant to paragraph (e) of this Section to reimburse such Issuing Bank shall be for the account of such Bank to the extent of such payment.

(i) Cash Collateral. If a Cash Collateral Event as described in clause (i), (ii) or (iii) of the definition thereof shall have occurred, then the Borrower shall immediately deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in Dollars equal to 100% of the aggregate LC Exposure of all Banks on the date of such Cash Collateral Event plus all accrued and unpaid interest thereon. If a Cash Collateral Event as described in clause (iv) of the definition thereof shall have occurred, then the Borrower shall immediately deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in Dollars at least equal to the amount of the LC Exposure of such Defaulting Lender; provided, however, that in the event such Cash Collateral Event arises as a result of a Bank becoming a Defaulting Lender by not making a payment to an Issuing Bank in respect of an LC Disbursement, then the Borrower shall immediately (x) pay to the Administrative Agent for the benefit of such Issuing Bank the amount owed in respect of such LC Disbursement, and (y) deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in Dollars at least equal to the remaining amount of the LC Exposure of such Defaulting Lender.

Such deposits shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrowers under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Such deposits shall not bear interest, nor shall the Administrative Agent be under any obligation whatsoever to invest the same, provided that, at the request of the Borrower, such deposits shall be invested by the Administrative Agent in direct short term obligations of, or in other short term obligations which are unconditionally guaranteed with respect to all principal thereof and interest thereon by, the United States of America, in each case maturing no later than the latest Letter of Credit expiry date. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank, on a pro rata basis, for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower or applicable Co-Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrowers under this Agreement.

“Cash Collateral Event” means (i) the Commitments shall have terminated under Section 6.1 at any time that no Loan or LC Disbursement is outstanding, (ii) the Obligations shall have become due and payable under Section 6.1, (iii) the Commitments of all of the Banks shall have terminated pursuant to Section 2.15, or (iv) any Bank becomes, and during the period it remains, a Defaulting Lender and any Letter of Credit is at the time outstanding.

(j) Resignation of Issuing Bank. If a Bank becomes, and during the period it remains, a Defaulting Lender, any Issuing Bank may, upon prior written notice to the Borrower and the Administrative Agent, resign as an Issuing Bank effective at the close of business New York time on a date specified in such notice (which date may not be less than five (5) Business Days after the date of such notice, or if cash collateral has been provided pursuant to Section 2.16(i), not less than 60 days after the date of such notice); provided that such resignation by an Issuing Bank will have no effect on the validity or enforceability of any Letter of Credit issued by such Issuing Bank and then outstanding or on the obligations of the Borrowers or any Lender under this Agreement with respect to any such outstanding Letter of Credit or otherwise to such Issuing Bank.

Section 2.17 Borrowings by Co-Borrowers. (a) The Borrower may, at any time or from time to time, designate any Wholly-Owned Subsidiary as a Co-Borrower hereunder by furnishing to the Administrative Agent a letter (a “Designation Letter”), in substantially the form of Exhibit F, duly completed and executed by the Borrower and such Wholly-Owned Subsidiary. Upon any such designation of such a Wholly-Owned Subsidiary and upon satisfaction of the conditions precedent in Section 3.4 (or waiver thereof in accordance with this Agreement), such Wholly-Owned Subsidiary shall be a Co-Borrower and as a Co-Borrower, entitled to borrow Loans and to request the issuance of Letters of Credit on and subject to the terms and conditions of this Agreement. The Administrative Agent shall promptly deliver to each Lender a copy of each Designation Letter received by the Administrative Agent. If the Borrower shall designate as a Co-Borrower hereunder any Wholly-Owned Subsidiary not organized under the laws of the United States or any State thereof, any Lender may, with notice to the Administrative Agent and the Borrower, fulfill its Commitment by causing an Affiliate of such Lender to act as the Lender in respect of such Co-Borrower (and such Lender shall, to the extent of Loans made to and participations in Letters of Credit issued for the account of such Co-Borrower, be deemed for all purposes hereof to have pro tanto assigned such Loans and participations to such Affiliate in compliance with the provisions of Section 9.6).

(b) So long as either (i) all principal of and interest on all Loans made to any Co-Borrower have been paid in full and no Letters of Credit issued for the account of such Co-Borrower are outstanding or (ii) the Borrower has assumed, pursuant to an agreement in form and substance reasonably satisfactory to the Required Banks, all Obligations of a Co-Borrower hereunder and under any other Loan Document, including all of such Co-Borrower’s obligations in respect of Letters of Credit issued for its account, the Borrower may terminate the status of such Co-Borrower as a Co-Borrower hereunder by furnishing to the Administrative Agent a letter (a “Termination Letter”) in substantially the form of Exhibit G, duly completed and

executed by the Borrower. Any Termination Letter furnished hereunder shall be effective upon receipt by the Administrative Agent, which shall promptly notify the Lenders. Notwithstanding the foregoing, the delivery of a Termination Letter with respect to any Co-Borrower shall not terminate any obligation of such Co-Borrower that remains unpaid at the time of such delivery (including without limitation any obligation arising thereafter in respect of such Co-Borrower under Sections 8.3, 8.6 and 9.3).

ARTICLE 3

CONDITIONS

Section 3.1 Effectiveness. This Agreement shall become effective on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 9.5):

(a) the Administrative Agent shall have received from each of the Borrower, each Issuing Bank and the Banks (x) a counterpart of this Agreement signed on behalf of such Person or (y) written evidence satisfactory to the Administrative Agent (which may include facsimile transmission of a signed signature page of this Agreement) that such Person has signed a counterpart of this Agreement;

(b) receipt by the Administrative Agent of written opinions (each dated the Effective Date and addressed to the Administrative Agent and the Lenders) of (i) the General Counsel of the Borrower and (ii) Hunton & Williams, special New York counsel for the Borrower, in each case in form and substance satisfactory to the Administrative Agent and the Lenders covering such matters relating to the Borrower, the Loan Documents and the transactions contemplated hereby as they may require;

(c) all Existing Bank Debt shall be paid in full, all Liens, if any, securing the same and all commitments thereunder shall be terminated, and the Administrative Agent shall have received satisfactory evidence of the foregoing;

(d) all fees payable to the Lenders and the Agents on the Effective Date, and the reasonable fees and expenses of counsel to the Administrative Agent incurred in connection with the preparation, negotiation and closing of the Loan Documents, shall have been paid;

(e) the Administrative Agent shall have received (i) a certificate of good standing with respect to the Borrower from the Secretary of State of its state of incorporation, and (ii) a certificate of the Secretary or an Assistant Secretary of the Borrower, in form and substance reasonably satisfactory to the Administrative Agent, attaching (A) organizational documents, (B) resolutions authorizing the Loan Documents and the transactions contemplated thereby which are in full force and effect, and (C) containing an incumbency certification with respect to each officer thereof signing any Loan Document;

(f) the representations and warranties set forth in Article 4 are true and correct on and as of the Effective Date; and

(g) no Default shall have occurred and be continuing on the Effective Date.

Notwithstanding anything to the contrary contained in this Section 3.1, this Agreement shall not become effective or be binding on any party hereto unless not later than November 1, 2009, all of the foregoing conditions are satisfied (or waived in accordance with Section 9.5). The Borrower and the Banks party to the Existing Agreements, to the extent that the Banks constitute “Required Banks” thereunder, hereby agree that the commitments to extend credit thereunder shall terminate automatically upon the Effective Date. The Administrative Agent shall promptly notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding on all parties hereto.

Section 3.2 Each Credit Extension. In addition to the requirements set forth in Sections 3.1 (a)-(e), the obligation of any Bank to make a Loan, and of any Issuing Bank to issue, renew or extend a Letter of Credit, is subject to the satisfaction of the following conditions:

(a) in the case of a Borrowing, receipt by the Administrative Agent of an applicable Notice of Borrowing or, in the case of a Letter of Credit, a notice requesting the issuance of a Letter of Credit required by Section 2.16(b);

(b) the fact that, immediately after such Borrowing or such issuance, renewal or extension of a Letter of Credit, the aggregate Credit Exposure of all Banks will not exceed the aggregate amount of the Commitments;

(c) the fact that, and at the time of and immediately after such Borrowing or issuance, renewal or extension of a Letter of Credit, no Default shall have occurred and be continuing; and

(d) the fact that the representations and warranties of the Borrower contained in the Loan Documents (other than the representations and warranties set forth in Sections 4.4(c) and 4.5) shall be true on and as of the date of such Borrowing or issuance, renewal or extension of a Letter of Credit.

Each Borrowing and each issuance, renewal or extension of a Letter of Credit hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (b), (c) and (d) of this Section.

Section 3.3 Defaulting Lenders. In addition to the other conditions precedent herein set forth, if any Bank becomes, and during the period it remains, a Defaulting Lender, no Issuing Bank will be required to issue any Letter of Credit or to amend any outstanding Letter of Credit to increase the face amount thereof, alter the drawing terms thereunder or extend the expiry date thereof unless such Issuing Bank is satisfied that any exposure that would result therefrom is fully covered by the cash collateralization obligations of the Borrower or the applicable Co-Borrower pursuant to Section 2.16(i).

Section 3.4 Co-Borrower Conditions. The designation of any Wholly-Owned Subsidiary of the Borrower as a Co-Borrower hereunder is subject to the satisfaction of the following conditions:

(a) receipt by the Administrative Agent of the Designation Letter duly executed by the Borrower and such Co-Borrower;

(b) receipt by the Administrative Agent of written opinions (each addressed to the Administrative Agent and the Lenders) of (i) the General Counsel of such Co-Borrower and (ii) Hunton & Williams or such other special New York counsel for such Co-Borrower, in each case in form and substance satisfactory to the Administrative Agent and the Lenders, covering such matters relating to such Co-Borrower, the Designation Letter and the transactions contemplated thereby as they may require;

(c) receipt by the Administrative Agent of (i) a certificate of good standing with respect to such Co-Borrower issued by the Secretary of State or other appropriate governmental officer in its state of incorporation or formation, and (ii) a certificate of the Secretary or an Assistant Secretary, general partner or managing member of such Co-Borrower, in form and substance reasonably satisfactory to the Administrative Agent, attaching (A) organizational documents, (B) resolutions or consents approving and authorizing the execution and delivery of the Designation Letter and the performance of the transactions contemplated thereby which are in full force and effect, and (C) the names and true signatures of each officer, partner, member or other representative of such Co-Borrower who has been authorized to execute and deliver the Designation Letter on behalf of such Co-Borrower;

(d) if the addition of such Wholly-Owned Subsidiary of the Borrower as a Co-Borrower hereunder obliges the Administrative Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, then the Borrower shall have promptly, upon the request of the Administrative Agent or any Lender (which request shall have been made within 10 days following such Lender’s receipt of the applicable Designation Letter), supplied such documentation and other evidence as reasonably requested by the Administrative Agent or any Lender in order for the Administrative Agent or such Lender to carry out and be satisfied, and the Administrative Agent or such Lender, shall have been satisfied, that it has complied with the results of all necessary “know your customer” or other similar checks under all applicable laws and regulations; and

(e) if such Wholly-Owned Subsidiary of the Borrower is organized under the laws of a jurisdiction other than of the United States or a State thereof and any Lender has notified the Administrative Agent and the Borrower within five (5) Business Days following its receipt of the Designation Letter that it cannot legally lend to, establish credit for the account of and/or do any business whatsoever with such Wholly-Owned Subsidiary, then the Borrower shall have notified the Administrative Agent and such Lender that the Commitments of such Lender have been terminated or assigned; provided that (x) in the case of the termination of the Commitments of such Lender, such Lender shall have received from the Borrower payment of an amount equal to the outstanding principal of its Loans and/or LC Disbursement obligations, accrued interest thereon, accrued fees and all other amounts payable to such Lender hereunder and (y) in the case of an assignment of the Commitments of such Lender, such Lender shall have received an amount equal to the outstanding principal of its Loans and/or LC Disbursement obligations, accrued interest thereon, accrued fees and all other amounts payable to such Lender

hereunder from (1) an assignee (which if not a Bank, then a financial institution reasonably acceptable to the Administrative Agent, the Borrower and each Issuing Bank), to the extent of such outstanding principal and accrued interest and fees or (2) the Borrower or the relevant Co-Borrower (in the case of all other amounts).

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants that:

Section 4.1 Corporate Existence and Power. The Borrower is a corporation validly existing and in good standing under the laws of the state of Delaware, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.

Section 4.2 Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Borrower of each Loan Document to which it is a party are within the Borrower’s corporate powers, have been authorized by all necessary corporate action, require no action or approval by or in respect of, or (except for informational filings under section 13 or 15(d) of the Exchange Act) filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by laws of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

Section 4.3 Binding Effect. This Agreement and each of the Loan Documents to which the Borrower is a party constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with the respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 4.4 Financial Information.

(a) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 2008, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year then ended, reported on by Pricewaterhouse Coopers LLP, a copy of which has been delivered to each of the Lenders, present fairly, in all material respects, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as at such date, and the results of their operations and their cash flows for such year, in conformity with generally accepted accounting principles practices applied consistently with those used in the preparation of the Borrower’s 2007 Form 10-K, except for changes in accounting principles disclosed in the Borrower’s 2008 Form 10-K and without regard to Section 1.2 hereof.

(b) The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of June 30, 2009 and the related unaudited consolidated statements of operations and cash flows for both the three months and six months then ended, set forth in the Borrower’s quarterly report for the fiscal quarter ended June 30, 2009 as filed with the Securities and Exchange Commission on Form 10-Q, a copy of which has been delivered to each of the Lenders have been prepared on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Borrower’s Form 10-Q for fiscal period ended June 30, 2008, except for changes in accounting principles disclosed in the Borrower’s Form 10-Q for the fiscal period ended June 30, 2009 and without regard to Section 1.2 hereof.

(c) Since December 31, 2008, there has been no material adverse change in the business, financial position or operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, nor have any matters or occurrences come to the Borrower’s attention which are likely to cause any material adverse change in the business, financial position or operations of the Borrower.

Section 4.5 Litigation. There is no action, suit, proceeding or investigation pending against, or to the knowledge of the Borrower threatened against, the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity, legality or enforceability of this Agreement or any other Loan Document.

Section 4.6 Compliance with ERISA. Each member of each ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of any ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which failure or amendment has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA (other than a liability to the PBGC for premiums under Section 4007 of ERISA) that has resulted in liability to the Borrower in excess of $50,000,000 or that, when added to any other liabilities under Title IV of ERISA that have occurred within the twelve (12) month period immediately preceding such incurrence, has resulted in liability to the Borrower in excess of $50,000,000. As of the Effective Date, no ERISA Event has occurred with respect to any Plan or Multiemployer Plan that has resulted in liability to the Borrower in excess of $50,000,000 or that, when added to the liability related to any other ERISA Events that have occurred within the twelve (12) month period immediately preceding such ERISA Event, has resulted in liability to the Borrower in excess of $50,000,000.

Section 4.7 Subsidiaries. Each Domestic Subsidiary is a Corporation validly existing and in good standing under the laws of its jurisdiction of formation, and has all corporate or analogous powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.

Section 4.8 Not an Investment Company. The Borrower is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 4.9 Certain Regulations. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board), and no proceeds of any Loan will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock in contravention of Regulation T, U or X of the Federal Reserve Board. Following the application of the proceeds of any Loan or Letter of Credit, no more than 25% of the value of the assets of the Borrower will consist of or be represented by margin stock (within the meaning of Regulation U of the Federal Reserve Board).

Section 4.10 Full Disclosure. The information prepared or furnished to the Administrative Agent, any Lender or any prospective Lender by or on behalf of the Borrower in connection with the Loan Documents or the consummation of the transactions contemplated thereunder, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; provided, that with respect to projections and other forward-looking information, the Borrower represents and warrants only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time made.

ARTICLE 5

COVENANTS

The Borrower agrees that, so long as any Bank has any Commitment hereunder, or there remains any Credit Exposure:

Section 5.1 Information. The Borrower will deliver to each of the Lenders:

(a) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on without material qualification by independent public accountants of nationally recognized standing;

(b) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of operations for such quarter and for the portion of the Borrower’s fiscal year ended at the end of such quarter, and the related consolidated statement of cash flows

for the portion of the Borrower’s fiscal year ended at the end of such quarter, setting forth in comparative form the figures for the corresponding date or period in the prior fiscal year, prepared in conformity with generally accepted accounting principles;

(c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of a Responsible Officer (i) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto, and (ii) setting forth (A) the Total Debt to Total Capitalization Ratio, (B) the Interest Coverage Ratio and (C) the ratio of Subsidiary Total Debt to Consolidated Net Worth, in each case as in effect on the last day of the immediately preceding fiscal quarter of the Borrower and showing the calculation thereof in reasonable detail;

(d) within five days after a Responsible Officer obtains knowledge of any Default, if such Default is then continuing, a certificate of a Responsible Officer setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto;

(e) as soon as practicable and within five days after the Borrower knows or has reason to know that (i) an ERISA Event has occurred with respect to a Plan or Multiemployer Plan, (ii) any member of the ERISA Group has failed to make a timely contribution or premium payment in respect of a Plan that could give rise to a lien being imposed on the assets of the Borrower under ERISA, or (iii) any member of the ERISA Group has applied for a waiver of an accumulated funding deficiency under Section 412 of the Code, a statement of a Responsible Officer of the Borrower describing such event and any action that the Borrower or other member of the ERISA Group proposes to take with respect thereto, together with a copy of any notice or filing from the PBGC, Internal Revenue Service, Department of Labor or that may be required by the PBGC or other governmental authority with respect to such event; provided, however, that no notice shall be required pursuant to this clause (e) unless such event has resulted in or is reasonably expected to result in liability to the Borrower in excess of $50,000,000 or the liability relating to one or more such events in the twelve (12) month period immediately preceding such event has resulted in or is reasonably expected to result in liability to the Borrower in excess of $50,000,000; and

(f) from time to time such additional information regarding the financial position, business or operations of the Borrower and its Subsidiaries as the Administrative Agent, at the request of any Lender, may reasonably request.

Section 5.2 Maintenance of Property; Insurance. (a) The Borrower will keep, and will cause each Domestic Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted.

(b) The Borrower will, and will cause each Domestic Subsidiary to, maintain (either in the name of the Borrower or in the relevant Domestic Subsidiary’s own name) with financially sound and responsible insurance companies, insurance on all their respective properties in at least such amounts and against at least such risks (and with such risk retention) as

are usually insured against in the same general area by companies of established repute of similar size engaged in the same or a similar business; and will furnish to the Lenders, upon request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried.

Section 5.3 Payment of Taxes and Assessments, Conduct of Business; Maintenance of Existence; Etc. (a) The Borrower will, and will cause each Domestic Subsidiary to, pay all material Taxes, assessments and governmental charges levied or assessed upon it, its property, or upon any part thereof or upon its income or profits, or any part thereof, whether by withholding, advance payments or otherwise, before the same shall become delinquent, and will observe and conform to all lawful requirements of any governmental authority relative to any of its property, and all covenants, terms and conditions upon or under which any of its property is held; and within four months after receipt of notice of any lawful claims or demands for labor, materials or supplies or other objects which might become a lien or charge, material in amount, upon any Principal Property of the Borrower or any Domestic Subsidiary thereof or the income therefrom, it will pay or cause to be discharged to make adequate provision to satisfy and discharge the same; provided that nothing in this Section 5.3 or elsewhere in this Agreement contained shall require the Borrower or any Domestic Subsidiary thereof to observe or conform to any requirement of governmental authority or to cause to be paid or discharged, or to make provision for, any such claim, demand, lien or charge or to pay any such Taxes, assessment or governmental charge so long as (i) the validity thereof shall be contested in good faith and by proper proceedings, (ii) the failure to pay could not reasonably be expected to have a material adverse effect on the business, financial condition or operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, (iii) adequate reserves have been established with respect to any such Taxes, claims, demands, liens or charges and potential penalties or other costs relating thereto, or other adequate provision for payment thereof which shall be reasonably satisfactory to the Administrative Agent shall have been made, and (iv) no lien resulting therefrom attaches to its property and becomes enforceable against the Lenders and the Agents.

(b) Subject to the other provisions of this Agreement, the Borrower will, and will cause each Domestic Subsidiary to, maintain its corporate or analogous existence and right to carry on its business and procure all necessary renewals and extensions thereof and use its best efforts to maintain, preserve and renew all such rights, powers, privileges and franchises; provided, however, that nothing herein contained shall be construed to prevent the Borrower or each Domestic Subsidiary from ceasing or omitting to exercise any rights, powers, privileges or franchises (including, in the case of such Domestic Subsidiary, the corporate or analogous existence thereof) which in the judgment of the Board of Directors of the Borrower or such Domestic Subsidiary can no longer be profitably exercised, or to prevent the liquidation of such Domestic Subsidiary or the consolidation or merger of such Domestic Subsidiary or Domestic Subsidiaries with or into any other Domestic Subsidiary or Domestic Subsidiaries and/or the Borrower.

Section 5.4 Compliance with Laws. The Borrower will comply, and cause each Domestic Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation,

ERISA and the rules and regulations thereunder and Environmental Laws) which could materially adversely affect the business, consolidated financial position or operations of the Borrower and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity, legality or enforceability of this Agreement or any other Loan Document, except where the necessity of compliance therewith is contested in good faith by appropriate proceedings.

Section 5.5 Restrictions on Sale and Lease Back Transactions. The Borrower will not, nor will it permit any Domestic Subsidiary to, enter into any arrangement with any person providing for the leasing by the Borrower or any Domestic Subsidiary thereof of any Principal Property (except for temporary leases for a term, including any renewal thereof, of not more than three years and except for leases between the Borrower and a Domestic Subsidiary or between Domestic Subsidiaries), which Principal Property has been or is to be sold or transferred by the Borrower or such Domestic Subsidiary to such person (herein referred to as a “Sale and Lease back Transaction”) unless the net proceeds of such sale are at least equal to the fair value (as determined by the Board of Directors of the Borrower) of such Principal Property and either (a) the Borrower or such Domestic Subsidiary would be entitled, pursuant to the provisions of (1) clause (i) of paragraph (a) of Section 5.6 or (2) paragraph (b) of Section 5.6 hereof, to incur Debt secured by a mortgage on the Principal Property to be leased without equally and ratably securing the Obligations, or (b) the Borrower shall, and in any such case the Borrower covenants that it will, within 120 days of the effective date of any such arrangement (or in the case of (ii) below, within six months thereafter pursuant to a firm purchase commitment entered into within such 120 day period), apply or cause to be applied an amount equal to the fair value (as so determined) of such Principal Property (i) to the payment or other retirement of Funded Debt incurred or assumed by the Borrower which ranks senior to or pari passu with the Obligations or of Funded Debt incurred or assumed by the Borrower or any Domestic Subsidiary thereof (other than, in any case, Funded Debt owned by the Borrower or any Domestic Subsidiary thereof) or (ii) to the purchase of Principal Property (other than the Principal Property involved in such sale). For this purpose, Funded Debt means any Debt which by its terms matures at or is extendable or renewable at the sole option of the obligor without requiring the consent of the obligee to a date more than 12 months after the date of the creation of such Debt.

Section 5.6 Negative Pledge.

(a) The Borrower will not, nor will it permit any Domestic Subsidiary to, issue, assume or guarantee any Debt secured by any mortgage, security interest, pledge, lien or other encumbrance (hereinafter called “mortgage” or “mortgages”) upon any Principal Property of the Borrower or of a Domestic Subsidiary thereof or upon any shares of stock or indebtedness of any such Domestic Subsidiary (whether such Principal Property, shares of stock or indebtedness is now owned or hereafter acquired) without in any such case effectively securing, concurrently with the issuance, assumption or guaranty of any such Debt, the Obligations (together with, if the Borrower shall so determine, any other indebtedness of or guaranteed by the Borrower or such Domestic Subsidiary ranking equally with or senior (whether by agreement or by structure) to the Obligations and then existing or thereafter created) equally and ratably with such Debt; provided, however, that the foregoing restrictions shall not apply to:

(i) mortgages on any property acquired, constructed or improved by the Borrower or any Domestic Subsidiary after the date of this Agreement which are created or assumed contemporaneously with, or within 120 days after, such acquisition, or completion of such construction or improvement, or within six months thereafter pursuant to a firm commitment for financing arranged with a lender or investor within such 120 day period, to secure or provide for the payment of all or any part of the purchase price of such property or the cost of such construction or improvement incurred after the date of this Agreement or, in addition to mortgages contemplated by clauses (ii) and (iii) below, mortgages on any property existing at the time of acquisition thereof, provided that the mortgage shall not apply to any property theretofore owned by the Borrower or any Domestic Subsidiary other than, in the case of any such construction or improvement, any theretofore unimproved real property on which the property so constructed, or the improvement, is located;

(ii) mortgages on any property, shares of stock, or indebtedness existing, at the time of acquisition thereof from a Corporation which is merged with or into the Borrower or such Domestic Subsidiary;

(iii) mortgages on property of a Corporation existing at the time such Corporation becomes a Domestic Subsidiary;

(iv) mortgages to secure Debt of (A) a Domestic Subsidiary of the Borrower to the Borrower or (B) a Domestic Subsidiary of the Borrower (other than a Domestic Subsidiary that is also a Co-Borrower) to another Domestic Subsidiary of the Borrower;

(v) mortgages in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, to secure partial progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such mortgages;

(vi) mortgages on timberlands in connection with an arrangement under which the Borrower or a Domestic Subsidiary thereof is obligated to cut or pay for timber in order to provide the secured party with a specified amount of money, however determined;

(vii) mortgages securing tax-exempt Debt of the Borrower or its Domestic Subsidiaries; or

(viii) mortgages for the sole purpose of extending, renewing or replacing in whole or in part Debt secured by any mortgage referred to in the foregoing clauses (i) to (iv), inclusive, or in this clause (viii) or any mortgage (A) on property of Westvaco Corporation or any domestic subsidiary thereof existing on March 1, 1983, or (B) on property of The Mead Corporation or any subsidiary thereof existing on November 10, 2000, provided, however, that the principal amount of Debt secured thereby shall not

exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the mortgage so extended, renewed or replaced (plus improvements on such property).

(b) The provisions of subsection (a) of this Section 5.6 shall not apply to the issuance, assumption or guarantee by the Borrower or any Domestic Subsidiary thereof of Debt secured by a mortgage which would otherwise be subject to the foregoing restrictions up to an aggregate amount which, together with all other Debt of the Borrower and its Domestic Subsidiaries secured by mortgages (other than mortgages permitted by subsection (a) of this Section 5.6) which would otherwise be subject to the foregoing restrictions and the Value of all Sale and Lease back Transactions (as defined in Section 5.5) of the Borrower and its Domestic Subsidiaries in existence at such time (other than any such Sale and Lease back Transaction which, if such Sale and Lease back Transaction had been a mortgage, would have been permitted by clause (i) of Section 5.6(a) and other than any such Sale and Lease back Transactions as to which application of amounts have been made in accordance with clause (b) of Section 5.5) does not at the time exceed 5% of Consolidated Net Tangible Assets of the Borrower.

The term “Value” shall mean, with respect to a Sale and Lease back Transaction, as of any particular time, the amount equal to the greater of (1) the net proceeds from the sale or transfer of the property leased pursuant to such Sale and Lease back Transaction or (2) the fair value in the opinion of the Board of Directors of the Borrower of such property at the time of entering into such Sale and Lease back Transaction, in either case divided first by the number of full years of the term of the lease and then multiplied by the number of full years of such term remaining at the time of determination, without regard to any renewal or extension options contained in the lease.

(c) If at any time the Borrower or any Domestic Subsidiary thereof shall issue, assume or guarantee any Debt secured by any mortgage and if paragraph (a) of this Section 5.6 requires that the Obligations be secured equally and ratably with such Debt, the Borrower will promptly deliver to the Administrative Agent:

(i) an officer’s certificate stating that the covenant of the Borrower contained in paragraph (a) of this Section 5.6 has been complied with; and

(ii) an opinion of counsel to the effect that such covenant has been complied with, and that any instruments executed by the Borrower and each Domestic Subsidiary thereof in the performance of such covenant comply with the requirements of such covenant.

Section 5.7 Consolidations, Mergers and Sales of Assets. (a) Neither the Borrower nor any Co-Borrower shall consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless:

(i)(x) in the case of the Borrower, the corporation formed by such consolidation or into which the Borrower is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Borrower

substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Administrative Agent, in form satisfactory to the Required Banks, the due and punctual payment of the Obligations and the performance of every covenant of this Agreement on the part of the Borrower to be performed or observed and (y) in the case of a Co-Borrower, the corporation formed by such consolidation or into which such Co-Borrower is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of such Co-Borrower substantially as an entirety shall be (1) a Wholly-Owned Subsidiary of the Borrower that can and does become a Co-Borrower hereunder in accordance with the terms of this Agreement or (2) another Person acceptable to the Required Banks and that shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Administrative Agent, in form satisfactory to the Required Banks, the due and punctual payment of the Obligations and the performance of every covenant of this Agreement on the part of such Co-Borrower to be performed or observed;

(ii) immediately after giving effect to such transaction, no Default shall have happened and be continuing; and

(iii) the Borrower has delivered to the Administrative Agent an officer’s certificate and an opinion of counsel, each stating that such consolidation, merger, conveyance, transferor lease and supplemental agreement comply with this Section 5.7 and that all conditions precedent herein provided for relating to such transaction have been complied with.

(b) Upon any consolidation by the Borrower or any Co-Borrower with or merger by the Borrower or any Co-Borrower into any other corporation or any conveyance, transfer or lease of the properties and assets of the Borrower or any Co-Borrower substantially as an entirety in accordance with this Section 5.7, the successor corporation formed by such consolidation or into which the Borrower or such Co-Borrower, as the case may be, is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Borrower or such Co-Borrower, as the case may be, under this Agreement with the same effect as if such successor corporation had been named as the Borrower or Co-Borrower, as the case may be, herein, and thereafter, except in the case of a lease, the predecessor corporation shall be relieved of all obligations and covenants under this Agreement.

(c) Neither the Borrower nor any Co-Borrower shall transfer any Principal Property to any one or more Subsidiaries of the Borrower, whether now existing or hereafter acquired.

Section 5.8 Use of Proceeds. The proceeds of the Loans made, and the Letters of Credit issued, under this Agreement will be used by the Borrower or the applicable Co-Borrower for its general corporate purposes. None of such proceeds will be used in violation of applicable law, including, without limitation, Regulations T, U and X of the Federal Reserve Board.

Section 5.9 Books and Records; Inspection. The Borrower will, and will cause each Domestic Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all material dealings and transactions in relation to its business, operations and activities. The Borrower will, and will cause each Domestic Subsidiary to, permit the Administrative Agent and the Lenders, or any agents or representatives thereof, upon reasonable advance written notification of the same, during normal business hours to, (a) examine and make copies of and abstracts from the records and books of the account of the Borrower and each Domestic Subsidiary, (b) visit the properties of the Borrower and each Domestic Subsidiary and (c) discuss the affairs, finances and accounts of the Borrower and each Domestic Subsidiary with any of their respective officers. So long as no Event of Default has occurred and is continuing, the Lenders shall coordinate such examinations and visits with the Administrative Agent such that no more than one such examination and visit per calendar quarter shall be made by the Administrative Agent and the Lenders in the aggregate, with each such examination and visit at the expense of each applicable Lender exercising such rights. If an Event of Default has occurred and is continuing, then the examination and inspection rights of the Administrative Agent and Lenders as contemplated by this Section 5.9(i) shall be unlimited in number, (ii) shall not require any advance notice to the Borrower, (iii) shall be without any coordination requirements among the Administrative Agent and the Lenders, and (iv) shall be at the expense of the Borrower.

Section 5.10 Receivables Facility Attributable Indebtedness. The Borrower will not at any time permit Receivables Facility Attributable Indebtedness of the Borrower and its Subsidiaries to exceed $300,000,000 in the aggregate.

Section 5.11 Total Debt to Total Capitalization Ratio. The Total Debt to Total Capitalization Ratio shall not exceed 0.55:1.00 at any time. For purposes of this Section, the following terms have the following meanings, subject to Section 1.2:

“Total Debt to Total Capitalization Ratio” shall mean, as of any date, the ratio, in each case with respect to the Borrower and its Consolidated Subsidiaries on a consolidated basis, of (a) Total Debt as of such date to (b) the sum of (i) the amount determined under clause (a) of this defined term, plus (ii) the sum of shareholders’ equity, plus (iii) deferred income taxes, minus (iv) any noncash income (loss) attributable to interest rate or currency hedging or derivative arrangements, as each of the items set forth in clauses (ii)-(iv) of this defined term is set forth on the consolidated financial statements of the Borrower most recently delivered pursuant to Section 5.1(a) or (b), as the case may be; and

“Total Debt” means without duplication (i) all Debt, (ii) all obligations upon which interest charges are customarily paid, (iii) all obligations under conditional sale or other title retention agreements relating to property acquired, (iv) all obligations in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (v) all Total Debt of others secured by (or for which the holder of such Total Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by the Borrower or any Consolidated Subsidiary, whether or not the Total Debt secured thereby has been

assumed, (vi) all guarantees of Total Debt of others, (vii) all capital lease obligations, (viii) all obligations, contingent or otherwise, of the Borrower and its Consolidated Subsidiaries as an account party in respect of letters of credit and letters of guaranty, (ix) all obligations to pay a specified purchase price for goods or services which purchase price is payable whether or not such goods or services are delivered or accepted, (x) all obligations, contingent or otherwise, in respect of bankers’ acceptances, (xi) all Receivables Facility Attributed Indebtedness of the Borrower and its Consolidated Subsidiaries on the date of determination regardless of its treatment under generally accepted accounting principles, and (xii) to the extent not otherwise included, all net obligations under hedging agreements. The Total Debt of any Person shall include the Total Debt 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 Total Debt provide that such Person is not liable therefor. Notwithstanding the foregoing, the Total Debt of any Person shall not include Defeased Debt of such Person.

Section 5.12 Interest Coverage Ratio. The Interest Coverage Ratio for any Computation Period shall not be less than 3.25:1.00 for such Computation Period. For purposes of this Section, the following terms have the following meanings, subject to Section 1.2:

“Computation Period” means each period of four consecutive fiscal quarters of the Borrower ending on the last day of a fiscal quarter of the Borrower.

“Consolidated Net Income” means, for any period, with respect to the Borrower and its Consolidated Subsidiaries on a consolidated basis, the net income (or loss) appearing on the consolidated financial statements of the Borrower and its Consolidated Subsidiaries for such period.

“EBITDA” means, for any period, with respect to the Borrower and its Consolidated Subsidiaries on a consolidated basis, (a) Consolidated Net Income for such period, plus (b) the sum of, in each case for such period and to the extent included in the calculation of Consolidated Net Income for such period, but without duplication, (i) any provision for income taxes, (ii) Interest Expense, (iii) depreciation, depletion and amortization expenses, (iv) non-cash restructuring charges and non-cash one-time costs, and (v) any aggregate non-cash loss from the sale, exchange or other disposition of capital assets, minus (c) the sum of, in each case for such period and to the extent included in the calculation of Consolidated Net Income for such period, (i) any credit for income taxes, (ii) any aggregate net gain from the sale, exchange or other disposition of capital assets (ignoring gains from all sales of land and land improvement assets), and (iii) any other non-cash gains.

“Interest Coverage Ratio” means, for any Computation Period, the ratio of EBITDA for such Computation Period to Interest Expense for such Computation Period.

“Interest Expense” means, for any period, with respect to the Borrower and its Consolidated Subsidiaries on a consolidated basis, the sum of (a) interest expense for

such period, as it appears in the consolidated financial statements and the notes to the consolidated financial statements of the Borrower for such period, minus (b) any interest expense with respect to “Insurance Policies” for such period, as it appears in the consolidated financial statements of the Borrower for such period, minus (c) any interest income for such period, as it appears in the consolidated financial statements of the Borrower for such period.

Section 5.13 Subsidiary Debt. The Borrower will not at any time allow any Subsidiary to incur any item constituting a part of Total Debt if, at the time of such incurrence and after giving effect thereto, Subsidiary Total Debt would exceed 10% of Consolidated Net Worth at such time; provided that in the case of any particular incurrence of an item constituting a part of Subsidiary Total Debt, Subsidiary Total Debt shall be determined on a pro forma basis for such incurrence, the substantially contemporaneous application of proceeds therefrom and the substantially contemporaneous consummation of any related transactions. For purposes of this Section, the following terms have the following meanings, subject to Section 1.2:

“Subsidiary Total Debt” means Total Debt of the Consolidated Subsidiaries on a consolidated basis, excluding, without duplication, any (a) Total Debt evidenced by the Timber Note Monetization, (b) Receivables Facility Attributed Indebtedness permitted under Section 5.10, (c) unsecured Total Debt of each Co-Borrower and (d) Total Debt to the extent owed to the Borrower; and

“Consolidated Net Worth” means, with respect to the Borrower as of any date of calculation, all items that would be required to be included under shareholders’ equity on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at such date.

ARTICLE 6

DEFAULTS

Section 6.1 Events of Default. If one or more of the following events (each an “Event of Default”) shall have occurred and be continuing:

(a) the Borrower or any Co-Borrower shall fail to pay when due any principal of any Loan or reimbursement obligation in respect of any LC Disbursement, or shall fail to post any cash collateral when due under Section 2.16, or shall fail to pay within three Business Days of the due date thereof any interest on any Loan or LC Disbursement, or any fees or any other amount payable hereunder;

(b) the Borrower or any Co-Borrower shall fail to observe or perform any covenant or agreement contained in any Loan Document (other than those covered by clause (a) of this Section 6.1) for 30 days after written notice thereof has been given to the Borrower by the Administrative Agent at the request of any Lender;

(c) any representation, warranty, certification or statement made by the Borrower or any Co-Borrower in any Loan Document or in any certificate, financial statement or other document delivered pursuant to any Loan Document shall prove to have been incorrect in

any material respect when made or deemed made (other than any representation or warranty qualified by materiality, in which case, such representation or warranty shall prove to have been incorrect in any respect when made or deemed made, but giving effect to the materiality qualifier contained therein);

(d) the Borrower, any Co-Borrower or any Domestic Subsidiary shall fail to make any payment in respect of any Material Debt when due or within any applicable grace period;

(e) any event or condition shall occur which results in the acceleration of the maturity of any Material Debt or enables (or, with the giving of notice or lapse of time or both, would enable) the holder of such Debt or any Person acting on such holder’s behalf to accelerate the maturity thereof;

(f) the Borrower, any Co-Borrower or any Domestic Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate or analogous action to authorize any of the foregoing;

(g) an involuntary case or other proceeding shall be commenced against the Borrower or any Domestic Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 90 days; or an order for relief shall be entered against the Borrower or any Domestic Subsidiary under the federal bankruptcy laws as now or hereafter in effect;

(h) any member of an ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $10,000,000 which it shall have become liable to pay under Title IV of ERISA which could give rise to a lien being imposed on the assets of the Borrower under ERISA or any ERISA Event, or other event shall occur with respect to one or more Plans or Multiemployer Plans which could cause one or more members of any ERISA Group to incur a current payment obligation in excess of $75,000,000; or

(i) one or more judgments or orders for the payment of money in excess of $75,000,000 in the aggregate shall be rendered against the Borrower, any Co-Borrower or any one or more Domestic Subsidiaries and (x) in the case of the Borrower, any Co-Borrower organized in the United States or any State thereof, or any one or more Domestic Subsidiaries, such judgments or orders shall continue unsatisfied and unstayed for a period of 60 days and (y) in the case of any Co-Borrower not organized in the United States or any State thereof, such judgments or orders shall continue unsatisfied and shall be final and non-appealable;

then, and in every such event, the Administrative Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Borrower terminate the Commitments and they shall thereupon terminate, and (ii) if requested by Banks having more than 50% of the aggregate Credit Exposure, by notice to the Borrower declare the Obligations to be, and the Obligations shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; provided that in the case of any of the Events of Default specified in clause (f) or (g) above with respect to the Borrower, without any notice to the Borrower or any other act by the Administrative Agent or the Lenders, the Commitments shall thereupon terminate and the Obligations shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

Section 6.2 Notice of Default. The Administrative Agent shall give notice to the Borrower under Section 6.1(b) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof.

ARTICLE 7

THE ADMINISTRATIVE AGENT

Section 7.1 Appointment and Authority. Each Lender hereby irrevocably appoints Citibank, N.A. to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower and each Co-Borrower shall have no rights as third party beneficiaries of any of such provisions.

Section 7.2 Administrative Agent Individually. (a) The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Co-Borrower or any of their respective Subsidiaries or other Affiliates as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

(b) Each Lender understands that the Person serving as an Agent, acting in its individual capacity, and its Affiliates (collectively, the “Agent’s Group”) are engaged in a wide range of financial services and businesses (including investment management, financing, securities trading, corporate and investment banking and research) (such services and businesses

are collectively referred to in this Section 7.2 as “Activities”) and may engage in the Activities with or on behalf of the Borrower, any Co-Borrower or any of their respective Affiliates. Furthermore, the Agent’s Group may, in undertaking the Activities, engage in trading in financial products or undertake other investment businesses for its own account or on behalf of others (including the Borrower, any Co-Borrower and their respective Affiliates and including holding, for its own account or on behalf of others, equity, debt and similar positions in the Borrower, any Co-Borrower or their respective Affiliates), including trading in or holding long, short or derivative positions in securities, loans or other financial products of the Borrower, any Co-Borrower or their respective Affiliates. Each Lender understands and agrees that in engaging in the Activities, the Agent’s Group may receive or otherwise obtain information concerning the Borrower, any Co-Borrower or their respective Affiliates (including information concerning the ability of the Borrower or any Co-Borrower to perform their respective Obligations hereunder and under the other Loan Documents) which information may not be available to any of the Lenders that are not members of the Agent’s Group. No Agent or any member of the Agent’s Group shall have any duty to disclose to any Lender or use on behalf of the Lenders, and shall not be liable for the failure to so disclose or use, any information whatsoever about or derived from the Activities or otherwise (including any information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrower or any Co-Borrower or any of their respective Affiliates) or to account for any revenue or profits obtained in connection with the Activities, except that such Agent shall deliver or otherwise make available to each Lender such documents as are expressly required by any Loan Document to be transmitted by such Agent to the Lenders.

(c) Each Lender further understands that there may be situations where members of the Agent’s Group or their respective customers (including the Borrower, any Co-Borrower and their respective Affiliates) either now have or may in the future have interests or take actions that may conflict with the interests of any one or more of the Lenders (including the interests of the Lenders hereunder and under the other Loan Documents). Each Lender agrees that no member of the Agent’s Group is or shall be required to restrict its activities as a result of the Person serving as an Agent being a member of the Agent’s Group, and that each member of the Agent’s Group may undertake any Activities without further consultation with or notification to any Lender. None of (i) this Agreement nor any other Loan Document, (ii) the receipt by the Agent’s Group of information (including Information) concerning the Borrower, any Co-Borrower or their respective Affiliates (including information concerning the ability of the Borrower or any Co-Borrower to perform their respective Obligations hereunder and under the other Loan Documents) nor (iii) any other matter shall give rise to any fiduciary, equitable or contractual duties (including without limitation any duty of trust or confidence) owing by any Agent or any member of the Agent’s Group to any Lender including any such duty that would prevent or restrict the Agent’s Group from acting on behalf of customers (including the Borrower, any Co-Borrower or their respective Affiliates) or for its own account.

Section 7.3 Duties of Administrative Agent; Exculpatory Provisions. (a) The Administrative Agent’s duties hereunder and under the other Loan Documents are solely ministerial and administrative in nature and the Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent shall not have any duty to take

any discretionary action or exercise any discretionary powers, but shall be required to act or refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written direction of the Required Banks (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent or any of its Affiliates to liability or that is contrary to any Loan Document or applicable law.

(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Banks or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.6 or Article 6 or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default or the event or events that give or may give rise to any Default or Event of Default unless and until the Borrower or any Lender shall have given notice to the Administrative Agent describing such Default or Event of Default and such event or events.

(c) Neither the Administrative Agent nor any member of the Agent’s Group shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty, representation or other information made or supplied in or in connection with this Agreement or any other Loan Document or the information memorandum, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith or the adequacy, accuracy and/or completeness of the information contained therein, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, or instrument or (v) the satisfaction of any condition set forth in Article 3 or elsewhere herein, other than (but subject to the foregoing clause (ii)) to confirm receipt of items expressly required to be delivered to the Administrative Agent.

(d) Nothing in this Agreement or any other Loan Document shall require the Administrative Agent or any of its Related Parties to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Administrative Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Administrative Agent or any of its Related Parties.

Section 7.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a

Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless an officer of the Administrative Agent responsible for the transactions contemplated hereby shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower or any Co-Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 7.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. Each such sub-agent and the Related Parties of the Administrative Agent and each such sub-agent shall be entitled to the benefits of all provisions of this Article 7 and Section 9.3 (as though such sub-agents were the “Administrative Agent” under the Loan Documents) as if set forth in full herein with respect thereto.

Section 7.6 Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify each Agent and each Issuing Bank (to the extent not reimbursed by the Borrowers) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss (except any loss in respect of any fee arrangement between the Borrower and any Agent to which each Bank is not a party) or liability (except such as result from such Agent’s or such Issuing Bank’s gross negligence or willful misconduct) that such Agent or such Issuing Bank may suffer or incur in connection with the Loan Documents or any action taken or omitted by such Agent or such Issuing Bank thereunder.

Section 7.7 Resignation of Administrative Agent. The Administrative Agent may at any time give notice of its resignation to the Lender and the Borrower. Upon receipt of any such notice of resignation, the Required Banks shall have the right, in consultation with the Borrower (except if an Event of Default is continuing, in which case no consultation with the Borrower shall be required), to appoint a successor, which shall be a bank with an office in New York, New York, or an Affiliate of any such bank with an office in New York, New York. If no such successor shall have been so appointed by the Required Banks and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (such 30-day period, the “Lender Appointment Period”), then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above. In addition and without any obligation on the part of the retiring Administrative Agent to appoint, on behalf of the Lenders, a successor Administrative Agent, the retiring Administrative Agent may at any time upon or after the end of the Lender Appointment Period notify the Borrower and the Lenders that no qualifying Person has accepted appointment as successor Administrative Agent and the effective date of such retiring Administrative Agent’s resignation which effective date shall be no earlier than three business days after the date of such notice. Upon the resignation effective date established in such notice and regardless of whether a successor Administrative Agent has been appointed and accepted such appointment, the retiring

Administrative Agent’s resignation shall nonetheless become effective and (i) the retiring Administrative Agent shall be discharged from its duties and obligations as Administrative Agent hereunder and under the other Loan Documents and (ii) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Banks appoint a successor Administrative Agent as provided for above in this paragraph. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties as Administrative Agent of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations as Administrative Agent hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower or any Co-Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower or any Co-Borrower and such successor Administrative Agent. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article 7 and Section 9.3 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

Section 7.8 Non-Reliance on Administrative Agent and Other Lenders. (a) Each Lender confirms to each Agent, each other Lender and each of their respective Related Parties that it (i) possesses (individually or through its Related Parties) such knowledge and experience in financial and business matters that it is capable, without reliance on any Agent, any other Lender or any of their respective Related Parties, of evaluating the merits and risks (including tax, legal, regulatory, credit, accounting and other financial matters) of (x) entering into this Agreement, (y) making Loans and other extensions of credit hereunder and under the other Loan Documents and (z) in taking or not taking actions hereunder and thereunder, (ii) is financially able to bear such risks and (iii) has determined that entering into this Agreement and making Loans and other extensions of credit hereunder is suitable and appropriate for it.

(b) Each Lender acknowledges that (i) it is solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with this Agreement and the other Loan Documents, (ii) it has, independently and without reliance upon any Agent, any other Lender or any of their respective Related Parties, made its own appraisal and investigation of all risks associated with, and its own credit analysis and decision to enter into, this Agreement based on such documents and information, as it has deemed appropriate and (iii) it will, independently and without reliance upon any Agent, any other Lender or any of their respective Related Parties, continue to be solely responsible for making its own appraisal and investigation of all risks arising under or in connection with, and its own credit analysis and decision to take or not take action under, this Agreement and the other Loan Documents based on such documents and information as it shall from time to time deem appropriate, which may include, in each case:

(i) the financial condition, status and capitalization of the Borrower or any Co-Borrower;

(ii) the legality, validity, effectiveness, adequacy or enforceability of this Agreement and each other Loan Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Loan Document;

(iii) determining compliance or non-compliance with any condition hereunder to the making of a Loan or the issuance of a Letter of Credit, and the form and substance of all evidence delivered in connection with establishing the satisfaction of each such condition;

(iv) the adequacy, accuracy and/or completeness of the information memorandum and any other information delivered by any Agent, any other Lender or by any of their respective Related Parties under or in connection with this Agreement or any other Loan Document, the transactions contemplated hereby and thereby or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Loan Document.

Section 7.9 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the Persons acting as Bookrunners, Lead Arrangers, Documentation Agents or Syndication Agent listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or as a Lender hereunder.

ARTICLE 8

CHANGE IN CIRCUMSTANCES

Section 8.1 Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Spread Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate for such Interest Period, or

(b) Banks having 50% or more of the aggregate amount of the Commitments advise the Administrative Agent that the Eurocurrency Rate as determined for such Interest Period will not adequately and fairly reflect the cost of such Banks of funding their Spread Loans for such Interest Period,

the Administrative Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Banks to make Spread Loans shall be suspended. Unless the Borrower notifies the Administrative Agent at least two Business Days before the date of any Spread Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Spread Borrowing is a Committed Euro-Dollar Borrowing or a Committed Alternate Currency Borrowing, such Borrowing shall instead be made as a Committed Base Rate Borrowing and (ii) if such Spread Borrowing is a Money Market Margin Auction Borrowing, the Money Market Margin Auction Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day.

Section 8.2 Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any applicable lending office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender (or any applicable lending office) to make, maintain or fund its Alternate Currency Loans or Eurocurrency Loans and such Lender shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon until such Lender notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Eurocurrency Loans and/or Alternate Currency Loans shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section, such Lender shall designate a different lending office if such designation will avoid the need for giving such notice and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such Lender shall determine that it may not lawfully continue to maintain and fund any of its outstanding Alternate Currency Loans or Eurocurrency Loans to maturity and shall so specify in such notice, the Borrower or the applicable Co-Borrower shall immediately prepay in full the then outstanding principal amount of each such Eurocurrency Loan and Alternate Currency Loan, together with accrued interest thereon. Concurrently with prepaying each such Eurocurrency Loan and Alternate Currency Loan, the Borrower or the applicable Co-Borrower shall borrow a Committed Base Rate Loan in a Dollar Equivalent principal amount from such Bank (on which interest and principal shall be payable contemporaneously with the related Eurocurrency Loans or Alternate Currency Loans of the other Banks), and such Bank shall make such a Committed Base Rate Loan.

Section 8.3 Increased Cost and Reduced Return. (a) If on or after (x) the date hereof, in the case of any Committed Loan (other than a Committed Base Rate Loan) or Letter of Credit or any obligation to make such Committed Loans or issue or participate in any Letter of Credit (each an “Affected Committed Credits or Obligation”) or (y) the date of the related Money Market Quote, in the case of any Money Market Loan (each an “Affected Money Market Credit or Obligation” and, together with each Affected Committed Credit or Obligation, an “Affected Credit or Obligation”), the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

(i) shall subject any Lender (or its applicable lending office) to any tax, duty or other charge with respect to its Affected Loans or Obligations, or shall change the basis of taxation of payments to any Lender (or its applicable lending office) of the principal of or interest in respect of its Affected Loans or Obligations or any other

amounts due under this Agreement in respect of its Affected Loans or Obligations (except for changes in the rate of tax on the overall net income of such Lender or its applicable lending office imposed by the jurisdiction in which such Lender’s principal executive office or applicable lending office is located); or

(ii) shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Federal Reserve Board, but excluding with respect to any Eurocurrency Loan, any such requirement included in an applicable Eurocurrency Reserve Percentage), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (or its applicable lending office) or shall impose on any Lender (or its applicable lending office) or on the London interbank market any other condition affecting its Affected Loans or Obligations;

and the result of any of the foregoing is to increase the cost to such Lender (or its applicable lending office) of making or maintaining any Affected Loan or Obligation, or the cost to such Lender of issuing, participating in or maintaining any Affected Loan or Obligation, or to reduce the amount of any sum received or receivable by such Lender (or its applicable lending office) under this Agreement or in respect of its portion of the Obligations with respect thereto, then, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Borrowers shall pay to such Bank such additional amount or amounts as will compensate such Lender for such increased cost or reduction. Notwithstanding the foregoing, the Borrowers’ obligation to compensate a Lender for any increased costs or reductions under this Section 8.3 that are attributable to taxes shall be governed by Section 8.6.

(b) If any Lender shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Lender (or its Parent Company) as a consequence of such Lender’s obligations hereunder to a level below that which such Lender (or its Parent Company) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy), then from time to time, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender (or its Parent Company) for such reduction.

(c) Each Lender will promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section and will designate a different applicable lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. A certificate of any Lender claiming compensation under this Section and setting forth a calculation in reasonable detail of the additional amount or amounts to be paid to it hereunder shall be conclusive if prepared in good faith and on a reasonable basis. In determining such amount, such Lender may use any reasonable averaging and attribution methods.

Section 8.4 Committed Base Rate Loans Substituted for Affected Loans. If (i) the obligation of any Lender to make Eurocurrency Loans or Alternate Currency Loans has been suspended pursuant to Section 8.2 or (ii) any Lender has demanded compensation under Section 8.3(a) and the Borrower shall, by at least five Business Days’ prior notice to such Lender through the Administrative Agent, have elected that the provisions of this Section shall apply to such Lender, then, unless and until such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist:

(a) all Loans which would otherwise be made by such Bank as Eurocurrency Loans or Alternate Currency Loans shall be made instead as Committed Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Fixed Rate Loans of the other Banks), and

(b) after each of its Eurocurrency Loans or Alternate Currency Loans has been repaid, all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay its Committed Base Rate Loans instead.

Section 8.5 Substitution or Removal of Bank. (a) If with respect to any Bank, (i) such Bank has demanded compensation under Section 8.3, or (ii) any of the Borrowers shall become obligated pursuant to Section 8.6(a) to increase the amount of any payment to or for the benefit of such Bank, the Borrower shall have the right at its sole expense (including the fees referred to in Section 9.6(b)), with the assistance of the Administrative Agent, to seek a substitute bank or banks (which may be one or more of the Banks) to purchase its portion of the Obligations and assume the Commitment of such Bank; provided that if such substitute bank is not a Bank, then (x) such substitute bank shall have been approved by the Administrative Agent and each Issuing Bank and (y) the Borrower shall have paid the Administrative Agent a $3,500 administrative fee. A Bank may not be replaced pursuant to this Section 8.5(a) unless, among other things, no Default has occurred and is continuing, such Bank has received all outstanding principal of, and accrued interest on, such Bank’s Loans, all accrued fees owing to such Bank hereunder, and all other sums then due and payable to such Bank (including, without limitation, any sums that would be due to such Bank under Article 8), and if such Bank is replaced pursuant to this Section 8.5(a), such Bank shall continue to be entitled to the benefits of Sections 2.13, 8.3, 8.6 and 9.3.

(b) If any Bank becomes a Non-Consenting Bank, then the Borrower, at its sole expense (including the fees referred to in Section 9.6(b)) and effort, shall have the right, within 45 days of the date such Bank became a Non-Consenting Bank (a) to seek a substitute bank or banks (which may be one or more of the Banks) to purchase its portion of the Obligations and assume the Commitment of such Bank, provided that if any such substitute bank is not a Bank, then (x) such substitute bank shall have been approved by the Administrative Agent and each Issuing Bank and (y) the Borrower shall have paid the Administrative Agent a $3,500 administrative fee, or (b) provided that no Default shall have occurred and be continuing, to remove such Bank as a “Bank” pursuant to this Section; provided that after giving effect to

each removal of a Non-Consenting Bank, the sum of (A) a fraction (expressed as a percentage), the numerator of which is the Commitment of such Non-Consenting Bank, and the denominator of which is the sum of the aggregate Commitments existing at the time immediately prior to the removal of such Non-Consenting Bank, plus (B) with respect to each other Non-Consenting Bank removed in accordance with this Section since the Effective Date, the percentage calculated with respect thereto under the immediately preceding clause (A) at the time of the removal of such prior Non-Consenting Bank, shall not exceed 15%. A Non-Consenting Bank that has been duly selected by the Borrower to be removed shall be removed as a “Bank” effective upon (i) the delivery to the Administrative Agent and such Non-Consenting Bank of a written notice to such effect, (ii) the payment to the Administrative Agent, for the account of such Bank, of all outstanding principal of, and accrued interest on, such Bank’s Loans and all accrued fees owing to such Bank hereunder, and (iii) the payment to such Non-Consenting Bank of all other sums then due and payable thereto (including, without limitation, any sums that would be due to such Non-Consenting Bank under Article 8), at which time the Commitment of such Non-Consenting Bank shall automatically terminate and such Non-Consenting Bank shall no longer be a “Bank” under the Loan Documents (but shall continue to be entitled to the benefits of Sections 2.13, 8.3, 8.6 and 9.3). In the event that (x) the Borrower or the Administrative Agent has requested the Banks to consent to a departure from or waiver of any provisions of the Loan Documents or agree to any amendment thereto and (y) Required Banks have agreed to such consent, waiver or amendment, then any Bank that does not agree to such consent, waiver or amendment (whether affirmatively or by failure to respond within five Business Days of a request therefor) shall be deemed a “Non-Consenting Bank”.

Section 8.6 Taxes. (a) Each payment made by any of the Borrowers to a Lender or the Administrative Agent under each Loan Document shall be made free and clear of, and without deduction or withholding for or on account of, any Non-Excluded Taxes. If any such Non-Excluded Taxes are required to be withheld from any amount payable by the Borrower or the applicable Co-Borrower to the Administrative Agent or any Lender hereunder or under any Loan Document, in each such case (i) such amount payable shall be increased by the Borrower or the applicable Co-Borrower by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.6) the Administrative Agent or such Lender shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or the applicable Co-Borrower shall make such deductions, and (iii) the Borrower or the applicable Co-Borrower shall pay the full amount deducted to the relevant taxing authority or other governmental authority in accordance with applicable law. Whenever any Non-Excluded Taxes or Other Taxes are payable by any of the Borrowers, as promptly as possible thereafter, but no later than thirty (30) days after the date of payment, the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower or the applicable Co-Borrower showing payment of the full amount thereof.

(b) Each Lender (or any assignee or participant described in Section 9.6) that is not a United States Person within the meaning of Section 7701(a)(30) of the Internal Revenue Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a participant described in Section 9.6, to the Lender from which the related

participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN; Form W-8ECI (as applicable), or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 87 1(h) or 88 1(c) of the Internal Revenue Code with respect to payments of “portfolio interest”, a Form W-8BEN, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender, claiming an exemption with respect to payments of “portfolio interest”, delivers a Form W-8BEN, an annual certificate representing that such Non-U.S. Lender is not a “bank” for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code) or any other similar representations required under any successor exemptions), properly completed and duly executed by such Non-U.S. Lender claiming that such Non-U.S. Lender is, on the date of delivery thereof, exempt from U.S. federal withholding tax on all payments by the Borrowers under the Loan Documents, or subject to a reduced rate of U.S. federal withholding tax with respect to such payments, and any other forms or documentation reasonably requested by Borrower or the Administrative Agent from time to time to establish an exemption from or reduction in any U.S. federal withholding taxes. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to any Loan Document and on or before such date, if any, such Non-U.S. Lender changes its applicable lending office (or, in the case of any such participant, on or before the date such participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower and the Administrative Agent at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose) or that a certificate previously provided has become inapplicable. Notwithstanding any other provision of this paragraph (b), a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph (i) that such Non-U.S. Lender is not legally able to complete, execute and deliver, or (ii) which results, in the reasonable determination of such Non-U.S. Lender, in the imposition of (1) any additional material out-of-pocket costs in each case, not otherwise indemnified by the Borrowers in a manner satisfactory to such Lender or (2) any other material adverse consequences.

(c) A Lender that is entitled to an exemption from or reduction of non-U.S. Non- Excluded Tax shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that (i) such Lender is legally entitled to complete, execute and deliver such documentation, or (ii) the completion, execution and delivery of such documentation does not result, in the reasonable determination of such Lender, in the imposition of (1) any additional material out-of-pocket costs in each case, not otherwise indemnified by the Borrowers in a manner satisfactory to such Lender or (2) any other material adverse consequences.

(d) The Borrowers shall pay any present or future stamp or documentary taxes or any other excise or property, intangible or mortgage recording or similar taxes, charges or

levies which arise from any payment made by the Borrowers hereunder or under the other Loan Documents or any other documents to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, any Loan Document or any other documents to be delivered hereunder (hereinafter referred to as “Other Taxes”).

(e) The Borrowers shall indemnify each Lender and the Administrative Agent for and hold it harmless against the full amount of Non-Excluded Taxes or Other Taxes and for the full amount of any Taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 8.6 imposed on or paid by such Lender or such Administrative Agent (as the case may be) and any liability (including expenses) arising therefrom or with respect thereto, whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally imposed or asserted by the applicable jurisdiction. This indemnification shall be made within 30 days from the date such Lender or such Administrative Agent (as the case may be) makes written demand therefor.

(f) If the Administrative Agent or a Lender determines, in its reasonable discretion, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower or a Co-Borrower or with respect to which the Borrower or a Co-Borrower has paid additional amounts, in either case pursuant to this Section 8.6, it shall pay over such refund to the Borrower or the applicable Co-Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower or the applicable Co-Borrower under this Section 8.6 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided that the Borrower or the applicable Co-Borrower, upon the request of the Administrative Agent or such Lender, shall repay the amount (or portion thereof) paid over to the Borrower or the applicable Co-Borrower (plus any penalties, interest or other charges imposed by the relevant governmental authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund (or portion thereof) to such governmental authority.

(g) Nothing in this Section 8.6 shall be construed to require the Administrative Agent or any Lender to make any tax returns or other confidential information available to any of the Borrowers or any other Person.

(h) At the request of the Borrower, the Administrative Agent and each Lender shall take reasonable steps to avoid the need for the Borrowers to pay any amounts under this Section 8.6 to or for the account of the Administrative Agent or such Lender, as the case may be, if such steps will not, in the reasonable judgment of the Administrative Agent or such Lender, be otherwise disadvantageous to the Administrative Agent or such Lender.

(i) Amounts payable by the Borrowers under this Section 8.6 shall be in addition to, but not in duplication of, amounts otherwise payable by the Borrowers under the Loan Documents.

(j) The agreements in this Section 8.6 shall survive the termination of this Agreement and each other Loan Document and the payment of the Loans and all other amounts payable hereunder and thereunder.

ARTICLE 9

MISCELLANEOUS

Section 9.1 Notices. (a) Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Borrower, to the Borrower at 299 Park Avenue, New York, New York 10171, Attention Treasurer (Facsimile No. (212) 318-5691), with a copy to General Counsel (Facsimile No. (212) 318-5035);

(ii) if to the Administrative Agent, to the Administrative Agent’s Office;

(iii) if to a Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto; and

(iv) if to a Co-Borrower, to it at its address (or telecopy number) set forth in its Designation Letter pursuant to which such Co-Borrower shall have become a party hereto.

or, if any of (i), (ii), (iii), or (iv) at such other address or facsimile number as the applicable party may designate from time to time in a written notice to the Borrower and the Administrative Agent.

(b) All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given (i) on the date of receipt if delivered by hand or overnight courier service or sent by telecopy, (ii) on the date of transmission if sent by electronic mail or through the Internet or (iii) on the date five Business Days after dispatch by certified or registered mail, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.1 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.1.

(c) The Borrower and each Co-Borrower hereby agrees that, unless otherwise requested by the Administrative Agent, it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to this Agreement, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing, borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any default or event

of default under this Agreement, (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement set forth in Article 3 and/or any borrowing or other extension of credit hereunder or (v) initiates or responds to legal process (all such non-excluded information being referred to herein collectively as the “Communications”) by transmitting the Communications in an electronic/soft medium (provided such Communications contain any required signatures) in a format reasonably acceptable to the Administrative Agent to GLAgentOfficeOps@citigroup.com (or such other e-mail address designated by the Administrative Agent from time to time in a written notice to the Borrower). The Administrative Agent and each Lender hereby agrees that, notwithstanding any other provision hereof, any Communication delivered by the Borrower or any Co-Borrower pursuant to this paragraph shall be deemed to have been delivered in accordance with this Agreement.

(d) Each party hereto agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on IntraLinks or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent) (the “Platform”). Nothing in this Section 9.1 shall prejudice the right of the Administrative Agent to make the Communications available to the Lenders in any other manner specified in this Agreement.

(e) The Borrower and each Co-Borrower hereby acknowledges that certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or any Co-Borrower or their respective securities) (each, a “Public Lender”). The Borrower and each Co-Borrower hereby agrees that (i) Communications that are to be made available on the Platform to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Communications “PUBLIC,” the Borrower and each Co-Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Communications as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Borrower or any Co-Borrower or their respective securities for purposes of United States Federal and state securities laws, (iii) all Communications marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Lender,” and (iv) the Administrative Agent shall be entitled to treat any Communications that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Lender.”

(f) Each Lender agrees that e-mail notice to it (at the address provided pursuant to the next sentence and deemed delivered as provided in the next paragraph) specifying that Communications have been posted to the Platform shall constitute effective delivery of such Communications to such Lender for purposes of this Agreement. Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) from time to time to ensure that the Administrative Agent has on record an effective e-mail address for such Lender to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.

(g) Each party hereto agrees that any electronic communication referred to in this Section 9.1 shall be deemed delivered upon the posting of a record of such communication (properly addressed to such party at the e-mail address provided to the Administrative Agent) as “sent” in the e-mail system of the sending party or, in the case of any such communication to the Administrative Agent, upon the posting of a record of such communication as “received” in the e-mail system of the Administrative Agent; provided that if such communication is not so received by the Administrative Agent during the normal business hours of the Administrative Agent, such communication shall be deemed delivered at the opening of business on the next Business Day for the Administrative Agent.

(h) Each party hereto acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Communications and the Platform are provided “as is” and “as available,” (iii) none of the Administrative Agent, its affiliates nor any of their respective officers, directors, employees, agents, advisors or representatives (collectively, the “Citigroup Parties”) warrants the adequacy, accuracy or completeness of the Communications or the Platform, and each Citigroup Party expressly disclaims liability for errors or omissions in any Communications or the Platform, and (iv) no warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any Citigroup Party in connection with any Communications or the Platform.

Section 9.2 No Waivers. No failure or delay by the Administrative Agent or any Bank in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 9.3 Expenses; Indemnification. (a) The Borrowers shall pay (i) all out of pocket expenses of the Agents, including fees and disbursements of special counsel for the Agents, in connection with the preparation and administration of each Loan Document, any waiver or consent thereunder or any amendment thereof or any Default or alleged Default, (ii) all reasonable out-of-pocket costs and expenses incurred by each Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all out of pocket expenses incurred by any Agent or Lender, including fees and disbursements of counsel, in connection with any enforcement of rights or workout, any Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom.

(b) The Borrowers agree to indemnify each Agent, each Lender and their respective Affiliates and the respective directors, officers, employees, agents and advisors of such Agent, such Lender and such Lender’s Affiliates (each of the foregoing being an “Indemnified Person”) and hold each Indemnified Person harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnified

Person (or by any Agent (together with its officers, directors, employees, agents and advisors and Affiliates) in connection with its actions as Agent hereunder) in connection with or arising out of or as a result of (i) the execution, delivery or performance of the Loan Documents, any agreement or instrument contemplated thereby, the transactions contemplated thereby or any Loan or Letter of Credit, or the actual or proposed used of the Loans or Letters of Credit or (ii) any investigative, administrative or judicial proceeding (whether or not such Indemnified Person shall be designated a party thereto) relating to or arising out of the Loan Documents or any actual or proposed use of proceeds of Loans or Letters of Credit hereunder including any refusal of an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit; provided that no Indemnified Person shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct to the extent determined by a court of competent jurisdiction in a final and non-appealable judgment. Notwithstanding the above, no Bank will be entitled to indemnification with respect to any facility fees for which such Bank was not entitled to receive as a result of being a Defaulting Lender pursuant to Section 2.8(e).

(c) To the fullest extent permitted by applicable law, none of the Borrowers shall assert, and each of the Borrowers hereby waives, any claim against any Indemnified Person, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any issuance of a Letter of Credit. No Indemnified Person referred to in Section 9.3 shall be liable for any damages arising from the use by unintended or unauthorized recipients of any information or other materials distributed by it through telecommunications, electronic or other similar information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

Section 9.4 Sharing of Set Offs and Payments. Each Lender agrees that if it shall, by exercising any right of set off or counterclaim or by any other means, receive payment of a proportion of the aggregate amount of the Obligations held by it (other than in the circumstances contemplated by Section 8.5) which is greater than the proportion received by any other Lender in respect of the Obligations held by such other Lender, the Lender receiving such proportionately greater payment shall purchase such participations in the Obligations held by the other Lenders, and such other adjustments shall be made, as may be required so that all such payments of the Obligations held by the Lenders shall be shared by the Lenders pro rata; provided that nothing in this Section shall impair the right of any Lender to exercise any right of set off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than the Obligations. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Bank’s portion of the Obligations, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set off or counterclaim and other rights with respect to such participation as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation.

Section 9.5 Amendments and Waivers. Any provision of the Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrowers and the Required Banks (and, if the rights or duties of the Administrative Agent are affected thereby, by the Administrative Agent); provided that no such amendment or waiver shall (i) increase the Commitment of any Bank without the written consent of such Bank, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder without the written consent of each Bank affected thereby, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder without the written consent of each Bank affected thereby, (iv) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Obligations, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement without the written consent of each Bank, (v) change any provision hereof in any manner that would alter the pro rata sharing of payments required by this Agreement without the written consent of each Bank, (vi) add any additional currency as an Agreement Currency without the written consent of each Bank, (vii) waive any condition set forth in Section 3.1 or Section 3.2 without the written consent of each Bank, (viii) change any provision of this Section without the written consent of each Bank, or (ix) change any provision of the Loan Documents affecting the rights or obligations of any Issuing Bank without the consent of such Issuing Bank. Anything herein to the contrary notwithstanding, during such period that a Bank is a Defaulting Lender, to the fullest extent permitted by applicable law, such Defaulting Lender will not be entitled to vote in respect of amendments and waivers hereunder which are subject to the approval of the Required Banks, and the Commitment and the outstanding Loans or other extensions of credit of such Defaulting Lender hereunder will not be taken into account in determining whether the Required Banks have approved any such amendment or waiver (and the definition of “Required Banks” will automatically be deemed modified accordingly for the duration of such period).

Section 9.6 Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that none of the Borrowers may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Lenders; and provided further that except as contemplated by sub sections (b), (e) and (f) of this Section 9.6 and by Sections 2.4(b) and 9.4, no Lender may assign, grant participations in or otherwise transfer any of its rights or obligations under this Agreement.

(b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, its LC Exposure and the Loans and other Obligations at the time owing to it), provided that (i) except in the case of an assignment to a Lender, an Eligible Affiliate or an Approved Fund, each of the Borrower and the Administrative Agent (and, in the case of an assignment of all or any portion of a Commitment, each Issuing Bank) must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Bank, an Eligible Affiliate or an assignment of the entire remaining amount of the assigning Bank’s Commitment, or unless the Borrower, each Issuing Bank and the Administrative Agent shall otherwise consent, the amount of the Commitment of the assigning Bank subject to each such assignment (determined as of the date the Assignment and Acceptance

with respect to such assignment is delivered to the Administrative Agent) shall be $10,000,000 or a larger multiple of $1,000,000, (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance together with a processing and recordation fee of $3,500, (iv) any assignment to the Borrower or any Affiliate thereof shall require the prior written consent of each of the Lenders and each Issuing Bank, and (v) the assignee, if it shall not be a Bank, shall deliver to the Administrative Agent an Administrative Questionnaire, and provided further, that any consent of the Borrower otherwise required under this paragraph shall not be required if a Default has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 8.3, 8.6 and 9.3). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph or paragraph (f) shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. For purposes of this Section 9.6(b), “Eligible Affiliate” means, with respect to any Lender, any Affiliate thereof that has combined capital and surplus of at least $250,000,000.

(c) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Acceptance and each notice of removal of a Bank under Section 8.5 delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent clearly demonstrable error, and the Borrowers and each Lender and the Administrative Agent shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender and the Administrative Agent, at any reasonable time and from time to time upon reasonable prior notice.

(d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. Upon the effectiveness of any removal of a Bank pursuant to Section 8.5, the Administrative Agent shall record the relevant information in the Register. No assignment shall be effective, and no removal of any Bank shall be effective, for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e) Any Lender may at any time grant to one or more banks or other institutions (each a “Participant”) participating interests in any of its Obligations. In the event of any such grant by a Lender of a participating interest to a Participant, whether or not upon notice to the Borrower and the Administrative Agent, the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrowers hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Lender will not agree to any modification, amendment or waiver of this Agreement described in clause (i) through (viii) of Section 9.5 without the consent of the Participant. The Borrowers agree that each Participant shall, to the extent provided in its participation agreement and subject to the requirements of Article 8, be entitled to the benefits of Article 8 with respect to its participating interest.

(f) Any Lender may at any time, without the consent of the Administrative Agent or any of the Borrowers, pledge or assign a security interest in all or any portion of its rights under this Agreement to secure the obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest. No such pledge or assignment shall release the transferor Lender from its obligations hereunder.

(g) No Participant in any Lender’s Credit Exposure shall be entitled to receive any greater payment under Section 8.3 and Section 8.6 than such Lender would have been entitled to receive.

Section 9.7 [Intentionally omitted]

Section 9.8 Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York.

Section 9.9 Jurisdiction; Consent to Service of Process. (a) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to the Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that, to the extent permitted by applicable law, all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by applicable law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any Agent or any Lender may otherwise have to bring any action or proceeding relating to the Loan Documents against the Borrower, or any of its property, in the courts of any jurisdiction.

(b) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to the Loan Documents in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 9.10 Jury Trial.

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 9.11 Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page to this Agreement by telecopy or electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 9.12 Judgment Currency. (a) If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in one currency into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency in the city in which it normally conducts its foreign exchange operation for the first currency on the Business Day preceding the day on which final judgment is given.

(b) The obligation of the Borrower and each Co-Borrower in respect of any sum due from it to any Lender hereunder shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by such Lender of any sum adjudged to be so

due in the Judgment Currency such Lender may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency; if the amount of Agreement Currency so purchased is less than the sum originally due to such Lender in the Agreement Currency, the Borrower and each Co-Borrower agrees notwithstanding any such judgment to indemnify such Lender against such loss, and if the amount of the Agreement Currency so purchased exceeds the sum originally due to any Lender, such Lender agrees to remit to the Borrower or such Co-Borrower, as the case may be, such excess.

Section 9.13 Patriot Act. Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower and each Co-Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-5 6 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower and such Co-Borrower, which information includes the name and address of the Borrower and such Co-Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and such Co-Borrower in accordance with the Patriot Act.

Section 9.14 Right of Setoff. If a Default or Event of Default shall have occurred and be continuing, each Lender (and any of its Affiliates) is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender (or any of its Affiliates) to or for the credit or the account of the Borrower or any Co-Borrower against any of and all the obligations of the Borrowers now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

Section 9.15 Survival of Agreement. All covenants, agreements, representations and warranties made by the Borrower or any Co-Borrower herein or in any other Loan Document and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitments have not been terminated or there remains any Credit Exposure.

Section 9.16 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges which are treated as interest under applicable law (collectively the “Charges”), as provided for herein or in any other document executed in connection herewith, or otherwise contracted for, charged, received, taken or reserved by any Lender, shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by such Lender in accordance with applicable law, the rate of interest payable on the Loan of such Lender, together with all Charges payable to such Lender, shall be limited to the Maximum Rate.

Section 9.17 Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 9.18 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

Section 9.19 No Fiduciary Relationship. The Borrower and each Co-Borrower agree that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower, any Co-Borrower and their respective Affiliates, on the one hand, and Agents, the Lenders and their respective Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Agents, the Lenders or their respective Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications.

Section 9.20 Confidentiality. Each of the Administrative Agent and each Lender agrees, for the benefit of the Borrower and each Co-Borrower, to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it or any of its Affiliates (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective party (or its managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives) to any swap or derivative or similar transaction under which payments are to be made by reference to the Borrower or any Co-Borrower and their respective obligations, this Agreement or payments hereunder, (iii) any rating agency, or (iv) the CUSIP Service Bureau or any similar organization, (g) with the written consent of the Borrower, or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or a Co-Borrower.

For purposes of this Section, “Information” means all information received from the Borrower, any Co-Borrower or any of their respective Subsidiaries relating to the Borrower, any Co-Borrower or any of their respective Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower, any Co-Borrower or any of their respective Subsidiaries, provided that, in the case of information received from the Borrower, any Co-Borrower or any of their respective Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 9.21 Cure. If the Borrower, the Administrative Agent and each Issuing Bank agree in writing in their discretion that a Bank that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender will, to the extent applicable, purchase such portion of outstanding Loans of the other Lenders and/or make such other adjustments as the Administrative Agent may determine to be necessary to cause the Committed Credit Exposure of the Lenders to be on a pro rata basis in accordance with their respective Commitments, whereupon such Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender (and such Committed Credit Exposure of each Lender will automatically be adjusted on a prospective basis to reflect the foregoing); provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while such Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.

Section 9.22 Joint and Several Liability. The Borrower and each Co-Borrower shall be jointly and severally liable for all Obligations, as more specifically set forth in each Designation Letter.

MEADWESTVACO CORPORATION

CREDIT AGREEMENT

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.


MEADWESTVACO CORPORATION

By:
Name:
Title:

MEADWESTVACO CORPORATION

CREDIT AGREEMENT

MEADWESTVACO CORPORATION

CREDIT AGREEMENT

MEADWESTVACO CORPORATION

CREDIT AGREEMENT

MEADWESTVACO CORPORATION

CREDIT AGREEMENT

MEADWESTVACO CORPORATION

CREDIT AGREEMENT

MEADWESTVACO CORPORATION

CREDIT AGREEMENT

SCHEDULE 1

ADMINISTRATIVE AGENT ADDRESS

Citibank, N.A., as Administrative Agent

Two Penns Way, Suite 200

New Castle, Delaware 19720

Attn:

Telephone:

Facsimile:

E-mail:

with a copy to:

390 Greenwich Street, 1st Floor

New York, New York, 10013

Attn:

Telephone:

Facsimile:

E-mail:

Wire Instructions for USD Payments:

Bank Name: Citibank N.A.

ABA/Routing No.:

Swift Code:

Account Name:

Account No:

Reference: MeadWestvaco Corporation

Wire Instruction for Alternate Currency Payments:

Bank Name: Citibank London

Swift Code:

Account Name:

Account No:

Reference: MeadWestvaco Corporation

EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]¹ Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]² Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]³ hereunder are several and not joint.]⁴ Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including without limitation any letters of credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively

¹	For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

²	For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

³	Select as appropriate.

⁴	Include bracketed language if there are either multiple Assignors or multiple Assignees.

as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by [the][any] Assignor.



1. Assignor[s]:		____________________________

2. Assignee[s]:		____________________________

		____________________________

		____________________________

		[and is an [Affiliate][Approved Fund] of [identify Lender]

3. Borrower:		MeadWestvaco Corporation

4. Co-Borrowers (if applicable)		____________________________

5. Administrative Agent:		Citibank, N.A., as the administrative agent under the Credit Agreement

6. Credit Agreement:		The Credit Agreement dated as of October [—], 2009 among MeadWestvaco Corporation and the other entities party thereto from time to time, as Borrowers, the Lenders from time to time party thereto, Citibank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and UBS Loan Finance LLC, as Documentation Agents

7. Assigned Interest[s]:


Assignor[s]	Assignee[s]	Aggregate Amount of Commitment/Loans for all Lenders	Amount of Commitment/ Loans Assigned	Percentage Assigned of Commitment/ Loans⁵
		$	$	%
		$	$	%
		$	$	%

⁵	Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Acceptance are hereby agreed to:


ASSIGNOR[S]⁶

[NAME OF ASSIGNOR]

By:
		Name:
		Title:

ASSIGNEE[S]⁷

[NAME OF ASSIGNEE]


By:
		Name:
		Title:


[Consented to and]⁸ Accepted:

Citibank, N.A., as Administrative Agent

By
		Name:
		Title:

⁶	Add additional signature blocks as needed.

⁷	Add additional signature blocks as needed.

⁸	To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

[Consented to:]⁹


[NAME OF RELEVANT PARTY]

By
		Name:
		Title:

⁹	To be added only if the consent of the Borrower and/or other parties (e.g. Issuing Bank) is required by the terms of the Credit Agreement.

ANNEX 1

TO ASSIGNMENT AND ACCEPTANCE

MEADWESTVACO CORPORATION CREDIT AGREEMENT

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

1. Representations and Warranties.

1.1 Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower or any Co-Borrower, any of their respective Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower or any Co-Borrower, any of their respective Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.6(b) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.6(b) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.1 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, and (vii) if it is a Non-U.S. Lender, attached to the Assignment and Acceptance is any documentation required to be

delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.

EXHIBIT B

FORM OF COMMITMENT INCREASE SUPPLEMENT

COMMITMENT INCREASE SUPPLEMENT, dated as of 200 , to the CREDIT AGREEMENT, dated as of October [—], 2009 (as amended, supplemented or otherwise modified and in effect on the date hereof, the “Credit Agreement”) by and among MeadWestvaco Corporation and the other entities party thereto from time to time, as Borrowers, the Lenders from time to time party thereto, Citibank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and UBS Loan Finance LLC, as Documentation Agents. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

1. Pursuant to Section 2.9(b) of the Credit Agreement, the Borrower hereby submits this Commitment Increase Supplement to the Administrative Agent.

2. Each of the following Banks (each an “Increasing Bank”) has been invited by the Borrower, and is ready, willing and able, to increase its Commitment as follows:


Name of Bank		Commitment (after giving effect to this increase)
		$
		$

3. Each of the following Persons (each a “Proposed Bank”) has been invited by the Borrower, and is ready, willing and able, to become a “Bank” and provide a new Commitment as follows:


Name of Person		Commitment
		$
		$

4. The Borrower hereby represents and warrants to the Administrative Agent, each Lender, each Increasing Bank and each Proposed Bank that, assuming the Administrative Agent executes and delivers this Commitment Increase Supplement, all of the conditions set forth in Section 2.9(b) of the Credit Agreement have been satisfied.

5. Pursuant to Section 2.9(b) of the Credit Agreement, by execution and delivery of this Commitment Increase Supplement, together with the satisfaction of all of the other requirements set forth in such Section 2.9(b), (a) each Increasing Bank’s Commitment shall be increased to the amount set forth above next to its name, and (b) each Proposed Bank shall become a party to the Credit Agreement and shall for all purposes of the Loan Documents be deemed a “Bank” having a Commitment as set forth above next to its name.

[signature page follows]

MEADWESTVACO CORPORATION

COMMITMENT INCREASE SUPPLEMENT

IN WITNESS WHEREOF, the parties hereto have caused this Commitment Increase Supplement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.


MEADWESTVACO CORPORATION

By:
Name:
Title:

MEADWESTVACO CORPORATION

COMMITMENT INCREASE SUPPLEMENT


[INCREASING BANK]

By:
Name:
Title:

[PROPOSED BANK]

By:
Name:
Title:

Consented to:¹


[NAME OF ISSUING BANK]

By
		Name:
		Title:

[Consented to and]² Accepted:

Citibank, N.A., as Administrative Agent

By
		Name:
		Title:

¹	Consent of each Issuing Bank is required by the terms of the Credit Agreement.

²	To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

EXHIBIT C

FORM OF MONEY MARKET QUOTE REQUEST


		[Date]


To:		Citibank, N.A., as Administrative Agent

From:		MeadWestvaco Corporation (the “Borrower”)

Re:		Credit Agreement, dated as of October [—], 2009, by and among MeadWestvaco Corporation and the other entities party thereto from time to time, as Borrowers, the Lenders from time to time party thereto, Citibank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and UBS Loan Finance LLC, as Documentation Agents (as the same may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”).

We hereby give notice pursuant to Section 2.3 of the Credit Agreement that we request Money Market Quotes for the following proposed Money Market Borrowing(s):

Date of Borrowing:_______________

Currency for such Borrowing:^{_____________________1}

Borrower(s) to be recipient of funds:_________


Principal Amount²		Interest Period
$

Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate].

Terms used herein have the meanings assigned to them in the Credit Agreement.


MEADWESTVACO CORPORATION

By:
Title:

¹	Must specify an Agreement Currency.

²	Amount must be (1) $10,000,000 or a larger multiple of $1,000,000 or (2) the Dollar Equivalent amount of the amount determined under clause (1).

EXHIBIT D

FORM OF INVITATION FOR MONEY MARKET QUOTES

To:	[NAME OF BANK]

Re:	Invitation for Money Market Quotes to MeadWestvaco Corporation (the “Borrower”)

Pursuant to Section 2.3 of the Credit Agreement, dated as of October [—], 2009, by and among MeadWestvaco Corporation and the other entities party thereto from time to time, as Borrowers, the Lenders from time to time party thereto, Citibank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and UBS Loan Finance LLC, as Documentation Agents, as the same may be amended, supplemented or otherwise modified from time to time, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s):

Date of Borrowing:______________

Currency for such Borrowing:^{___________________1}

Borrower(s) to be recipient of funds:________


Principal Amount²		Interest Period
$

Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate].

Please respond to this invitation by no later than [2:00 P.M. (for any Money Market Alternate Currency Borrowing)] [2:00 P.M. (for any Money Market Domestic Margin Auction Borrowing)] [9:15 A.M. (for any Money Market Domestic Absolute Rate Auction)] (New York City time) on [DATE].³


CITIBANK, N.A., as Administrative Agent

By:
		Authorized Officer

¹	Must specify an Agreement Currency.

²	Amount must be (1) $10,000,000 or a larger multiple of $1,000,000 or (2) the Dollar Equivalent amount of the amount determined under clause (1).

³	See Section 2.3 of the Credit Agreement to determine the applicable date.

EXHIBIT E

FORM OF MONEY MARKET QUOTE

CITIBANK, N.A., as Administrative Agent

388 Greenwich St.

New York, New York 10013

Attention:

Re:	Money Market Quote to MeadWestvaco Corporation (the “Borrower”)

In response to your invitation on behalf of the Borrower dated , we hereby make the following Money Market Quote on the following terms:

1.	Quoting Bank:__________________________________________________

2.	Person to contact at Quoting Bank:___________________________________

3.	Date of Borrowing:^{_____________________________________________________________________1}

4.	Currency of such Borrowing^{___________________________________________________________2}

5.	We hereby offer to make Money Market Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates:


		Money Market
Principal Amount³	Interest Period⁴	[Margins⁵] [Absolute Rate⁶]

¹	As specified in the related Invitation.

²	As specified in the related Invitation.

Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Bank is willing to lend. Bids must be made for (1) $5,000,000 or a larger multiple of $1,000,000, or (2) if such Money Market Loan is denominated in a currency other than Dollars, the Dollar Equivalent amount of the amounts determined under clause (1).

⁴	As specified in the related Invitation.

⁵	Margin over or under the Eurocurrency Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000th of 1%) and specify whether “PLUS” or “MINUS”.

⁶	Specify rate of interest per annum (to the nearest 1/10,000th of 1%).

We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Credit Agreement, dated as of October [—], 2009, by and among MeadWestvaco Corporation and the other entities party thereto from time to time, as Borrowers, the Lenders from time to time party thereto, Citibank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and UBS Loan Finance LLC, as Documentation Agents, as the same may be amended, supplemented or otherwise modified from time to time, irrevocably obligates us to make Money Market Loan(s) for which any offer(s) are accepted, in whole or in part.


Very truly yours,

[NAME OF BANK]

By:
		Authorized Officer

Dated:

EXHIBIT F

FORM OF DESIGNATION LETTER

To Citibank, N.A.,

as Administrative Agent

Attention:

Ladies and Gentlemen:

We make reference to the Credit Agreement dated as of October [ ], 2009 (said agreement, as further amended, supplemented or otherwise modified from time to time, being the “Credit Agreement”), by and among MeadWestvaco Corporation and the other entities party thereto from time to time, as Borrowers, the Lenders from time to time party thereto, Citibank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and UBS Loan Finance LLC, as Documentation Agents. Terms defined in the Credit Agreement are used herein as defined therein.

The Borrower hereby designates [ ] (the “Co-Borrower”), a Wholly-Owned Subsidiary of the Borrower and an entity duly formed and organized under the laws of [ ], as a Co-Borrower in accordance with Section 2.17(a) of the Credit Agreement until such designation is terminated in accordance with said Section 2.17(b).

The Co-Borrower hereby accepts the above designation and hereby expressly and unconditionally accepts the obligations of a Co-Borrower under the Credit Agreement, adheres to the Credit Agreement and agrees and confirms that, upon its execution and return to the Borrower of the enclosed copy of this letter, it shall be a Co-Borrower for purposes of the Credit Agreement and agrees to be bound by and perform and comply with the terms and provisions of the Credit Agreement applicable to it as if it had originally executed the Credit Agreement as a Co-Borrower. The Co-Borrower hereby authorizes and empowers the Borrower to act as its representative and attorney-in-fact for the purposes of executing and delivering all documents, instruments and certificates and giving and receiving notices (including Notices of Borrowing under the Credit Agreement) and other communications in connection with the Credit Agreement and the transactions contemplated thereby and for the purposes of modifying or amending any provision of the Credit Agreement and further agrees that the Administrative Agent and each Lender may conclusively rely on the foregoing authorization. The Borrower hereby accepts such authorization and appointment.

The Borrower and the Co-Borrower each state and acknowledge that: (i) each has determined that it will benefit specifically and materially from the advances of credit contemplated by the Credit Agreement and the Loan Documents; and (ii) it is both a condition precedent to the obligations of each Lender under the Credit Agreement and a desire of the Borrower and the Co-Borrower to execute and deliver this Designation Letter.

The Borrower and the Co-Borrower shall be liable for all amounts due to the Administrative Agent and/or any Lender from the Borrower or any other Co-Borrower under the Credit Agreement, regardless of which of the Borrower or any Co-Borrower actually receives Loans, the benefit of any issuance of a Letter of Credit or other extensions of credit under the Credit Agreement (all such extensions of credit being, collectively, “Extensions of Credit”) or the amount of such Extensions of Credit received by the Borrower or any Co-Borrower or the manner in which the Administrative Agent and/or such Lender accounts for such Extensions of Credit on its books and records (without limiting the foregoing, the Borrower and the Co-Borrower shall be liable for Extensions of Credit made to the Borrower and any other Co-Borrower). Each of the Borrower’s and the Co-Borrower’s Obligations with respect to Extensions of Credit made to it, and the Borrowers’ Obligations arising as a result of the joint and several liability of the Borrowers under the Credit Agreement, with respect to Extensions of Credit made to the Borrower or any Co-Borrower under the Credit Agreement, shall be separate and distinct obligations, but all such Obligations shall be primary obligations of the Borrower or the Co-Borrower, as the case may be.

The Borrower and the Co-Borrower each agree that if the Borrowers’ joint and several liability under the Credit Agreement, or if any Liens securing such joint and several liability, would, but for the application of this sentence, be unenforceable under applicable law, such joint and several liability and each such Lien shall be valid and enforceable to the maximum extent that would not cause such joint and several liability or such Lien to be unenforceable under applicable law, and such joint and several liability and such Lien shall be deemed to have been automatically amended accordingly at all relevant times.

Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may proceed directly and at once, without notice, against the Borrower or the Co-Borrower to collect and recover the full amount, or any portion of the Obligations, without first proceeding against the Borrower, any Co-Borrower or any other Person. The Borrower and the Co-Borrower each consent and agree that the Administrative Agent shall be under no obligation to marshal any assets in favor of the Borrower or the Co-Borrower, as the case may be, or against or in payment of any or all of the Obligations.

The Borrower and the Co-Borrower are obligated to repay the Obligations as joint and several obligors under the Credit Agreement. To the extent that the Borrower or the Co-Borrower shall, under the Credit Agreement as a joint and several obligor, repay any of the Obligations incurred directly and primarily by any of the other Borrowers (an “Accommodation Payment”), then the Borrower or the Co-Borrower, as the case may be, making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Borrower’s “Allocable Amount” (as defined below) and the denominator of which is the sum of the Allocable Amounts of all of the Borrowers. As of any date of determination, the “Allocable Amount” of the Borrower and each Co-Borrower shall be equal to the maximum

amount of liability for Accommodation Payments which could be asserted against the Borrower or such Co-Borrower, as the case may be, under the Credit Agreement without (i) rendering the Borrower or such Co-Borrower, as the case may be, “insolvent” within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (ii) leaving the Borrower or such Co-Borrower, as the case may be, with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (iii) leaving the Borrower or such Co-Borrower, as the case may be, unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of contribution, indemnification and reimbursement described above shall be subordinate in right of payment to the prior payment in full of the Obligations.

The Borrower hereby represents and warrants to the Administrative Agent and each Lender that, before and after giving effect to this Designation Letter, (i) the representations and warranties set forth in Article 4 of the Credit Agreement are true and correct on the date hereof as if made on and as of the date hereof and (ii) no Default or Event of Default has occurred and is continuing. The Co-Borrower represents and warrants that each of the representations and warranties set forth in Sections 4.1, 4.2, 4.3, 4.8, 4.9 and 4.10 of the Credit Agreement are true as if each reference therein to the Borrower were a reference to the Co-Borrower and as if each reference therein to the Loan Documents were a reference to this Designation Letter executed by the Co-Borrower in connection herewith.

For purposes of Section 9.1 of the Credit Agreement, notices and other communications to the Co-Borrower shall be mailed by certified or registered mail or sent by telecopy, at [insert address], Attention [insert contact] (Facsimile No. [insert fax number]).*

The Co-Borrower hereby agrees that this Designation Letter, the Credit Agreement and the Loan Documents shall be governed by, and construed in accordance with, the law of the State of New York. The Co-Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Designation Letter, the Credit Agreement or the transactions contemplated thereby. The Co-Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Co-Borrower further agrees that service of process in any such action or proceeding brought in New York may be made upon it by service upon the Borrower at the “Address for Notices” specified in the Credit Agreement.

*	Applicable contact information to be inserted by the Co-Borrower.

[The Co-Borrower hereby irrevocably designates and appoints CT Corporation System, having an office on the date hereof at 111 Eighth Avenue, New York, New York 10011 as its authorized agent, to accept and acknowledge on its behalf, service of any and all process which may be served in any suit, action or proceeding of the nature referred to in paragraph (b) hereof in any Federal or New York State court sitting in New York City. The Co-Borrower represents and warrants that such agent has agreed in writing to accept such appointment and that a true copy of such designation and acceptance has been delivered to the Administrative Agent. If such agent shall cease so to act, the Co-Borrower covenants and agrees to designate irrevocably and appoint without delay another such agent satisfactory to the Administrative Agent and to deliver promptly to the Administrative Agent evidence in writing of such other agent’s acceptance of such appointment.]¹

THE CO-BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS DESIGNATION LETTER, THE CREDIT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

[Remainder of page intentionally left blank; signature pages follow]


MEADWESTVACO CORPORATION

By
		Name:
		Title²:

[NAME OF CO-BORROWER]

By
		Name:
		Title:

¹	Include this paragraph if Co-Borrower is organized under the laws of a jurisdiction other than a state of the United States or a political subdivision thereof.

²	Signature of Chief Financial Officer required if Co-Borrower is organized under the laws of a jurisdiction other than a state of the United States or a political subdivision thereof.


ACCEPTED:

CITIBANK, N.A,
as Administrative Agent

By
		Name:
		Title:

EXHIBIT G

FORM OF TERMINATION LETTER

To Citibank, N.A.,

as Administrative Agent

Attention:

Ladies and Gentlemen:

The Borrower hereby terminates the status as a Co-Borrower of [ ], in accordance with Section 2.17(b) of the Credit Agreement, effective as of the date of receipt of this notice by the Administrative Agent. The undersigned hereby represents and warrants that all principal and interest on any Loan of the above-referenced Co-Borrower and all other amounts payable by such Co-Borrower pursuant to the Credit Agreement have been paid in full on or prior to the date hereof, and that no Letter of Credit issued for the account of such Co-Borrower remains outstanding. Notwithstanding the foregoing, this Termination Letter shall not affect any obligation which by the terms of the Credit Agreement survives termination thereof.


MEADWESTVACO CORPORATION

By
		Name:
		Title:

EX-10.27 4 dex1027.htm EXHIBIT 10.27 Exhibit 10.27

Exhibit 10.27

MeadWestvaco Corporation

Compensation Program for Non-Employee Directors

Effective April 26, 2010, the compensation program for non-employee directors of MeadWestvaco Corporation has been modified and the form and amount of compensation consist of the following components:

(1)

Following the annual meeting of shareholders, all non-employee directors are awarded MeadWestvaco stock units valued at $85,000 which track the performance of MeadWestvaco common stock. The stock units are distributed to directors on termination of Board membership in shares of MeadWestvaco common stock.

(2)

Following the annual meeting of shareholders, all non-employee directors receive an annual cash retainer of $65,000. In addition, non-employee directors also receive an annual cash retainer based on their service as follows:

Members of the Audit Committee (other than the Chair) receive an annual cash retainer of $10,000.

The Chair of the Audit Committee receives an annual cash retainer of $20,000.

The Chair of the Compensation and Organization Development Committee receives an annual cash retainer of $15,000.

The Chair of each other standing Committee of the Board of Directors receives an annual cash retainer of $10,000.

The lead director receives an annual cash retainer of $25,000.

Annual cash retainers are payable in a lump sum. Non-employee directors may elect to defer all or a portion of their annual cash retainer.

EX-10.34 5 dex1034.htm EXHIBIT 10.34 Exhibit 10.34

Exhibit 10.34

Summary of MeadWestvaco Corporation 2010 Long-Term Incentive Plan under 2005

Performance Incentive Plan, as amended

Under the MeadWestvaco Corporation Long-Term Incentive Plan (the “Plan”), which is a part of the 2005 Performance Incentive Plan, the Compensation and Organization Development Committee (the “Committee”) of the Board of Directors awards each executive a long-term incentive award that is payable entirely in equity, with no cash component. The size of each executive officer’s long-term incentive award is determined after review of external competitive market data, peer group and general industry trends.

For 2010, approximately 50% of a senior executive’s long-term award is payable in the form of performance-accelerated restricted stock units (“PARSUs”) and approximately 50% in the form of non-qualified stock options.

The PARSU award will be front loaded in an amount approximating a three-year grant, with no future award of restricted stock units anticipated to be made in either 2011 or 2012. The PARSU includes retention features relating to the settlement of shares described below. PARSUs vest based on continued service, a pre-established performance threshold level for earnings before interest and tax (“EBIT”) in 2010, 2011 or 2012, as well as on improvement in enterprise economic profit (“EP”) over a five-year period (January 1, 2010 to December 31, 2014). No PARSUs are eligible for vesting until after the second anniversary of the grant date. Beginning in 2012 (assuming the EBIT performance threshold is achieved), PARSUs may vest based on improvement in EP. PARSUs that vest because of enterprise EP performance up to 125% of target will be settled and paid immediately after the close of the year in which earned. PARSUs earned because of performance above 125% of target will be deferred and settled at the end of the five year performance period. If goals are not achieved within 5 years, no PARSUs vest. Vesting of PARSUs is also subject to a maximum payout of 200% of the original award with a performance driven threshold equal to 50% of the original award. In the event of below target performance relative to improvement in EP, the Committee retains discretion to make smaller awards to reflect progress made towards target performance levels; provided that no award shall vest in the event of performance below a threshold EBIT level to be achieved in either 2010, 2011 or 2012. During the vesting period, dividends on unvested restricted stock unit awards are credited to an executive’s award in the form of additional units, but are only delivered when and to the extent that the underlying award vests.

EBIT is full year net sales less the cost of goods sold and selling, general and administrative expenses, excluding interest income and expense, corporate income taxes, extraordinary items, discontinued operations, restructuring charges and certain one-time costs and the cumulative effect of accounting changes.

Enterprise EP is a measure of performance that is defined as after-tax EBIT, less the company’s weighted average cost of capital applied to the capital employed (net debt plus total equity) subject to certain adjustments.

Stock options awarded under the plan generally are subject to a three-year pro rata vesting expiring on the third anniversary of the grant date. While there is no performance-based prerequisite to the vesting of stock options, in the event the market value of the common stock does not appreciate over the exercise price, the options will have no value. The exercise price for stock options is not less than the “fair market value” of the common stock underlying the awards on the grant date. “Fair market value” is defined as the closing price of such common stock as reflected on the New York Stock Exchange on the grant date and is a term and condition of all stock option awards approved by the Committee. No dividend rights attach to non-qualified stock options.

Both awards of PARSUs and stock options are subject to automatic forfeiture in the event of termination for gross misconduct and are subject to the company’s Recoupment Policy.

EX-10.35 6 dex1035.htm EXHIBIT 10.35 Exhibit 10.35

Exhibit 10.35

Summary of MeadWestvaco Corporation 2010 Annual Incentive Plan under 2005

Performance Incentive Plan, as amended

Under the MeadWestvaco Corporation Annual Incentive Plan (the “Plan”), which is a part of the 2005 Performance Incentive Plan, the Compensation and Organization Development Committee (the “Committee”) of the Board of Directors annually awards each executive an annual incentive award that is payable in cash. The size of each executive officer’s annual award is determined by application of his or her annual incentive target expressed as a percentage of base salary, which the Committee examines annually to confirm that the target is reasonable when viewed against external competitive market data, peer group and general industry trends.

For 2010, the Committee established a performance-based incentive pool for certain executive officers equal to a designated percentage of actual earnings before interest and tax (“EBIT”) achieved. EBIT is defined as full year net sales less the cost of goods sold and selling, general and administrative expenses, excluding interest income and expense, corporate income taxes, extraordinary items, discontinued operations, restructuring charges and certain one-time costs and the cumulative effect of accounting changes.

Funding of the performance-based incentive pool under this formula permits the Committee to pay annual cash incentives to all executive officers based on the attainment of additional key financial and/or operational metrics. These additional objectives for executive officers are also set by the Committee, and generally include such goals as enterprise economic profit (“EP”), defined as EBIT less the company’s weighted average cost of capital applied to total capital employed, (net debt plus total equity), subject to certain adjustments and EP actions, which include profitable revenue growth, productivity, selling, general and administrative expense reduction and cash cycle improvement For each of these additional performance objectives, the Committee sets performance driven threshold, target and stretch payout levels reflecting a suggested payout curve ranging from 50% of the target incentive to 200% of the target incentive. Annual incentives are subject to an individual maximum payout in accordance with the terms of the Plan. The Committee may adjust award values to reflect progress made towards target performance levels for EP related goals, provided no awards are payable in the event the designated percentage for threshold EBIT (which funds the incentive pool) is not achieved.

Annual incentive awards are subject to the company’s Recoupment Policy.

EX-21 7 dex21.htm EXHIBIT 21 Exhibit 21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

The following were significant subsidiaries of the Registrant as of December 31, 2009:


Name		State or Jurisdiction of Incorporation
MeadWestvaco Coated Board, Inc.		Delaware
MeadWestvaco Consumer Packaging Group, LLC		Illinois
MeadWestvaco Packaging Systems, LLC		Delaware
MeadWestvaco South Carolina, LLC		Delaware
MeadWestvaco Community Development & Land Management, LLC		Delaware
Rigesa, Celulose, Papel E. Embalagens Ltda.		Brazil

EX-23.1 8 dex231.htm EXHIBIT 23.1 Exhibit 23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-161567, 333-81638, 333-91660, 333-113183, 333-127861, 333-147175, and 333-147176) and on Form S-3 (Nos. 333-161382 and 333-103918) of MeadWestvaco Corporation of our report dated February 23, 2010 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Richmond, Virginia

February 23, 2010

EX-31.1 9 dex311.htm EXHIBIT 31.1 Exhibit 31.1

EXHIBIT 31.1

CERTIFICATION

I, John A. Luke, Jr. certify that:

1.	I have reviewed this annual report on Form 10-K of MeadWestvaco Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 23, 2010


		/s/ JOHN A. LUKE, JR.
Name:		John A. Luke, Jr.
Title:		Chief Executive Officer

EX-31.2 10 dex312.htm EXHIBIT 31.2 Exhibit 31.2

EXHIBIT 31.2

CERTIFICATION

I, E. Mark Rajkowski certify that:

1.	I have reviewed this annual report on Form 10-K of MeadWestvaco Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 23, 2010


		/s/ E. MARK RAJKOWSKI
Name:		E. Mark Rajkowski
Title:		Chief Financial Officer

EX-32.1 11 dex321.htm EXHIBIT 32.1 Exhibit 32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in his capacity as an officer of MeadWestvaco Corporation (the “Company”), for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•

the Annual Report of the Company on Form 10-K for the period ended December 31, 2009 fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

•

the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: February 23, 2010


		/s/ JOHN A. LUKE, JR.
Name:		John A. Luke, Jr.
Title:		Chief Executive Officer

EX-32.2 12 dex322.htm EXHIBIT 32.2 Exhibit 32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

•

the Annual Report of the Company on Form 10-K for the period ended December 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•

the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: February 23, 2010


		/s/ E. MARK RAJKOWSKI
Name:		E. Mark Rajkowski
Title:		Chief Financial Officer

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