Exhibit 10.3

Execution Version

 

 

 

AMENDED AND RESTATED LOAN, SECURITY AND GUARANTEE AGREEMENT

Dated as of January 6, 2016

among

KRATON POLYMERS U.S. LLC,

as Initial U.S. Borrower and a Guarantor,

ARIZONA CHEMICAL COMPANY, LLC,

as Added U.S. Borrower and Guarantor

KRATON PERFORMANCE POLYMERS, INC.,

as Parent,

KRATON POLYMERS LLC,

KRATON POLYMERS CAPITAL CORPORATION,

ARIZONA CHEMICAL HOLDINGS CORPORATION,

AZ CHEM INTERMEDIATE INC.,

AZ CHEM US HOLDINGS INC.,

AZ CHEM US INC.,

and

ELASTOMERS HOLDINGS LLC,

as Guarantors,

KRATON POLYMERS NEDERLAND B.V.,

as Initial Dutch Kraton Borrower,

K.P. GLOBAL HOLDINGS C.V.,

KRATON POLYMERS HOLDINGS B.V.,

and

KP INTERNATIONAL C.V.

as Foreign Guarantors,

any other Borrowers party hereto from time to time,

certain Persons party hereto from time to time as Guarantors,

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders,

 

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Collateral Agent and Security Trustee

 

 

 

BANK OF AMERICA, N.A.,

CREDIT SUISSE AG,

NOMURA SECURITIES INTERNATIONAL, INC., and

DEUTSCHE BANK SECURITIES INC.,

as Joint Lead Arrangers and Joint Book Managers

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

     Page   SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION      1        1.1.   
Definitions      1        1.2.    Accounting Terms      69        1.3.   
Uniform Commercial Code      69        1.4.    Certain Matters of Construction
     69        1.5.    Currency Calculations      70    SECTION 2. CREDIT
FACILITIES      71        2.1.    Commitment      71        2.2.    Dutch
Letters of Credit      78        2.3.    U.S. Letters of Credit      81   
    2.4.    Resignation of Fronting Banks      83        2.5.    Applicable
Foreign Borrower Sublimits      84    SECTION 3. INTEREST, FEES AND CHARGES     
84        3.1.    Interest      84        3.2.    Fees      86        3.3.   
Computation of Interest and Fees      87        3.4.    Reimbursement
Obligations      87        3.5.    Illegality      88        3.6.    Inability
to Determine Rates      88        3.7.    Increased Costs; Capital Adequacy     
89        3.8.    [Reserved]      90        3.9.    Mitigation      90   
    3.10.    Funding Losses      90        3.11.    Maximum Interest      90   
SECTION 4. LOAN ADMINISTRATION      91        4.1.    Manner of Borrowing and
Funding Loans      91        4.2.    Defaulting Lender      93        4.3.   
Number and Amount of LIBOR Loans; Determination of Rate      94        4.4.   
Loan Party Agents      94        4.5.    One Obligation      95        4.6.   
Effect of Termination      95    SECTION 5. PAYMENTS      95        5.1.   
General Payment Provisions      95        5.2.    Repayment of Obligations     
96        5.3.    Payment of Other Obligations      96        5.4.   
Marshaling; Payments Set Aside      96        5.5.    Post-Default Allocation of
Payments      97        5.6.    Application of Payments      99        5.7.   
Loan Account; Account Stated      99        5.8.    Taxes      100        5.9.
   Lender Tax Information      103        5.10.    Guarantees      104   
    5.11.    Currency Matters      109   

--------------------------------------------------------------------------------

SECTION 6. CONDITIONS PRECEDENT      110        6.1.    Conditions Precedent to
Loans on the Closing Date      110        6.2.    Conditions Precedent to All
Subsequent Credit Extensions      112    SECTION 7. COLLATERAL      113   
    7.1.    Grant of Security Interest      113        7.2.    Cash Collateral
     117        7.3.    Administration      118        7.4.    No Assumption of
Liability      118        7.5.    Further Assurances      118        7.6.   
Termination of Security Interest      119        7.7.    Real Estate Collateral
     119    SECTION 8. COLLATERAL ADMINISTRATION      119        8.1.   
Borrowing Base Certificates      119        8.2.    Administration of Accounts
     120        8.3.    Administration of Inventory      121        8.4.   
Administration of Deposit Accounts, Securities Accounts and Commodity Accounts
     122        8.5.    General Provisions      122        8.6.    Power of
Attorney      123    SECTION 9. REPRESENTATIONS AND WARRANTIES      123   
    9.1.    General Representations and Warranties      123        9.2.   
Complete Disclosure      129    SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
     129        10.1.    Affirmative Covenants      129        10.2.    Negative
Covenants      136        10.3.    Financial Covenants      151    SECTION 11.
EVENTS OF DEFAULT; REMEDIES ON DEFAULT      151        11.1.    Events of
Default      151        11.2.    Remedies upon Default      153        11.3.   
License      154        11.4.    Setoff      154        11.5.    Remedies
Cumulative; No Waiver      154        11.6.    Judgment Currency      155   
SECTION 12. AGENT AND SECURITY TRUSTEES      155        12.1.    Appointment,
Authority and Duties of Agent      155        12.2.    Dutch Security Trustee   
  156        12.3.    Agreements Regarding Collateral and Field Examination
Reports      161        12.4.    Reliance By Agent      163        12.5.   
Action Upon Default      163        12.6.    Ratable Sharing      163   
    12.7.    Indemnification      163        12.8.    Limitation on
Responsibilities of Agent      164        12.9.    Successor Agent and Co-Agents
     164        12.10.    Due Diligence and Non-Reliance      165        12.11.
   Remittance of Payments and Collections      165        12.12.    Agent in its
Individual Capacity      166   

--------------------------------------------------------------------------------

    12.13.    Agent Titles      166        12.14.    Bank Product Providers     
166        12.15.    Withholding Taxes      166        12.16.    No Third Party
Beneficiaries      167    SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND
PARTICIPATIONS      167        13.1.    Successors and Assigns      167   
    13.2.    Participations      167        13.3.    Assignments      168   
SECTION 14. MISCELLANEOUS      170        14.1.    Consents, Amendments and
Waivers      170        14.2.    Indemnity      173        14.3.    Notices and
Communications      173        14.4.    Performance of Loan Parties’ Obligations
     174        14.5.    Credit Inquiries      175        14.6.    Severability
     175        14.7.    Cumulative Effect; Conflict of Terms      175   
    14.8.    Counterparts      175        14.9.    Entire Agreement      175   
    14.10.    Relationship with Lenders      175        14.11.    No Advisory or
Fiduciary Responsibility      175        14.12.    Confidentiality      176   
    14.13.    [Reserved]      176        14.14.    GOVERNING LAW      176   
    14.15.    Consent to Forum      177        14.16.    Patriot Act Notice     
177        14.17.    [Reserved]      178        14.18.    Reinstatement      178
       14.19.    Nonliability of Lenders      178        14.20.    Restrictions
on Foreign Pledges      178        14.21.    NO ORAL AGREEMENTS      179   
    14.22.    ABL Intercreditor Agreement      179        14.23.    Amendment
and Restatement      179   

--------------------------------------------------------------------------------

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A-1   Form of Assignment and Acceptance Exhibit A-2   Form of Assignment
Notice Exhibit B-1   Form of U.S. Kraton Borrowing Base Certificate Exhibit B-2
  Form of U.S. Arizona Borrowing Base Certificate Exhibit B-3   Form of Dutch
Kraton Borrowing Base Certificate Exhibit C-1   Form of Dutch Revolver Note
Exhibit C-2   Form of U.S. Revolver Note Exhibit D   Form of Compliance
Certificate Exhibit E   Form of Notice of Borrowing Exhibit F   Form of Notice
of Conversion/Continuation Exhibit G   Form of Joinder Agreement Exhibit H-1  
Form of U.S. Tax Certificate for Foreign Lenders that are not Partnerships
Exhibit H-2   Form of U.S. Tax Certificate for Foreign Participants that are not
Partnerships Exhibit H-3   Form of U.S. Tax Certificate for Foreign Participants
that are Partnerships Exhibit H-4   Form of U.S. Tax Certificate for Foreign
Lenders that are Partnerships Exhibit I   Form of Release Confirmation Letter
Exhibit J   Form of Solvency Certificate Exhibit K   Form of Joinder Agreement
for Arizona Chemical B.V. Schedule 2.1.1(a)   Dutch Kraton Revolver Commitment
Schedule 2.1.1(b)   U.S. Revolver Commitment Schedule 7.1.3   Excluded Property
Schedule 8.4   Accounts Schedule 8.5.1   Location of Inventory Schedule 9.1.4  
Subsidiaries; Capital Structure Schedule 9.1.8   Supplier Financing Transactions

--------------------------------------------------------------------------------

Schedule 9.1.11   Intellectual Property Schedule 9.1.14   Compliance with
Environmental Laws Schedule 9.1.15   Restrictive Agreements Schedule 9.1.16  
Litigation Schedule 9.1.17   Insurance Schedule 9.1.20   Labor Relations
Schedule 10.1.18   Post-Closing Items Schedule 10.2.1(c)   Permitted Debt
Schedule 10.2.1(h)   Permitted Intercompany Debt Schedule 10.2.2   Permitted
Liens Schedule 10.2.4   Investments Existing on the Closing Date

--------------------------------------------------------------------------------

AMENDED AND RESTATED LOAN, SECURITY AND GUARANTEE AGREEMENT

THIS AMENDED AND RESTATED LOAN, SECURITY AND GUARANTEE AGREEMENT (this
“Agreement”) is dated as of January 6, 2016, among KRATON PERFORMANCE POLYMERS,
INC., a Delaware corporation (“Parent”), KRATON POLYMERS U.S. LLC, a Delaware
limited liability company (the “Initial U.S. Borrower”), ARIZONA CHEMICAL
COMPANY, LLC, a Delaware limited liability company (the “Added U.S. Borrower”),
and KRATON POLYMERS NEDERLAND B.V., a besloten vennootschap (a private limited
liability company) organized under the laws of the Netherlands (the “Initial
Dutch Kraton Borrower”) and together with Initial U.S. Borrower, Added U.S.
Borrower, the Initial Kraton Arizona Borrower, and each other Subsidiary of the
Parent that becomes a Borrower in accordance with Section 10.1.9, the
“Borrowers” and each, a “Borrower”), the other Persons from time to time party
to this Agreement as Guarantors, the financial institutions from time to time
party to this Agreement as lenders (collectively, “Lenders”), and BANK OF
AMERICA, N.A., a national banking association, in its capacity as collateral
agent, administrative agent and security trustee for itself and the other
Secured Parties (together with any successor agent appointed pursuant to
Section 12.9, the “Agent”).

R E C I T A L S:

WHEREAS, capitalized terms used in these Recitals and not otherwise defined
shall have the respective meanings set forth for such terms in Section 1.1
hereof.

WHEREAS, pursuant to the Existing Credit Agreement, the original lenders party
thereto have provided to Initial U.S. Borrower and Initial Dutch Kraton Borrower
senior secured revolving credit facilities to finance their mutual and
collective business in an initial aggregate principal amount of $250,000,000
consisting of a foreign revolving credit facility in the initial facility amount
of $100,000,000 and a U.S. revolving credit facility in the initial facility
amount of $150,000,000.

WHEREAS, subject to the terms and conditions of this Agreement, Agent, the
Lenders party hereto and the Loan Parties party hereto desire to amend and
restate the Existing Credit Agreement to among other things, (a) add Additional
U.S. Borrower as a U.S. Borrower and add additional Loan Parties, (b) amend
certain terms and provisions of the credit facilities provided for in the
Existing Credit Agreement, and (c) ratify all Liens granted to Agent in
connection with the Existing Credit Agreement and the Obligations thereunder,
without causing a novation or extinguishment of any outstanding Obligations or
termination of any outstanding Liens (including for Belgian, English, Dutch,
French and German law purposes).

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

1.1. Definitions. As used herein, the following terms have the meanings set
forth below:

ABL Intercreditor Agreement: means that certain Intercreditor Agreement dated on
or about the Closing Date, by and among Term Agent, in its capacity as agent for
the Fixed Asset Lenders (as defined therein), Agent, and acknowledged by certain
Loan Parties, as amended from time to time in accordance with the terms thereof.

ABL Priority Collateral: the “ABL Priority Collateral” as defined in the ABL
Intercreditor Agreement.

 

1

--------------------------------------------------------------------------------

Account: as defined in Article 9 of the UCC.

Account Debtor: any Person who is obligated under an Account.

Accounting Changes: as defined in Section 1.2.

Acquisition: a transaction or series of transactions resulting in
(a) acquisition of a business, division, or substantially all assets of a
Person; (b) record or beneficial ownership of more than 50% of the Equity
Interests of a Person; or (c) merger, consolidation or combination of Parent or
any Restricted Subsidiary with another Person.

Added U.S. Borrower Field Exam and Inventory Appraisal: an examination of the
Added U.S. Borrower’s books and records or any other financial or Collateral
matters as Agent deems appropriate conducted by a Person satisfactory to Agent
and appraisals of Inventory to be included in the U.S. Borrowing Base to be
conducted by a Person satisfactory to Agent, in each case, to the extent
acceptable to Agent, in its Permitted Discretion.

Additional Dutch Kraton Lender: as defined in Section 2.1.7(a).

Additional Foreign Borrower: means any Person that is organized and operates
outside of the U.S. that, after the date hereof, has executed a supplement or
joinder to this Agreement in accordance with Section 10.1.9 and has satisfied
the other requirements of Section 10.1.9 in order to become a Foreign Borrower
hereunder.

Additional Lender: as defined in Section 2.1.7(b).

Additional U.S. Lender: as defined in Section 2.1.7(b).

Affiliate: with respect to any Person, any branch of such Person or any other
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified. For
purpose of this definition, (a) “Control” means the possession, directly or
indirectly, of the power (i) to vote 20% or more of the Equity Interests having
ordinary voting power for the election of directors, in the case of a
corporation, or equivalent governing body, in the case of any other type of
legal entity, of a Person or (ii) to otherwise direct or cause the direction of
the management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise and (b) “Controlled” has a correlative
meaning. For the avoidance of doubt, none of the Joint Lead Arrangers, Joint
Book Managers, the Agent, the Co-Syndication Agents, their respective lending
affiliates or any entity acting as a Fronting Bank hereunder shall be deemed to
be an Affiliate of Parent, the Borrowers or any of their respective
Subsidiaries.

Agent: as defined in the preamble to this Agreement.

Agent Indemnitees: the Agent and its officers, directors, employees, Affiliates
and agents, including, without limitation, the Security Trustees.

Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by the Agent.

 

2

--------------------------------------------------------------------------------

Agreement: this Amended and Restated Loan, Security and Guarantee Agreement, as
the same may be amended, restated, amended and restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof.

Allocable Amount: as defined in Section 5.10.3(b).

AML Legislation: as defined in Section 14.16.

Anti-Terrorism Law: any law relating to terrorism or money laundering, including
the Proceeds of Crime Act and the Patriot Act.

Applicable Dutch Kraton Borrower: (a) Initial Dutch Kraton Borrower or (b) any
other Dutch Kraton Borrower, as the context may require.

Applicable Dutch Kraton Borrower Commitment: with respect to any Dutch Kraton
Borrower, the maximum amount of Dutch Kraton Revolver Commitments under which
such Dutch Kraton Borrower may borrow Dutch Kraton Revolver Loans or request the
issuance of Dutch Kraton Letters of Credit, as designated by the North American
Loan Party Agent from time to time, and in an aggregate amount for all Dutch
Kraton Borrowers not to exceed the total Dutch Kraton Revolver Commitments.

Applicable Foreign Borrower: (a) an Applicable Dutch Kraton Borrower, or (b) any
other Foreign Borrower, as the context requires.

Applicable Foreign Borrower Commitment: any Applicable Dutch Kraton Borrower
Commitment or the maximum amount of Revolver Commitments with respect to an
Applicable Foreign Borrower, from time to time, as the context may require.

Applicable Law: all laws, rules, regulations and legally binding governmental
guidelines applicable to the Person, conduct, transaction, agreement or matter
in question, including all applicable statutory law and common law, and all
provisions of constitutions, treaties, statutes, rules, regulations, orders and
decrees of Governmental Authorities having the force of law.

Applicable Lenders: (a) with respect to the U.S. Borrowers, the U.S. Lenders, or
(b) with respect to the Dutch Kraton Borrowers, the Dutch Kraton Lenders.

Applicable Margin: with respect to any Type of Loan and any other Obligations
specified below, the respective margin set forth below, based on the Borrowers’
Average Total Excess Availability for the most recent Fiscal Quarter determined
as of the most recent determination date:

 

Level

  

Average Total Excess
Availability

  

LIBOR Loans, European
Base Rate Loans and

Letter of Credit Fees

  

U.S. Base Rate Loans

I

   > $80,000,000    1.50%    0.50%

 

  

 

  

 

  

 

II

   ³ $40,000,000 but < $80,000,000    1.75%    0.75%

III

   < $40,000,000    2.00%    1.00%

 

3

--------------------------------------------------------------------------------

Until the delivery to the Agent, pursuant to Section 8.1, of a Borrowing Base
Certificate for each Borrowing Base covering the first calendar month ending
after the Closing Date, the Applicable Margin shall be determined as if Level II
were applicable. Thereafter, (a) the Applicable Margin shall be determined
(i) on the first day of the calendar month until the end of the first Fiscal
Quarter ended after the Closing Date and (ii) as of the end of each Fiscal
Quarter, in each case based upon the Borrowing Base Certificates delivered
pursuant to Section 8.1 and (b) each change in the Applicable Margin shall be
effective during the period commencing on the first day of the calendar month
following the receipt by the Agent of the financial statements and Compliance
Certificate for the Fiscal Quarter or, in the case of the last Fiscal Quarter of
each year, the calendar year then ended pursuant to Section 10.1.2(a) or (b), as
applicable, and ending on the date immediately preceding the effective date of
the next such change. Average Total Excess Availability shall be deemed to be in
Level III at the option of the Agent or at the request of the Required Lenders
if the Loan Party Agents fail to deliver any Borrowing Base Certificate required
to be delivered by any of them pursuant to Section 8.1, during the period from
the expiration of the time for delivery thereof until such Borrowing Base
Certificate is delivered.

Applicable U.S. Borrower: (a) the Initial U.S. Borrower, (b) the Added U.S.
Borrower, or (c) any other U.S. Borrower, as the context may require.

Approved Fund: any Person (other than a natural person) that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in its Ordinary Course of Business, has the
capacity to fund Revolver Loans hereunder and is administered or managed by a
Lender, an entity that administers or manages a Lender, or an Affiliate of
either.

Arizona Chemical Acquisition: the acquisition on the Closing Date by KPLLC of
all the Equity Interests in Arizona Chemical Holdings pursuant to the Arizona
Chemical Acquisition Documents.

Arizona Chemical Acquisition Agreement: that certain Stock Purchase Agreement,
dated as of September 27, 2015, among KPLLC, Arizona Chemical Holdings and AZC
Holding Company LLC, together with all exhibits, schedules and annexes thereto.

Arizona Chemical Acquisition Documents: collectively, the Arizona Chemical
Acquisition Agreement and each other document, instrument, certificate and
agreement executed and delivered in connection therewith.

Arizona Chemical Holdings: Arizona Chemical Holdings Corporation, a Delaware
corporation.

Assignment and Acceptance: an assignment agreement between a Lender and Eligible
Assignee, in the form of Exhibit A-1.

Availability: Dutch Kraton Availability and/or U.S. Availability, as the context
may require.

Average Total Excess Availability: for any period, the average daily Excess
Availability during such period.

Bank of America: Bank of America, N.A., a national banking association, and its
successors and assigns.

Bank of America (London): Bank of America (acting through its London branch).

Bank of America Indemnitees: Bank of America, Bank of America (London), and
their respective officers, directors, employees, Affiliates and agents.

 

4

--------------------------------------------------------------------------------

Bank Product: any of the following products, services (other than cash
management services) or facilities extended to any Loan Party or any other
Subsidiary of Parent by a Lender or any of its Affiliates or any Person that is
not a Lender hereunder (in the case of clause (b), at the time the Hedge
Agreement is executed or, if such time is prior to the Closing Date, on the
Closing Date): (a) Banking Services; (b) products under Hedge Agreements;
(c) other banking products or services as may be requested by any Borrower or
any other Loan Party, other than Loans and Letters of Credit and (d) any other
demand deposit, operating account relationships or money market accounts.

Bank Product Debt: Debt and other obligations of a Loan Party or any of its
Subsidiaries relating to Bank Products.

Bank Product Document: any agreement, instrument or other document entered into
in connection with any Bank Product Debt.

Banking Services: any of the following services: (a) commercial credit cards,
merchant cards, and purchasing card services (including, without limitation, the
processing of payments and other administrative services with respect thereto),
(b) stored value cards and (c) Treasury Management Services.

Base Rate: European Base Rate and/or U.S. Base Rate, as the context requires.

Base Rate Loan: a European Base Rate Loan and/or U.S. Base Rate Loan, as the
context requires.

Belgian Security Agreement: each pledge and security agreement governed by
Belgian law by and among any Dutch Domiciled Loan Party and the Dutch Security
Trustee.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Loan Party or Restricted Subsidiary, without
duplication, its (a) Debt that (i) arises from the lending of money by any
Person to such Loan Party or Restricted Subsidiary, (ii) is evidenced by notes,
drafts, bonds, debentures, loan agreements or similar instruments, (iii) accrues
interest or is a type upon which interest charges are customarily paid;
(b) Capital Lease Obligations; (c) reimbursement obligations with respect to
letters of credit issued for the account of such Loan Party or Restricted
Subsidiary; and (d) guaranties of any Debt of the foregoing types owing by
another Person.

Borrower and Borrowers: as defined in the preamble to this Agreement.

Borrower Group: a group consisting of (a) the U.S. Borrowers, (b) the Dutch
Kraton Borrowers, and (c) Additional Foreign Borrowers, as the context requires.

Borrower Group Commitment: with respect to the commitment of (a) a U.S. Lender,
its U.S. Revolver Commitment, and (b) a Dutch Kraton Lender, its Dutch Kraton
Revolver Commitment. The term “Borrower Group Commitments” means (i) the
Borrower Group Commitment of all U.S. Lenders, or (ii) the Borrower Group
Commitment of all Dutch Kraton Lenders, as the context requires. To the extent
any Lender has more than one Borrower Group Commitment, each such Commitment
shall be considered as a separate Commitment for purposes of this definition.

 

5

--------------------------------------------------------------------------------

Borrower Materials: Borrowing Base information, reports, financial statements
and other materials delivered in writing by Borrowers hereunder, as well as
other Reports and information provided by the Agent to Lenders.

Borrowing: a group of Loans of one Type that are made on the same day or are
converted into Loans of one Type on the same day.

Borrowing Base: (a) the U.S. Borrowing Base, and/or (b) the Dutch Kraton
Borrowing Base, as the context requires.

Borrowing Base Certificate: a certificate, duly executed by a Senior Officer of
the Foreign Loan Party Agent or the North American Loan Party Agent, as
applicable, in the form of (a) Exhibit B-1 with respect to the portion of the
U.S. Borrowing Base applicable to the Initial U.S. Borrower, (b) Exhibit B-2
with respect to the portion of the U.S. Borrowing Base applicable to the Added
U.S. Borrower, and (c) Exhibit B-3 with respect to the Dutch Kraton Borrowing
Base, in each case, with such changes as may be agreed to by such Loan Party
Agent and the Agent, setting forth the Borrowers’ calculation of their
respective Borrowing Base (including, without limitation, the then-current
listing of all Account Debtors participating in any Supplier Financing
Transaction with Parent and/or any of its Subsidiaries, Affiliates or Kraton
SPV, as applicable).

Business Day: any day excluding Saturday, Sunday and any other day that is a
legal holiday under the Applicable Laws of the State of New York, the State of
Texas or the United Kingdom, or is a day on which banking institutions located
in such states are authorized to close, or are in fact closed; and when used
with reference to (a) a LIBOR Loan (and related interest rate settings,
fundings, disbursements, settlements and payments), the term shall also exclude
any day on which banks are authorized to close, or are in fact closed for the
transaction of banking business in London, England, and (b) a Dutch Revolver
Loan (and related interest rate settings, fundings, disbursements, settlements
and payments), shall also exclude any day (i) on which banks are not open for
the transaction of banking business in London, England or the Netherlands and
(ii) in respect of any such Revolver Loan denominated in Euros (and related
interest rate settings, fundings, disbursements, settlements and payments), any
day that is not a TARGET Day.

Capital Expenditures: capital expenditures made by a Loan Party or Restricted
Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more than
one year; provided, however, that Capital Expenditures shall not include any
such expenditures which are: (a) made with the proceeds of any contribution of
capital to Parent or sale or issuance by Parent of Equity Interests (other than
Disqualified Equity Interests), in each case, the proceeds of which have been
contributed to Borrowers and which are designated as being for such purpose by
written notice from the applicable Loan Party Agent, (b) Permitted Acquisitions,
(c) made with net proceeds of the sale or other Disposition (including by
casualty or condemnation) of a capital asset reinvested in assets to the extent
made within 364 days of the date of such sale or disposition (or committed to be
invested within such 364 day period and invested within 180 days thereafter),
(d) expenditures made in connection with the replacement, substitution,
restoration or repair of assets to the extent financed with (I) insurance
proceeds paid on account of the loss of or damage to the assets being replaced,
restored or repaired, or (II) awards of compensation arising from the taking by
eminent domain or condemnation of the assets being replaced, (e) the purchase
price of equipment that is purchased simultaneously with the trade-in of
existing equipment to the extent that the gross amount of such purchase price is
reduced by the credit granted by the seller of such equipment for the equipment
being traded in at such time, (f) expenditures that are accounted for as capital
expenditures by the Parent or any Restricted Subsidiary and that actually are
paid for by a Person other than the Parent or any Restricted Subsidiary to the
extent neither the Parent nor any Restricted Subsidiary has provided or is
required to

 

6

--------------------------------------------------------------------------------

provide or incur, directly or indirectly, any consideration or obligation to
such Person or any other Person (whether before, during or after such period) to
make payment for such assets, provided that (I) any expenditure necessary in
order to permit such asset to be reused shall be included as a Capital
Expenditure during the period in which such expenditure actually is made and
(II) such book value shall have been included in Capital Expenditures when such
asset was originally acquired or (g) that portion of interest on Indebtedness
incurred for Capital Expenditures which is paid in cash and capitalized in
accordance with GAAP.

Capital Lease: as applied to any Person, any lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.

Capital Lease Obligations: as applied to any Person, all obligations under
Capital Leases of such Person or any of its Subsidiaries, in each case, taken at
the amount thereof accounted for as liabilities in accordance with GAAP.

Cash Collateral: cash held in the applicable Cash Collateral Account
specifically for the purpose of constituting “Cash Collateral” under this
Agreement and which is subject to a first priority, perfected Lien in favor of
Agent or the applicable Security Trustee, and any interest or other income
earned thereon.

Cash Collateral Account: the U.S. Cash Collateral Account and/or Dutch Kraton
Cash Collateral Account, as the context may require.

Cash Collateralize: the delivery of Cash Collateral to the Agent or a Security
Trustee, as security for the payment of Secured Obligations, in an amount equal
to (a) with respect to LC Obligations, 105% of the aggregate LC Obligations, and
(b) with respect to any inchoate, contingent or other Secured Obligations, the
Agent’s good faith estimate of the amount that is due or could become due,
including all fees and other amounts relating to such Secured Obligations. “Cash
Collateralization” and “Cash Collateralized” have a correlative meaning.

Cash Dominion Event: the occurrence of any one of the following events: (a) an
Event of Default under Section 11.1(a) or (g) shall have occurred and be
continuing, (b) any other Event of Default under Section 11.1 shall have
occurred and be continuing and the Agent or Required Lenders shall have
determined (by written notice to Borrowers) to declare a Cash Dominion Event as
a result of such Event of Default (until such time as such Event of Default is
no longer continuing), (c) U.S. Availability shall be less than the greater of
(A) 12.50% of the U.S. Line Cap and (B) $18,750,000 (and in the case of this
clause (c), the Agent has notified Parent thereof); provided that, to the extent
that a Cash Dominion Event has occurred as a result of clause (c)(A) above, if
U.S. Availability shall have exceeded the greater of (x) 12.50% of the U.S. Line
Cap and (y) $18,750,000 at all times for at least forty-five (45) consecutive
days, the Cash Dominion Event shall be deemed to be over. At any time that a
Cash Dominion Event shall be deemed to be over or otherwise cease to exist, the
Agent shall take such actions as may reasonably be requested by a Loan Party
Agent to terminate the cash sweeps and other transfers existing pursuant to
Section 5.6 as a result of any notice or direction given by the Agent during the
existence of a Cash Dominion Event (other than with respect to the Dutch
Borrowers).

Cash Equivalents: means:

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

 

7

--------------------------------------------------------------------------------

(b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s;

(c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any Lender or any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which has a
combined capital and surplus and undivided profits of not less than
$500,000,000;

(d) fully collateralized repurchase agreements with a term of not more than
thirty (30) days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above;

(e) money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a 7 under the Investment Company Act of 1940,
(ii) are rated AAA by S&P and AAA by Moody’s and (iii) have portfolio assets of
at least $5,000,000,000;

(f) securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or any political subdivision or taxing authority thereof, and
rated at least A by S&P or Moody’s;

(g) any money market fund of which the assets are comprised of not less than 90%
of the items specified in clauses (a) through (c), (e) or (f) above; and

(h) with respect to any Foreign Subsidiary investments denominated in the
currency of the jurisdiction in which such Person is organized which are similar
to the items specified in clauses (a) through (f) above (other than the
nationality of the governmental or non-governmental issuer or counterparty
involved).

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof; or (c) the making, issuance or
application of any request, guideline, requirement or directive (whether or not
having the force of law) by any Governmental Authority; provided, however, that
“Change in Law” shall include, regardless of the date enacted, adopted or
issued, all requests, guidelines, requirements or directives (i) under or
relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or
(ii) promulgated pursuant to Basel III by the Bank of International Settlements,
the Basel Committee on Banking Supervision (or any similar authority) or any
other Governmental Authority.

Change in Tax Law: the enactment, promulgation, execution or ratification of, or
any change in or amendment to, any law (including the Code), treaty, regulation
or rule (or in the official application or interpretation of any law, treaty,
regulation or rule, including a holding, judgment or order by a court of
competent jurisdiction) relating to taxation.

Change of Control: means (a) during any period of twelve (12) consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of Parent ceases to be composed of individuals (i) who were
members of that board or equivalent governing body on the first

 

8

--------------------------------------------------------------------------------

day of such period, (ii) whose election or nomination to that board or
equivalent governing body was approved by individuals referred to in clause
(i) of this clause (a) who, at the time of such election or nomination,
constitute at least a majority of that board or equivalent governing body or a
majority of any nominating committee of the board, (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) of this clause (a) who, at the
time of such election or nomination, constitute at least a majority of that
board or equivalent governing body or a majority of any nominating committee of
the board, or (iv) who were members of that board or equivalent governing body
on the Closing Date; (b) Parent shall cease to own, directly or indirectly, 100%
of the outstanding Equity Interests in KPLLC; (c) subject to the actions
permitted by Section 10.2.8, KPLLC shall cease to own, directly or indirectly,
100% of the outstanding Equity Interests in the U.S. Borrower or the Dutch
Borrowers; (d) so long as any Term Debt remains outstanding, the occurrence of
any “Change of Control”, as such term is defined in the Term Loan Agreement;
(e) so long as any Senior Notes remain outstanding, the occurrence of any
“Change of Control” as such term is defined in the Senior Notes Indenture; or
(f) a sale of all or substantially all of the assets of Parent in contravention
of this Agreement.

Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses (including remedial
response costs, reasonable and documented attorneys’ fees which shall be limited
to the fees, disbursements and other charges of one outside counsel, and if
reasonably necessary, one local counsel in each relevant jurisdiction (which may
include a single special counsel acting in multiple jurisdictions) for the
Indemnitees (unless there is an actual or perceived conflict of interest or the
availability of different claims or defenses in which case each such Indemnitee
may retain its own counsel) and Extraordinary Expenses) at any time (including
after Full Payment of the Obligations or replacement of the Agent or any Lender)
incurred by any Indemnitee or asserted against any Indemnitee by any Loan Party
or other Person, in any way relating to (a) any Loans, Letters of Credit, Loan
Documents, Borrower Materials, or the use thereof or transactions relating
thereto, (b) any action taken or omitted in connection with any Loan Documents,
(c) the existence or perfection of any Liens, or realization upon any
Collateral, (d) exercise of any rights or remedies under any Loan Documents or
Applicable Law, or (e) failure by any Loan Party to perform or observe any terms
of any Loan Document, in each case including all costs and expenses relating to
any investigation, litigation, arbitration, settlement (which settlement costs
will be subject to consultation with the Borrowers) or other proceeding
(including an Insolvency Proceeding or appellate proceedings), whether or not
the applicable Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Code: the Internal Revenue Code of 1986 (unless as specifically provided
otherwise), as amended to the date hereof and from time to time hereafter, and
any successor statute.

Collateral: all Property described in Section 7.1, all Property described in any
Security Document as security for any Secured Obligations, and all other
Property that now or hereafter secures (or is intended to secure) any Secured
Obligations.

Commitment: for any Lender, the aggregate amount of such Lender’s Borrower Group
Commitments. “Commitments” means the aggregate amount of all Borrower Group
Commitments (not to exceed the Maximum Facility Amount), which amount shall on
the Closing Date be equal to $250,000,000 consisting of (a) $75,000,000 in
respect of the Dutch Kraton Revolver Commitments, and (b) $175,000,000 in
respect of the U.S. Revolver Commitments, in each case as such amount may be
adjusted from time to time in accordance with the terms of this Agreement,
including pursuant to any applicable Revolver Commitment Increases or
Allocations.

 

9

--------------------------------------------------------------------------------

Commitment Letter: the letter agreement, dated October 7, 2015, among KPLLC, the
Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, the Joint Lead
Arrangers, et al.

Commitment Parties: as defined in the Commitment Letter.

Commodity Account: as defined in Article 9 of the UCC.

Commodity Account Control Agreement: the commodity account control agreements
(whether in the form of an agreement, notice and acknowledgement or like
instrument), in form and substance reasonably satisfactory to the Agent and the
applicable Loan Party, and, if required under the laws of the jurisdiction of
the commodity account, executed by each financial institution or commodity
intermediary maintaining a Commodity Account for such Loan Party, in favor of
the Agent or a Security Trustee.

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as
amended from time to time, and any successor statute.

Company Material Adverse Effect: has the meaning assigned to such term in the
Arizona Chemical Acquisition Agreement.

Compliance Certificate: a certificate, in the form of Exhibit D with such
changes as may be agreed to by North American Loan Party Agent and the Agent, by
which the North American Loan Party certifies to the matters set forth in
Section 10.1.2(d).

Confirmation Agreement: Confirmation Agreement regarding certain Security
Interests, confirming the effectiveness of the German Security Agreement, in
form and substance satisfactory to Agent, duly executed by Initial Dutch Kraton
Borrower and Security Trustee.

Consolidated Tangible Assets: as of any date of determination, the aggregate of
the assets of the Parent and the Restricted Subsidiaries less goodwill and all
assets properly classified as intangible assets in accordance with GAAP, in each
case, on a consolidated basis, after giving effect to purchase accounting and as
of the most recent Fiscal Quarter ended for which financial statements have been
delivered pursuant to Section 10.1.2.

Consolidated Total Assets means, on any date, the total assets of Parent and its
Subsidiaries on a consolidated basis determined in accordance with GAAP as of
the last day of the Fiscal Quarter immediately preceding the date of
determination.

Contingent Obligation: as to any Person, any obligation of such Person
guaranteeing or intended to guarantee any Debt of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person, whether or not contingent, (a) to purchase any such
Debt or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such Debt or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such Debt of the ability of the primary obligor to make payment
of such Debt or (d) otherwise to assure or hold harmless the holder of such Debt
against loss in respect thereof. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the Debt
in respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.

 

10

--------------------------------------------------------------------------------

Contract Rights: all rights of any Loan Party under each Contract, including,
without limitation, (i) any and all rights to receive and demand payments under
any or all Contracts, (ii) any and all rights to receive and compel performance
under any or all Contracts and (iii) any and all other rights, interests and
claims now existing or in the future arising in connection with any or all
Contracts.

Contracts: all contracts between any Loan Party and one or more additional
parties (including, without limitation, any hedging agreements, licensing
agreements and any partnership agreements, joint venture agreements and limited
liability company agreements).

Copyrights: with respect to any Loan Party, all of such Loan Party’s right,
title and interest in and to the following: (i) all copyrights, rights and
interests in copyrights, works protectable by copyright whether published or
unpublished, copyright registrations, and copyright applications; (ii) all
renewals of any of the foregoing; (iii) all income, royalties, damages, and
payments now or hereafter due and/or payable under any of the foregoing,
including, damages or payments for past or future infringements for any of the
foregoing; (iv) the right to sue for past, present, and future infringements of
any of the foregoing; and (v) all domestic rights corresponding to any of the
foregoing.

Credit Documents: the Loan Documents and the Secured Bank Product Documents.

Credit Party: the Agent, a Lender or any Fronting Bank; and “Credit Parties”
means the Agent, Lenders and Fronting Banks.

Creditor Representative: under any Applicable Law, a receiver, manager,
controller, interim receiver, receiver and manager, trustee (including any
trustee in bankruptcy), custodian, conservator, administrator, examiner,
sheriff, monitor, assignee, liquidator, provisional liquidator, sequestrator,
administrative receiver, judicial manager, statutory manager or similar officer
or fiduciary.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as applied to any Person, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) the deferred purchase price of assets or
services that in accordance with GAAP would be included as liabilities on the
balance sheet of such Person; (c) all reimbursement obligations in connection
with letters of credit issued for the account of such Person; (d) all
Disqualified Equity Interests; (e) all non-recourse Debt secured by any Lien on
any property owned by such Person, whether or not such Debt has been assumed,
(f) all Capital Lease Obligations of such Person and (g) all obligations of such
Person under Hedge Agreements (but taking into account only the mark-to-market
value or, if any actual amount is due as a result of the termination or close
out of such transaction, that amount) and (i) all Contingent Obligations of such
Person; provided that Debt shall not include (i) trade payables and accrued
expenses, in each case arising in the Ordinary Course of Business, (ii) deferred
or prepaid revenue, (iii) purchase price holdbacks in respect of a portion of
the purchase price of an asset to satisfy warranty or other unperformed
obligations of the respective seller, (iv) endorsements of instruments for
deposit or collection in the Ordinary Course of Business and (v) indemnity
obligations, purchase price adjustments or earn-out obligations in effect on the
Closing Date or entered into in connection with any Specified Transaction or
acquisition or disposition of assets or Equity Interests permitted under this
Agreement. The Debt of a Person shall include any recourse Debt of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or joint venture except to the extent such Person’s liability for such
Debt is otherwise limited and only to the extent (A) such Debt would be included
in the calculation of Total Debt and (B) in the case of Parent and its
Subsidiaries, such Debt does not include all intercompany Debt having a term not
exceeding 364 days (inclusive of any roll-over or extensions of terms) and made
in the Ordinary Course of Business. The amount of Debt of any Person for
purposes of clause (e) shall be deemed to be equal to the lesser of (i) the
aggregate unpaid amount of such Debt and (ii) the fair market value of the
property encumbered thereby as determined by such Person in good faith.

 

11

--------------------------------------------------------------------------------

Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2.00% per annum plus the interest rate otherwise
applicable thereto, or if such Obligation does not bear interest, a rate equal
to the U.S. Base Rate plus 2.00% per annum.

Defaulting Lender: any Lender that, as reasonably determined by the Agent,
(a) has failed to perform any funding obligations hereunder, and such failure is
not cured within two (2) Business Days (unless such Lender notifies the
Administrative Agent and the Borrower in writing that such failure is the result
of such Lender’s determination that one or more conditions precedent to funding
(each of which conditions precedent, together with any applicable default, shall
be specifically identified in such writing) has not been satisfied); (b) has
notified the Agent or any Borrower that such Lender does not intend to comply
with its funding obligations hereunder or has made a public statement to the
effect that it does not intend to comply with its funding obligations hereunder
(unless such writing or public statement relates to such Lender’s obligation to
fund a Loan hereunder and states that such position is based on such Lender’s
determination that a condition precedent to funding (which condition precedent,
together with any applicable default, shall be specifically identified in such
writing or public statement) cannot be satisfied); (c) has failed, within one
(1) Business Day following written request by the Agent and/or Parent, to
confirm in a manner reasonably satisfactory to the Agent that such Lender will
comply with its funding obligations hereunder; provided that such Lender shall
cease to be a Defaulting Lender pursuant to this clause (c) upon receipt by the
Agent and/or the Parent of such confirmation; or (d) has, or has a direct or
indirect parent company that has, become the subject of an Insolvency Proceeding
or taken any action in furtherance thereof; provided, however, that a Lender
shall not be a Defaulting Lender solely by virtue of a Governmental Authority’s
ownership of an Equity Interest in such Lender or parent company, so long as
such ownership interest does not result in or provide such Lender with immunity
from the jurisdiction of courts within the U.S. or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
made with such Lender.

Deposit Account: (i) any “deposit account” as such term is defined in Article 9
of the UCC and (ii) with respect to any such Deposit Account located outside of
the U.S., any bank account with a deposit function.

Deposit Account Control Agreements: the deposit account control agreements
(whether in the form of an agreement, notice and acknowledgement or like
instrument) (i) other than in the case of any Dutch Kraton Dominion Account, in
form and substance reasonably satisfactory to the Agent and the applicable Loan
Party and executed by each lockbox servicer (if applicable) and financial
institution maintaining a lockbox and/or Deposit Account for a Loan Party, in
favor of the Agent or a Security Trustee, for the benefit of the applicable
Secured Parties and (ii) in the case of each Dutch Kraton Dominion Account in
substantially the form executed and delivered by the Initial Dutch Kraton
Borrower, the Dutch Security Trustee and Bank of America as account bank as a
condition precedent to the making of any Dutch Kraton Revolver Loan or the
issuing of any Dutch Kraton Letter of Credit (or such other form as the Agent
(acting reasonably) may approve).

Designated Non-Cash Consideration: the fair market value of non-cash
consideration received by Parent or a Restricted Subsidiary in connection with a
Disposition pursuant to Section 10.2.5(a) that is designated as Designated
Non-Cash Consideration pursuant to a certificate of a Senior Officer of the

 

12

--------------------------------------------------------------------------------

relevant Loan Party Agent, setting forth the basis of such valuation (which
amount will be reduced by the fair market value of the portion of the non-cash
consideration converted to cash within 180 days following the consummation of
the applicable Disposition).

Dilution Percent: the percent, determined for each applicable Borrower (and in
the case of the U.S. Borrowers, determined for all U.S. Borrowers in the
aggregate) for the most recent Fiscal Quarter, equal to (a) bad debt write-downs
or write-offs, discounts, returns, promotions, credits, credit memos and other
dilutive items with respect to the applicable Borrower’s Accounts, divided by
(b) gross sales of the applicable Borrower.

Disposition: as defined in Section 10.2.5(a).

Disqualified Equity Interests: means any Equity Interest that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case, at the option of the holder of the Equity Interest),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Equity Interest, in whole or in part, on or prior to the
date that is ninety-one (91) days after the Facility Termination Date.
Notwithstanding the preceding sentence, any Equity Interest that would
constitute Disqualified Equity Interests solely because the holders of the
Equity Interests have the right to require the Parent or any Restricted
Subsidiary to repurchase such Equity Interest upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Equity Interests if
the terms of such Equity Interests provide that the Parent or Restricted
Subsidiary, as applicable, may not repurchase or redeem any such Equity
Interests pursuant to such provisions unless such repurchase or redemption
complies with Section 10.2.3. The amount of Disqualified Equity Interests deemed
to be outstanding at any time for purposes of this Agreement will be the maximum
amount that the Parent and the Restricted Subsidiaries may become obligated to
pay upon the maturity of, or pursuant to any mandatory redemption provisions of,
such Disqualified Equity Interests, exclusive of accrued dividends.

Distribution: any declaration or payment of a distribution, interest or dividend
(whether in cash, securities or other Property) on any Equity Interest or Equity
Interest Equivalent of Parent or any Subsidiary (other than payment-in-kind);
any distribution, advance or repayment of Debt to a holder of Equity Interests
or Equity Interest Equivalents of Parent or any Subsidiary; or any purchase,
redemption, or other acquisition or retirement for value of any Equity Interest
or Equity Interest Equivalent of Parent or any Subsidiary.

Document: as defined in (i) Article 9 of the UCC and/or (ii) with respect to any
Document of a Dutch Domiciled Loan Party, a ceel or other bearer document (stuk
aan toonder of order) within the meaning of section 7:607 of the Dutch Civil
Code or any other Applicable Law, as applicable.

Dollar Equivalent: on any date, (a) with respect to any amount denominated in
Dollars, such amount in Dollars, and (b) with respect to any stated amount in a
lawful currency other than Dollars, the amount of Dollars that the Agent
determines (which determination shall be conclusive and binding absent manifest
error) would be necessary to be sold on such date at the applicable Exchange
Rate to obtain the stated amount of the other currency.

Dollars and $: lawful money of the United States.

Domain Name: all Internet domain names and associated URL addresses in or to
which any Loan Party now or hereafter has any right, title or interest.

 

13

--------------------------------------------------------------------------------

Domestic Subsidiary: any Subsidiary that is organized under the Applicable Laws
of the United States, any state thereof or the District of Columbia.

Domestic Arizona Subsidiary: any Subsidiary of the Added U.S. Borrower that is
organized under the Applicable Laws of the United States, any state thereof or
the District of Columbia.

Dominion Account: with respect to (a) the Dutch Domiciled Loan Parties, each
Dutch Kraton Dominion Account and (b) the U.S. Domiciled Loan Parties, each U.S.
Dominion Account.

Dutch Borrowers: (a) the Initial Dutch Kraton Borrower and (b) each other Dutch
Subsidiary that, after the date hereof, has executed a supplement or joinder to
this Agreement in accordance with Section 10.1.9 and has satisfied the other
requirements set forth in Section 10.1.9 in order to become a Dutch Borrower.

Dutch Domiciled Loan Party: any Dutch Borrower and each Dutch Subsidiary now or
hereafter party hereto as a Loan Party.

Dutch Facility Collateral: Collateral that now or hereafter secures (or is
intended to secure) any of the Dutch Facility Secured Obligations, including
Property of the Dutch Facility Guarantors, pledged to secure the Dutch Facility
Secured Obligations.

Dutch Facility Guarantor: each U.S. Borrower, each U.S. Facility Guarantor, each
Dutch Borrower and each Dutch Domiciled Loan Party, in each case who guarantees
payment and performance of any Dutch Facility Secured Obligations (including
pursuant to a Foreign Cross-Guarantee); provided that, no Subsidiary shall be
required to become a Guarantor hereunder that is (i) an Excluded Subsidiary (as
defined in the Term Loan Agreement), (ii) an investment company under the
Investment Company Act of 1940 (or would be such an investment company if it
were to provide or maintain a Guarantee (including a Foreign Cross-Guarantee),
(iii) a Joint Venture (as defined in the Term Loan Agreement), (iv) an
Immaterial Subsidiary, (v) prohibited or restricted by applicable law, rule or
regulation or by any contractual obligations existing on the Closing Date (or,
if later, the date it becomes a Restricted Subsidiary) from guaranteeing the
Secured Obligations or which would require governmental (including regulatory)
consent, approval, license or authorization to provide a guarantee unless such
consent, approval, license or authorization has been received, (vi) a
not-for-profit Subsidiary or captive insurance company, (vii) a Subsidiary for
which the providing of a guarantee could reasonably be expected to result in a
violation or breach of, or conflict with, fiduciary duties of such Subsidiary’s
officers, directors or managers and (viii) a Restricted Subsidiary acquired
pursuant to a Permitted Acquisition financed with indebtedness permitted to be
incurred pursuant to this Agreement as assumed indebtedness and any Restricted
Subsidiary thereof that guarantees such indebtedness, in each case to the extent
such secured indebtedness prohibits such subsidiary from becoming a Guarantor.

Dutch Facility Loan Party: a Dutch Borrower or a Dutch Facility Guarantor.

Dutch Facility Obligations: all Obligations of the Dutch Domiciled Loan Parties
and the other Foreign Facility Obligations that are the subject of a Foreign
Cross-Guarantee made by the Dutch Domiciled Loan Parties.

Dutch Facility Secured Obligations: all Secured Obligations of the Dutch
Domiciled Loan Parties and the other Foreign Facility Secured Obligations that
are the subject of a Foreign Cross-Guarantee made by the Dutch Domiciled Loan
Parties.

 

14

--------------------------------------------------------------------------------

Dutch Facility Secured Parties: the Agent, any Dutch Fronting Bank, Dutch
Lenders and Secured Bank Product Providers of Bank Products for the account of
Dutch Domiciled Loan Parties and the other Foreign Facility Secured Parties and
their Subsidiaries that are the beneficiaries of a Foreign Cross-Guarantee made
by the Dutch Domiciled Loan Parties.

Dutch Fronting Bank: Bank of America (London) or any Affiliate thereof that
agrees to issue Dutch Letters of Credit or, if reasonably acceptable to North
American Loan Party Agent, any other Dutch Lender or Affiliate thereof that
agrees to issue Dutch Letters of Credit.

Dutch Fronting Bank Indemnitees: any Dutch Fronting Bank and its officers,
directors, employees, Affiliates and agents.

Dutch Kraton Allocated U.S. Availability: U.S. Availability designated by the
North American Loan Party Agent for application to clause (d) of a Dutch Kraton
Borrowing Base.

Dutch Kraton Allocated U.S. Availability Reserve: Dutch Kraton Availability
Reserves established in respect of the Dutch Kraton Allocated U.S. Availability.

Dutch Kraton Availability: as of any such date of determination, (a) the lesser
of (i) the Dutch Kraton Revolver Commitments, minus all Dutch Kraton
Availability Reserves and (ii) the Dutch Kraton Borrowing Base, minus, in each
case (b) the sum of (i) the Dollar Equivalent of the principal balance of all
Dutch Kraton Revolver Loans, and (ii) all Dutch Kraton LC Obligations.

Dutch Kraton Availability Reserves: the sum (without duplication) of (a) the
Dutch Kraton Rent Reserve; (b) the Dutch Kraton Bank Product Reserve; (c) the
Dutch Kraton Priority Payables Reserve; (d) the Dutch Kraton Inventory Reserve;
(e) the Dutch Kraton Dilution Reserve; and (f) such additional reserves, in such
amounts and with respect to such matters, as the Agent may establish in its
Permitted Discretion and in accordance with the terms hereof.

Dutch Kraton Bank Product Reserve: at any time with respect to Secured Bank
Product Obligations of the Dutch Kraton Dutch Domiciled Loan Parties and their
Subsidiaries, an amount equal to the sum of (a) the maximum amount of the then
outstanding Qualified Secured Bank Product Obligations of the Dutch Kraton Dutch
Domiciled Loan Parties and their Subsidiaries owing (i) to Bank of America and
its Affiliates as determined by the Agent in its Permitted Discretion and
(ii) to any other Secured Bank Product Provider as set forth in the notice
delivered by such Secured Bank Product Provider providing such Bank Product and
the North American Loan Party Agent to the Agent in accordance with the
definition of Secured Bank Product Obligations and (b) with respect to any other
Secured Bank Product Obligations of the Dutch Kraton Dutch Domiciled Loan
Parties and their Subsidiaries, reserves established by the Agent from time to
time in its Permitted Discretion to reflect the reasonably anticipated
liabilities in respect of the then outstanding Secured Bank Product Obligations
for the account of the Dutch Kraton Dutch Domiciled Loan Parties and their
Subsidiaries.

Dutch Kraton Borrowers: (a) the Initial Dutch Kraton Borrower and (b) each other
Dutch Subsidiary that, after the date hereof, has executed a supplement or
joinder to this Agreement in accordance with Section 10.1.9 and has satisfied
the other requirements set forth in Section 10.1.9 in order to become a Dutch
Kraton Borrower.

Dutch Kraton Borrowing Base: at any time, with respect to the Applicable Dutch
Kraton Borrower, an amount equal to the sum (expressed in Dollars, based on the
Dollar Equivalent thereof) of, without duplication:

 

15

--------------------------------------------------------------------------------

(a) the Value of Dutch Kraton Eligible Accounts of the Applicable Dutch Kraton
Borrower multiplied by the advance rate of 85%, plus

(b) the lesser of (i) 65% of the Value of Dutch Kraton Eligible Inventory
composed of finished goods of the Applicable Dutch Kraton Borrower and (ii) 85%
of the NOLV Percentage of the Value of Dutch Kraton Eligible Inventory composed
of finished goods of the Applicable Dutch Kraton Borrower, plus

(c) the lesser of (i) 65% of the Value of Dutch Kraton Eligible Inventory not
composed of finished goods of the Applicable Dutch Kraton Borrower and (ii) 85%
of the NOLV Percentage of the Value of Dutch Kraton Eligible Inventory not
composed of finished goods of the Applicable Dutch Kraton Borrower, plus

(d) Dutch Kraton Allocated U.S. Availability for such Applicable Dutch Kraton
Borrower, minus

(e) all Dutch Kraton Availability Reserves with respect to the Applicable Dutch
Kraton Borrower, any change therein to become effective (i) immediately upon or
(ii) three (3) Business Days after, in the case of Dutch Kraton Availability
Reserves allocable to the Applicable Dutch Kraton Borrower which would cause the
aggregate amount of the Dutch Kraton Revolver Exposure allocable to the
Applicable Dutch Kraton Borrower at such time to exceed the lesser of the
Applicable Dutch Kraton Borrower’s Applicable Dutch Kraton Borrower Commitment
and the Applicable Dutch Kraton Borrower’s Dutch Kraton Borrowing Base then in
effect, notification thereof to the North American Loan Party Agent by the
Agent; provided that, the Agent shall have provided the North American Loan
Party Agent at least three (3) Business Days’ prior written notice of any such
establishment or increase; provided further that, the Agent may only establish
or increase a Dutch Kraton Availability Reserve after the date hereof based on
an event, condition or other circumstance arising after the Closing Date or
based on facts not known to the Agent as of the Closing Date. The amount of any
Dutch Kraton Availability Reserve established by the Agent shall have a
reasonable relationship to the event, condition, other circumstance or new fact
that is the basis for the Dutch Kraton Availability Reserve. Upon delivery of
such notice, the Agent shall be available to discuss the proposed Dutch Kraton
Availability Reserve or increase, and the applicable Borrowers may take such
action as may be required so that the event, condition, circumstance or new fact
that is the basis for such Dutch Kraton Availability Reserve or increase no
longer exists, in a manner and to the extent reasonably satisfactory to the
Agent in the exercise of its Permitted Discretion. In no event shall such notice
and opportunity limit the right of the Agent to establish or change such Dutch
Kraton Availability Reserve, unless the Agent shall have determined in its
Permitted Discretion that the event, condition, other circumstance or new fact
that is the basis for such new Dutch Kraton Availability Reserve or such change
no longer exists or has otherwise been adequately addressed by the applicable
Borrower. Notwithstanding anything herein to the contrary, Dutch Kraton
Availability Reserves shall not duplicate amounts that are ineligible under the
definition of “Dutch Kraton Eligible Inventory” or amounts already deducted in
or by other Dutch Kraton Availability Reserves or in connection with criteria
already used to calculate the NOLV Percentage of Dutch Kraton Eligible
Inventory.

The Dutch Kraton Borrowing Base at any time shall be determined by reference to
the most recent Borrowing Base Certificate theretofore delivered to the Agent
with such adjustments as the Agent deems appropriate in its Permitted Discretion
to assure that the Dutch Kraton Borrowing Base is calculated in accordance with
the terms of this Agreement. It is the intention of the Agent to evaluate, in
its discretion, the inclusion of eligibility criteria with respect to Accounts
and Inventory of the Dutch Kraton Borrower that are guaranteed by the United
States of America or any instrumentality thereof in connection with an EXIM
Program.

 

16

--------------------------------------------------------------------------------

Dutch Kraton Cash Collateral Account: a bank account established by the Agent at
Bank of America (London) in connection with the Dutch Kraton Revolver
Commitments that is (a) segregated, (b) for the benefit of the Dutch Kraton
Facility Secured Parties, (c) subject to the Agent’s or Security Trustee’s Liens
securing the Dutch Kraton Facility Secured Obligations and (d) under the
exclusive control of Agent or the applicable Security Trustee.

Dutch Kraton Dilution Reserve: with respect to an Applicable Dutch Kraton
Borrower, without duplication of any other reserves or items that are otherwise
addressed or excluded through eligibility criteria, the aggregate amount of
reserves, as established by the Agent from time to time, in an amount equal to
the Value of the Applicable Dutch Kraton Borrower’s Eligible Accounts multiplied
by 1% for each percentage point (or portion thereof) that the Applicable Dutch
Kraton Borrower’s Dilution Percent exceeds 5%.

Dutch Kraton Dominion Account: each special deposit account established by the
Dutch Kraton Dutch Domiciled Loan Parties at Bank of America (London) or another
bank reasonably acceptable to the Agent (i) which is a collection account and
not a disbursement account and (ii) (subject to section 8.2.4, save in respect
of the Dutch Kraton Excluded Dominion Accounts) is the subject of a Deposit
Account Control Agreement and a duly perfected and enforceable Lien under the
Applicable Law of the location of such special deposit account.

Dutch Kraton Dutch Domiciled Loan Party: any Dutch Kraton Borrower and each
Dutch Subsidiary of a Dutch Kraton Borrower now or hereafter party hereto as a
Loan Party, and “Dutch Kraton Dutch Domiciled Loan Parties” means all such
Persons, collectively.

Dutch Kraton Eligible Accounts: at any time, the Accounts of the Applicable
Dutch Kraton Borrower at such date except any Account:

(a) which (i) is not subject to a duly perfected and enforceable Lien in favor
of the Agent or Security Trustee (as applicable) under the law where the
Applicable Dutch Kraton Borrower is organized or (ii) in the case of Accounts
owed by an account debtor organized in a Perfection Jurisdiction, are not
subject to a duly perfected and enforceable Lien in favor of the Agent under the
law where the account debtor is organized;

(b) which is subject to any Lien (including Liens permitted by Section 10.2.2)
other than (i) a Lien in favor of the Agent, (ii) a Lien permitted under
Section 10.2.2(i) or (iii) a Lien permitted under Section 10.2.2(j) or (m) which
does not have priority over the Lien in favor of the Agent;

(c) (i) for each invoice with an original due date not later than thirty
(30) days after the date thereof, which is unpaid for (A) more than sixty
(60) days after the original due date or (B) unless otherwise agreed in writing
by the Agent in its discretion, more than ninety (90) days after the original
invoice date; (ii) for each invoice with an original due date later than thirty
(30) days after the date thereof but not later than sixty (60) days after the
date thereof, which is unpaid for (A) more than sixty (60) days after the
original due date or (B) unless otherwise agreed in writing by the Agent in its
discretion, more than 120 days after the original invoice date; (iii) for each
invoice with an original due date later than sixty (60) days after the date
thereof but not later than ninety (90) days after the date thereof, which is
unpaid for (A) more than sixty (60) days after the original due date or
(B) unless otherwise agreed in writing by the Agent in its discretion, more than
150 days after the original invoice date;

(d) which is owing by an Account Debtor for which more than 50% of the Accounts
owing from such Account Debtor and its Affiliates are ineligible pursuant to
clause (c) above (in calculating the ineligible portion of Accounts under clause
(c) for purposes of this clause (d), credit balances that are

 

17

--------------------------------------------------------------------------------

unapplied for more than ninety (90) days shall not reduce the amount of the
Accounts ineligible thereunder); provided that Accounts that are determined not
to be Dutch Kraton Eligible Accounts solely as a result of the provisions of
clause (e) below, shall be excluded in calculating such percentage;

(e) which is owing by any Account Debtor to the extent the aggregate amount of
otherwise Dutch Kraton Eligible Accounts owing from such Account Debtor and its
Affiliates to the Borrowers exceeds 20% of the aggregate Dutch Kraton Eligible
Accounts (or such higher percentage as the Agent may establish for the Account
Debtor from time to time), only to the extent of such excess;

(f) with respect to which any covenant, representation or warranty relating to
such Account contained in this Agreement or a Security Document has been
materially breached or is not true in any material respect respectively (or with
respect to such covenant, representation or warranty qualified by materiality,
after giving effect to such qualification, in all respects);

(g) which (i) does not arise from the sale of goods or performance of services
in the Ordinary Course of Business, (ii) is not evidenced by an invoice, or
other similar documentation reasonably satisfactory to the Agent, which has been
sent to the Account Debtor, (iii) represents a progress billing or a retention,
(iv) is contingent upon the Applicable Dutch Kraton Borrower’s completion of any
further performance, (v) represents a cash or credit card sale or a sale on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment
which is billed by the Applicable Dutch Kraton Borrower, as consignor, prior to
actual sale to the end user, cash-on-delivery or any other repurchase or return
basis, or (vi) represents interest or fees; provided that ineligibility as a
result of this clause (vi) shall be limited to the amount of such interest and
fees;

(h) for which the goods giving rise to such Account have not been loaded on a
carrier for shipment to the Account Debtor or for which the services giving rise
to such Account have not been performed by the Applicable Dutch Kraton Borrower;

(i) with respect to which any check or other instrument of payment has been
returned uncollected for any reason and such Account is or should be written off
of Parent’s books as uncollectible, consistent with Parent’s collection
policies;

(j) which is owed by an Account Debtor in respect of which an Insolvency
Proceeding has been commenced or which is otherwise a debtor or a debtor in
possession under any bankruptcy law or any other federal, state or foreign
(including any province or territory) receivership, insolvency relief or other
law or laws for the relief of debtors, including the Dutch Bankruptcy Code
(Fallissementswet), unless the payment of Accounts from such Account Debtor is
secured by assets of, or guaranteed by, in either case, in a manner reasonably
satisfactory to the Agent, a Person that is reasonably acceptable to the Agent
or, if the Account from such Account Debtor arises subsequent to a decree or
order for relief with respect to such Account Debtor under the Dutch Bankruptcy
Code (Fallissementswet), as now or hereafter in effect, the Agent shall have
reasonably determined that the timely payment and collection of such Account
will not be impaired;

(k) which is owed by an Account Debtor which has suspended or ceased doing
business, is liquidating, dissolving or winding up its affairs or has declared
itself as or been declared by a court of competent jurisdiction, to be not
Solvent;

(l) which is owed by an Account Debtor which is not organized or incorporated
under the applicable law of an Eligible Account Debtor Jurisdiction unless
(i) the Agent determines to include such Account Debtor in its Permitted
Discretion or (ii) such Account is backed by a letter of credit or other credit
support reasonably acceptable to the Agent; provided that notwithstanding the
foregoing, the Agent may, in its Permitted Discretion, deem Accounts that would
otherwise be ineligible as a result of this clause (l)(i) to be eligible in an
amount not to exceed $15,000,000 in the aggregate at any time.

 

18

--------------------------------------------------------------------------------

(m) which is owed in any currency other than Eligible Account Currencies;

(n) which is owed by any Governmental Authority, unless such Account is backed
by a letter of credit reasonably acceptable to the Agent or is otherwise
acceptable to the Agent in its Permitted Discretion;

(o) which is owed by any Affiliate, employee, director, or officer of any Loan
Party;

(p) which is owed by an Account Debtor or any Affiliate of such Account Debtor
which is the holder of Debt issued or incurred by any Loan Party; provided that
any such Account shall only be ineligible as to that portion of such Account
which is less than or equal to the amount owed by the Loan Party to such Person;

(q) except as provided in clause (s) below, which is subject to any
counterclaim, deduction, defense, setoff, right of compensation or material
dispute, but only to the extent of the amount of such counterclaim, deduction,
defense, setoff, right of compensation or material dispute unless (i) the Agent,
in its Permitted Discretion, has established Dutch Kraton Availability Reserves
and determines to include such Account as a Dutch Kraton Eligible Account or
(ii) such Account Debtor has entered into an agreement reasonably acceptable to
the Agent to waive such rights;

(r) which is evidenced by any promissory note, Chattel Paper or Instrument;

(s) with respect to which the Applicable Dutch Kraton Borrower has made any
agreement with the Account Debtor for any reduction thereof, but only to the
extent of such reduction, other than discounts and adjustments given in the
Ordinary Course of Business; or

(t) which Account has been transferred pursuant to a Supplier Financing
Transaction.

Subject to Section 14.1.1 and the definition of Dutch Kraton Borrowing Base, the
Agent may modify the foregoing criteria and the application of the foregoing
criteria to any specific Account and may determine an Account is ineligible, in
each case, in its Permitted Discretion; provided that, the Agent shall have
provided the North American Loan Party Agent at least three (3) Business Days’
prior written notice of any such modification, application or determination;
provided further, that upon delivery of such notice, the Agent shall be
available to discuss the proposed modification, application or determination.
For the avoidance of doubt, it is acknowledged and agreed that any calculation
of ineligibility made pursuant to more than one clause above shall be made
without duplication.

Dutch Kraton Eligible In-Transit Inventory: at any date of determination
thereof, the lesser of (a) $10,000,000 and (b) the aggregate amount of all
Inventory owned by a Dutch Kraton Borrower at such date that would be Dutch
Kraton Eligible Inventory if it were not in transit to a location of a U.S.
Borrower within the United States from a location of a Dutch Kraton Borrower.
Without limiting the foregoing, no Inventory shall be Dutch Kraton Eligible
In-Transit Inventory unless it meets, and then only for so long as it continues
to meet, the Agent’s standard requirements for including in-transit Inventory in
Eligible Inventory, which include, among other things, the following:

(a) title to the Inventory is in a Dutch Kraton Borrower or a U.S. Borrower, the
Inventory is owned by a Dutch Kraton Borrower or a U.S. Borrower, and the
Inventory is in transit from a Dutch Kraton Borrower intercompany to a U.S.
Borrower to a location of a U.S. Borrower within the United States;

 

19

--------------------------------------------------------------------------------

(b) the Inventory is fully insured for not less than 100% of the invoice cost
thereof, and the Agent shall have received evidence of satisfactory casualty
insurance naming the Agent as loss payee and otherwise covering such risks as
the Agent may reasonably request;

(c) the Inventory is subject to a first priority security interest in and Lien
upon such goods in favor of the Agent (except for any possessory lien upon such
goods in the possession of a freight carrier or shipping company securing only
the freight charges for the transportation of such goods to the applicable
destination, and the Agent shall have established Dutch Kraton Availability
Reserves equal to the amount of such Lien or the Agent has received a Lien
waiver in form and substance reasonably satisfactory to it with respect to such
Lien); and

(d) the Inventory is evidenced by and deliverable pursuant to a tangible bill of
lading or such other documentation of a type and in a form acceptable to the
Agent in its Permitted Discretion that has been issued by a common carrier
acceptable to the Agent, and if a bill of lading such bill of lading shall be in
the possession of either the Agent, or a freight forwarder or customs broker in
each case acting for the Agent under the terms of an Imported Goods Agreement
which has been delivered to the Agent.

Notwithstanding the foregoing clauses (c) and (d) above, Inventory which would
otherwise constitute Dutch Kraton Eligible In-Transit Inventory except that it
is not evidenced by and deliverable pursuant to a Permitted Bill of Lading shall
for the purposes of this Agreement be considered Dutch Kraton Eligible
In-Transit Inventory; provided, however, if at any time (x) the amount of the
U.S. Availability is less than $50,000,000 or (y) the sum of the U.S.
Availability and the Dutch Kraton Availability is less than $75,000,000, then
such Inventory shall no longer constitute Dutch Kraton Eligible In-Transit
Inventory unless such Inventory otherwise constitutes Dutch Kraton Eligible
In-Transit Inventory pursuant to the express provisions of this definition.

Dutch Kraton Eligible Inventory: at any date of determination thereof, the
aggregate amount of all Inventory owned by the Applicable Dutch Kraton Borrower
at such date except any Inventory:

(a) which, in the case of Inventory located in a Perfection Jurisdiction, is not
subject to a duly perfected and enforceable Lien in favor of the Agent or the
applicable Security Trustee;

(b) which is subject to any Lien (including Liens permitted by Section 10.2.2)
other than (i) a Lien in favor of the Agent or applicable Security Trustee or a
Lien permitted under Section 10.2.2(gg) and (ii) a Lien permitted under
Section 10.2.2(i) but to the extent such Lien has priority over the Lien of
Agent or the applicable Security Trustee, the eligibility of such Inventory
shall be reduced by the amount determined by the Agent in its Permitted
Discretion; (iii) a Lien permitted under Section 10.2.2(j), provided that
clauses (h) and (i) below of this definition of Dutch Kraton Eligible Inventory
are satisfied in the case of a Lien of a landlord, bailee, warehouseman or
processor in a Perfection Jurisdiction; (iv) a Lien permitted under
Section 10.2.2(o) or (s) which does not have priority over the Lien in favor of
the Agent; or (v) a Lien permitted under Section 10.2.2(v) to the extent of the
amount of such payable customs duties secured by such Lien;

(c) which is, in the Agent’s Permitted Discretion, slow moving (unless the
Inventory component of the Dutch Kraton Borrowing Base of the Applicable Dutch
Kraton Borrower is being determined pursuant to clause (b)(ii) thereof and slow
moving Inventory was taken into account in determining the NOLV Percentage),
obsolete, unmerchantable, defective, unfit for sale, not salable at prices
approximating at least the cost of such Inventory in the Ordinary Course of
Business or unacceptable due to age, type, category and/or quantity;

 

20

--------------------------------------------------------------------------------

(d) with respect to which any covenant, representation or warranty regarding
such Inventory contained in this Agreement or any Security Document has been
materially breached or is not true in any material respect;

(e) which does not conform in all material respects to all standards imposed by
any applicable Governmental Authority (except that any standard that is
qualified as to “materiality” shall have been conformed to in all material
respects);

(f) which constitutes packaging and shipping material, work in process,
manufacturing supplies, display items, returned or repossessed Inventory (other
than goods that are undamaged and able to be resold in the Ordinary Course of
Business), goods held on consignment by the Applicable Dutch Kraton Borrower as
consignee prior to any title passing to such Dutch Kraton Borrower, as buyer,
goods to be returned to the Applicable Dutch Kraton Borrower’s suppliers (but
not held for resale) or goods which are not of a type held for sale in the
Ordinary Course of Business or Inventory which is the subject of a sale on a
bill and hold basis, other than to the extent such bill and hold sale would
otherwise constitute a Dutch Kraton Eligible Account except for the fact that
such sale is on a bill and hold basis;

(g) which is not located in a Perfection Jurisdiction or is not at a location
listed on Schedule 8.5.1 (as updated from time to time in accordance with the
provisions hereof) other than (i) Inventory in transit between locations of the
Dutch Kraton Dutch Domiciled Loan Parties; and (ii) Dutch Kraton Eligible
In-Transit Inventory;

(h) which is located in any location in a Perfection Jurisdiction leased by the
Applicable Dutch Kraton Borrower, unless the lessor has delivered to the Agent a
Lien Acknowledgment; provided, that the exclusion in this clause (h) shall not
apply if the Applicable Dutch Kraton Borrower has used commercially reasonable
efforts to deliver a Lien Acknowledgment to Agent (regardless of whether such
Lien Acknowledgment is ultimately obtained by the Applicable Dutch Kraton
Borrower) or if such Lien Acknowledgment is not customarily delivered or
obtained in the applicable jurisdiction prior to the occurrence and continuance
of an Event of Default;

(i) which is located in a Perfection Jurisdiction in any third party warehouse
or in the possession of a bailee or processor, unless such warehouseman, bailee
or processor has delivered to the Agent a Lien Acknowledgment or such other
documentation as the Agent may reasonably require; provided, that the exclusion
in this clause (i) shall not apply in relation to Inventory located in the U.S.
if the Applicable Dutch Kraton Borrower has used commercially reasonable efforts
to deliver a Lien Acknowledgment to Agent (regardless of whether such Lien
Acknowledgment is ultimately obtained by the Applicable Dutch Kraton Borrower);

(j) which is evidenced by a Document, except to the extent such Inventory
constitutes Dutch Kraton Eligible In-Transit Inventory;

(k) which is the subject of a consignment by the Applicable Dutch Kraton
Borrower as consignor (except goods held on consignment that the Agent in its
Permitted Discretion allows to be Dutch Kraton Eligible Inventory);

(l) [Reserved];

 

21

--------------------------------------------------------------------------------

(m) which constitutes movable assets as set out in section 21 paragraph 2 in
conjunction with section 22 paragraph 3 of the Dutch Tax Collection Act
(Invorderingswet 1990); or

(n) which is located in any location where the aggregate Value of the Inventory
is less than $2,000,000.

Subject to Section 14.1.1 and the definition of Dutch Kraton Borrowing Base, the
Agent may modify the foregoing criteria and the application of the foregoing
criteria to specific Inventory and may determine specific Inventory is otherwise
ineligible, in each case, in its Permitted Discretion; provided that, the Agent
shall have provided the North American Loan Party Agent at least three
(3) Business Days’ prior written notice of any such modification, application or
determination; provided further, that upon delivery of such notice, the Agent
shall be available to discuss the proposed modification, application or
determination.

Dutch Kraton Excluded Dominion Accounts: the bank accounts of the Initial Dutch
Kraton Borrower designated as “EUR ZBA Child Collection-only Accounts” in Milan
(with account number 6641 13999011) and Madrid (with account number 6508
35706016) with Bank of America (London) (or successor accounts, in each case).

Dutch Kraton Facility Collateral: Collateral that now or hereafter secures (or
is intended to secure) any of the Dutch Kraton Facility Secured Obligations,
including Property of the Dutch Kraton Facility Guarantors pledged to secure the
Dutch Kraton Facility Secured Obligations.

Dutch Kraton Facility Guarantor: each U.S. Borrower, each U.S. Facility
Guarantor, each Dutch Borrower and each Dutch Domiciled Loan Party, in each
case, who guarantees payment and performance of any Dutch Kraton Facility
Secured Obligations (including pursuant to a Foreign Cross-Guarantee).

Dutch Kraton Facility Loan Party: a Dutch Kraton Borrower or a Dutch Kraton
Facility Guarantor.

Dutch Kraton Facility Obligations: all Obligations of Dutch Kraton Borrowers and
the other Dutch Domiciled Loan Parties and the other Foreign Facility
Obligations that are the subject of a Foreign Cross-Guarantee made by the Dutch
Kraton Dutch Domiciled Loan Parties.

Dutch Kraton Facility Secured Obligations: all Secured Obligations of the Dutch
Kraton Dutch Domiciled Loan Parties and the other Foreign Facility Secured
Obligations that are the subject of a Foreign Cross-Guarantee made by the Dutch
Kraton Dutch Domiciled Loan Parties.

Dutch Kraton Facility Secured Parties: the Agent, any Dutch Fronting Bank, Dutch
Lenders and Secured Bank Product Providers of Bank Products for the account of
Dutch Kraton Dutch Domiciled Loan Parties and the other Foreign Facility Secured
Parties and their Subsidiaries that are the beneficiaries of a Foreign
Cross-Guarantee made by the Dutch Kraton Dutch Domiciled Loan Parties.

Dutch Kraton Inventory Reserve: the aggregate amount of reserves, as established
by the Agent from time to time in its Permitted Discretion, to reflect factors
that may negatively impact the value of Dutch Kraton Eligible Inventory,
including, without duplication of eligibility criteria, changes in salability,
slow moving, obsolescence, shrinkage, theft, imbalance, change in composition or
mix, markdowns and vendor chargebacks.

Dutch Kraton LC Application: an application by any Dutch Kraton Borrower on
behalf of itself or any other Dutch Kraton Borrower or any Restricted Subsidiary
to a Dutch Fronting Bank for issuance of a Dutch Kraton Letter of Credit, in
form and substance reasonably satisfactory to such Dutch Fronting Bank.

 

22

--------------------------------------------------------------------------------

Dutch Kraton LC Conditions: the following conditions necessary for issuance of a
Dutch Letter of Credit: (a) each of the conditions set forth in Section 6.2
being satisfied or waived; (b) after giving effect to such issuance, the total
Dutch Kraton LC Obligations do not exceed the Dutch Kraton Letter of Credit
Sublimit, no Dutch Kraton Overadvance exists or would result therefrom and, in
the case of any Dutch Kraton Borrower, Section 2.5 is satisfied; (c) unless the
applicable Dutch Fronting Bank and the Agent otherwise consent, (i) the
expiration date of such Dutch Kraton Letter of Credit, if it is a documentary
letter of credit, is no more than thirty (30) days before the Facility
Termination Date and (ii) the expiration date of such Dutch Kraton Letter of
Credit, if it is a standby letter of credit, is no more than the lesser of
thirty (30) days before the Facility Termination Date and twelve (12) months
from issuance of such standby letter of credit (or such other expiry date longer
than twelve (12) months from issuance to which the Dutch Kraton Borrower, the
applicable Dutch Fronting Bank and Agent shall agree); provided that each Dutch
Kraton Letter of Credit which is a standby letter of credit may, upon the
request of the Applicable Dutch Kraton Borrower, include a provision whereby
such Letter of Credit shall be renewed automatically for additional consecutive
periods of twelve (12) months or less; (d) the Dutch Kraton Letter of Credit and
payments thereunder are denominated in Euros, Sterling or Dollars, or in any
other currency acceptable to the Agent and the applicable Dutch Fronting Bank;
(e) the form of the proposed Dutch Kraton Letter of Credit is reasonably
satisfactory to the Agent and the applicable Dutch Fronting Bank; and (f) the
proposed use of the Dutch Kraton Letter of Credit is for a lawful purpose.

Dutch Kraton LC Documents: all documents, instruments, and agreements (including
Dutch LC Requests and Dutch Kraton LC applications) delivered by any Dutch
Kraton Borrower to a Dutch Fronting Bank or the Agent in connection with
issuance, amendment or renewal of, or payment under, any Dutch Letter of Credit.

Dutch Kraton LC Obligations: with respect to the Applicable Dutch Kraton
Borrower, the Dollar Equivalent of the sum (without duplication) of (a) all
amounts owing by such Applicable Dutch Kraton Borrower for any drawings under
Dutch Kraton Letters of Credit; (b) the stated amount of all outstanding Dutch
Kraton Letters of Credit applied for by a Dutch Kraton Borrower and issued for
the account of such Applicable Dutch Kraton Borrower or any Restricted
Subsidiary; and (c) all fees and other amounts owing with respect to such Dutch
Kraton Letters of Credit.

Dutch Kraton Lenders: Bank of America (London) and each other Lender that has
issued a Dutch Kraton Revolver Commitment.

Dutch Kraton Letter of Credit: any standby or commercial letter of credit or
documentary bankers’ acceptances, in each case, applied for by a Dutch Kraton
Borrower and issued by a Dutch Fronting Bank for the account of a Dutch Kraton
Borrower or any Restricted Subsidiary, or any indemnity, performance bond,
guarantee, exposure transmittal memorandum or similar form of credit support
issued by the Agent or a Dutch Fronting Bank for the benefit of a Dutch Kraton
Borrower or any Restricted Subsidiary, whether in existence on the Closing Date
or issued on or after the Closing Date.

Dutch Kraton Letter of Credit Sublimit: the lesser of (a) $10,000,000 and
(b) the Dutch Kraton Revolver Commitments.

Dutch Kraton Overadvance: as defined in Section 2.1.5(a).

Dutch Kraton Overadvance Loan: a Loan made to a Dutch Kraton Borrower when a
Dutch Kraton Overadvance exists or is caused by the funding thereof.

 

23

--------------------------------------------------------------------------------

Dutch Kraton Overadvance Loan Balance: on any date, the Dollar Equivalent of the
amount by which the aggregate Dutch Kraton Revolver Loans of the Applicable
Dutch Kraton Borrower or all Dutch Kraton Borrowers, as the case may be, exceed
the amount of the Dutch Kraton Borrowing Base of such Applicable Dutch Kraton
Borrower on such date.

Dutch Kraton Priority Payables Reserve: on any date of determination, a reserve
in such amount as the Agent may determine in its Permitted Discretion which
reflects amounts secured by any Liens against the Collateral owned by a Dutch
Kraton Borrower, choate or inchoate, which rank or are capable of ranking in
priority to the Agent’s and/or the Secured Parties’ Liens and/or for amounts
which may represent costs relating to the enforcement of the Agent’s or the
applicable Security Trustee’s Liens.

Dutch Kraton Protective Advances: as defined in Section 2.1.6(a).

Dutch Kraton Reimbursement Date: as defined in Section 2.2.2(a).

Dutch Kraton Rent Reserve: the aggregate of (a) all past due rent and other past
due charges owing by any Dutch Kraton Borrower to any landlord, bailee,
warehouseman or other Person who possesses any Dutch Kraton Facility Collateral
or could assert a Lien on such Dutch Kraton Facility Collateral; plus (b) a
reserve in an amount equal to at least three (3) months’ rent and other charges
that could be payable to any such Person, unless such Person has executed a Lien
Acknowledgment which validly waives or subordinates any such Lien under any
Applicable Law.

Dutch Kraton Revolver Commitment: for any Dutch Kraton Lender, its obligation to
make Dutch Kraton Revolver Loans and to issue Dutch Kraton Letters of Credit, in
the case of any Dutch Fronting Bank, or participate in Dutch Kraton LC
Obligations, in the case of the other Dutch Kraton Lenders, to the Dutch Kraton
Borrowers up to the maximum principal amount shown on Schedule 2.1.1(a), or as
hereafter determined pursuant to each Assignment and Acceptance to which it is a
party, as such Dutch Kraton Revolver Commitment may be adjusted from time to
time in accordance with the provisions of Sections 2.1.4, 2.1.7 or 11.2. “Dutch
Kraton Revolver Commitments” means the aggregate amount of such commitments of
all Dutch Kraton Lenders.

Dutch Kraton Revolver Commitment Increase: as defined in Section 2.1.7(a).

Dutch Kraton Revolver Commitment Termination Date: the earliest of (a) the U.S.
Revolver Commitment Termination Date (without regard to the reason therefor),
(b) the date on which the North American Loan Party Agent terminates or reduces
to zero all of the Dutch Kraton Revolver Commitments pursuant to Section 2.1.4,
and (c) the date on which the Dutch Kraton Revolver Commitments are terminated
pursuant to Section 11.2, in each case, such date being a Business Day. From and
after the Dutch Kraton Revolver Commitment Termination Date, the Dutch Kraton
Borrowers shall no longer be entitled to request a Dutch Kraton Revolver
Commitment Increase pursuant to Section 2.1.7 hereof.

Dutch Kraton Revolver Exposure: on any date, the Dollar Equivalent of an amount
equal to the sum of (a) the Dutch Kraton Revolver Loans outstanding on such date
and (b) the Dutch Kraton LC Obligations on such date.

Dutch Kraton Revolver Loan: a Revolver Loan made by Dutch Kraton Lenders to a
Dutch Kraton Borrower pursuant to Section 2.1.1, which Revolver Loan shall, if
denominated in Euros, Sterling or Dollars, be a European Base Rate Loan or a
LIBOR Loan, in each case as selected by the Applicable Dutch Kraton Borrower,
and including any Dutch Kraton Swingline Loan, Dutch Kraton Overadvance Loan or
Dutch Kraton Protective Advance.

 

24

--------------------------------------------------------------------------------

Dutch Kraton Revolver Notes: the promissory notes, if any, executed by Dutch
Kraton Borrowers in favor of each Dutch Kraton Lender to evidence the Dutch
Kraton Revolver Loans funded from time to time by such Dutch Kraton Lender,
which shall be in substantially the form of Exhibit C-3 to this Agreement,
together with any replacement or successor notes therefor.

Dutch Kraton Swingline Lender: Bank of America (London) or an Affiliate of Bank
of America (London).

Dutch Kraton Swingline Loan: a Swingline Loan made by the Dutch Kraton Swingline
Lender to a Dutch Kraton Borrower pursuant to Section 2.1.8(a), which Swingline
Loan shall, if denominated in Euros, Sterling or Dollars, be a European Base
Rate Loan.

Dutch Kraton Swingline Sublimit: 10% of the Dutch Kraton Revolver Commitments.

Dutch LC Documents: all documents, instruments and agreements (including Dutch
LC Requests and Dutch Kraton LC Applications) delivered by any Dutch Borrower to
a Dutch Fronting Bank or the Agent in connection with issuance, amendment or
renewal of, or payment under, any Dutch Letter of Credit.

Dutch LC Request: a request for issuance of a Dutch Letter of Credit, to be
provided by a Dutch Borrower to a Dutch Fronting Bank, in form reasonably
satisfactory to the Agent and such Dutch Fronting Bank.

Dutch Letter of Credit: any Dutch Kraton Letter of Credit.

Dutch Lenders: Bank of America (London) and each other Lender that has issued a
Dutch Revolver Commitment.

Dutch Overadvances: the Dutch Kraton Overadvances.

Dutch Protective Advances: the Dutch Kraton Protective Advances.

Dutch Revolver Commitment: the Dutch Kraton Revolver Commitment.

Dutch Revolver Exposure: the Dutch Kraton Revolver Exposure.

Dutch Revolver Loan: a Dutch Kraton Revolver Loan.

Dutch Security Agreement: each pledge (including, without limitation, each
pledge over movable assets (undisclosed and non-possessory) and each pledge of
receivables) or security agreement governed by Dutch law among any Dutch
Domiciled Loan Party and the applicable Security Trustee.

Dutch Security Trustee: Bank of America in its capacity as Agent and security
trustee for the Lenders under the Foreign Security Agreements.

Dutch Subsidiary: Each Subsidiary of Parent incorporated or organized under the
laws of the Netherlands.

Dutch Swingline Lender: a Dutch Kraton Swingline Lender.

Dutch Swingline Loan: a Dutch Kraton Swingline Loan.

 

25

--------------------------------------------------------------------------------

EBITDA: means, for any period, for Parent and its Restricted Subsidiaries on a
consolidated basis, an amount equal to the Net Income for such period:

(a) increased (without duplication) by and to the extent deducted (and not added
back) in arriving at such Net Income, the sum of the following amounts for such
a period:

(i) the amount of depreciation and amortization, as determined in accordance
with GAAP; plus

(ii) total Interest Expense and, to the extent not reflected in such total
Interest Expense, the sum of (A) premium payments, debt discount, fees, charges
and related expenses incurred in connection with Borrowed Money (including
capitalized interest) or in connection with the deferred purchase price of
assets plus (B) the portion of rent expense with respect to such period under
Capital Leases that is treated as Interest Expense in accordance with GAAP plus
(C) the implied interest component of synthetic leases with respect to such
period plus (D) any losses on hedging obligations or other derivative
instruments entered into for the purpose of hedging interest rate risk, net of
interest income and gains on such hedging obligations or such derivative
instruments plus (E) bank and letter of credit fees and costs of surety bonds in
connection with financing activities, plus (F) any commissions, discounts, yield
and other fees and charges; plus

(iii) provision for Taxes based on income or profits or capital, including,
without limitation, federal, state, provincial, franchise, excise and similar
Taxes and foreign withholding Taxes (including any future Taxes or other levies
which replace or are intended to be in lieu of such Taxes and any penalties and
interest related to such Taxes or arising from tax examinations); plus

(iv) negative effects of purchase accounting; plus

(v) all extraordinary, nonrecurring or one-time charges; plus

(vi) the amount of “run rate” cost savings, operating expense reductions, other
operating improvements and synergies related to any acquisition and other
specified actions, any restructuring, cost saving initiative or other initiative
projected by the Borrowers in good faith to be realized as a result of actions
(including the Arizona Chemical Acquisition) taken, committed to be taken or
planned to be taken, in each case on or prior to the date that is 24 months
after the end of the relevant period (including actions initiated prior to the
Closing Date) (which cost savings shall be added to EBITDA until fully realized
and calculated on a pro forma basis as though such cost savings had been
realized on the first day of the relevant period), net of the amount of actual
benefits realized from such actions; provided that such cost savings are
reasonably identifiable and quantifiable; plus

(vii) all non-cash charges; provided, that for any such non-cash charges
resulting in a cash payment or cash outlay in a subsequent period, EBITDA will
be reduced by the amount of the cash payment or cash outlay in the period made;
plus

(viii) any non-cash loss attributable to the mark-to-market movement in the
valuation of Hedge Agreements pursuant to FASB Accounting Standards Codification
815—“Derivatives and Hedging”; plus

(ix) (A) the amount of any restructuring provisions, restructuring charges,
restructuring accruals or restructuring reserves, (B) cost initiative charges
embedded in cost of goods sold (cash and non-cash charges) and (C) cost
initiative charges embedded in selling, general and administrative expenses
(cash and non-cash charges); plus

 

26

--------------------------------------------------------------------------------

(x) non-recurring operating location exit charges; provided no amounts pursuant
to this clause (x) may be added if such amount was added in a prior period; plus

(xi) actual plant turnaround costs and expenses to the extent deducted in
calculating Net Income in an aggregate amount not to exceed $7,500,000 in such
period; plus

(xii) losses on sales of assets, disposals or abandonments other than in the
ordinary course of business (cash and non-cash); plus

(xiii) Transaction Costs and any fees, costs and expenses payable by Parent and
the Restricted Subsidiaries in connection with any offering of Equity Interests
of Parent, Permitted Acquisitions, joint ventures or other Investments permitted
hereunder (whether consummated or unsuccessful and other than Investments made
in the ordinary course of business and other than Investments in Subsidiaries)
expensed or amortized in such period; plus

(xiv) Pro Forma EBITDA;

(b) decreased (without duplication) by and to the extent included in arriving at
such Net Income, the sum of the following amounts for such period:

(i) gains on sales of assets other than in the ordinary course of business (cash
and non-cash); minus

(ii) any non-cash gains attributable to the mark-to-market movement in the
valuation of Hedge Agreements pursuant to FASB Accounting Standards Codification
815—“Derivatives and Hedging”;

(c) increased or decreased (without duplication) by, as applicable, any effects
of Inventory Revaluation; and

(d) to the extent included in Net Income, there shall be excluded in determining
EBITDA currency translation gains and losses related to currency re-measurements
of assets or liabilities (including the net loss or gain resulting from hedging
agreements for currency exchange risk and revaluations of intercompany
balances).

Elastomers: Elastomers Holdings LLC, a Delaware limited liability company.

Eligible Account Currencies: Dollars, Euros, Sterling, Yen and such other
currencies determined by the Agent in its discretion.

Eligible Account Debtor Jurisdictions: (i) Belgium, France, Germany, the
Netherlands, the U.K., and the U.S. (together with any state or province
thereof, as applicable), (ii) as long as no Cash Dominion Event has occurred,
Australia, Austria, Canada, Denmark, Finland, Greece, Hong Kong, Ireland, Italy,
Japan, Luxembourg, New Zealand, Norway, Portugal, Singapore, South Korea, Spain,
Sweden and Switzerland (together, in each case, with any state or province
thereof, as applicable); provided, however, that during the continuance of a
Cash Dominion Event, any such jurisdiction shall continue to be an Eligible
Account Debtor Jurisdiction solely to the extent that the Agent determines, in
its Permitted Discretion, that Agent or a Security Trustee has a duly perfected
and enforceable Lien in the Accounts of

 

27

--------------------------------------------------------------------------------

Accounts Debtors organized or located in such jurisdiction under the Applicable
Law of such jurisdiction, and (iii) such other jurisdictions as shall be
acceptable to Agent, in its sole discretion; provided, however, that, in the
case of this clause (iii), the Agent shall in no event determine such
jurisdiction to be an “Eligible Account Debtor Jurisdiction” unless Agent
determines, in its Permitted Discretion, that Agent or a Security Trustee has a
duly perfected and enforceable Lien in the applicable Accounts of Account
Debtors organized or located in such jurisdiction under the Applicable Law of
such jurisdiction.

Eligible Accounts: the (a) Dutch Kraton Eligible Accounts and/or (b) U.S.
Eligible Accounts, as the context requires.

Eligible Assignee: subject to the requirements of Section 13.3.3, a Person that
is (a) a Lender, an Affiliate of a Lender or an Approved Fund; (b) any other
financial institution approved by the Agent and North American Loan Party Agent
(which approval by North American Loan Party Agent shall not be unreasonably
withheld or delayed, and shall be deemed given if no objection is made within
ten (10) Business Days after delivery of written notice of the proposed
assignment to the North American Loan Party Agent and which approval shall not
be required during any Event of Default under Section 11.1(a) or, solely with
respect to the Parent or any Borrower, Section 11.1(g)), that is organized,
registered or incorporated under the laws of a Participating Member State, the
United Kingdom or the United States or any state, province or district thereof,
and extends asset-based lending facilities in its Ordinary Course of Business
and whose becoming an assignee would not constitute a prohibited transaction
under Section 4975 of the Code or any other Applicable Law and would not
immediately following any such assignment, result in additional increased costs
payable by the Loan Parties pursuant to Section 3.7; and (c) during any Event of
Default under Section 11.1(a) or, solely with respect to the Parent or any
Borrower, Section 11.1(g), any Person reasonably acceptable to the Agent in its
discretion.

Eligible Inventory: the (a) Dutch Kraton Eligible Inventory and/or (b) U.S.
Eligible Inventory, as the context requires.

Enforcement Action: any commercially reasonable action to enforce any
Obligations or Loan Documents or to exercise any rights or remedies relating to
any Collateral (whether by judicial action, self-help, notification of Account
Debtors, exercise of setoff or recoupment, exercise of any right to act in Loan
Party’s Insolvency Proceeding or to credit bid Obligations, or otherwise).

Enhanced Reporting Trigger: the occurrence of any one of the following events:
(a) Excess Availability shall be less than the greater of (i) 27.5% of the Total
Line Cap and (ii) $68,750,000 or (b) U.S. Availability shall be less than the
greater of (i) 27.5% of the U.S. Line Cap and (ii) $41,250,000; provided that,
to the extent that the Enhanced Reporting Trigger has occurred due to clause
(a) of this definition, if Excess Availability shall have exceeded the greater
of (w) 27.5% of the Total Line Cap and (x) $68,750,000 at all times for at least
forty-five (45) consecutive days, the Enhanced Reporting Trigger shall be deemed
to have ended; provided, further, that to the extent that the Enhanced Reporting
Trigger has occurred due to clause (b) of this definition, if U.S. Availability
shall have exceeded the greater of (y) 27.5% of the U.S. Line Cap and
(z) $41,250,000 at all times for at least forty-five (45) consecutive days, the
Enhanced Reporting Trigger shall be deemed to have ended.

Environmental Laws: all Applicable Laws (including all applicable, legally
binding programs, permits and guidance promulgated by regulatory agencies),
relating to public health (but excluding occupational safety and health, to the
extent regulated by OSHA) or the protection or pollution of the environment,
including CERCLA, RCRA and CWA.

 

28

--------------------------------------------------------------------------------

Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any potential noncompliance with, investigation of
a potential violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,
summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

Environmental Release: a release as defined in CERCLA or, with respect to
hazardous materials, under any other Environmental Law.

Equity Interest: all Pledged Stock, Pledged LLC Interests, Pledged Partnership
Interests, Pledged Trust Interests and any other participation or interests in
any equity or profits of any business entity, including any trust and all
management rights relating to any entity whose equity interests are included as
Equity Interests.

Equity Interest Equivalents: all securities convertible into or exchangeable for
Equity Interests and all warrants, options or other rights to purchase or
subscribe for any Equity Interests, whether or not presently convertible,
exchangeable or exercisable.

ERISA: the Employee Retirement Income Security Act of 1974 (unless as
specifically provided otherwise, as amended to the date hereof and from time to
time hereafter and any successor statute).

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with a Loan Party or treated as a single employer with a Loan
Party, in each case within the meaning of Section 414 of the Code or
Section 4001(b)(1) of ERISA.

ERISA Event: (a) any Reportable Event; (b) the failure of a U.S. Employee Plan
to meet the minimum funding standards under Section 412 of the Code or
Section 302 of ERISA (determined without regard to any waiver of the funding
provisions therein or in Section 430 of the Code or Section 303 of ERISA);
(c) the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an
application for a waiver of the minimum funding standard with respect to any
U.S. Employee Plan; (d) the incurrence by any Loan Party or any ERISA Affiliate
of any liability under Title IV of ERISA with respect to the termination of any
U.S. Employee Plan (including any liability in connection with the filing of a
notice of intent to terminate a U.S. Employee Plan or the treatment of a U.S.
Employee Plan amendment as a termination under Section 4041 of ERISA); (e) any
event or condition that results in the termination of a Multiemployer Plan
pursuant to 4041A of ERISA; (f) the filing of a notice of intent or the
commencement by the PBGC of proceeding to terminate any U.S. Employee Plan or to
appoint a trustee to administer any U.S. Employee Plan or the occurrence of any
other event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
U.S. Employee Plan; (g) the incurrence by any Loan Party or any ERISA Affiliate
of any liability under Section 4062(e) of ERISA or with respect to the
withdrawal or partial withdrawal from any U.S. Employee Plan (including as a
“substantial employer,” as defined in Section 4001(a)(2) of ERISA) or
Multiemployer Plan (including the incurrence by any Loan Party or any ERISA
Affiliate of any Withdrawal Liability); (h) a determination that a Multiemployer
Plan is, or is expected to be, in endangered or critical status, within the
meaning of Section 305 of ERISA, or insolvent or in reorganization, within the
meaning of Title IV of ERISA; or (i) imposition of any material liability under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA that are not past due.

Euro and €: the lawful single currency of the Participating Member States which
have adopted the euro unit as their single currency pursuant to the Treaty of
Rome of March 25, 1957, establishing the European Community.

 

29

--------------------------------------------------------------------------------

European Base Rate: with respect to Euros, Sterling and Dollars outside of the
U.S. and Canada, as applicable, a fluctuating rate of interest per annum equal
to the rate of interest in effect for such day as announced from time to time by
the European Central Bank and used by the local branch of Bank of America in the
jurisdiction in which such currency is funded as its “base rate” with respect to
such currency. Any change in such rate shall take effect at the opening of
business on the day of such change. In no event shall the European Base Rate be
less than zero.

European Base Rate Loan: a Dutch Revolver Loan, or portion thereof, funded in
Sterling, Dollars or Euros and bearing interest calculated by reference to the
European Base Rate.

Event of Default: as defined in Section 11.1.

Excess Availability: as of any date of determination, an amount equal to (a) the
lesser of (i) the Commitments, minus Reserves and (ii) the Total Borrowing Base,
minus (b) the sum of (i) the Dollar Equivalent of the principal balance of all
Revolver Loans and (ii) all LC Obligations.

Excess Cash Flow: as defined in the Term Loan Agreement as in effect on the
Closing Date.

Exchange Rate: the exchange rate, as of any date, as determined by the Agent
(or, solely, for the purposes of Section 1.5(b), the North American Loan Party
Agent), applicable to conversion of a currency into Dollars that is (a) the
exchange rate reported by Bloomberg (or other commercially available source
designated by the Agent) as of the end of the preceding Business Day in the
financial market for such currency; or (b) if such report is unavailable for any
reason, the spot rate for the purchase of such currency with Dollars through the
Agent’s principal foreign exchange trading office for the currency during such
office’s preceding Business Day.

Excluded Accounts: (a) Deposit Accounts that are zero balance disbursement
accounts; (b) Deposit Accounts used solely to fund payroll, payroll Taxes and
similar employment Taxes or employee benefits in the Ordinary Course of
Business; (c) other Deposit Accounts with an amount on deposit of less than
$1,000,000 at any time in the aggregate for all such Deposit Accounts;
(d) Deposit Accounts used to secure lease or tax obligations; and (e) Deposit
Accounts and Securities Accounts holding proceeds from the sale of Property that
is not Collateral.

Excluded Assets: any asset of any Loan Party excluded from the Collateral
pursuant to Section 7.1.3, but only to the extent, and for so long as, so
excluded thereunder.

Excluded Swap Obligation: means, with respect to any U.S. Guarantor, any Swap
Obligation arising under a swap transaction entered into after the date hereof
if, and to the extent that, all or a portion of the Guarantee of such Guarantor
of, or the grant by such Guarantor of a security interest to secure, such Swap
Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity
Exchange Act or any rule, regulation or order of the Commodity Futures Trading
Commission (or the application or official interpretation of any thereof) by
virtue of such Guarantor’s failure for any reason not to constitute an “eligible
contract participant” as defined in the Commodity Exchange Act at the time the
Guarantee of such Guarantor becomes effective with respect to such related Swap
Obligation.

Excluded Tax: with respect to any Recipient (a) Taxes imposed on or measured by
its net income (however denominated), and franchise Taxes imposed on it (i) by
the jurisdiction (or any political subdivision thereof) under the laws of which
such Recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable Lending Office is located or
(ii) that are Other Connection Taxes, (b) any branch profits Taxes imposed by
the United States or any similar Tax imposed by any other jurisdiction in which
such Recipient has a branch; (c) in the case of a Foreign

 

30

--------------------------------------------------------------------------------

Lender (other than an assignee pursuant to Section 3.9), any withholding Tax
that is imposed on amounts payable to such Foreign Lender pursuant to laws in
force at the date on which such Foreign Lender becomes a Lender (or designates a
new Lending Office) hereunder, or any additional withholding Tax that is imposed
on amounts payable to a Foreign Lender after the date on which such Foreign
Lender becomes a Lender (or designates a new Lending Office) hereunder, except
that Taxes in this clause (c) shall not include (i) additional withholding Tax
that may be imposed on amounts payable to a Foreign Lender after the date such
Foreign Lender becomes a party to the Agreement (or designates a new Lending
Office), as a result of a Change in Tax Law after such time and (ii) any
withholding Tax to the extent that such Foreign Lender (or its assignor, if any)
was previously entitled to receive additional amounts in respect thereof
pursuant to Section 5.8 of this Agreement, at the time such Foreign Lender
designates a new Lending Office (or on the date of the assignment), if any;
(d) any U.S. federal withholding Tax imposed under FATCA; or (e) any Tax that is
attributable to such Recipient’s failure or inability to comply with
Section 5.9.

EXIM: the Export-Import Bank of the United States.

EXIM Program: foreign trade insurance or guarantee program which (a) is provided
to a Borrower by EXIM; (b) is in form and substance acceptable to Agent; and
(c) as to which Agent has been named the beneficiary or loss payee (or similar
designation) thereof pursuant to an assignment, endorsement, or similar writing
in form and substance satisfactory to Agent.

Existing Credit Agreement: that certain Loan, Security and Guarantee Agreement
dated as of March 27, 2013 among the Initial U.S. Borrower, the Initial Kraton
Borrower, Parent, KPLLC, certain subsidiaries of KPLLC, Agent, as administrative
agent, and the lenders named therein, as amended, and as may be further amended,
modified or otherwise supplemented from time to time through the date hereof.

Extraordinary Expenses: all costs, expenses or advances that the Agent and any
Security Trustee may incur during an Event of Default, or during the pendency of
any Insolvency Proceeding of Parent or any Subsidiary, including those relating
to (a) any audit, inspection, repossession, storage, repair, appraisal,
insurance, manufacture, preparation or advertising for sale, sale, collection,
or other preservation of or realization upon any Collateral; (b) any action,
arbitration or other proceeding (whether instituted by or against the Agent, any
Security Trustee, any Fronting Bank, any Lender, any Loan Party, any
representative of creditors of any Loan Party or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of the Agent’s or any Security Trustee’s Liens with respect to any
Collateral), Loan Documents, Letters of Credit or Obligations, including any
lender liability or other Claims; (c) the exercise, protection or enforcement of
any rights or remedies of the Agent or any Security Trustee in, or the
monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any
Taxes, charges or Liens with respect to any Collateral; (e) any Enforcement
Action; (f) negotiation and documentation of any modification, waiver, workout,
restructuring or forbearance with respect to any Loan Documents or Obligations;
and (g) Protective Advances. Such costs, expenses and advances include transfer
fees, Other Taxes, storage fees, insurance costs, permit fees, utility
reservation and standby fees, appraisal fees, brokers’ fees and commissions,
auctioneers’ fees and commissions, accountants’ fees, environmental study fees,
wages and salaries paid to employees of any Loan Party or independent
contractors in liquidating any Collateral, travel expenses, receivers’ and
managers’ fees and legal fees.

Facility Termination Date: January 6, 2021, or such earlier date on which the
Commitments are terminated in whole pursuant to the provisions hereof, or,
solely with respect to the Extended Commitments of each Lender, such later date
as shall be agreed to pursuant to the provisions of Section 14.1.1(f) hereof.

 

31

--------------------------------------------------------------------------------

Fair Market Value: the value that would be paid by a willing buyer to an
unaffiliated willing seller in a transaction not involving distress or necessity
of either party, and, in the case of any transaction involving aggregate
consideration in excess of $25,000,000, as determined in good faith by the board
of directors of Parent.

FATCA: Sections 1471 through 1474 of the Code, as of the date of this Agreement
(or any amended version to the extent substantively comparable and not
materially more onerous to comply with), and any current or future regulations
or official interpretations thereof, any intergovernmental agreements in force
with respect thereto, and any agreements entered into pursuant to
Section 1471(b) of the Code.

FCCR Test Event: the occurrence of any one of the following events: (a) Excess
Availability shall be less than the greater of (i) 12.5% of the Total Line Cap
and (ii) $31,250,000 or (b) U.S. Availability shall be less than the greater of
(i) 12.5% of the U.S. Line Cap and (ii) $18,750,000; provided that, to the
extent that the FCCR Test Event has occurred due to clause (a) of this
definition, if Excess Availability shall have exceeded the greater of (w) 12.5%
of the Total Line Cap and (x) $31,250,000 at all times for at least forty-five
(45) consecutive days, the FCCR Test Event shall be deemed to have ended;
provided, further, that to the extent that the FCCR Test Event has occurred due
to clause (b) of this definition, if U.S. Availability shall have exceeded the
greater of (y) 12.5% of the U.S. Line Cap and (z) $18,750,000 at all times for
at least forty-five (45) consecutive days, the FCCR Test Event shall be deemed
to have ended.

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on the applicable Business Day (or on the preceding
Business Day, if the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if no such
rate is published on the next Business Day, the average rate (rounded up, if
necessary, to the nearest 1/8 of 1%) charged to Bank of America on the
applicable day on such transactions, as determined by the Agent.

Fee Letter: the amended and restated letter agreement, dated October 7, 2015,
among Credit Suisse AG, Cayman Islands Branch, Credit Suisse Securities (USA)
LLC, Nomura Securities International, Inc., Deutsche Bank AG New York Branch,
Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc., Bank of
America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated and KPLLC.

Fiscal Quarter: each period of three calendar months, commencing on the first
day of a Fiscal Year.

Fiscal Year: the twelve (12) month fiscal period of Parent and its Subsidiaries
for accounting and Tax purposes, ending on December 31 of each calendar year.

Fixed Charge Coverage Ratio: the ratio, determined as of the end of the last
Fiscal Quarter of Parent and its Restricted Subsidiaries for the Test Period
then ended, of (a) (i) EBITDA minus (ii) the sum of Capital Expenditures plus or
minus Pro Forma CAPEX (in each case, except those financed with Debt other than
Revolver Loans) minus (iii) Taxes paid in cash (net of refunds received in cash,
but not less than $0) to (b) the sum of cash Interest Expense plus scheduled
principal payments on Borrowed Money (after giving effect to any reductions in
scheduled principal payments attributable to any optional or mandatory
prepayment and excluding payments in respect of intercompany debt owed among the
Loan Parties) plus Distributions paid in cash (other than Distributions made
pursuant to Sections 10.2.3(b)(ii), (e), (f), (g), (h) or (j) or Permitted
Payments described in clause (a) of the definition thereof), all calculated for
such period, without duplication, for Parent and its Restricted Subsidiaries on
a consolidated basis in accordance with GAAP.

 

32

--------------------------------------------------------------------------------

FLSA: the Fair Labor Standards Act of 1938.

Foreign Borrower Group: a group consisting of (a) the Dutch Kraton Borrowers or
(b) any Additional Foreign Borrowers, as the context requires.

Foreign Borrowers: the Dutch Borrowers and Additional Foreign Borrowers.

Foreign Cross-Guarantee: as defined in Section 5.10.4.

Foreign Domiciled Loan Party: the Dutch Domiciled Loan Parties and any other
Foreign Subsidiary now or hereafter party hereto as a Loan Party, and “Foreign
Domiciled Loan Parties” means all such Persons, collectively.

Foreign Facility Obligations: the Dutch Facility Obligations and similar
Obligations of other Foreign Domiciled Loan Parties.

Foreign Facility Secured Obligations: the Dutch Facility Secured Obligations and
similar secured obligations of other Foreign Domiciled Loan Parties.

Foreign Facility Secured Parties: Dutch Facility Secured Parties and Secured
Bank Product Providers of Bank Products to Foreign Domiciled Loan Parties.

Foreign Guarantor: the Dutch Facility Guarantor and any other Person that
guarantees any Foreign Facility Secured Obligations in accordance with this
Agreement from time to time.

Foreign Lender: (a) with respect to each Borrower that is a U.S. Person, each
Lender or Fronting Bank that is not a U.S. Person, and (b) with respect to each
Borrower that is not a U.S. Person, each Lender or Fronting Bank that is
resident or organized under the laws of a jurisdiction other than that in which
such Borrower is resident for Tax purposes.

Foreign Loan Party Agent: as defined in Section 4.4.2.

Foreign Plan: any material pension plan maintained or contributed to by Parent
or any of its Subsidiaries with respect to employees employed outside of the
United States or Canada, other than any state social security arrangements.

Foreign Revolver Commitments: the Dutch Revolver Commitment and other
Commitments to other Foreign Borrowers as provided hereunder from time to time
in accordance with the terms hereof.

Foreign Security Agreements: the Dutch Security Agreements, the French Security
Agreements, the Belgian Security Agreements, the German Security Agreements, the
UK Security Agreements and each other pledge or security agreement governed by
the laws of any jurisdiction outside of the United States of America and
executed by a Dutch Domiciled Loan Party in favor of a Security Trustee with
respect to the Dutch Facility Secured Obligations and the Deposit Account
Control Agreements with respect to such jurisdictions.

Foreign Subsidiary: a Subsidiary of Parent that is not a Domestic Subsidiary.

 

33

--------------------------------------------------------------------------------

French Security Agreements: each pledge or security agreement governed by French
law among any Dutch Domiciled Loan Party and the Dutch Security Trustee.

Fronting Bank: (a) a Dutch Fronting Bank and/or (b) a U.S. Fronting Bank, as the
context requires.

Fronting Bank Indemnitees: (a) Dutch Fronting Bank Indemnitees and/or (b) U.S.
Fronting Bank Indemnitees, as the context requires.

Full Payment: with respect to any Obligations or Secured Obligations (other than
unasserted contingent indemnity claims), (a) the full cash payment thereof in
the applicable currency required hereunder, including any interest and
documented fees and other charges accruing during an Insolvency Proceeding
(whether or not allowed in the proceeding); and (b) if such Obligations or
Secured Obligations are LC Obligations, Secured Bank Product Debt or inchoate or
contingent in nature, Cash Collateralization thereof (or delivery of a standby
letter of credit acceptable to the Agent in its discretion, in the amount of
required Cash Collateral). No Loans shall be deemed to have been paid in full
until all Commitments related to such Loans have expired or been terminated.

GAAP: generally accepted accounting principles in effect in the United States,
from time to time, applied consistently, subject to Section 1.2 hereof.

General Intangibles: as defined in the UCC (and/or with respect to any or any
other Applicable Law, as applicable).

German Security Agreements: each pledge or security agreement governed by German
law among any Dutch Domiciled Loan Party and the Dutch Security Trustee.

Global Intercompany Note: a promissory note evidencing all Debt of any Loan
Party or Restricted Subsidiary owed to any other Loan Party in a form approved
by the Agent.

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: any federal, state, provincial, municipal, foreign or
other governmental department, agency, commission, board, bureau, court,
tribunal, instrumentality, political subdivision, authority, corporation or
body, regulatory or self-regulatory organization or other entity or officer
exercising executive, legislative, judicial, statutory, regulatory or
administrative functions for or pertaining to any government or court (including
any supranational bodies such as the European Union), in each case whether it is
or is not associated with the Netherlands or the United States or any state,
province, district or territory thereof, or any other foreign entity or
government.

Guarantee: each guarantee agreement (including this Agreement) executed by a
Guarantor in favor of the Agent guaranteeing all or any portion of the Secured
Obligations.

Guarantor Payment: as defined in Section 5.10.3(b).

Guarantors: (a) With respect to any Dutch Facility Obligations, the Dutch
Facility Guarantors and any other Person who guarantees payment or performance
of such Dutch Facility Obligations and (b) with respect to any Secured
Obligations, the U.S. Facility Guarantors, and each other Person who guarantees
payment or performance of such Secured Obligations.

 

34

--------------------------------------------------------------------------------

Hedge Agreement: any swap, cap, collar, forward purchase or similar agreements
or arrangements dealing with interest rates, currency exchange rates or
commodity prices, either generally or under specific contingencies entered into
for the purpose of hedging Parent’s or any Subsidiary of Parent’s exposure to
interest or exchange rates, loan credit exchanges, security or currency
valuations or commodity prices not for speculative purposes.

Historical Financial Statements: as of the Closing Date, (a) (i) the audited
consolidated financial statements of Parent and its Subsidiaries for the Fiscal
Years ended December 31, 2012, December 31, 2013 and December 31, 2014, and
(ii) the unaudited consolidated statements of Parent and its Subsidiaries for
the Fiscal Quarters ended March 31, 2015, June 30, 2015, and September 30, 2015
and (b) (i) the audited consolidated financial statements of AZC Holding Company
LLC and its Subsidiaries for the Fiscal Years ended December 31,
2012, December 31, 2013, and December 31, 2014, and (ii) the unaudited
consolidated financial statements of AZC Holding Company LLC and its
Subsidiaries for the Fiscal Quarters ended March 31, 2015, June 30, 2015 and
September 30, 2015.

HSBC Asian Production Facility: Kraton Formosa Polymers Corporation, a limited
liability company formed under the laws of the Republic of China, or any other
Asian production facility the North American Loan Party Agent may choose to
pursue.

Immaterial Subsidiary: at any date of determination, any one or more Restricted
Subsidiaries (other than a Borrower) whose (a) total tangible assets, on the
last day of the most recent Test Period for which financial statements have been
delivered pursuant to clause (a) or (b) of Section 10.1.2 were less than 5% of
Consolidated Tangible Assets, and (b) total revenues for such Test Period ending
on such date were less than 5% of total revenues of Parent and its Restricted
Subsidiaries, in each case determined in accordance with GAAP.

Imported Goods Agreement: each agreement that is mutually acceptable to Agent,
the applicable Borrower, and the applicable freight forwarding company, customs
brokerage house or other handler, as the case may be, with respect to the
transport of, access to and control of Eligible Inventory as set forth therein.

Inactive Subsidiary: Polymers Holdings Capital Corporation, a Delaware
corporation.

Increase Date: as defined in Section 2.1.7(c).

Increased Reporting Trigger: the occurrence of:

(a) any one of the following events for five (5) consecutive Business Days:

(i) Excess Availability shall be less than the greater of (A) 15% of the Total
Line Cap and (B) $37,500,000, or

(ii) U.S. Availability shall be less than the greater of (A) 15% of the U.S.
Line Cap and (B) $22,500,000;

provided that, to the extent that the Increased Reporting Trigger has occurred
due to clause (a)(i) of this definition, if Excess Availability shall have
exceeded the greater of (A) 15% of the Total Line Cap and (B) $37,500,000 at all
times for at least forty-five (45) consecutive days, the Increased Reporting
Trigger shall be deemed to have ended;

 

35

--------------------------------------------------------------------------------

provided, further, that to the extent that the Increased Reporting Trigger has
occurred due to clause (a)(ii) of this definition, if U.S. Availability shall
have exceeded the greater of (A) 15% of the U.S. Line Cap and (B) $22,500,000 at
all times for at least forty-five (45) consecutive days, the Increased Reporting
Trigger shall be deemed to have ended; and/or

(b) a FCCR Test Event.

Indemnified Taxes: Taxes other than Excluded Taxes and Other Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Fronting Bank Indemnitees
and Bank of America Indemnitees.

Initial Dutch Kraton Borrower: as defined in the preamble to this Agreement.

Initial U.S. Borrowers: as defined in the preamble to this Agreement.

Insolvency Proceeding: any case or proceeding, application, meeting convened,
resolution passed, proposal, corporate action or any other proceeding commenced
by or against a Person under any state, provincial, federal or foreign law for,
or any agreement of such Person to, (a) the entry of an order for relief under
the U.S. Bankruptcy Code, or any other insolvency, debtor relief, bankruptcy,
receivership, debt adjustment law or other similar law (whether state,
provincial, federal or foreign), including the Dutch Bankruptcy Act
(Faillissementswet); (b) the appointment of a Creditor Representative or other
custodian for such Person or any part of its Property; (c) an assignment or
trust mortgage for the benefit of creditors; (d) the winding up or strike off
the Person (other than in connection with a solvent reorganization permitted by
Section 10.2.8); (e) the proposal or implementation of a scheme of arrangement;
(f) a suspension of payment, moratorium of any debts, official assignment,
composition or arrangement with a Person’s creditors; or (g) in the case of a
Dutch Domiciled Loan Party, any (provisional) suspension of payment
((voorlopige) (surseance van betaling), bankruptcy (faillissement), dissolution
or winding up (ontbinding).

Insolvency Regulation: the Council Regulation (EC) No. 1346/2000 29 May 2000 on
Insolvency Proceedings.

Intellectual Property: the rights in and to (i) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(ii) all trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, (iii) all
copyrightable works, all copyrights and all applications, registrations and
renewals in connection therewith, (iv) all know-how, trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice (including ideas, research and development,
know-how, formulas, compositions and manufacturing and production process and
techniques, technical data, drawings, specifications, customer and supplier
lists, pricing and cost information and business and marketing plans and
proposals), (v) designs, (vi) all computer software (including data and related
documentation), (vii) all other proprietary rights and (viii) all licenses and
agreements in connection therewith.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit
or otherwise) that the Parent’s or any Restricted Subsidiary’s ownership, use,
marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other Property violates another Person’s Intellectual Property.

 

36

--------------------------------------------------------------------------------

Interest Expense: means, with reference to any period, total interest expense
payable in cash (including that attributable to capital lease obligations) of
Parent and its Restricted Subsidiaries for such period with respect to all
outstanding Borrowed Money of Parent and its Restricted Subsidiaries (including
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing and net costs under Hedge
Agreements in respect of interest rates to the extent such net costs are
allocable to such period in accordance with GAAP), calculated on a consolidated
basis for Parent and its Restricted Subsidiaries for such period in accordance
with GAAP but excluding (a) amortization of deferred financing costs and any
other amounts of non-cash interest and (b) the accretion or accrual of
discounted liabilities during such period to the extent not paid in cash.

Interest Period: as defined in Section 3.1.3.

Inventory: as defined in Article 9 of the UCC.

Inventory Appraisal: (a) in connection with the Transactions, the appraisals
prepared by HILCO Appraisal Services LLC dated July 16, 2015, as to Initial U.S.
Borrower and Initial Dutch Kraton Borrower, and December 3, 2015, as to Added
U.S. Borrower and (b) thereafter the most recent inventory appraisal conducted
by an independent appraisal firm and delivered pursuant to Section 10.1.1
hereof.

Inventory Revaluation: an adjustment (positive or negative) to EBITDA equal to
the difference of (a) EBITDA as determined in accordance with the
“first-in-first-out” method of accounting minus (b) EBITDA as determined in
accordance with the “replacement cost” method of accounting, computed by
adjusting cost of sales to reflect the cost of raw material prices during the
applicable period.

Investment: for any Person: (a) the purchase or acquisition (whether for cash,
property, services or securities or otherwise) of Equity Interests, Equity
Interest Equivalents, Debt or other securities of any other Person (including
any capital contribution); (b) the making of any deposit with, or advance, loan
or other extension of credit to, any other Person (including the purchase of
property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such Person); or (c) the
entering into of any guarantee of, or other Contingent Obligation with respect
to, Debt of any other Person. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

IRS: the United States Internal Revenue Service.

Joint Lead Arrangers: Bank of America, N.A., Credit Suisse AG, Nomura Securities
International, Inc. and Deutsche Bank Securities, Inc.

KPCC: Kraton Polymers Capital Corporation, a Delaware corporation.

KPLLC: Kraton Polymers LLC, a Delaware limited liability company.

LC Document: any of the Dutch LC Documents and/or the U.S. LC Documents, as the
context requires.

LC Obligations: the Dutch LC Obligations and/or the U.S. LC Obligations, as the
context requires.

Lender Indemnitees: Lenders, Affiliates of Lenders and their respective
officers, directors, members, partners, employees and agents.

 

37

--------------------------------------------------------------------------------

Lenders: as defined in the preamble to this Agreement, including (a) Bank of
America and its Affiliates in their respective capacities as the Dutch Swingline
Lender and the U.S. Swingline Lender, (b) the Dutch Lenders, (c) the U.S.
Lenders and (d) their respective permitted successors and assigns and, where
applicable, any Fronting Bank, and any other Person who hereafter becomes a
“Lender” pursuant to an Assignment and Acceptance.

Lending Office: the office designated as such by the Applicable Lender at the
time it becomes party to this Agreement or thereafter by notice to the Agent and
the relevant Loan Party Agent.

Letter-of-Credit Right: as defined in Article 9 of the UCC.

Letters of Credit: the Dutch Letters of Credit and/or the U.S. Letters of
Credit, as the context requires.

LIBOR: the per annum rate of interest (rounded up to the nearest 1/8th of 1% and
in no event less than zero) determined by Agent at or about 11:00 a.m. (London
time) two Business Days prior to an interest period, for a term equivalent to
such interest period, equal to the London Interbank Offered Rate, or comparable
or successor rate approved by Agent, as published on the applicable Reuters
screen page (or other commercially available source designated by Agent from
time to time); provided, that any comparable or successor rate shall be applied
by Agent, if administratively feasible, in a manner consistent with market
practice.

LIBOR Loan: each set of LIBOR Revolver Loans having a common currency, length
and commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR;
provided, however, that a European Base Rate Loan bearing interest as set forth
in the definition of European Base Rate, or a U.S. Base Rate Loan bearing
interest as set forth in clause (c) of the definition of U.S. Base Rate, shall
not constitute a LIBOR Revolver Loan.

License: with respect to any Loan Party, all of such Loan Party’s right, title,
and interest in and to (a) any and all written licensing agreements or similar
arrangements in (i) Patents, (ii) Copyrights, (iii) Trademarks, (iv) Trade
Secrets or (v) Software, and (b) all rights to sue for past, present, and future
breaches thereof.

Lien: any mortgage, pledge (including, without limitation, disclosed,
undisclosed, possessory and non-possessory), security interest, hypothecation,
assignment, statutory trust, deemed trust, privilege, lien, charge, bailment or
similar encumbrance, whether statutory, based on common law, contract or
otherwise, and including any agreement to give any of the foregoing, any
conditional sale, any retention of title or any other title retention agreement,
or any lease in the nature thereof.

Lien Acknowledgment: an agreement, in form and substance satisfactory to the
Agent (acting reasonably and in light of (A) the requirements of Applicable Law
to provide a valid and enforceable Lien over the relevant Inventory and (B) the
ability of the Agent or any Security Trustee to carry out an orderly enforcement
of its Liens over that Inventory following an Event of Default), by which for
any Eligible Inventory (a) located on leased premises or (b) held by a
warehouseman, such lessor or warehouseman is notified of the Agent’s or Security
Trustee’s Lien and, if required for perfection under the Applicable Law of such
jurisdiction and customary in such jurisdiction (i) acknowledges the Agent’s or
Security Trustee’s Lien on any such Eligible Inventory located on the premises
and (ii) agrees to permit the Agent or a Security Trustee to, upon an Event of
Default and for a reasonable time thereafter, (A) enter upon the premises,
(B) remove, store or dispose of such Collateral, (C) have the Collateral
delivered to the Agent upon the Agent’s instructions, or (D) in the case of
warehouseman agrees to hold the Goods as agent for the Agent, or such other
documentation to which the Agent may reasonably agree.

 

38

--------------------------------------------------------------------------------

Loan: a Revolver Loan.

Loan Account: as defined in Section 5.7.1.

Loan Documents: this Agreement, the Other Agreements and the Security Documents.

Loan Parties: the Dutch Facility Loan Parties and the U.S. Facility Loan
Parties, collectively, and “Loan Party” means any of the Loan Parties,
individually.

Loan Party Agent: the Foreign Loan Party Agent and/or the North American Loan
Party Agent, as the context requires.

Loan Party Group: a group consisting of (a) the Dutch Facility Loan Parties or
(b) the U.S. Facility Loan Parties, as the context requires.

Loan Party Group Obligations: with respect to (a) the Dutch Facility Loan
Parties, the Dutch Facility Obligations and (b) the U.S. Facility Loan Parties,
U.S. Facility Obligations.

Local Time: with respect to (a) U.S. Revolver Loans, Dallas, Texas time in the
United States and (b) Dutch Revolver Loans, prevailing time in London, England.

Margin Stock: as defined in Regulation U of the Board of Governors as in effect
from time to time.

Material Adverse Effect: (a) a material adverse effect on, the operations,
business, assets, properties or financial condition of Parent and its
Subsidiaries, taken as a whole; (b) a material impairment of the rights and
remedies of the Agent, any Secured Trustee or any Lender under any Loan
Documents; (c) a material impairment of the ability of (i) the U.S. Borrowers
and the U.S. Facility Guarantors, taken as a whole, to perform any of their
material obligations under any Loan Document or (ii) the Borrowers and the
Guarantors, taken as a whole, to perform any of their material obligations under
any Loan Document; or (d) a material adverse effect upon a material portion of
the Collateral or the validity or priority of the Agent’s or any Security
Trustee’s Liens thereon.

Material Contract: any agreement or arrangement to which any Loan Party or any
Restricted Subsidiary is party (other than the Loan Documents) (a) that is
deemed to be a material contract under any securities law applicable to such
Person, including the Securities Act of 1933, as amended; (b) for which breach,
termination, nonperformance or failure to renew could reasonably be expected to
have a Material Adverse Effect; or (c) that relates to Material Debt.

Material Debt: Debt (other than the Obligations and Letters of Credit), or
obligations in respect of one or more Hedge Agreements, of any one or more of
the Loan Parties and their Restricted Subsidiaries in an aggregate principal
amount exceeding $50,000,000. For purposes of determining Material Debt, the
“obligations” of any Loan Party or any Restricted Subsidiary in respect of any
Hedge Agreement at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that such Loan Party or such Restricted Subsidiary
would be required to pay if such Hedge Agreement were terminated at such time.

Maximum Facility Amount: $350,000,000.

 

39

--------------------------------------------------------------------------------

Mohawk Final Judgement: a final judgement in that certain case styled “Mohawk
Industries, Inc. and Aladdin Manufacturing Corporation, Plaintiffs v. Arizona
Chemical Company, LLC, Defendant”.

Mohawk Availability Reserve: as defined in clause (d) of the definition of “U.S.
Borrowing Base”.

Moody’s: Moody’s Investors Service, Inc., and its successors.

Mortgage: a second-priority mortgage, deed of trust or deed to secure debt in
which a Loan Party grants a Lien on Mortgaged Property to Agent, as security for
the Obligations, in each case substantially similar in form and substance to the
corresponding “Mortgage” (as defined in the Term Loan Agreement) against such
Mortgaged Property granted by such Loan Party for the benefit of the Term Loan
Lenders (except with respect to priority).

Mortgaged Property: as defined in the Term Loan Agreement.

Multiemployer Plan: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA and subject to Title IV of ERISA, to which any Loan
Party or ERISA Affiliate makes or is obligated to make contributions, or during
the preceding five (5) plan years, has made or been obligated to make
contributions.

Net Income: means, for any period, the net income (or loss) of Parent and its
Restricted Subsidiaries, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded (a) the income (or deficit) of any
Person accrued prior to the date it becomes a Restricted Subsidiary of Parent or
is merged into or consolidated with Parent or any of its Restricted
Subsidiaries, (b) the income (or deficit) of any Person (other than a Restricted
Subsidiary of Parent) in which Parent or any of its Restricted Subsidiaries has
an ownership interest, except to the extent that any such income is actually
received by Parent or such Restricted Subsidiary in the form of dividends or
similar distributions, (c) the undistributed earnings of any Restricted
Subsidiary of Parent to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is not at the time
permitted by the terms of any contractual obligation (other than under any Loan
Document) or Applicable Law and (d) the cumulative effect of a change in
accounting principles during such period to the extent included in Net Income.

New Lender: each Lender that becomes a party to this Agreement after the Closing
Date in accordance with the terms of this Agreement.

New Loan Party: any Person that executes a supplement or joinder to this
Agreement substantially in the form of Exhibit G and becomes a Loan Party under
this Agreement pursuant to Sections 10.1.9 or 10.2.8(b).

NOLV Percentage: the net orderly liquidation value of Inventory (determined in
accordance with the appraisal prepared in connection with the Transactions or by
any later such appraisal), expressed as a percentage, net of all liquidation
expenses, as determined from the most recent Inventory Appraisal approved by the
Agent.

Non-Consenting Lender: as defined in Section 13.3.4.

North American Loan Party Agent: as defined in Section 4.4.1.

 

40

--------------------------------------------------------------------------------

Notice of Borrowing: a Notice of Borrowing to be provided by the relevant Loan
Party Agent to request a Borrowing of Loans, in the form attached hereto as
Exhibit E or otherwise in form reasonably satisfactory to the Agent and such
Loan Party Agent.

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be
provided by the relevant Loan Party Agent to request a conversion or
continuation of any Loans as LIBOR Loans, in the form attached hereto as Exhibit
F or otherwise in form reasonably satisfactory to the Agent and such Loan Party
Agent.

Obligations: all (a) principal of and premium, if any, on the Loans, (b) LC
Obligations and other obligations of the Loan Parties with respect to Letters of
Credit, (c) interest, expenses, fees, indemnification obligations, Extraordinary
Expenses and other amounts payable by the Loan Parties from time to time under
the Loan Documents and (d) other Debt, obligations and liabilities of any kind
owing by the Loan Parties pursuant to the Loan Documents, whether now existing
or hereafter arising, whether evidenced by a note or other writing, whether
allowed in any Insolvency Proceeding, whether arising from an extension of
credit, issuance of a letter of credit, acceptance, loan, guarantee,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several,
including, without limitation, Secured Bank Product Obligations but (e) shall
exclude Excluded Swap Obligations.

Ordinary Course of Business: with respect to any Person, the ordinary course of
business of such Person, consistent with past practices or, with respect to
actions taken by such Person for which no past practice exists, consistent with
past practices of similarly situated companies, and, in each case, undertaken in
good faith.

Organization Documents: (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction), (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: each Revolver Note, the ABL Intercreditor Agreement, LC
Document, Fee Letter, Lien Acknowledgment, Borrowing Base Certificate,
Compliance Certificate, Borrower Materials, or other document, instrument,
certificate, notice, report or agreement (other than this Agreement or a
Security Document) now or hereafter delivered by or on behalf of a Loan Party to
the Agent, a Security Trustee, a Fronting Bank or a Lender in connection with
any transactions relating hereto.

Other Connection Taxes: with respect to any Recipient, Taxes imposed as a result
of a present or former connection between such Recipient and the jurisdiction
imposing such Tax (other than connections arising from such Recipient having
executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Loan, Letter of Credit or Loan Document).

 

41

--------------------------------------------------------------------------------

Other Taxes: all present or future stamp or documentary Taxes or any other
excise or property Taxes, charges or similar levies arising from any payment
made under any Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document, except any such Taxes that are
Other Connection Taxes imposed with respect to an assignment (other than an
assignment pursuant to Section 3.9).

Overadvance: a Dutch Overadvance or a U.S. Overadvance, as the context requires.

Overadvance Loan: a Dutch Overadvance Loan and/or a U.S. Overadvance Loan, as
the context requires.

Parent: as defined in the preamble to this Agreement.

Patents: with respect to any Loan Party, all of such Loan Party’s right, title,
and interest in and to: (i) any and all patents and patent applications;
(ii) all inventions claimed therein; (iii) all reissues, divisions,
continuations, renewals, extensions, and continuations-in-part thereof; (iv) all
income, royalties, damages, claims and payments now or hereafter due or payable
under and with respect thereto, including damages and payments for past and
future infringements thereof; (v) all rights to sue for past, present, and
future infringements thereof; and (vi) all domestic rights corresponding to any
of the foregoing.

Participant: as defined in Section 13.2.

Participant Register: as defined in Section 13.2.

Participating Member State: any member state of the European Communities that
adopts or has adopted the Euro as its lawful currency in accordance with the
legislation of the European Community relating to the Economic and Monetary
Union.

Patriot Act: USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)).

Payment Conditions: for Distributions, Acquisitions, Investments and Debt
payments, no Default or Event of Default has occurred and is continuing or would
result therefrom and either of the following:

(i) Excess Availability shall be at least 25.0% of the Total Line Cap on a pro
forma basis for each day (A) during the consecutive thirty (30) day period
immediately preceding such Distribution, Acquisition, Investment or Debt payment
and (B) during the consecutive thirty (30)-day period after giving effect
thereto; or

(ii) (A) the Pro Forma Fixed Charge Coverage Ratio for Parent and its Restricted
Subsidiaries after giving effect to such Distribution, Acquisition, Investment
or Debt payment shall be greater than 1.10 to 1.00 for the most recently
completed Test Period reported under Section 10.1.2 (calculated on a pro forma
basis in a manner acceptable to the Agent) as if a FCCR Test Event was in effect
and (B) Excess Availability shall be at least 17.5% of the Total Line Cap, in
the case of subclause (B), on a pro forma basis for each day (1) during the
consecutive thirty (30)-day period immediately preceding such Distribution,
Acquisition, Investment or Debt payment and (2) during the consecutive thirty
(30)-day period after giving effect thereto.

For purposes of the foregoing paragraph, pro forma basis shall be determined by
the North American Loan Party Agent in good faith with respect to such
Distribution, Acquisition, Investment or Debt Payment, as of the date such
payment is made; provided that (i) any Distribution for the purpose of making a
dividend to Parent shareholders may be determined solely as of the date of
declaration thereof

 

42

--------------------------------------------------------------------------------

so long as such dividend is actually made within sixty (60) days, (ii) any
Acquisition or Investment may be determined solely as of the date of entry into
definitive documentation with respect thereto, (iii) any Debt Payment may be
determined solely as of the date of any required notice of redemption or
prepayment notice; provided further that an officer’s certificate of the North
American Loan Party Agent delivered to the Agent at least five (5) Business Days
prior to such date of determination stating that the North American Loan Party
Agent has determined in good faith that the foregoing requirements have been
satisfied shall be conclusive evidence that the foregoing requirements have been
satisfied unless the Agent notifies the Parent, as the case may be, within such
five (5) Business Day period that it disagrees with such determination
(including a reasonable description of the basis upon which it disagrees).

Payment Item: each check, draft or other item of payment payable to a Loan
Party, including those constituting proceeds of any Collateral.

PBGC: the Pension Benefit Guaranty Corporation.

Perfection Certificate: a certificate disclosing information regarding the Loan
Parties in a form approved by the Agent.

Perfection Jurisdiction: each of Belgium, France, Germany, the Netherlands, UK
and U.S.

Permitted Acquisition: any Acquisition by a Loan Party or Restricted Subsidiary
in a transaction that satisfies each of the following requirements:

(a) an Acquisition of the Equity Interests or assets of another Person approved
by the board of directors (or other comparable governing body) of such other
Person;

(b) the business or assets acquired in connection with such Acquisition is not
engaged, directly or indirectly, in any line of business other than the
businesses in which the Loan Parties and Restricted Subsidiaries are engaged on
the Closing Date and any line of businesses or business activities that are
substantially similar, related, or incidental thereto;

(c) if the North American Loan Party Agent elects to include the Accounts and
Inventory acquired in connection with such Acquisition in the determination of
the applicable Borrowing Base, prior to such inclusion, the Agent shall have
conducted an audit and field examination and, to the extent required by the
Agent, an appraisal of such Inventory to its satisfaction, any applicable
Reserves have been established, and all appropriate lien filings and collateral
documentation, including Lien Acknowledgments (if capable of being obtained
using commercially reasonable efforts), have been duly completed, executed and
delivered to the Agent;

(d) [Reserved];

(e) in connection with an Acquisition of the Equity Interests in any Person, all
Liens on property of such Person shall be terminated unless permitted pursuant
to the Loan Documents, and in connection with an Acquisition of the assets of
any Person, all Liens on such assets shall be terminated unless permitted
pursuant to the Loan Documents; and

(f) no Default or Event of Default exists or would result therefrom.

Permitted Bill of Lading: a tangible negotiable bill of lading, of a type and in
a form acceptable to the Agent (as determined in the Agent’s Permitted
Discretion), which bill of lading is (i) issued by a common carrier acceptable
to the Agent and (ii) in the possession of either the Agent or a freight
forwarder or customs broker, as applicable, acting for the Agent, in each case,
under the terms of an Imported Goods Agreement which has been delivered to the
Agent.

 

43

--------------------------------------------------------------------------------

Permitted Contingent Obligations: Contingent Obligations (a) arising from Hedge
Agreements permitted hereunder; (b) existing on the Closing Date, and any
extension or renewal thereof that does not increase the amount of such
Contingent Obligation when extended or renewed; (c) take-or-pay obligations in
supply agreements entered into in the Ordinary Course of Business; (d) arising
under the Loan Documents, (e) arising with respect to Debt incurred pursuant to
Section 10.2.1(u) or (f) arising under the Senior Notes Documents.

Permitted Discretion: a determination made in good faith by the Agent and in the
exercise of reasonable credit judgment (from the perspective of a secured,
asset-based lender similarly situated).

Permitted Lien: as defined in Section 10.2.2.

Permitted Payments: without duplication as to amounts:

(a) Distributions by any Restricted Subsidiary of Parent to pay reasonable
accounting, legal and administrative expenses and general corporate operating
and overhead costs and expenses when due, to the extent such expenses are
attributable to the ownership and operation of Parent and its Restricted
Subsidiaries; and

(b) Distributions by KPLLC to Parent in amounts required for Parent to pay
federal, state and local income and similar taxes attributable to the income of
the KPLLC and its Subsidiaries; provided that the amount of such payments in any
Fiscal Year does not exceed the amount that KPLLC and its Subsidiaries would be
required to pay in respect of foreign, federal, state and local taxes for such
Fiscal Year were KPLLC and its Subsidiaries to pay such taxes separately from
Parent.

Permitted Purchase Money Debt: Purchase Money Debt of Loan Parties and
Restricted Subsidiaries that is unsecured or secured only by a Purchase Money
Lien, as long as the aggregate amount does not exceed the greater of 5.0% of
Consolidated Total Assets or $150,000,000 at any time.

Person: any individual, corporation, limited liability company, unlimited
liability company, partnership, joint venture, joint stock company, land trust,
business trust, unincorporated organization, Governmental Authority or other
entity.

PHCC: Polymer Holdings Capital Corporation, a Delaware corporation.

Pledged Equity Interests: all Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests, Pledged Trust Interests and any other participation or
interests in any equity or profits of any business entity, including any trust
and all management rights relating to any entity whose equity interests are
included as Pledged Equity Interests.

Pledged LLC Interests: all interests now owned or hereafter acquired by any Loan
Party in any limited liability company and each series thereof, including all
limited liability company interests set forth on Schedule B to the Perfection
Certificate, and the certificates, if any, representing such limited liability
company interests and any interest of any Loan Party on the books and records of
such limited liability company or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such limited liability company
interests and all rights as a member of the related limited liability company.

 

44

--------------------------------------------------------------------------------

Pledged Partnership Interests: all interests now owned or hereafter acquired by
any Loan Party in any general partnership, limited partnership, limited
liability partnership or other partnership, including all partnership interests
set forth on Schedule B to the Perfection Certificate, and the certificates, if
any, representing such partnership interests and any interests of any Loan Party
on the books and records of such partnership or on the books and records of any
securities intermediary pertaining to such interests and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for a portion of or all of such
partnership interests and all rights as a partner of the related partnership.

Pledged Stock: all shares of capital stock now owned or hereafter acquired by
any Loan Party, including all shares of capital stock set forth on Schedule B to
the Perfection Certificate, and the certificates, if any, representing such
shares and any interest of any Loan Party in the entries on the books of the
issuer of such shares or on the books of any securities intermediary pertaining
to such shares and all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such shares.

Pledged Trust Interests: all interests now owned or hereafter acquired in a
Delaware business trust or other trust including, without limitation, all trust
interests listed on Schedule B to the Perfection Certificate, and the
certificates, if any, representing such trust interests and any interest of any
Loan Party on the books and records of such trust or on the books and records of
any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such trust interests.

Pro Forma Basis: for purposes of calculating the Fixed Charge Coverage Ratio
under Section 10.3 (including Pro Forma CAPEX and Pro Forma EBITDA) for any
period during which one or more Specified Transactions occurs, such Specified
Transaction (and all other Specified Transactions that have been consummated
during the applicable period) shall be deemed to have occurred as of the first
day of the most recent four Fiscal Quarter period of measurement and all income
statement items (whether positive or negative) attributable to the Property or
Person disposed of in a Specified Disposition shall be excluded and all income
statement items (whether positive or negative) attributable to the Property or
Person acquired in a Permitted Acquisition shall be included; provided that the
foregoing pro forma adjustments may include anticipated cost savings and
synergies solely to the extent that such adjustments are factually supportable
and identifiable and reasonably expected to be realized within twelve
(12) months of such Specified Transaction as set forth in reasonable detail on a
certificate of a Senior Officer of the North American Loan Party Agent delivered
to the Agent; provided, further, that the foregoing pro forma adjustment shall
be without duplication of any cost savings or additional costs that are already
included in the calculation of EBITDA.

Pro Forma CAPEX: with respect to any Specified Transaction for any period, the
amount for such period of Capital Expenditures calculated on a Pro Forma Basis
for such Specified Transaction.

Pro Forma EBITDA: with respect to any Specified Transaction for any period, the
amount for such period of EBITDA calculated on a Pro Forma Basis for such
Specified Transaction.

Pro Forma Fixed Charge Coverage Ratio: for any period, the Fixed Charge Coverage
Ratio for such period calculated on a Pro Forma Basis, provided that clause
(b) of the definition of Fixed Charge Coverage Ratio shall include all
Distributions paid in cash (other than Distributions solely to Loan Parties and
Restricted Subsidiaries).

 

45

--------------------------------------------------------------------------------

Pro Rata: (a) when used with reference to a Lender’s (i) share on any date of
the total Borrower Group Commitments to a Borrower Group, (ii) participating
interest in LC Obligations (if applicable) to the members of such Borrower
Group, (iii) share of payments made by the members of such Borrower Group with
respect to such Borrower Group’s Obligations, (iv) increases or reductions to
the Borrower Group Commitments pursuant to Section 2.1.4 or 2.1.7, and
(v) obligation to pay or reimburse the Agent for Extraordinary Expenses owed by
or in respect of such Borrower Group or to indemnify any Indemnitees for Claims
relating to such Borrower Group, a percentage (expressed as a decimal, rounded
to the ninth decimal place) derived by dividing the amount of the Borrower Group
Commitment of such Lender to such Borrower Group on such date by the aggregate
amount of the Borrower Group Commitments of all Lenders to such Borrower Group
on such date (or if such Borrower Group Commitments have been terminated, by
reference to the respective Borrower Group Commitments as in effect immediately
prior to the termination thereof) or (b) when used for any other reason, a
percentage (expressed as a decimal, rounded to the ninth decimal place) derived
by dividing the aggregate amount of the Lender’s Commitments on such date by the
aggregate amount of the Commitments of all Lenders on such date (or if any such
Commitments have been terminated, such Commitments as in effect immediately
prior to the termination thereof).

Properly Contested: with respect to any obligation of a Loan Party or a
Restricted Subsidiary, (a) the obligation is subject to a bona fide dispute
regarding amount or the Loan Party’s or a Restricted Subsidiary’s liability to
pay; (b) the obligation is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently pursued; (c) appropriate reserves
have been established in accordance with GAAP; (d) non-payment could not
reasonably be expected to have a Material Adverse Effect (other than a Permitted
Lien), nor reasonably be expected to result in forfeiture or sale of any
Collateral of the Loan Party or any Restricted Subsidiary; (e) no Lien is
imposed on assets of the Loan Party or any Restricted Subsidiary, unless bonded
and stayed to the satisfaction of the Agent; and (f) if the obligation results
from entry of a judgment or other order, such judgment or order is stayed
pending appeal or other judicial review.

Property: any interest in any kind of property or asset, whether real
(immovable), personal (movable) or mixed, or tangible (corporeal) or intangible
(incorporeal).

Protective Advances: Dutch Protective Advances and/or U.S. Protective Advances,
as the context requires.

Purchase Money Debt: (a) Debt (other than the Obligations) incurred to finance
the acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Debt assumed in connection with the
acquisition of any such assets; provided that such Debt is incurred prior to or
within ninety (90) days before or after acquisition or completion of such
construction or improvement; and (b) any renewals, extensions or refinancings
(but not increases) thereof.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only
the fixed or capital assets acquired or financed with such Debt and constituting
a Capital Lease or a purchase money security interest under the UCC; provided
that Purchase Money Debt provided by a single lender may be cross-collateralized
to other Purchase Money Debt provided solely by such lender.

Qualified ECP Guarantor: means, in respect of any Swap Obligation, each U.S.
Domiciled Loan Party that has total assets exceeding $10,000,000 at the time
such Swap Obligation is incurred or such other person as constitutes an
“eligible contract participant” under the Commodity Exchange Act or any
regulations promulgated thereunder.

 

46

--------------------------------------------------------------------------------

Qualified Secured Bank Product Obligations: Secured Bank Product Obligations
with respect to Hedge Agreements.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

Receivables: the Accounts, Payment Intangibles, Chattel Paper and any other
rights or claims to receive money that are General Intangibles or that are
otherwise included as Collateral.

Recipient: any Agent, any Lender, any Fronting Bank, any Security Trustee or any
other recipient of a payment to be made by or on behalf of any Loan Party on
account of any Obligations under any Loan Document.

Records: as defined in Article 9 of the UCC.

Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is
in an aggregate principal amount that does not exceed the principal amount of
the Debt being extended, renewed or refinanced (plus fees, expenses and accrued
interest); (b) it has a final maturity no sooner than, and a weighted average
life no less than, the Debt being modified, extended, renewed, refunded,
substituted, replaced or refinanced; (c) if the initial Debt is junior Debt,
such Refinancing Debt shall be subordinated in right of payment to the
Obligations on terms at least as favorable to the Lenders as those contained in
the documentation governing the Debt being modified, extended, renewed,
refunded, substituted, replaced or refinanced; (d) the terms and conditions of
such Refinancing Debt are no more restrictive than the debt being refinanced in
any material respect and taken as a whole or not adverse to the Lenders in any
material respect (excluding as to interest rate, fees, funding discount and
prepayment or redemption premium); (e) the Liens to secure it shall not encumber
any additional property other than property securing the Debt being extended,
renewed or refinanced; and (f) no additional Person is obligated on such Debt;
provided that an officer’s certificate of the North American Loan Party Agent
delivered to the Agent at least five (5) Business Days prior to the incurrence
of such Debt, together with a reasonably detailed description of the material
terms and conditions of such Debt or drafts of the documentation relating
thereto, stating that the North American Loan Party Agent has determined in good
faith that such terms and conditions satisfy the foregoing requirement shall be
conclusive evidence that such terms and conditions satisfy the foregoing
requirement unless the Agent notifies the Parent, as the case may be, within
such five (5) Business Day period that it disagrees with such determination
(including a reasonable description of the basis upon which it disagrees).

Refinancing Debt: Borrowed Money that is issued, incurred or otherwise obtained
(including by means of the extension or renewal of existing Debt) in exchange
for, or as a modification, extension, renewal, refunding, substitution,
replacement or refinancing, in whole or in part, of existing Debt (or unused
commitments).

Register: as defined in Section 13.1.

Report: as defined in Section 12.3.4.

 

47

--------------------------------------------------------------------------------

Reportable Event: the occurrence of any of the events set forth in
Section 4043(c) of ERISA and regulations thereunder with respect to a U.S.
Employee Plan (other than an event for which the thirty (30)-day notice period
is waived).

Required Borrower Group Lenders: at any date of determination thereof, Lenders
having Borrower Group Commitments to a Borrower Group representing more than 50%
of the aggregate Borrower Group Commitments to such Borrower Group at such time;
provided, however, that if and for so long as any such Lender shall be a
Defaulting Lender, the term “Required Borrower Group Lenders” shall mean Lenders
(excluding such Defaulting Lender) having Borrower Group Commitments to such
Borrower Group representing more than 50% of the aggregate Borrower Group
Commitments to such Borrower Group (excluding the Borrower Group Commitments of
each Defaulting Lender) at such time; provided further, however, that if all of
the Borrower Group Commitments to such Borrower Group have been terminated, the
term “Required Borrower Group Lenders” shall mean Lenders to such Borrower Group
holding Revolver Loans to, and (if applicable) participating interest in LC
Obligations owing by, such Borrower Group representing more than 50% of the
aggregate outstanding principal amount of Revolver Loans and (if applicable) LC
Obligations owing by such Borrower Group at such time.

Required Lenders: at any date of determination thereof, Lenders having
Commitments representing more than 50% of the aggregate Commitments at such
time; provided, however, that for so long as any Lender shall be a Defaulting
Lender, the term “Required Lenders” shall mean Lenders (excluding such
Defaulting Lender) having Commitments representing more than 50% of the
aggregate Commitments (excluding the Commitments of each Defaulting Lender) at
such time; provided further, however, that if any of the Commitments have been
terminated, the term “Required Lenders” shall be calculated based on the Dollar
Equivalent thereof using (a) in lieu of such Lender’s terminated Commitment, the
outstanding principal amount of the Revolver Loans by such Lender to, and (if
applicable) participation interests in LC Obligations owing by, all Borrowers
and (b) in lieu of the aggregate Commitments to all Borrowers, the aggregate
outstanding Revolver Loans to, and (if applicable) LC Obligations owing by all
Borrowers.

Reserves: Dutch Kraton Availability Reserves and/or U.S. Availability Reserves,
as the context requires.

Restricted Subsidiary: any direct or indirect Subsidiary of Parent other than an
Unrestricted Subsidiary.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Loan Party or Restricted Subsidiary to incur or
repay Borrowed Money, to grant Liens on any material asset, to declare or make
Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany Debt.

Revolver Commitment Increase and Revolver Commitment Increases: as defined in
Section 2.1.7(b).

Revolver Commitment Termination Date: the Dutch Kraton Revolver Commitment
Termination Date and/or the U.S. Revolver Commitment Termination Date, as the
context requires.

Revolver Facilities: the facilities established pursuant to this Agreement under
the U.S. Revolver Commitments and the Dutch Kraton Revolver Commitments, and
“Revolver Facility” means any one of such Revolver Facilities.

 

48

--------------------------------------------------------------------------------

Revolver Loan: a loan made pursuant to Section 2.1.1, and any Overadvance Loan,
Swingline Loan or Protective Advance.

Revolver Notes: collectively, the Dutch Kraton Revolver Notes and the U.S.
Revolver Notes.

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by a Loan Party or Restricted Subsidiary under a License.

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.

Sanctions: any sanctions administered or enforced by the U.S. Department of
State, the U.S. Department of the Treasury’s Office of Foreign Assets Control,
Her Majesty’s Treasury, the European Union or other relevant sanctions
authority.

SEC: the Securities and Exchange Commission or any Governmental Authority
succeeding thereto.

Secured Bank Product Document: any agreement, instrument or other document
entered into in connection with any Secured Bank Product Obligations.

Secured Bank Product Obligations: Bank Product Debt owing to a Secured Bank
Product Provider (whether relating to Bank Products originally extended by such
Secured Bank Product Provider or Bank Product Debt assigned to such Secured Bank
Product Provider) and evidenced by one or more Secured Bank Product Documents
and, in the case of any Secured Bank Product Provider other than Bank of America
and its Affiliates, up to the maximum amount specified in writing to the Agent
pursuant to clause (b) of the definition of Secured Bank Product Provider, which
amount may be established and increased or decreased by further written notice
from such provider and a Loan Party Agent to the Agent from time to time.

Secured Bank Product Provider: (a) Bank of America or any of its Affiliates and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided that such other provider and a Loan Party Agent shall deliver a written
notice to the Agent, in form and substance reasonably satisfactory to the Agent,
by, as to each such Bank Product in existence on the Closing Date (including any
Bank Product that was entered into on or prior to the Closing Date), thirty
(30) Business Days after the Closing Date, and as to all other such Bank
Products, thirty (30) Business Days (or such later time as the Agent may agree
in its reasonable discretion) following the later of the creation of the Bank
Product or such Secured Bank Product Provider (or its Affiliate) becoming a
Lender hereunder, (i) reasonably specifying the key economic terms of the Bank
Product and requesting that such Bank Product Debt thereunder be treated as
Secured Bank Product Obligations, (ii) setting forth the amount of the related
Secured Bank Product Obligations (and, if all or any portion of such Secured
Bank Product Obligations are to constitute Qualified Secured Bank Product
Obligations, the amount of such Qualified Secured Bank Product Obligations) to
be secured by the Collateral which amounts may be revised from time to time by
written notice to Agent from such provider and such Loan Party Agent, and
(iii) if such provider is not a Lender, agreeing to be bound by Section 12.14.

Secured Obligations: Obligations and Secured Bank Product Obligations (other
than Excluded Swap Obligations), including in each case those under all Loan
Documents.

Secured Parties: Dutch Facility Secured Parties, U.S. Facility Secured Parties
and Secured Bank Product Providers.

 

49

--------------------------------------------------------------------------------

Securities Account Control Agreement: the securities account control agreements
(whether in the form of an agreement, notice and acknowledgment or like
instrument), in form and substance reasonably satisfactory to the Agent and the
applicable Loan Party and, if required and customary under the laws of the
jurisdiction of the securities account, executed by each financial institution
maintaining a Securities Account for such Loan Party, in favor of the Agent or a
Security Trustee.

Securities Account: as defined in Article 8 of the UCC.

Security Documents: this Agreement, the Guarantees, the Foreign Security
Agreements, the Confirmation Agreement, the Commodity Account Control
Agreements, the Deposit Account Control Agreements, the Securities Account
Control Agreements, the Mortgages, and all other documents, instruments and
agreements now or hereafter securing (or given with the intent to secure) any
Secured Obligations.

Security Trustee: the Dutch Security Trustee, and/or any other security trustee
appointed by the Agent from time to time, as the context requires.

Senior Notes: The 10.50% unsecured Senior Notes of Kraton Polymers LLC and
Kraton Polymers Capital Corporation issued pursuant to the Senior Notes
Indenture and any additional notes issued thereunder from time to time, as any
such notes may be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof.

Senior Notes Documents: The Senior Notes Indenture and each other material
document, instrument or material agreement which Parent, any Loan Party or any
of their Subsidiaries is or may hereafter become a party pertaining to the
Senior Notes.

Senior Notes Indenture: means the indenture, dated as of the date hereof, with
the Initial U.S. Borrower, as issuer, the subsidiary guarantors from time to
time party thereto and Wells Fargo Bank, N.A., as trustee, relating to the
Senior Notes, as such document may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof.

Senior Officer: the president, the chief executive officer, the chief financial
officer, managing director (bestuurder), the treasurer, the controller or any
other senior officer of a Person designated as such in writing to the Agent by
such Person, or in the case of a Dutch Domiciled Loan Party, a director.
Notwithstanding the foregoing, “Senior Officer” also means any member of the
Management Board of any of the Dutch Borrowers and any person who has been
appointed an authorized representative by a power of attorney, so long as such
power of attorney remains in effect.

Settlement Report: a report delivered by the Agent to the Applicable Lenders
summarizing the Revolver Loans and, if applicable, participations in LC
Obligations of the applicable Borrower Group outstanding as of a given
settlement date, allocated to the Applicable Lenders on a Pro Rata basis in
accordance with their Commitments.

Software: computer programs, source code, object code and supporting
documentation including “software” as such term is defined in Article 9 of the
UCC, as well as computer programs that may be construed as included in the
definition of Goods.

Solvent: as it relates to (a) the Loan Parties, taken as a whole, (i) are
adequately capitalized with working capital to pay their debts as they become
due and (ii) have not incurred (by way of assumption or otherwise) any
obligations or liabilities (contingent or otherwise), or made any conveyance in
connection therewith, in each case, with actual intent to hinder, delay or
defraud either present or future creditors of

 

50

--------------------------------------------------------------------------------

such Persons or any of their Affiliates; and (b) (i) as to any other Person,
such Person (1) owns Property whose fair salable value is greater than the
amount required to pay all of its debts (including contingent, subordinated,
unmatured and unliquidated liabilities); (2) owns Property whose present fair
salable value (as defined below) is greater than the probable total liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities) of
such Person as they become absolute and matured; (3) is able to pay all of its
debts as they mature or fall due in the normal course of business; (4) has
capital that is not unreasonably small for its business and is sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage; (5) is not “insolvent” within the meaning of
Section 101(32) of the U.S. Bankruptcy Code; and (6) has not incurred (by way of
assumption or otherwise) any obligations or liabilities (contingent or
otherwise) or made any conveyance in connection therewith, with actual intent to
hinder, delay or defraud either present or future creditors of such Person or
any of its Affiliates, (ii) as to any other Person incorporated or organized
under the laws of the Netherlands, (1) is able to pay all of its debts as they
mature or fall due in the normal course of business; and (2) is not in a
situation that it has ceased to pay within the meaning of section 1 paragraph 1
of the Dutch Bankruptcy Act. “Fair salable value” means the amount that could be
obtained for assets within a reasonable time, either through collection or
through sale under ordinary selling conditions by a capable and diligent seller
to an interested buyer who is willing (but under no compulsion) to purchase. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably expected to become an actual or
matured liability. For the purposes of the foregoing, Debt shall be deemed due
as of its stated maturity date unless and until such maturity is accelerated.

Specified Acquisition Agreement Representations: means the representations and
warranties made by Arizona Chemical Holdings Corporation in the Arizona Chemical
Acquisition Agreement as are material to the interests of the Lenders, but only
to the extent that the Initial U.S. Borrower or any of its Affiliates has the
right to terminate its obligations under the Arizona Chemical Acquisition
Agreement or not be obligated to consummate the acquisition thereunder as a
result of a breach of such representations and warranties in the Arizona
Chemical Acquisition Agreement shall be true and correct in all material
respects.

Specified Disposition: any disposition of all or substantially all of the assets
or Equity Interests of any Restricted Subsidiary of Parent or any division,
business unit, product line or line of business of such Restricted Subsidiary or
Parent.

Specified Representations: means the representations and warranties of the
Initial U.S. Borrower, the Initial Dutch Kraton Borrower, and to the extent
applicable the Guarantors set forth in Section 9.1.2 and Section 9.1.3 (in each
case with respect to the entering into and performance of the Loan Documents),
the last sentence of Section 9.1.5, the last sentence of Section 9.1.7 (as of
the Closing Date), Section 9.1.21,Section 9.1.22, Section 9.1.28 and the first
sentence of Section 10.1.12 of this Agreement.

Specified Transaction: (a) any Specified Disposition, (b) any Permitted
Acquisition and (c) the incurrence or repayment of any Debt.

Sterling and £: the lawful currency of the United Kingdom.

Subordinated Debt: Debt incurred by a Loan Party or a Restricted Subsidiary that
is expressly subordinate and junior in right of payment to Full Payment of all
or any portion of Obligations, and is on terms (including maturity, interest,
fees, repayment, covenants and subordination) reasonably satisfactory to the
Agent.

 

51

--------------------------------------------------------------------------------

Subsidiary: with respect to any Person, (a) any corporation more than 50% of
whose Equity Interests of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time Equity Interests of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (b) any partnership, limited liability
company, association, joint venture or other entity in which such Person
directly or indirectly through Subsidiaries has more than a 50% equity interest
at the time. Unless otherwise expressly provided, all references herein to a
“Subsidiary” shall mean a direct or indirect Subsidiary of Parent.

Successor Borrower: as defined in Section 10.2.8(a).

Successor Parent: as defined in Section 10.2.8(f).

Super-Majority Lenders: at any date of determination thereof, Lenders having
Commitments representing more than 66 2⁄3% of the aggregate Commitments at such
time; provided, however, that for so long as any Lender shall be a Defaulting
Lender, the term “Super-Majority Lenders” shall mean Lenders (excluding such
Defaulting Lender) having Commitments representing more than 66 2⁄3% of the
aggregate Commitments (excluding the Commitments of each Defaulting Lender) at
such time; provided further, however, that if any of the Commitments have been
terminated, the term “Super-Majority Lenders” shall be calculated based on the
Dollar Equivalent thereof using (a) in lieu of such Lender’s terminated
Commitment, the outstanding principal amount of the Revolver Loans by such
Lender to, and (if applicable) participation interests in LC Obligations owing
by, all Borrowers and (b) in lieu of the aggregate Commitments to all Borrowers,
the aggregate outstanding Revolver Loans to, and (if applicable) LC Obligations
owing by all Borrowers.

Supplier Financing Transaction: means, any transaction in which the Borrowers
may, from time to time, transfer right, title and interest in certain Accounts
to a special purpose vehicle (each such special purpose vehicle, a “Kraton SPV”)
for an amount equal to the market value of such Accounts, which Kraton SPV will
promptly (a) sell to a bank buyer such Accounts and (b) transfer any and all
consideration received for such Accounts back to the applicable Borrower, in
each case on a non-recourse and true sale basis.

Supporting Obligations: as defined in Article 9 of the UCC.

Swap Obligation: means, with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act.

Swingline Lender: Dutch Swingline Lender and/or the U.S. Swingline Lender, as
the context requires.

Swingline Loan: a loan made pursuant to Section 2.1.8.

TARGET Day: any day on which the Trans-European Automated Realtime Gross
Settlement Express Transfer (TARGET) payment system (or, if such payment system
ceases to be operative, such other payment system (if any) determined by the
Agent to be a suitable replacement) is open for the settlement of payments in
Euro.

Tax Credit: a credit against, relief or remission for, or refund or repayment
of, any Taxes.

 

52

--------------------------------------------------------------------------------

Tax Deduction: a deduction or withholding for or on account of Taxes (other than
Excluded Taxes) from a payment under any Loan Document.

Tax Payment: either the increase in a payment made by a Loan Party to any
Recipient under Section 5.8.2(a) or any payment made by a Loan Party to any
Recipient under Section 5.8.2(b) or Section 5.8.2(d).

Taxes: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other similar
charges imposed in the nature of taxation by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto.

Term Agent: has the meaning set forth in the ABL Intercreditor Agreement.

Term Debt: all Borrowed Money owed to the Term Loan Lenders.

Term Debt Documents: means (i) the Term Loan Agreement and (ii) each of the
other material agreements, instruments, and other material documents with
respect to the Term Debt, all as in effect on the date hereof or as may be
amended, modified or supplemented from time to time in accordance with the ABL
Intercreditor Agreement.

Term Debt Priority Collateral: the “Fixed Asset Priority Collateral” as defined
in the ABL Intercreditor Agreement.

Term Debt Priority Collateral Release Date: as defined in Section 12.3.1.

Term Loan Agreement: means that certain Credit and Guarantee Agreement, dated as
of the Closing Date, by and among the Initial U.S. Borrower, Kraton Performance
Polymers, Inc., certain subsidiaries of Kraton Polymers LLC as guarantors,
Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral
agent and the other agents party thereto, the lenders party thereto in their
capacities as lenders thereunder, as the same may be amended, restated,
modified, supplemented, extended, renewed, refunded, replaced or refinanced from
time to time in one or more agreements (in each case with the same or new
lenders, institutional investors or agents), including any agreement extending
the maturity thereof or otherwise restructuring all or any portion of the Debt
thereunder or increasing the amount loaned or issued thereunder or altering the
maturity thereof, in each case as and to the extent permitted by this Agreement
and the ABL Intercreditor Agreement.

Term Loan Lenders: each “Lender” as defined in the Term Loan Agreement.

Test Period: for any determination under this Agreement, the most recent period
of four consecutive Fiscal Quarters of Parent ended on or prior to such time
(taken as one accounting period) in respect of which financial statements for
each quarter or Fiscal Year in such period have been or are required to be
delivered. A Test Period may be designated by reference to the last day thereof
(i.e., the “May 31, 2013 Test Period” refers to the period of four consecutive
Fiscal Quarters of the Parent ended May 31, 2013, and a Test Period shall be
deemed to end on the last day thereof).

Third Party Bank Product Debt: Bank Product Debt owing by a Borrower or a
Restricted Subsidiary to a Person that is neither a Lender nor an Affiliate of a
Lender.

Total Borrowing Base: the sum of the Dutch Kraton Borrowing Base and the U.S.
Borrowing Base.

 

53

--------------------------------------------------------------------------------

Total Debt: as of any date of determination, (a) the aggregate principal amount
of Debt for Borrowed Money of the Parent and the Restricted Subsidiaries
outstanding on such date excluding Contingent Obligations, determined on a
consolidated basis in accordance with GAAP (but excluding the effects of any
discounting of such Debt resulting from the application of purchase accounting
in connection with any Permitted Acquisition), minus (b) the aggregate amount of
unrestricted cash and Cash Equivalents held in accounts on the consolidated
balance sheet of the Parent and the Restricted Subsidiaries.

Total Line Cap: as of any date of determination, the lesser of (i) the
Commitments as of such date of determination and (ii) the Total Borrowing Base
as of such date of determination.

Total Revolver Exposure: as of any date of determination the sum of the Dutch
Revolver Exposure and the U.S. Revolver Exposure on such date of determination.

Trademarks: with respect to any Loan Party, all of such Loan Party’s right,
title, and interest in and to the following: (i) all trademarks (including
service marks), trade names, trade dress, and logos, slogans and other similar
indicia of origin and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the foregoing; (ii) all
renewals of the foregoing; (iii) all income, royalties, damages, and payments
now or hereafter due or payable with respect thereto, including, without
limitation, damages, claims, and payments for past and future infringements
thereof; (iv) all rights to sue for past, present, and future infringements of
the foregoing; and (v) all domestic rights corresponding to any of the
foregoing.

Trade Secrets: with respect to any Loan Party, all of such Loan Party’s right,
title and interest in and to the following: (i) trade secrets or other
confidential information, including unpatented inventions, invention
disclosures, engineering or other data, production procedures, know-how,
financial data, customer lists, supplier lists, business and marketing plans,
processes, schematics, algorithms, techniques, analyses, proposals, source code,
and data collections; (iii) all income, royalties, damages, and payments now or
hereafter due or payable with respect thereto, including, without limitation,
damages, claims and payments for past and future infringements thereof;
(iii) all rights to sue for past, present and future infringements of the
foregoing; and (iv) all rights corresponding to any of the foregoing.

Transaction Costs: the fees, costs and expenses payable by the Loan Parties in
connection with the Transactions, including any premiums in connection therewith
and amounts payable to the Agent and the Lenders.

Transactions: collectively, (a) the execution, delivery and performance by the
Loan Parties of the Loan Documents to which they are a party and the making of
the Borrowings hereunder, (b) the repayment of all amounts due or outstanding
under or in respect of the Existing Credit Agreement, (c) the payment of all
related fees and expenses, (d) consummation of the Arizona Chemical Acquisition,
(e) closing and funding of Term Debt, and (f) closing and funding of the Senior
Notes.

Transfer: as defined in Section 2.1.6(d).

Transfer Date: as defined in Section 2.1.6(d).

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

Treasury Management Services: any services provided from time to time by any
Lender or any of its Affiliates to Parent or any of its Restricted Subsidiaries
in connection with operating, collections,

 

54

--------------------------------------------------------------------------------

payroll, trust or other depository or disbursement accounts, including automated
clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled
disbursement, overdraft, depository, information reporting, lockbox and stop
payment services.

Type: any type of a Loan (i.e., Base Rate Loan, LIBOR Loan or European Base Rate
Loan, etc.) and which shall be either a LIBOR Loan or a Base Rate Loan.

UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other U.S. state or territory govern the creation, perfection,
priority or enforcement of any Lien, the Uniform Commercial Code of such state
or territory.

UK or United Kingdom: the United Kingdom of Great Britain and Northern Ireland.

UK Debenture: that certain Debenture in respect of the assets of the Initial
Dutch Borrower located in the UK, governed by English law, dated April 29, 2013,
among the Initial Dutch Borrower and the Dutch Security Trustee, as amended,
restated, supplemented or otherwise modified from time to time.

UK Security Agreements: the UK Debenture and each other debenture or security
agreement governed by the laws of the United Kingdom among any Dutch Domiciled
Loan Party and the Agent or the Dutch Security Trustee.

Unrestricted Subsidiary: (a) each Subsidiary of the Parent that has been
designated following the Closing Date as an Unrestricted Subsidiary in
compliance with Section 10.1.17 and (b) each Subsidiary of a Subsidiary
specified in clause (a) of this definition.

U.S.: the United States of America.

U.S. Assignment of Claims Act: Assignment of Claims Act of 1940, 31 U.S.C. §
3727, 41 U.S.C. § 15, as amended.

U.S. Availability: as of any such date of determination, (a) the lesser of
(i) the U.S. Revolver Commitments minus all U.S. Availability Reserves and
(ii) the U.S. Borrowing Base, minus, in each case (b) the sum of (i) the
principal balance of all U.S. Revolver Loan, and (ii) all U.S. LC Obligations.

U.S. Availability Reserves: the sum (without duplication) of (a) the U.S. Rent
Reserve; (b) the U.S. Bank Product Reserve; (c) the U.S. Inventory Reserve;
(d) the U.S. Dilution Reserve, (e) the Dutch Kraton Overadvance Loan Balance,
(f) the Dutch Kraton Allocated U.S. Availability Reserve and (g) such additional
reserves, in such amounts and with respect to such matters, as the Agent may
establish in its Permitted Discretion and in accordance with the terms hereof.

U.S. Bank Product Reserve: at any time with respect to Secured Bank Product
Obligation for the accounts of the U.S. Domiciled Loan Parties and their
Subsidiaries, an amount equal to the sum of (a) the maximum amount of the then
outstanding Qualified Secured Bank Product Obligations for the accounts of the
U.S. Domiciled Loan Parties and their Subsidiaries owing (i) to Bank of America
and its Affiliates as determined by the Agent in its Permitted Discretion and
(ii) to any other Secured Bank Product Provider as set forth in the notice
delivered by such Secured Bank Product Provider providing such Bank Product and
the North American Loan Party Agent to the Agent in accordance with the
definition of Secured Bank Product Provider and (b) with respect to any other
Secured Bank Product Obligations for the account of the U.S. Domiciled Loan
Parties and their Subsidiaries, reserves established by the Agent from time to
time in its Permitted Discretion to reflect the reasonably anticipated
liabilities in respect for the account of the then outstanding Secured Bank
Product Obligations of the U.S. Domiciled Loan Parties and their Subsidiaries.

 

55

--------------------------------------------------------------------------------

U.S. Bankruptcy Code: Title 11 of the United States Code.

U.S. Barge In-Transit Inventory: at any date of determination, all Inventory of
the Initial U.S. Borrower which is in-transit by river on barges from the
location of the relevant third-party seller within the United States to the
Initial U.S. Borrower’s plant located in Belpre, Ohio; provided, that at any
date of determination, the amount of U.S. Barge In-Transit Inventory which may
be included in U.S. Eligible Inventory may not exceed $15,000,000.

U.S. Base Rate: for any day, a per annum rate equal to the greatest of (a) the
U.S. Prime Rate for such day; (b) the Federal Funds Rate for such day, plus
0.50%; or (c) Dollar LIBOR for a 30 day interest period as determined on such
day, plus 1.0%. In no event shall the U.S. Base Rate be less than zero.

U.S. Base Rate Loan: any Loan that bears interest based on the U.S. Base Rate.

U.S. Borrowers: (a) the Initial U.S. Borrower, (b) the Added U.S. Borrower and
(c) each other U.S. Subsidiary that, after the date hereof, has executed a
supplement or joinder to this Agreement in accordance with Section 10.1.9
specifying that it wishes to be a U.S. Borrower.

U.S. Borrowing Base: at any time, an amount equal to the sum (expressed in
Dollars) of, without duplication:

(a) the Value of U.S. Eligible Accounts multiplied by the advance rate of 85%,
plus

(b) the lesser of (i) 65% of the Value of U.S. Eligible Inventory composed of
finished goods and (ii) 85% of the NOLV Percentage of the Value of U.S. Eligible
Inventory composed of finished goods, plus

(c) the lesser of (i) 65% of the Value of U.S. Eligible Inventory not composed
of finished goods and (ii) 85% of the NOLV Percentage of the Value of U.S.
Eligible Inventory not composed of finished goods, minus

(d) all U.S. Availability Reserves, any change therein to become effective
(i) immediately upon or (ii) three (3) Business Days after, in the case of U.S.
Availability Reserves which would cause the aggregate amount of the U.S.
Revolver Loans at such time to exceed the lesser of the U.S. Revolver
Commitments and the U.S. Borrowing Base then in effect, notification thereof to
the North American Loan Party Agent by the Agent (provided that the Dutch Kraton
Allocated U.S. Availability Reserve will be effective immediately without notice
to North American Loan Party Agent); provided that, the Agent shall have
provided the North American Loan Party Agent at least three (3) Business Days’
prior written notice of any such establishment or increase; provided further
that, the Agent may only establish or increase a U.S. Availability Reserve after
the date hereof based on an event, condition or other circumstance arising after
the Closing Date or based on facts not known to the Agent as of the Closing
Date. Notwithstanding the foregoing, Agent may, in its Permitted Discretion,
establish U.S. Availability Reserves in connection with the Mohawk Final
Judgment (the “Mohawk Availability Reserve”) if any of the plaintiffs or any
assignees of or successors to the plaintiffs thereunder become a Lien Creditor
pursuant to Section 9-102 of the UCC and obtain priority over future advances
under this Agreement pursuant to Section 9-323 of the UCC, or take any action to
enforce any Lien such Person may have on any Collateral with priority superior
to the Liens securing the Obligations. The amount of any U.S. Availability
Reserve established by the Agent shall have a reasonable relationship to the
event, condition,

 

56

--------------------------------------------------------------------------------

other circumstance or new fact that is the basis for the U.S. Availability
Reserve. Upon delivery of such notice, the Agent shall be available to discuss
the proposed U.S. Availability Reserve or increase, and the applicable Borrowers
may take such action as may be required so that the event, condition,
circumstance or new fact that is the basis for such U.S. Availability Reserve or
increase no longer exists, in a manner and to the extent reasonably satisfactory
to the Agent in the exercise of its Permitted Discretion. In no event shall such
notice and opportunity limit the right of the Agent to establish or change such
U.S. Availability Reserve, unless the Agent shall have determined in its
Permitted Discretion that the event, condition, other circumstance or new fact
that is the basis for such new U.S. Availability Reserve or such change no
longer exists or has otherwise been adequately addressed by the applicable
Borrower. Notwithstanding anything herein to the contrary U.S. Availability
Reserves shall not duplicate amounts already deducted in or by other
Availability Reserves or in connection with criteria already used to calculate
the NOLV Percentage of U.S. Eligible Inventory. As to the Mohawk Availability
Reserve (i) no such Mohawk Availability Reserve shall be instituted as long as
the Mohawk Final Judgment and enforcement of any Lien relating thereto continues
to be stayed pending appeal or other judicial review or bonded pending approval
and (ii) the Mohawk Availability Reserve shall be automatically released
concurrently upon the Mohawk Final Judgment (together with any related court
recording charges) being paid off in full or otherwise satisfied, discharged or
vacated (and for the avoidance of doubt, the imposition of such Mohawk
Availability Reserve shall not, in and of itself, prevent the U.S. Borrowers
from borrowing the full amount available under the U.S. Borrowing Base in the
form of a U.S. Revolving Loan while such Mohawk Availability Reserve is in
effect for the sole purposes of satisfying the Mohawk Final Judgment).

The U.S. Borrowing Base at any time shall be determined by reference to the most
recent Borrowing Base Certificate theretofore delivered to the Agent with such
adjustments as the Agent deems appropriate in its Permitted Discretion to assure
that the U.S. Borrowing Base is calculated in accordance with the terms of this
Agreement.

Notwithstanding anything to the contrary in the foregoing, until the date of
completion of the Added U.S. Borrower Field Exam and Inventory Appraisal and the
results thereof are satisfactory to the Agent, in its Permitted Discretion,
(A) the advance rate against the Value of U.S. Eligible Accounts of the Added
U.S. Borrower shall be (1) 75% for the period beginning with the Closing Date
and continuing through the 59th day after the Closing Date, (2) 70% for the
period beginning on the 60th day after the Closing Date and continuing through
the 89th day after the Closing Date, and (3) 0% thereafter; provided, however,
the advance rate against the Value of U.S. Eligible Accounts of the Added U.S.
Borrower shall immediately become 85% upon the actual date of completion of such
satisfactory Added U.S. Borrower Field Exam and Inventory Appraisal, and (B) the
advance rate against the Value of U.S. Eligible Inventory of Added U.S. Borrower
relevant to clauses (b)(i) and (c)(i) of the definition of “U.S. Borrowing Base”
shall be (1) 45% for the period beginning with the Closing Date and continuing
through the 59th day after the Closing Date, (2) 40% for the period beginning on
the 60th day after the Closing Date and continuing through the 89th day after
the Closing Date, and (3) 0% thereafter; provided, however, the advance rate
against the Value of U.S. Eligible Inventory of Added U.S. Borrower relevant to
clauses (b)(i) and (c)(i) of the definition of “U.S. Borrowing Base” shall
immediately become 65% upon the actual date of completion of such satisfactory
Added U.S. Borrower Field Exam and Inventory Appraisal.

U.S. Cash Collateral Account: a bank account established by the Agent at Bank of
America in connection with the U.S. Revolver Commitments that is (a) segregated,
(b) for the benefit of the U.S. Facility Secured Parties, (c) subject to the
Agent’s Liens securing the Secured Obligations and (d) under the exclusive
control of Agent.

U.S. Dilution Reserve: with respect to an Applicable U.S. Borrower, without
duplication of any other reserves or items that are otherwise addressed or
excluded through eligibility criteria, the aggregate

 

57

--------------------------------------------------------------------------------

amount of reserves, as established by the Agent from time to time, in an amount
equal to the Value of the U.S. Eligible Accounts multiplied by 1% for each
percentage point (or portion thereof) that the U.S. Borrowers’ Dilution Percent
exceeds 5%.

U.S. Domiciled Loan Party: any U.S. Borrower and each U.S. Facility Guarantor,
and “U.S. Domiciled Loan Parties” means all such Persons, collectively.

U.S. Dominion Account: each special deposit account established by the U.S.
Domiciled Loan Parties, without duplication of any other reserves or items that
are otherwise addressed or excluded through eligibility criteria, at Bank of
America or another bank reasonably acceptable to the Agent, over which the Agent
has control and over which, upon the commencement of an activation period (which
the Agent may trigger after a Cash Dominion Event hereunder), the Agent may
exercise exclusive control, which deposit account is a collection account and
not a disbursement account.

U.S. Eligible Accounts: at any time, the Accounts of the U.S. Borrowers at such
date except any Account):

(a) which is not subject to a duly perfected and enforceable security interest
in favor of the Agent under U.S. law;

(b) which is subject to any Lien (including Liens permitted by Section 10.2.2)
other than (i) a Lien in favor of the Agent, (ii) a Lien permitted under
Section 10.2.1(i) or (iii) a Lien permitted under Section 10.2.2(j), (m) or (hh)
which does not have priority over the Lien in favor of the Agent;

(c) (i) for each invoice with an original due date not later than thirty
(30) days after the date thereof, which is unpaid for (A) more than sixty
(60) days after the original due date or (B) unless otherwise agreed in writing
by the Agent in its discretion, more than ninety (90) days after the original
invoice date; (ii) for each invoice with an original due date later than thirty
(30) days after the date thereof but not later than sixty (60) days after the
date thereof, which is unpaid for (A) more than sixty (60) days after the
original due date or (B) unless otherwise agreed in writing by the Agent in its
discretion, more than 120 days after the original invoice date; (iii) for each
invoice with an original due date later than sixty (60) days after the date
thereof but not later than ninety (90) days after the date thereof, which is
unpaid for (A) more than sixty (60) days after the original due date or
(B) unless otherwise agreed in writing by the Agent in its discretion, more than
150 days after the original invoice date;

(d) which is owing by an Account Debtor for which more than 50% of the Accounts
owing from such Account Debtor and its Affiliates are ineligible pursuant to
clause (c) above (in calculating the ineligible portion of Accounts under clause
(c) for purposes of this clause (d), credit balances that are unapplied for more
than ninety (90) days shall not reduce the amount of the Accounts ineligible
thereunder); provided that Accounts that are determined not to be U.S. Eligible
Accounts solely as a result of the provisions of clause (e) below, shall be
excluded in calculating such percentage;

(e) which is owing by an Account Debtor to the extent the aggregate amount of
otherwise Eligible Accounts owing from such Account Debtor and its Affiliates to
the Borrowers exceeds 20% of the aggregate Eligible Accounts (or such higher
percentage as the Agent may establish for the Account Debtor from time to time),
in each case, only to the extent of such excess;

(f) with respect to which any covenant, representation, or warranty relating to
such Account contained in this Agreement has been materially breached or is not
true in any material respect, respectively (or with respect to such covenant,
representation or warranty qualified by materiality, after giving effect to such
qualification in all respects);

 

58

--------------------------------------------------------------------------------

(g) which (i) does not arise from the sale of goods or performance of services
in the Ordinary Course of Business, (ii) is not evidenced by an invoice, or
other similar documentation reasonably satisfactory to the Agent, which has been
sent to the Account Debtor, (iii) represents a progress billing, (iv) represents
contract retention, (v) is contingent upon such U.S. Borrower’s completion of
any further performance, (vi) represents a cash or credit card sale,
(vii) represents a sale on a bill-and-hold, guaranteed sale, sale-and-return,
sale on approval, consignment which is billed by the Applicable U.S. Borrower,
as consignor, prior to the actual sale to the end user, cash-on-delivery or any
other repurchase or return basis; provided that, regardless of the foregoing, up
to $15,000,000 at any time outstanding of Accounts representing bill-and-hold
transactions (documented to the reasonable satisfaction of Agent, in its
Permitted Discretion) will be deemed U.S. Eligible Accounts for the period
beginning October 1 of each calendar year and ending on April 30 of the
immediately following calendar year; or (viii) represents interest or fees;
provided that ineligibility as a result of this clause (viii) shall be limited
to the amount of such interest and fees;

(h) for which the goods giving rise to such Account have not been loaded on a
carrier for shipment to the Account Debtor (other than goods for which title has
passed to the Account Debtor pursuant to bill-and-hold transactions described in
the proviso to subclause (vii) of clause (g) above in the definition of U.S.
Eligible Accounts) or for which the services giving rise to such Account have
not been performed by such U.S. Borrower;

(i) with respect to which any check or other instrument of payment has been
returned uncollected for any reason and such Account is or should be written off
of Parent’s books as uncollectible, consistent with Parent’s collection
policies;

(j) which is owed by an Account Debtor in respect of which an Insolvency
Proceeding has been commenced or which is otherwise a debtor or a debtor in
possession under any bankruptcy law or any other federal, state or foreign
(including any province or territory) receivership, insolvency relief or other
law or laws for the relief of debtors, including the U.S. Bankruptcy Code,
unless the payment of Accounts from such Account Debtor is secured by assets of,
or guaranteed by, in either case in a manner reasonably satisfactory to the
Agent, a Person that is reasonably acceptable to the Agent or, if the Account
from such Account Debtor arises subsequent to a decree or order for relief with
respect to such Account Debtor under the U.S. Bankruptcy Code, as now or
hereafter in effect, the Agent shall have reasonably determined that the timely
payment and collection of such Account will not be impaired;

(k) which is owed by an Account Debtor which has suspended or ceased doing
business, is liquidating, dissolving or winding up its affairs or has declared
itself or has been declared by a court of competent jurisdiction, to be, not
Solvent;

(l) which is owed by an Account Debtor which is not organized or incorporated
under the applicable law of an Eligible Account Debtor Jurisdiction unless
(i) the Agent determines to include such Account Debtor in its Permitted
Discretion or (ii) such Account is backed by a letter of credit or other credit
support reasonably acceptable to the Agent; provided that, notwithstanding the
foregoing, the amount of Accounts made eligible by Agent as a result of
subclause (i) of this clause (l) shall not exceed $20,000,000 in the aggregate
at any time;

(m) which is owed in any currency other than an Eligible Account Currency;

(n) which is owed by any Governmental Authority, unless (i) the Account Debtor
is the United States or any department, agency or instrumentality thereof, and
the Account has been assigned to the Agent in compliance with the U.S.
Assignment of Claims Act, and any other steps necessary to perfect the Lien of
the Agent in such Account have been complied with to the Agent’s reasonable

 

59

--------------------------------------------------------------------------------

satisfaction, (ii) the Account Debtor is the government of Canada or a province
or territory thereof, and the Account has been assigned to the Agent in
compliance with the Financial Administration Act (or similar Applicable Law of
such province or territory), and any other steps necessary to perfect the Lien
of the Agent in such Account have been complied with to the Agent’s reasonable
satisfaction, or (iii) such Account is backed by a letter of credit reasonably
acceptable to the Agent and which is in the possession of the Agent or is
otherwise acceptable to the Agent in its Permitted Discretion;

(o) which is owed by any Affiliate, employee, director, or officer of any Loan
Party;

(p) which is owed by an Account Debtor or any Affiliate of such Account Debtor
which is the holder of Debt issued or incurred by any Loan Party; provided that
any such Account shall only be ineligible as to that portion of such Account
which is less than or equal to the amount owed by the Loan Party to such Person;

(q) except as provided in clause (t) below, which is subject to any
counterclaim, deduction, defense, setoff or material dispute, but only to the
extent of the amount of such counterclaim, deduction, defense, setoff or
dispute, unless (i) the Agent, in its Permitted Discretion, has established
appropriate U.S. Availability Reserves and determines to include such Account as
a U.S. Eligible Account or (ii) such Account Debtor has entered into an
agreement reasonably acceptable to the Agent to waive such rights;

(r) which is evidenced by any promissory note, Chattel Paper, or Instrument;

(s) which is owed by an Account Debtor located in any State of the U.S. to the
extent such jurisdiction requires, as a condition to access to the courts of
such jurisdiction, that a creditor qualify to transact business, file a business
activities report or other report or form, or take one or more other actions,
unless such U.S. Borrower has so qualified, filed such reports or forms, or
taken such actions (and, in each case, paid any required fees or other charges),
except to the extent such U.S. Borrower may qualify subsequently as a foreign
entity authorized to transact business in such state or jurisdiction and gain
access to such courts, without incurring any cost or penalty reasonably viewed
by the Agent to be material in amount, and such later qualification cures any
access to such courts to enforce payment of such Account;

(t) with respect to which such U.S. Borrower has made any agreement with the
Account Debtor for any reduction thereof, but only to the extent of such
reduction, other than discounts and adjustments given in the Ordinary Course of
Business; or

(u) which Account has been transferred pursuant to a Supplier Financing
Transaction.

Subject to Section 14.1.1 and the definition of U.S. Borrowing Base, the Agent
may modify the foregoing criteria and the application of the foregoing criteria
to any specific Account and may determine an Account is ineligible, in each
case, in its Permitted Discretion; provided that, the Agent shall have provided
the North American Loan Party Agent at least three (3) Business Days’ prior
written notice of any such modification, application or determination; provided
further, that upon delivery of such notice, the Agent shall be available to
discuss the proposed modification, application or determination. For the
avoidance of doubt, it is acknowledged and agreed that any calculation of
ineligibility made pursuant to more than one clause above shall be made without
duplication.

U.S. Eligible In-Transit Inventory: at any date of determination, the U.S.
Eligible In-Transit Inventory of Initial U.S. Borrower plus the U.S. Eligible
In-Transit Inventory of Added U.S. Borrower.

 

60

--------------------------------------------------------------------------------

U.S. Eligible In-Transit Inventory of Added U.S. Borrower: at any date of
determination thereof, (a) the lesser of (i) $5,000,000 and (ii) the aggregate
amount of all Inventory owned by Added U.S. Borrower at such date that would be
U.S. Eligible Inventory if it were not in transit from a foreign location to a
location of Added U.S. Borrower within the United States (the “Added U.S.
Borrower In-Bound In-Transit Inventory”) and (b) the lesser of (i) $20,000,000
and (ii) aggregate amount of all Inventory owned by Added U.S. Borrower at such
date that would be U.S. Eligible Inventory if it were not in transit from a
location of Added U.S. Borrower within the United States to a location of a
Dutch Borrower within the Netherlands, Belgium, the U.K., France or Germany
(“Added U.S. Borrower Out-Bound In-Transit Inventory”). Without limiting the
foregoing, no Inventory shall be U.S. Eligible In-Transit Inventory of Added
U.S. Borrower unless it meets, and then only for so long as it continues to
meet, the Agent’s standard requirements for including in-transit Inventory in
Eligible Inventory, which include, among other things, the following:

(a) title to the Inventory is in Added U.S. Borrower and the Inventory is owned
by Added U.S. Borrower (except that in the cases of Added U.S. Borrower In-Bound
In-Transit Inventory that is in transit intercompany and Added U.S. Borrower
Out-Bound In-Transit Inventory, title to the Inventory may be in Added U.S.
Borrower or a Dutch Borrower and the Inventory may be owned by Added U.S.
Borrower or a Dutch Borrower);

(b) in the case of Added U.S. Borrower In-Bound In-Transit Inventory, the
Inventory is in transit to Added U.S. Borrower to a location of Added U.S.
Borrower within in the United States;

(c) in the case of Added U.S. Borrower Out-Bound In-Transit Inventory, the
Inventory is in transit intercompany from Added U.S. Borrower to a Dutch
Borrower to a location of the Dutch Borrower in the Netherlands, Belgium, the
U.K., France or Germany;

(d) the Inventory is fully insured for not less than 100% of the invoice cost
thereof, and the Agent shall have received evidence of satisfactory casualty
insurance naming the Agent as loss payee and otherwise covering such risks as
the Agent may reasonably request;

(e) the Inventory is subject to a first priority security interest in and Lien
upon such goods in favor of the Agent (except for any possessory Lien upon such
goods in the possession of a freight carrier or shipping company securing only
the freight charges for the transportation of such goods to the applicable
destination, and the Agent shall have established U.S. Availability Reserves
equal to the amount of such lien or the Agent has received a Lien waiver in form
and substance reasonably satisfactory to it with respect to such Lien);

(f) in the case of Added U.S. Borrower In-Bound In-Transit Inventory that is not
in transit intercompany, the Inventory is evidenced by and deliverable pursuant
to a tangible bill of lading of a type and in a form acceptable to the Agent in
its Permitted Discretion that has been issued by a common carrier acceptable to
the Agent, and such bill of lading shall be in the possession of either the
Agent or a freight forwarder or customs broker in each case acting for the Agent
under the terms of an Imported Goods Agreement which has been delivered to the
Agent; and

(g) in the cases of Added U.S. Borrower In-Bound In-Transit Inventory that is in
transit intercompany and Added U.S. Borrower Out-Bound In-Transit Inventory, the
Inventory is evidenced by and deliverable pursuant to a tangible bill of lading
or such other documentation of a type and in a form acceptable to the Agent in
its Permitted Discretion that has been issued by a common carrier acceptable to
the Agent, and if a bill of lading such bill of lading shall be in the
possession of either the Agent or a freight forwarder or customs broker in each
case acting for the Agent under the terms of an Imported Goods Agreement which
has been delivered to the Agent.

 

61

--------------------------------------------------------------------------------

Notwithstanding the foregoing clauses (e) and (g) above, Added U.S. Borrower
Out-Bound In-Transit Inventory which would otherwise constitute U.S. Borrower
Eligible In-Transit Inventory of Added U.S. Borrower except that it is not
evidenced by and deliverable pursuant to a Permitted Bill of Lading shall for
the purposes of this Agreement be considered U.S. Eligible In-Transit Inventory
of Added U.S. Borrower; provided, however, if at any time (x) the amount of the
U.S. Availability is less than $50,000,000 or (y) the sum of the U.S.
Availability and the Dutch Kraton Availability is less than $75,000,000, then
such Added U.S. Borrower Out-Bound In-Transit Inventory shall no longer
constitute U.S. Eligible In-Transit Inventory of Added U.S. Borrower unless such
Added U.S. Borrower Out-Bound In-Transit Inventory otherwise constitutes U.S.
Eligible In-Transit Inventory of Added U.S. Borrower pursuant to the express
provisions of this definition.

U.S. Eligible In-Transit Inventory of Initial U.S. Borrower: at any date of
determination thereof, (a) the lesser of (i) $30,000,000 and (ii) the aggregate
amount of all Inventory owned by Initial U.S. Borrower at such date that would
be U.S. Eligible Inventory if it were not in transit from a foreign location to
a location of Initial U.S. Borrower within the United States (the “Initial U.S.
Borrower In-Bound In-Transit Inventory”) and (b) the lesser of (i) $15,000,000
and (ii) aggregate amount of all Inventory owned by Initial U.S. Borrower at
such date that would be U.S. Eligible Inventory if it were not in transit from a
location of Initial U.S. Borrower within the United States to a location of a
Dutch Borrower within the Netherlands, Belgium, the U.K., France or Germany
(“Initial U.S. Borrower Out-Bound In-Transit Inventory”). Without limiting the
foregoing, no Inventory shall be U.S. Eligible In-Transit Inventory of Initial
U.S. Borrower unless it meets, and then only for so long as it continues to
meet, the Agent’s standard requirements for including in-transit Inventory in
Eligible Inventory, which include, among other things, the following:

(a) title to the Inventory is in Initial U.S. Borrower and the Inventory is
owned by Initial U.S. Borrower (except that in the cases of Initial U.S.
Borrower In-Bound In-Transit Inventory that is in transit intercompany and
Initial U.S. Borrower Out-Bound In-Transit Inventory, title to the Inventory may
be in Initial U.S. Borrower or a Dutch Borrower and the Inventory may be owned
by Initial U.S. Borrower or a Dutch Borrower);

(b) in the case of Initial U.S. Borrower In-Bound In-Transit Inventory, the
Inventory is in transit to Initial U.S. Borrower to a location of Initial U.S.
Borrower within in the United States;

(c) in the case of Initial U.S. Borrower Out-Bound In-Transit Inventory, the
Inventory is in transit intercompany from Initial U.S. Borrower to a Dutch
Borrower to a location of the Dutch Borrower in the Netherlands, Belgium, the
U.K., France or Germany;

(d) the Inventory is fully insured for not less than 100% of the invoice cost
thereof, and the Agent shall have received evidence of satisfactory casualty
insurance naming the Agent as loss payee and otherwise covering such risks as
the Agent may reasonably request;

(e) the Inventory is subject to a first priority security interest in and Lien
upon such goods in favor of the Agent (except for any possessory Lien upon such
goods in the possession of a freight carrier or shipping company securing only
the freight charges for the transportation of such goods to the applicable
destination, and the Agent shall have established U.S. Availability Reserves
equal to the amount of such lien or the Agent has received a Lien waiver in form
and substance reasonably satisfactory to it with respect to such Lien);

(f) in the case of Initial U.S. Borrower In-Bound In-Transit Inventory that is
not in transit intercompany, the Inventory is evidenced by and deliverable
pursuant to a tangible bill of lading of a type and in a form acceptable to the
Agent in its Permitted Discretion that has been issued by a common

 

62

--------------------------------------------------------------------------------

carrier acceptable to the Agent, and such bill of lading shall be in the
possession of either the Agent or a freight forwarder or customs broker in each
case acting for the Agent under the terms of an Imported Goods Agreement which
has been delivered to the Agent; and

(g) in the cases of Initial U.S. Borrower In-Bound In-Transit Inventory that is
in transit intercompany and Initial U.S. Borrower Out-Bound In-Transit
Inventory, the Inventory is evidenced by and deliverable pursuant to a tangible
bill of lading or such other documentation of a type and in a form acceptable to
the Agent in its Permitted Discretion that has been issued by a common carrier
acceptable to the Agent, and if a bill of lading such bill of lading shall be in
the possession of either the Agent or a freight forwarder or customs broker in
each case acting for the Agent under the terms of an Imported Goods Agreement
which has been delivered to the Agent.

Notwithstanding the foregoing clauses (e) and (g) above, Initial U.S. Borrower
Out-Bound In-Transit Inventory which would otherwise constitute U.S. Borrower
Eligible In-Transit Inventory of Initial U.S. Borrower except that it is not
evidenced by and deliverable pursuant to a Permitted Bill of Lading shall for
the purposes of this Agreement be considered U.S. Eligible In-Transit Inventory
of Initial U.S. Borrower; provided, however, if at any time (x) the amount of
the U.S. Availability is less than $50,000,000 or (y) the sum of the U.S.
Availability and the Dutch Kraton Availability is less than $75,000,000, then
such Initial U.S. Borrower Out-Bound In-Transit Inventory shall no longer
constitute U.S. Eligible In-Transit Inventory of Initial U.S. Borrower unless
such Initial U.S. Borrower Out-Bound In-Transit Inventory otherwise constitutes
U.S. Eligible In-Transit Inventory of Initial U.S. Borrower pursuant to the
express provisions of this definition.

U.S. Eligible Inventory: at any date of determination thereof, the aggregate
amount of all Inventory owned by U.S. Borrowers at such date except any
Inventory:

(a) which is not subject to a duly perfected security interest in favor of the
Agent;

(b) which is subject to any Lien (including Liens permitted by Section 10.2.2)
other than (i) a Lien in favor of the Agent, (ii) a Lien permitted under
Section 10.2.2(i), but to the extent it has priority over the Lien of Agent or
the applicable Security Trustee, the eligibility of such Inventory shall be
reduced by the amount determined by the Agent in its Permitted Discretion;
(iii) a Lien permitted under Section 10.2.2(c) or (hh) which does not have
priority over the Lien in favor of the Agent, (iv) a Lien permitted under
Section 10.2.2(j); provided that clauses (h) and (i) below of this definition of
U.S. Eligible Inventory are satisfied in the case of a Lien of a landlord,
bailee, warehouseman or processor in the U.S.; (v) a Lien permitted under
Section 10.2.2(o) or (s) which does not have priority over the Lien in favor of
the Agent; or (vi) a Lien permitted under Section 10.2.2(v) to the extent of the
amount of such payable customs duties secured by such Lien;

(c) which is, in the Agent’s Permitted Discretion, slow moving (unless the
Inventory component of the U.S. Borrowing Base is being determined pursuant to
clause (b)(ii) thereof and slow moving Inventory was taken into account in
determining the NOLV Percentage), obsolete, unmerchantable, defective, unfit for
sale, not salable at prices approximating at least the cost of such Inventory in
the Ordinary Course of Business unacceptable due to age, type, category and/or
quantity;

(d) with respect to which any covenant, representation or warranty regarding
such Inventory contained in this Agreement has been materially breached or is
not true in any material respect;

(e) which does not conform in all material respects to all standards imposed by
any applicable Governmental Authority (except that any standard that is
qualified as to “materiality” shall have been conformed to in all material
respects);

 

63

--------------------------------------------------------------------------------

(f) which constitutes packaging and shipping material, work in process,
manufacturing supplies, display items, returned or repossessed Inventory (other
than goods that are undamaged and able to be resold in the Ordinary Course of
Business), Inventory held on consignment by the Applicable U.S. Borrower as
consignee prior to any title passing to such U.S. Borrower, as buyer, Inventory
to be returned to such U.S. Borrower’s suppliers (but not held for resale) or
goods which are not of a type held for sale in the Ordinary Course of Business
or Inventory which is the subject of a sale on a bill and hold basis other than
to the extent (i) such bill and hold sale does not create a U.S. Eligible
Account pursuant to clause (g)(v) of the definition of U.S. Eligible Account and
(ii) such bill and hold sale would otherwise constitute a U.S. Eligible Account
except for the fact that such sale is on a bill and hold basis;

(g) which is not located in the United States or Canada or is not at a location
listed on Schedule 8.5.1 (as updated from time to time in accordance with the
provisions hereof) other than (i) Inventory in transit between locations of the
U.S. Domiciled Loan Parties, (ii) U.S. Eligible In-Transit Inventory; and
(iii) during the sixty (60) day period immediately following the Closing Date
(or such longer period as determined by the Agent in its sole discretion),
Inventory which would otherwise qualify as U.S. Eligible In-Transit Inventory
except for the satisfaction of clauses (d), (e) and (f) contained in the
definition of U.S. Eligible In-Transit Inventory of U.S. Added Borrower;

(h) which is located in any location in the United States or Canada leased by
such U.S. Borrower, unless the lessor has delivered to the Agent a Lien
Acknowledgment; provided, that the exclusion in this clause (h) shall not apply
if such U.S. Borrower has used commercially reasonable efforts to deliver a Lien
Acknowledgment to Agent (regardless of whether such Lien Acknowledgment is
ultimately obtained by such U.S. Borrower) or if in Canada such Lien
Acknowledgment is not customarily delivered or obtained prior to the occurrence
and continuance of an Event of Default and (ii) for ninety (90) days after the
Closing Date (or such longer period with the prior consent of the Agent (such
consent not to be unreasonably withheld));

(i) which is located in any third party warehouse or is in the possession of a
bailee or processor unless (i) such warehouseman, bailee, processor or other
Person has delivered to the Agent a Lien Acknowledgment and/or such other
documentation as the Agent may reasonably require; provided, that the exclusion
in this clause (i) shall not apply (i) if such U.S. Borrower has used
commercially reasonable efforts to deliver a Lien Acknowledgment to Agent
(regardless of whether such Lien Acknowledgment is ultimately obtained by such
U.S. Borrower) or if in Canada such Lien Acknowledgment is not customarily
delivered or obtained prior to the occurrence and continuance of an Event of
Default and (ii) if such U.S. Borrower is Added U.S. Borrower, for ninety
(90) days after the Closing Date (or such longer period with the prior consent
of the Agent (such consent not to be unreasonably withheld));

(j) which is evidenced by a Document, except to the extent such Inventory
constitutes U.S. Eligible In-Transit Inventory unless delivered to the Agent;

(k) which is the subject of a consignment by such U.S. Borrower as consignor
(except goods held on consignment that the Agent in its Permitted Discretion
allows to be U.S. Eligible Inventory);

(l) [Reserved]; or

(m) which is located in any location where the aggregate Value at such location
is less than $2,000,000.

Subject to Section 14.1.1 and the definition of U.S. Borrowing Base, the Agent
may modify the foregoing criteria or the application of the foregoing criteria
to specific items of Inventory and may determine

 

64

--------------------------------------------------------------------------------

Inventory is ineligible, in each case, in its Permitted Discretion; provided
that, the Agent shall have provided the North American Loan Party Agent at least
three (3) Business Days’ prior written notice of any such modification,
application or determination; provided further, that upon delivery of such
notice, the Agent shall be available to discuss the proposed modification,
application or determination.

Notwithstanding the foregoing clause (g) above, (A) U.S. Barge In-Transit
Inventory which otherwise would constitute U.S. Eligible Inventory except that
it is not evidenced by and deliverable pursuant to a Permitted Bill of Lading
shall for purposes of this Agreement be considered U.S. Eligible Inventory;
provided, however, if at any time (x) the amount of the U.S. Availability is
less than $50,000,000 or (y) the sum of the U.S. Availability and the Dutch
Kraton Availability is less than $75,000,000, such U.S. Barge In-Transit
Inventory shall no longer constitute U.S. Eligible Inventory unless such U.S.
Barge In-Transit Inventory otherwise constitutes U.S. Eligible Inventory
pursuant to the express provisions of this definition; provided, further, that
clause (g) of the definition of U.S. Eligible Inventory shall not apply if such
Inventory is evidenced by a Permitted Bill of Lading, and (B) U.S. Rail
In-Transit Inventory which otherwise would constitute U.S. Eligible Inventory
except that it is not evidenced by and deliverable pursuant to a Permitted Bill
of Lading shall for purposes of this Agreement be considered U.S. Eligible
Inventory; provided, however, if at any time (x) the amount of the U.S.
Availability is less than $50,000,000 or (y) the sum of the U.S. Availability
and the Dutch Kraton Availability is less than $75,000,000, such U.S. Rail
In-Transit Inventory shall no longer constitute U.S. Eligible Inventory unless
such U.S. Rail In-Transit Inventory otherwise constitutes U.S. Eligible
Inventory pursuant to the express provisions of this definition; provided,
further, that clause (g) of the definition of U.S. Eligible Inventory shall not
apply if such Inventory is evidenced by a Permitted Bill of Lading.

U.S. Employee Plan: any “employee pension benefit plan” (as defined in
Section 3(2) of ERISA), that is subject to the provisions of Title IV of ERISA,
Section 412 of the Code or Section 302 of ERISA (other than a Multiemployer
Plan), and is sponsored or maintained by any Loan Party or any ERISA Affiliate
or to which any Loan Party or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064 of ERISA, has made contributions at any time during
the immediately preceding five plan years.

U.S. Facility Collateral: Collateral that now or hereafter secures (or is
intended to secure) any of the U.S. Facility Secured Obligations.

U.S. Facility Guarantor: Parent, KPLLC, Elastomers, KPCC, Arizona Chemical
Holdings, AZ Chem Intermediate Inc., AZ Chem U.S. Holdings, Inc., AZ Chem US
Inc. each U.S. Borrower and each U.S. Subsidiary that, after the date hereof,
has executed a supplement or joinder to this Agreement in accordance with
Section 10.1.9 specifying that it is a U.S. Facility Guarantor; provided no
Excluded Subsidiary (as defined in the Term Loan Agreement) shall be (or shall
be required to become) a U.S. Facility Guarantor hereunder.

U.S. Facility Loan Party: a U.S. Borrower or a U.S. Facility Guarantor.

U.S. Facility Obligations: all Obligations of the U.S. Facility Loan Parties
(including, for the avoidance of doubt, the Obligations of the U.S. Domiciled
Loan Parties as guarantors of the Foreign Facility Obligations).

U.S. Facility Secured Obligations: all Secured Obligations of the U.S. Facility
Loan Parties (including, for the avoidance of doubt, the Secured Obligations of
the U.S. Domiciled Loan Parties as guarantors of the Foreign Facility Secured
Obligations).

 

65

--------------------------------------------------------------------------------

U.S. Facility Secured Parties: the Agent, any U.S. Fronting Bank, U.S. Lenders
and Secured Bank Product Providers of Bank Products for the account of U.S.
Domiciled Loan Parties and their Subsidiaries.

U.S. Fronting Bank: Bank of America or any Affiliate thereof that agrees to
issue U.S. Letters of Credit or, if reasonably acceptable to North American Loan
Party Agent, any other U.S. Lender or Affiliate thereof that agrees to issue
U.S. Letters of Credit.

U.S. Fronting Bank Indemnitees: any U.S. Fronting Bank and its officers,
directors, employees, Affiliates and agents.

U.S. Inventory Reserve: the aggregate amount of reserves, as established by the
Agent from time to time in its Permitted Discretion, to reflect factors that may
negatively impact the value of U.S. Eligible Inventory, including, without
duplication of eligibility criteria, changes in salability, slow moving,
obsolescence, shrinkage, theft, imbalance, change in composition or mix,
markdowns and vendor chargebacks.

U.S. LC Application: an application by North American Loan Party Agent on behalf
of a U.S. Borrower or any Restricted Subsidiary to a U.S. Fronting Bank for
issuance of a U.S. Letter of Credit, in form and substance reasonably
satisfactory to such U.S. Fronting Bank.

U.S. LC Conditions: the following conditions necessary for issuance of a U.S.
Letter of Credit: (a) each of the conditions set forth in Section 6.2 being
satisfied or waived; (b) after giving effect to such issuance, total U.S. LC
Obligations do not exceed the U.S. Letter of Credit Sublimit and no U.S.
Overadvance exists or would result therefrom; (c) after giving effect to such
issuance, total U.S. LC Obligations denominated in currencies other than Dollars
do not exceed the U.S. Letter of Credit Foreign Currency Sublimit; (d) unless
the applicable U.S. Fronting Bank and the Agent otherwise consent, the
expiration date of such U.S. Letter of Credit is no more than the lesser of
(A) thirty (30) days before the Facility Termination Date and (B) twelve
(12) months from issuance with respect to U.S. Letters of Credit other than
documentary U.S. Letters of Credit; provided that each standby U.S. Letter of
Credit may, upon the request of the applicable U.S. Borrower, include a
provision whereby such Letter of Credit shall be renewed automatically for
additional consecutive periods of twelve (12) months or less; (e) the U.S.
Letter of Credit and payments thereunder are denominated in Dollars or such
other currency as may be agreed to by the applicable U.S. Fronting Bank; (f) the
form of the proposed U.S. Letter of Credit is reasonably satisfactory to the
Agent and the applicable U.S. Fronting Bank; and (g) the proposed use of the
U.S. Letter of Credit is for a lawful purpose.

U.S. LC Documents: all documents, instruments and agreements (including U.S. LC
Requests and U.S. LC Applications) delivered by North American Loan Party Agent
on behalf a U.S. Borrower or a Restricted Subsidiary to a U.S. Fronting Bank or
the Agent in connection with issuance, amendment or renewal of, or payment
under, any U.S. Letter of Credit.

U.S. LC Obligations: the Dollar Equivalent of the sum (without duplication) of
(a) all amounts owing for any drawings under U.S. Letters of Credit; (b) the
stated amount of all outstanding U.S. Letters of Credit; and (c) all fees and
other amounts owing with respect to U.S. Letters of Credit.

U.S. LC Request: a request for issuance of a U.S. Letter of Credit, to be
provided by North American Loan Party Agent on behalf of a U.S. Borrower to a
U.S. Fronting Bank, in form reasonably satisfactory to the Agent and such U.S.
Fronting Bank.

 

66

--------------------------------------------------------------------------------

U.S. Lenders: Bank of America and each other Lender that has provided a U.S.
Revolver Commitment.

U.S. Letter of Credit: any standby or commercial letter of credit or documentary
bankers’ acceptances, in each case, issued by a U.S. Fronting Bank for the
account of a U.S. Borrower or any Restricted Subsidiary, whether in existence on
the Closing Date or issued on or after the Closing Date.

U.S. Letter of Credit Foreign Currency Sublimit: $15,000,000.

U.S. Letter of Credit Sublimit: $30,000,000.

U.S. Line Cap: as of any date of determination, the lesser of (i) the U.S.
Revolver Commitments as of such date of determination and (ii) the U.S.
Borrowing Base as of such date of determination.

U.S. Overadvance: as defined in Section 2.1.5(b).

U.S. Overadvance Loan: a U.S. Base Rate Loan made to a U.S. Borrower when a U.S.
Overadvance exists or is caused by the funding thereof.

U.S. Past Due Rent: as defined in the definition “U.S. Rent Reserve”.

U.S. Person: any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

U.S. Prime Rate: the rate of interest announced by Bank of America from time to
time as its prime rate. Such rate is set by Bank of America on the basis of
various factors, including its costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.

U.S. Protective Advances: as defined in Section 2.1.6(b).

U.S. Rail In-Transit Inventory: at any date of determination, all Inventory of
the Added U.S. Borrower which is in-transit within the United States by rail
from the location of the relevant third party seller within the United States to
any of the plants or distribution centers of the Added U.S. Borrower located
within the United States; provided, that at any date of determination, the
amount of U.S. Rail In-Transit Inventory which may be included in U.S. Eligible
Inventory may not exceed $12,000,000.

U.S. Reimbursement Date: as defined in Section 2.3.2(a).

U.S. Rent Reserve: the aggregate of (a) all past due rent and other past due
charges owing by any U.S. Borrower to any landlord, bailee, warehouseman or
other Person who possesses any U.S. Facility Collateral or could assert a Lien
on any U.S. Facility Collateral (such past due amount, the “U.S. Past Due
Rent”); plus (b) a reserve in an amount equal to at least three (3) months’ rent
and other charges that could be payable to any such Person, unless such Person
has executed a Lien Acknowledgment.

U.S. Revolver Commitment: for any U.S. Lender, its obligation to make U.S.
Revolver Loans and to issue U.S. Letters of Credit, in the case of any U.S.
Fronting Bank, or participate in U.S. LC Obligations, in the case of the other
U.S. Lenders, to the U.S. Borrowers up to the maximum principal amount, in each
case, shown on Schedule 2.1.1(b), or as hereafter determined pursuant to each

 

67

--------------------------------------------------------------------------------

Assignment and Acceptance to which it is a party, as such U.S. Revolver
Commitment may be adjusted from time to time in accordance with the provisions
of Section 2.1.4, 2.1.7 or 11.2. “U.S. Revolver Commitments” means the aggregate
amount of such commitments of all U.S. Lenders.

U.S. Revolver Commitment Increase: as defined in Section 2.1.7(b).

U.S. Revolver Commitment Termination Date: the earliest of (a) the Facility
Termination Date, (b) the date on which the North American Loan Party Agent
terminates or reduces to zero the U.S. Revolver Commitments pursuant to
Section 2.1.4, and (c) the date on which the U.S. Revolver Commitments are
terminated pursuant to Section 11.2.

U.S. Revolver Exposure: on any date, an amount equal to the sum of the (a) U.S.
Revolver Loans outstanding on such date and (b) U.S. LC Obligations on such
date.

U.S. Revolver Loan: a Revolver Loan made by a U.S. Lender to a U.S. Borrower
pursuant to Section 2.1.1(b) which Loan shall be denominated in Dollars and
shall be either a U.S. Base Rate Loan or a LIBOR Loan, in each case as selected
by North American Loan Party Agent, and including any U.S. Swingline Loan, U.S.
Overadvance Loan or U.S. Protective Advance.

U.S. Revolver Notes: the promissory notes, if any, executed by U.S. Borrowers in
favor of each U.S. Lender to evidence the U.S. Revolver Loans funded from time
to time by such U.S. Lender, which shall be substantially in the form of Exhibit
C-2 to this Agreement, together with any replacement or successor notes
therefor.

U.S. Subsidiary: each Subsidiary of Parent that is organized under the laws of
the United States, any state of the United States or the District of Columbia.

U.S. Swingline Lender: Bank of America or an Affiliate of Bank of America.

U.S. Swingline Loan: a Swingline Loan made by the U.S. Swingline Lender to a
U.S. Borrower pursuant to Section 2.1.8(b), which Swingline Loan shall be
denominated in Dollars and shall be a U.S. Base Rate Loan.

U.S. Swingline Sublimit: 10% of the U.S. Revolver Commitments.

U.S. Tax Certificate: as defined in Section 5.9.2.

Value: (a) for Inventory composed of raw materials, its value determined on the
basis of the lower of weighted average cost or market and excluding any portion
of cost attributable to intercompany profit among Borrowers and their
Affiliates; (b) for Inventory composed of finished goods, its value determined
on the basis of the lower of weighted average cost or market and excluding any
portion of cost attributable to intercompany profit among Borrowers and their
Affiliates; and (c) for an Account, its book value.

VAT:

(a) any Tax imposed in compliance with the Council Directive of 28 November 2006
on the common system of value added Tax (EC Directive 2006/112); and

 

68

--------------------------------------------------------------------------------

(b) any other Tax of a similar nature, whether imposed in a member state of the
European Union in substitution for, or levied in addition to, such Tax referred
to in paragraph (a) above, or imposed elsewhere.

Withdrawal Liability: any liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Title IV of ERISA.

1.2. Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of the Loan Parties delivered to the Agent before the
Closing Date. In the event that any “Accounting Changes” (as defined below)
shall occur and such change results in a change in the method of calculation of
financial covenants, standards or terms in this Agreement, then at the North
American Loan Party Agent’s request, the Agent and the Lenders shall enter into
negotiations in good faith with such Loan Party Agent in order to amend such
provisions of this Agreement so as to reflect equitably such Accounting Changes
with the desired result that the criteria for evaluating the financial condition
of the Loan Parties shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as such an amendment shall
have been executed and delivered by the Loan Parties, the Agent and the Required
Lenders, all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such Accounting Changes had not
occurred. Any (i) change in GAAP occurring after the date hereof or
(ii) application of guidance promulgated by EITF No. 01-08, in each case that
would require operating leases to be treated as capital leases shall be
disregarded for purposes of determining Debt and any financial ratio or
compliance requirement contained in any Loan Document. “Accounting Changes”
refers to changes in accounting principles required by GAAP.

1.3. Uniform Commercial Code. As used herein, the following terms are defined in
accordance with the UCC in effect in the State of New York from time to time:
“Chattel Paper”, “Commercial Tort Claim”, “Lien Creditor”, “Electronic Chattel
Paper”, “Equipment”, “Fixture”, “Goods”, “Instrument”, “Investment Property”,
“Payment Intangibles”, “Proceeds”, “Tangible Chattel Paper”. In addition, other
terms relating to Collateral used and not otherwise defined herein that are
defined in the UCC shall have the meanings set forth in the UCC and as the
context requires.

1.4. Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,” and
“to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any reference to any
Loan Document shall be deemed to include any amendments, restatements, waivers
and other modifications, extensions or supplements to, or renewals of, such Loan
Document; (c) section means, unless the context otherwise requires, a section of
this Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated
by reference; (e) any Person includes successors, permitted transferees and
permitted assigns of such Person; (f) time of day means time of day in Dallas,
Texas (Central Time) unless otherwise specified herein; (g) discretion of the
Agent, any Security Trustee, any Fronting Bank or any Lender means the sole and
absolute discretion of such Person exercised in a manner consistent with its
duties of good faith and fair dealing; or (h) “property” or “asset” includes any
real or personal, present or future,

 

69

--------------------------------------------------------------------------------

tangible or intangible property or asset and any right, interest, revenue or
benefit in, under or derived from the property or asset. To the extent not
otherwise specified herein, Borrowing Base calculations for each Borrower shall
be consistent with historical methods of valuation and calculation for such
Borrower’s Borrowing Base, and otherwise reasonably satisfactory to the Agent
(and not necessarily calculated in accordance with GAAP). Loan Parties shall
have the burden of establishing any alleged negligence, misconduct or lack of
good faith by the Agent, any Security Trustee, any Fronting Bank or any Lender
under any Loan Documents. No provision of any Loan Documents shall be construed
against any party by reason of such party having, or being deemed to have,
drafted the provision. A reference to a Loan Party’s “knowledge” or similar
concept means actual knowledge of a Senior Officer, or knowledge that a Senior
Officer would have obtained if he or she had engaged in due inquiry. Whenever
any payment, certificate, notice or other delivery shall be stated to be due on
a day other than a Business Day, the due date for such payment or delivery shall
be extended to the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be; provided, however, that if such extension would cause payment of
interest on or principal of any LIBOR Loan to be made in the next calendar
month, such payment shall be made on the immediately preceding Business Day.

1.5. Currency Calculations.

(a) All references in the Loan Documents to Loans, Letters of Credit,
Obligations and other amounts shall be denominated in Dollars, unless expressly
provided otherwise. The Dollar Equivalent of any amounts denominated or reported
under a Loan Document with respect to the components of the Total Borrowing Base
in a currency other than Dollars shall be determined by the Agent on a daily
basis based on the current Exchange Rate, with all other amounts determined and
reported in Dollars in accordance with GAAP. Each Borrower shall report Value
and other Borrowing Base components to the Agent in the currency invoiced by
such Borrower or shown in such Borrower’s financial records, and unless
expressly provided otherwise, Parent shall deliver consolidated financial
statements and calculate financial covenants in Dollars. Notwithstanding
anything herein to the contrary, if any Obligation is funded and expressly
denominated in a currency other than Dollars, Borrowers shall repay such
Obligation in such other currency.

(b) For purposes of determining compliance with Section 10.2 with respect to any
Dollar denominated restriction on Debt, Investments, Liens or Distributions, the
dollar equivalent of such Debt, Investment, Lien or Distribution, as applicable,
denominated in a currency other than Dollars shall be calculated based on the
relevant currency Exchange Rate (as determined by the North American Loan Party
Agent) in effect on the date such Debt, Investment, Lien or Distribution, as
applicable, was first committed or incurred and, no Default shall be deemed to
have occurred solely as a result of changes in rates of exchange occurring after
the time such Debt or Investment is incurred; provided that if such Debt is
incurred to refinance other Debt denominated in a foreign currency, and such
refinancing would cause the applicable Dollar denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in effect on the
date of such refinancing, such Dollar denominated restriction shall be deemed
not to have been exceeded so long as the principal amount of such refinancing
Debt does not exceed the principal amount of such Indebtedness being refinanced;
provided further that, for the avoidance of doubt, the foregoing provisions of
this Section 1.5(b) shall otherwise apply to such Sections, including with
respect to determining whether any Debt or Investment may be incurred at any
time under such Sections.

 

70

--------------------------------------------------------------------------------

SECTION 2. CREDIT FACILITIES

2.1. Commitment

2.1.1. Revolver Loans.

(a) Dutch Kraton Revolver Loans. Each Dutch Kraton Lender agrees, severally and
not jointly with the other Dutch Kraton Lenders, upon the terms and subject to
the conditions set forth herein, to make Dutch Kraton Revolver Loans to any of
the Dutch Kraton Borrowers from time to time on any Business Day during the
period from the Closing Date to the Dutch Kraton Revolver Commitment Termination
Date, not to exceed in aggregate principal amount outstanding at any time (based
on the Dollar Equivalent thereof), together with such Dutch Kraton Lender’s
portion of the Dutch Kraton LC Obligations, such Dutch Kraton Lender’s Dutch
Kraton Revolver Commitment at such time, which Dutch Kraton Revolver Loans may
be repaid and reborrowed in accordance with the provisions of this Agreement;
provided, however, that Dutch Kraton Lenders shall have no obligation to the
Dutch Kraton Borrowers whatsoever to honor any request for a Dutch Kraton
Revolver Loan (i) on or after the Dutch Kraton Revolver Commitment Termination
Date or (ii) if the Dollar Equivalent of the amount of the proposed Dutch Kraton
Revolver Loan exceeds Dutch Kraton Availability on the proposed funding date for
such Dutch Kraton Revolver Loan or, in the case of any Dutch Kraton Borrower,
the limit contained in Section 2.5. Each Borrowing of Dutch Kraton Revolver
Loans shall be funded by Dutch Kraton Lenders on a Pro Rata basis. The Dutch
Kraton Revolver Loans shall bear interest as set forth in Section 3.1. Each
Dutch Kraton Revolver Loan shall, at the option of the Applicable Dutch Kraton
Borrower, be made or continued as, or converted into, part of one or more
Borrowings that, unless specifically provided herein, shall consist entirely of
European Base Rate Loans or LIBOR Loans if denominated in Sterling, European
Base Rate Loans or LIBOR Loans if denominated in Euros, or European Base Rate
Loans or LIBOR Loans if denominated in Dollars. The Dutch Kraton Revolver Loans
shall be repaid in accordance with the terms of this Agreement and shall be
secured by all of the Dutch Facility Collateral. Each Dutch Kraton Revolver Loan
shall be funded in Euros or, at the option of the Applicable Dutch Kraton
Borrower, Dollars or Sterling and repaid in the same currency as the underlying
Dutch Kraton Revolver Loan was made.

(b) U.S. Revolver Loans to U.S. Borrowers. Each U.S. Lender agrees, severally
and not jointly with the other U.S. Lenders, upon the terms and subject to the
conditions set forth herein, to make U.S. Revolver Loans to any of the U.S.
Borrowers from time to time on any Business Day during the period from the
Closing Date to the U.S. Revolver Commitment Termination Date, not to exceed in
aggregate principal amount outstanding at any time, together with such U.S.
Lender’s portion of the U.S. LC Obligations, such U.S. Lender’s U.S. Revolver
Commitment at such time, which U.S. Revolver Loans may be repaid and reborrowed
in accordance with the provisions of this Agreement; provided, however, that
such U.S. Lenders shall have no obligation to U.S. Borrowers whatsoever to honor
any request for a U.S. Revolver Loan (i) on or after the U.S. Revolver
Commitment Termination Date or (ii) if the amount of the proposed U.S. Revolver
Loan exceeds U.S. Availability on the proposed funding date for such U.S.
Revolver Loan. Each Borrowing of U.S. Revolver Loans shall be funded by U.S.
Lenders on a Pro Rata basis. The U.S. Revolver Loans shall bear interest as set
forth in Section 3.1. Each U.S. Revolver Loan shall, at the option of the North
American Loan Party Agent, be made or continued as, or converted into, part of
one or more Borrowings that, unless specifically provided herein, shall consist
entirely of U.S. Base Rate Loans or LIBOR Loans. The U.S. Revolver Loans shall
be repaid in accordance with the terms of this Agreement and shall be secured by
all of the U.S. Facility Collateral. U.S. Borrowers shall be jointly and
severally liable to pay all of the U.S. Revolver Loans. Each U.S. Revolver Loan
shall be funded and repaid in Dollars.

(c) Cap on Total Revolver Exposure. Notwithstanding anything to the contrary
contained in this Section 2.1.1, in no event shall any Borrower be entitled to
receive a Revolver Loan if at the time of the proposed funding of such Loan (and
after giving effect thereto and all pending requests for Loans), the Total
Revolver Exposure exceeds (or would exceed) the aggregate amount of the
Commitments at such time.

 

71

--------------------------------------------------------------------------------

2.1.2. Revolver Notes. The Revolver Loans made by each Lender and interest
accruing thereon shall be evidenced by the records of the Agent and such Lender.
At the request of any Lender, the Borrowers within the Borrower Group to which
such Lender has extended Commitments shall deliver a Revolver Note to such
Lender in the amount of such Lender’s Commitment to such Borrower Group,
provided such request is made at least two (2) Business Days prior to the
Closing Date.

2.1.3. Use of Proceeds. The proceeds of Revolver Loans shall be used by
Borrowers solely (a) to refinance the Existing Credit Agreement; (b) to pay fees
and expenses associated with the Transaction; and (c) for other lawful, general
corporate purposes of the Loan Parties and their Subsidiaries.

2.1.4. Reduction or Termination of Commitments.

(a) Dutch Kraton Revolver Commitments. Unless sooner terminated in accordance
with this Agreement, the Dutch Kraton Revolver Commitments shall terminate on
the Dutch Kraton Revolver Commitment Termination Date. Upon at least thirty
(30) days’ prior written notice to the Agent from the North American Loan Party
Agent, Dutch Kraton Borrowers may, at their option, terminate the Dutch Kraton
Revolver Commitments in full without premium or penalty (other than funding
losses payable pursuant to Section 3.10). On the Dutch Kraton Revolver
Commitment Termination Date, the Dutch Kraton Facility Loan Parties shall make
Full Payment of all Dutch Kraton Facility Obligations.

(b) U.S. Revolver Commitments. Unless sooner terminated in accordance with this
Agreement, the U.S. Revolver Commitments shall terminate on the U.S. Revolver
Commitment Termination Date. Upon at least thirty (30) days’ prior written
notice to the Agent from the North American Loan Party Agent, U.S. Borrowers
may, at their option, terminate the U.S. Revolver Commitments in full without
premium or penalty (other than funding losses payable pursuant to Section 3.10).
If the U.S. Borrowers elect to permanently reduce to zero or terminate the U.S.
Revolver Commitments pursuant to the previous sentence, the Foreign Revolver
Commitments shall automatically terminate concurrently with the termination of
the U.S. Revolver Commitments. On the U.S. Revolver Commitment Termination Date,
the U.S. Facility Loan Parties shall make Full Payment of all U.S. Facility
Obligations.

(c) Partial Reductions. So long as no Default or Event of Default then exists or
would result therefrom and after giving effect thereto, a Loan Party Agent may
permanently and irrevocably reduce the Commitments by giving the Agent at least
10 Business Days’ prior irrevocable written notice thereof from a Senior Officer
of such Loan Party Agent, which notice shall (i) specify the date (which shall
be a Business Day) and amount of such reduction (which shall, in the case of the
U.S. Revolver Commitments, be in a minimum amount of $5,000,000 and increments
of $1,000,000 in excess thereof and, in the case of a Foreign Revolver
Commitment, be in a minimum amount of $5,000,000 and increments of $1,000,000 in
excess thereof), and (ii) specify the allocation of such reduction to, and the
corresponding reductions of, each Foreign Revolver Commitment and/or the U.S.
Revolver Commitment (each of which shall be allocated to the Lenders among the
affected Borrower Groups on a Pro Rata basis at the time of such reduction);
provided that in no event may any reduction of a Borrower Group Commitment be
made pursuant to this Section 2.1.4(c), if after giving effect thereto, the U.S.
Revolver Commitments would be less than sixty percent (60%) of the Commitment.
Without limiting the foregoing, (A) each reduction in the U.S. Revolver
Commitments may not exceed U.S. Availability, and (B) each reduction in the
Dutch Kraton Revolver Commitments may not exceed Dutch Kraton Availability.

(d) Notices Irrevocable. Any notice of termination or partial reduction given
pursuant to this Section 2.1.4 shall be irrevocable; provided, however, that
notice of termination of the

 

72

--------------------------------------------------------------------------------

Commitments in full may be contingent on the occurrence of a financing or
refinancing or the consummation of a sale, transfer, lease or other disposition
of assets or the occurrence of a Change of Control and may be revoked or the
termination date deferred if the financing or refinancing or sale, transfer,
lease or other disposition of assets or Change of Control does not occur.

2.1.5. Overadvances.

(a) Dutch Kraton Overadvance. If at any time the Dollar Equivalent of the
aggregate principal balance of all Dutch Kraton Revolver Loans owing by a Dutch
Kraton Borrower exceeds the Dutch Kraton Borrowing Base of such Dutch Kraton
Borrower (a “Dutch Kraton Overadvance”), the excess amount shall, subject to
Section 5.2(b), be payable by the Applicable Dutch Kraton Borrower on demand by
the Agent; provided however that if such excess is a result of fluctuations in
the Exchange Rate, the Applicable Dutch Kraton Borrower shall have three
(3) Business Days to prepay such excess pursuant to Section 1.5 of this
Agreement before the Agent makes such Dutch Kraton Overadvance; provided further
that, no new Loans (including, without limitation, Dutch Kraton Overadvances)
will be made during such period. All Dutch Kraton Overadvance Loans shall
constitute Dutch Kraton Facility Obligations secured by the Dutch Facility
Collateral and shall be entitled to all benefits of the Loan Documents.

(b) U.S. Overadvance. If at any time the aggregate principal balance of all U.S.
Revolver Loans exceeds the U.S. Borrowing Base (a “U.S. Overadvance”), the
excess amount shall, subject to Section 5.2, be payable by the U.S. Borrowers on
demand by the Agent; provided however that if such excess is a result of
fluctuations in the Exchange Rate, the Applicable U.S. Borrower shall have three
(3) Business Days to prepay such excess pursuant to Section 1.5 of this
Agreement before the Agent makes such U.S. Overadvance; provided further that,
no new Loans (including, without limitation, U.S. Overadvances) will be made
during such period. All U.S. Overadvance Loans shall constitute U.S. Facility
Obligations secured by the U.S. Facility Collateral and shall be entitled to all
benefits of the Loan Documents.

(c) Funding of Overadvance Loans. The Agent may require Applicable Lenders to
honor requests for Overadvance Loans and to forbear from requiring the
applicable Borrower(s) to cure an Overadvance as long as (i) such Overadvance
does not continue for more than 30 consecutive days, (ii) the aggregate amount
of Overadvances existing at any time do not exceed ten percent (10%) of the
Commitments then in effect and (iii) the aggregate amount of the Overadvances
existing at any time, together with the Protective Advances outstanding at any
time pursuant to Section 2.1.6 below, do not exceed fifteen percent (15%) of the
Commitments then in effect. Required Lenders may at any time revoke the Agent’s
authority to make further Overadvance Loans to any or all Borrowers by written
notice to the Agent. In no event shall Overadvance Loans be required that would
cause (A) the U.S. Revolver Exposure to exceed the aggregate U.S. Revolver
Commitments or (B) the Dutch Kraton Revolver Exposure to exceed the aggregate
Dutch Kraton Revolver Commitments. Any funding of an Overadvance Loan or
sufferance of an Overadvance shall not constitute an Event of Default unless the
relevant Borrower fails to pay such Overadvance within the time period provided
in Sections 2.1.5(a) and 2.1.5(b), as applicable, or a waiver by the Agent or
Lenders of the Default caused thereby. In no event shall any Borrower or other
Loan Party be deemed a beneficiary of this Section 2.1.5(c) nor authorized to
enforce any of its terms.

2.1.6. Protective Advances.

(a) Dutch Kraton Protective Advances. The Agent shall be authorized by each
Dutch Kraton Borrower and the Dutch Kraton Lenders, from time to time in the
Agent’s discretion (but shall have absolutely no obligation to), to make
European Base Rate Loans to any Dutch Kraton

 

73

--------------------------------------------------------------------------------

Borrower on behalf of the Dutch Kraton Lenders (any of such Loans are herein
referred to as “Dutch Kraton Protective Advances”) which the Agent in its
Permitted Discretion deems necessary or desirable to (i) preserve or protect
Dutch Kraton Facility Collateral or any portion thereof or (ii) to enhance the
likelihood of, or maximize the amount of, repayment of the Dutch Kraton Revolver
Loans and other Dutch Kraton Facility Obligations; provided that no Dutch Kraton
Protective Advance shall cause the aggregate amount of the Dutch Kraton Revolver
Exposure at such time to exceed the Dutch Kraton Revolver Commitments then in
effect. All Dutch Kraton Protective Advances made by the Agent with respect to
each Dutch Domiciled Loan Party shall be Dutch Facility Obligations of such
Dutch Domiciled Loan Party, secured by the applicable Dutch Facility Collateral
and, if denominated in Euros, shall be treated for all purposes as a European
Base Rate Loan or, if denominated in Dollars, shall be treated for all purposes
as a European Base Rate Loan or if denominated in Sterling, shall be treated for
all purposes as a European Base Rate Loan.

(b) U.S. Protective Advances. The Agent shall be authorized by each U.S.
Borrower and the U.S. Lenders, from time to time in the Agent’s discretion (but
shall have absolutely no obligation to), to make U.S. Base Rate Loans to the
U.S. Borrowers on behalf of the U.S. Lenders (any of such Loans are herein
referred to as “U.S. Protective Advances”) which the Agent in its Permitted
Discretion deems necessary or desirable to (i) preserve or protect U.S. Facility
Collateral or any portion thereof or (ii) to enhance the likelihood of, or
maximize the amount of, repayment of the U.S. Revolver Loans and other U.S.
Facility Obligations; provided that no U.S. Protective Advance shall cause the
aggregate amount of the U.S. Revolver Exposure at such time to exceed the U.S.
Revolver Commitments then in effect. All U.S. Protective Advances made by the
Agent with respect to U.S. Domiciled Loan Parties shall be U.S. Facility
Obligations, secured by the U.S. Facility Collateral and shall be treated for
all purposes as U.S. Base Rate Loans.

(c) Limitations on Protective Advances. The aggregate amount of Protective
Advances outstanding at any time pursuant to this Section 2.1.6 shall not exceed
five percent (5%) of the Commitments then in effect. Protective Advances may be
made even if the conditions set forth in Section 6.2 have not been satisfied.
Each Applicable Lender shall participate in each Protective Advance on a Pro
Rata basis. Required Lenders may at any time revoke the Agent’s authority to
make further Protective Advances to any or all Borrowers by written notice to
the Agent. Absent such revocation, the Agent’s determination that funding of a
Protective Advance is appropriate shall be conclusive. At any time that there is
sufficient Availability for the applicable Borrower Group and the conditions
precedent set forth in Section 6 have been satisfied, the Agent may request the
Applicable Lenders to make a Revolver Loan to repay a Protective Advance. At any
other time, the Agent may require the Applicable Lenders to fund their risk
participations described in Section 2.1.6(d).

(d) Transfers. Upon the making of a Protective Advance by the Agent (whether
before or after the occurrence of a Default or Event of Default), each
Applicable Lender shall be deemed, without further action by any party hereto,
to have unconditionally and irrevocably purchased from the Agent without
recourse or warranty, an undivided interest and participation in such Protective
Advance in proportion to its Pro Rata share of such Protective Advance. Each
Applicable Lender shall transfer (a “Transfer”) the amount of such Applicable
Lender’s Pro Rata share of the outstanding principal amount of the applicable
Protective Advance with respect to such purchased interest and participation
promptly when requested to the Agent, to such account of the Agent as the Agent
may designate, but in any case not later than 3:00 p.m. (Local Time) on the
Business Day notified (if notice is provided by the Agent prior to 12:00 p.m.
(Local Time) and otherwise on the immediately following Business Day (the
“Transfer Date”). Transfers may occur during the existence of a Default or Event
of Default and whether or not the applicable conditions precedent set forth in
Section 6 have then been satisfied. Such amounts transferred to the Agent shall
be applied against the amount of the Protective Advance and, together with
Applicable Lender’s Pro Rata share of such Protective Advance, shall constitute
Loans of such

 

74

--------------------------------------------------------------------------------

Applicable Lenders, respectively. If any such amount is not transferred to the
Agent by any Applicable Lender on such Transfer Date, the Agent shall be
entitled to recover such amount on demand from such Applicable Lender together
with interest thereon as specified in Section 3.1. From and after the date, if
any, on which any Applicable Lender is required to fund, and funds, its
participation in any Protective Advance purchased hereunder, the Agent shall
promptly distribute to such Applicable Lender, such Applicable Lender’s Pro Rata
share of all payments of principal and interest and all proceeds of Collateral
received by the Agent in respect of such Protective Advance.

2.1.7. Increase in Revolver Commitments; Reallocations.

(a) Dutch Kraton Revolver Commitment Increase. The North American Loan Party
Agent may by written notice to the Agent request an increase in the Dutch Kraton
Revolver Commitments then in effect (a “Dutch Kraton Revolver Commitment
Increase”) by increasing the Dutch Kraton Revolver Commitment of a Dutch Kraton
Lender (with the consent of such Dutch Kraton Lender) or by causing a Person
that constitutes an Eligible Assignee and at such time is not a Dutch Kraton
Lender to become a Dutch Kraton Lender (an “Additional Dutch Kraton Lender”).
After giving effect to any Dutch Kraton Revolver Commitment Increase, the Dutch
Kraton Revolver Commitment of each Dutch Kraton Lender (and the percentage of
each Dutch Kraton Revolver Loan that each Participant must purchase a Dutch
Kraton Revolver Loan participation in) shall be equal to such Dutch Kraton
Lender’s (or such Participant’s) Pro Rata share of the amount of the increased
Dutch Kraton Revolver Commitments.

(b) U.S. Revolver Commitment Increase. The North American Loan Party Agent may
by written notice to the Agent elect to increase the U.S. Revolver Commitments
then in effect (a “U.S. Revolver Commitment Increase” and together with any
Dutch Kraton Revolver Commitment Increase, “Revolver Commitment Increases”) by
increasing the U.S. Revolver Commitment of a U.S. Lender (with the consent of
such U.S. Lender) or by causing a Person that constitutes an Eligible Assignee
and at such time is not a U.S. Lender to become a U.S. Lender (an “Additional
U.S. Lender” and together with any Additional Dutch Lender, “Additional
Lenders”). After giving effect to any U.S. Revolver Commitment Increase, the
U.S. Revolver Commitment of each U.S. Lender (and the percentage of each U.S.
Revolver Loan that each Participant must purchase a U.S. Revolver Loan
participation in) shall be equal to such U.S. Lender’s (or such Participant’s)
Pro Rata share of the amount of the increased U.S. Revolver Commitments.

(c) Terms of Revolver Commitment Increases. Each notice of an increase in any
Borrower Group Commitment shall specify the proposed date (each, an “Increase
Date”) for the effectiveness of the Revolver Commitment Increase, which date
shall be not less than ten (10) Business Days after the date on which such
notice is delivered to the Agent. Any such increase shall be subject to the
following additional conditions: (i) no Default or Event of Default shall have
occurred and be continuing as of the date of such notice or both immediately
before and after giving effect to such Revolver Commitment Increase as of the
Increase Date; (ii) after giving effect to the proposed increase, the U.S.
Revolver Commitment shall be at least sixty percent (60%) of the Commitments,
(iii) no Lender shall be obligated to participate in the Revolver Commitment
Increase by increasing its Commitment; (iv) the Revolver Commitment Increase
shall be on the same terms and conditions as this Agreement, except with respect
to closing fees; (v) the Revolver Commitment Increase, to the extent arising
from the admission of an Additional Lender, shall be effected pursuant to one or
more joinder agreements executed and delivered by the Applicable Borrowers, the
Additional Lender(s) and the Agent, each of which shall be in form and substance
reasonably satisfactory to the Agent; (vi) the relevant Loan Party Agent shall
deliver or cause to be delivered any officers’ certificates, board resolutions,
legal opinions or other documents reasonably requested by the Agent in
connection with the Revolver Commitment Increase; (vii) the Borrowers shall pay
all reasonable and documented fees and expenses in connection with the Revolver
Commitment Increase, including payments required pursuant to Section 3.10 in
connection with

 

75

--------------------------------------------------------------------------------

the Revolver Commitment Increase and any applicable arrangement fees; (viii) the
Agent shall have consented in writing to such Revolver Commitment Increase
(which consent shall not be unreasonably withheld); and (ix) such increase shall
be in a minimum amount of $25,000,000 in the case of the U.S. Revolver
Commitments or in a minimum amount of $10,000,000 in the case of each of the
Foreign Revolver Commitments. Notwithstanding the foregoing, in no event shall
the aggregate amount of all Revolver Commitment Increases made under this
Section 2.1.7 exceed the sum of $100,000,000.

(d) Increases Generally. The Agent shall promptly inform the Lenders of any
request for a Revolver Commitment Increase made by a Loan Party Agent. If the
conditions set forth in clause (c) above are not satisfied on the applicable
Increase Date (or, to the extent such conditions relate to an earlier date, such
earlier date), the Agent shall notify such Loan Party Agent in writing that the
requested Revolver Commitment Increase will not be effectuated. On each Increase
Date, the Agent shall notify the Lenders and the relevant Loan Party Agent, on
or before 3:00 p.m. (Local Time), by facsimile, e-mail or other electronic
means, of the occurrence of the Revolver Commitment Increase to be effected on
such Increase Date, the amount of Revolver Loans held by each Lender as a result
thereof, the amount of the Commitment of each Lender (and the percentage of each
Revolver Loan, if any, that each Participant must purchase a participation
interest in) as a result thereof.

(e) Reallocation Mechanism. Subject to the terms and conditions of
Section 2.1.7(e) and (f), the North American Loan Party Agent may, effective as
of the first day of a specified Fiscal Quarter, effective for such Fiscal
Quarter, require that the Lenders to certain Borrower Groups (and such Lenders
shall be deemed to agree to) change the then current allocation of each such
Lender’s (and, if applicable, its affiliate’s) Commitment among the Borrower
Group Commitments in order to effect an increase or decrease in particular
Borrower Group Commitments, with any such increase or decrease in a Borrower
Group Commitment to be accompanied by a concurrent and equal decrease or
increase, respectively, in another Borrower Group Commitment (each, a
“Reallocation”). In addition to the conditions set forth in Section 2.1.7(f),
any such Reallocation shall be subject to the following conditions: (i) the
North American Loan Party Agent shall have provided to the Agent a written
notice (in reasonable detail) at least ten (10) Business Days prior to the
requested effective date therefor (which effective date must be the first day of
a Fiscal Quarter) (the “Reallocation Date”) setting forth the Reallocation Date
and the amounts of the proposed Borrower Group Commitment reallocations to be
effected, (ii) any such Reallocation shall increase or decrease the applicable
Borrower Group Commitments in an amount equal to $5,000,000 and in increments of
$1,000,000 in excess thereof, (iii) after giving effect to any such
Reallocation, the U.S. Revolver Commitments shall be at least 60% of the
Commitments, (iv) no Default or Event of Default shall have occurred and be
continuing either as of the date of such notice or on the Reallocation Date
(both immediately before and after giving effect to such Reallocation), (v) any
increase in a Borrower Group Commitment shall result in a dollar-for-dollar
decrease in another Borrower Group Commitment, (vi) in no event shall the sum of
all the Borrower Group Commitments exceed the aggregate amount of the
Commitments then in effect, (vii) after giving effect to such Reallocation, no
Overadvance would exist or would result therefrom, and (viii) at least three
(3) Business Days prior to the proposed Reallocation Date, a Senior Officer of
the North American Loan Party Agent shall have delivered to the Agent a
certificate certifying as to compliance with preceding clauses (iv), (vi) and
(vii) and demonstrating (in reasonable detail) the calculations, if any,
required in connection therewith, which certificate shall be deemed recertified
to the Agent by a Senior Officer of the North American Loan Party Agent on and
as of the Reallocation Date.

(f) Reallocations Generally. The Agent shall promptly inform the Lenders of the
affected Borrower Groups of any notice of a Reallocation. If the conditions set
forth in Section 2.1.7(e) and (f) are not satisfied on the applicable
Reallocation Date (or, to the extent such conditions relate to an earlier date,
such earlier date), the Agent shall notify the North American Loan Party Agent
in writing that the requested Reallocation will not be effectuated; provided
that the Agent shall in all cases be

 

76

--------------------------------------------------------------------------------

entitled to rely (without liability) on the certificate delivered by the North
American Loan Party Agent pursuant to Section 2.1.7(viii) in making its
determination as to the satisfaction of certain conditions set forth in
Section 2.1.7(e). On each Reallocation Date, the Agent shall notify the Lenders
of the affected Borrower Groups and the North American Loan Party Agent, on or
before 3:00 p.m. by facsimile, e-mail or other electronic means, of the
occurrence of the Reallocation to be effected on such Reallocation Date, the
amount of the Loans held by each such Lender as a result thereof and the amount
of the affected Borrower Group Commitments of each such Lender as a result
thereof. To the extent necessary where a Lender in one Borrower Group and its
separate affiliate that is a Lender in another Borrower Group are participating
in a Reallocation, the Reallocation among such Persons shall be deemed to have
been consummated pursuant to an Assignment and Acceptance. The respective Pro
Rata shares of the Lenders shall thereafter, to the extent applicable, be
determined based on such reallocated amounts (subject to any subsequent changes
thereto), and the Agent and the affected Lenders shall make such adjustments as
the Agent shall deem necessary so that the outstanding Loans and LC Obligations
of each Lender equals its Pro Rata share thereafter giving effect to the
Reallocation.

2.1.8. Swingline Loans.

(a) Dutch Kraton Swingline Loans to Dutch Kraton Borrowers. The Dutch Kraton
Swingline Lender will, in the Dutch Kraton Swingline Lender’s discretion, make
Dutch Kraton Swingline Loans to any of the Dutch Kraton Borrowers on any
Business Day during the period from the Closing Date to the Dutch Kraton
Revolver Commitment Termination Date, not to exceed the Dutch Kraton Swingline
Sublimit in aggregate principal amount outstanding at any time (based on the
Dollar Equivalent thereof), which Dutch Kraton Swingline Loans may be repaid and
reborrowed in accordance with the provisions of this Agreement; provided,
however, that the Dutch Kraton Swingline Lender shall not honor any request for
a Dutch Kraton Swingline Loan (i) on or after the Dutch Kraton Revolver
Commitment Termination Date, (ii) if the Dollar Equivalent of the amount of the
proposed Dutch Kraton Swingline Loan exceeds Dutch Kraton Availability on the
proposed funding date for such Dutch Kraton Swingline Loan, (iii) if the
requirements of Section 2.5 are not satisfied or (iv) if the Dutch Kraton
Swingline Lender has knowledge that any of the conditions in Section 6.2 are not
satisfied. The Dutch Kraton Swingline Loans shall be European Base Rate Loans if
denominated in Euros and European Base Rate Loans if denominated in Dollars and
bear interest as set forth in Section 3.1. Each Dutch Kraton Swingline Loan
shall constitute a Revolver Loan for all purposes except that payments thereon
shall be made to the Dutch Kraton Swingline Lender for its own account. The
Dutch Kraton Swingline Loans of each Dutch Kraton Borrower shall be repaid in
accordance with the terms of this Agreement and shall be secured by all of the
Dutch Facility Collateral of such Dutch Kraton Borrower. Each Dutch Kraton
Swingline Loan shall be funded in Euros or, at the option of the Applicable
Dutch Kraton Borrower, Dollars or Sterling and repaid in the same currency as
the underlying Dutch Kraton Swingline Loan was made.

(b) U.S. Swingline Loans to U.S. Borrowers. The U.S. Swingline Lender will, in
the U.S. Swingline Lender’s discretion, make U.S. Swingline Loans to any of the
U.S. Borrowers on any Business Day during the period from the Closing Date to
the U.S. Revolver Commitment Termination Date, not to exceed the U.S. Swingline
Sublimit in aggregate principal amount outstanding at any time, which U.S.
Swingline Loans may be repaid and reborrowed in accordance with the provisions
of this Agreement; provided, however, that the U.S. Swingline Lender shall not
honor any request for a U.S. Swingline Loan (i) on or after the U.S. Revolver
Commitment Termination Date, (ii) if the amount of the proposed U.S. Swingline
Loan exceeds U.S. Availability on the proposed funding date for such U.S.
Swingline Loan or (iii) if the U.S. Swingline Lender has knowledge that any of
the conditions in Section 6.2 are not satisfied. The U.S. Swingline Loans shall
be U.S. Base Rate Loans and bear interest as set forth in Section 3.1. Each U.S.
Swingline Loan shall constitute a Revolver Loan for all purposes except that
payments thereon shall be made to the U.S. Swingline Lender for its own account.
The U.S.

 

77

--------------------------------------------------------------------------------

Swingline Loans shall be repaid in accordance with the terms of this Agreement
and shall be secured by all of the U.S. Facility Collateral. The U.S. Borrowers
shall be jointly and severally liable to pay all of the U.S. Swingline Loans.
Each U.S. Swingline Loan shall be funded and repaid in Dollars.

(c) Swinglines Generally. The Swingline Loans made by each Swingline Lender and
interest accruing thereon shall be evidenced by the records of the Agent and
such Swingline Lender and need not be evidenced by any promissory note.

2.2. Dutch Letters of Credit.

2.2.1. Issuance of Dutch Letters of Credit.

(a) Issuance of Dutch Kraton Letters of Credit. Each Dutch Fronting Bank agrees
to issue Dutch Kraton Letters of Credit for the account of any Dutch Kraton
Borrower or any Restricted Subsidiary from time to time until the Facility
Termination Date (or until the Dutch Kraton Revolver Commitment Termination
Date, if earlier), in Euros or, at the option of the Applicable Dutch Kraton
Borrower, Dollars or Sterling, or in any other currency acceptable to the Agent
or Dutch Fronting Bank, on the terms set forth herein, including the following:

(i) Each Dutch Kraton Borrower acknowledges that each Dutch Fronting Bank’s
willingness to issue any Dutch Kraton Letter of Credit is conditioned upon such
Dutch Fronting Bank’s receipt of a Dutch Kraton LC Application with respect to
the requested Dutch Kraton Letter of Credit, as well as such other instruments
and agreements as such Dutch Fronting Bank may customarily require for issuance
of a letter of credit of similar type and amount. No Dutch Fronting Bank shall
have any obligation to issue any Dutch Kraton Letter of Credit unless (A) such
Dutch Fronting Bank and the Agent receive a Dutch Kraton LC Request and Dutch
Kraton LC Application at least three (3) Business Days prior to the requested
date of issuance; (B) each Dutch Kraton LC Condition is satisfied; and (C) if a
Defaulting Lender that is a Dutch Kraton Lender exists, such Lender or Dutch
Kraton Borrowers have entered into arrangements reasonably satisfactory to the
Agent and such Dutch Fronting Bank to eliminate any funding risk associated with
such Defaulting Lender. If a Dutch Fronting Bank receives written notice from a
Dutch Kraton Lender at least three (3) Business Days before issuance of a Dutch
Kraton Letter of Credit that any Dutch Kraton LC Condition has not been
satisfied, such Dutch Fronting Bank shall have no obligation to issue the
requested Dutch Kraton Letter of Credit (or any other) until such notice is
withdrawn in writing by the Required Borrower Group Lenders or until the
Required Borrower Group Lenders have waived such condition in accordance with
this Agreement. Prior to receipt of any such notice, a Dutch Fronting Bank shall
not be deemed to have knowledge of any failure of Dutch Kraton LC Conditions.

(ii) Dutch Kraton Letters of Credit may be requested by the North American Loan
Party Agent or the Foreign Loan Party Agent to support obligations incurred in
the Ordinary Course of Business, or as otherwise approved by Agent. The renewal
or extension of any Dutch Kraton Letter of Credit shall be treated as the
issuance of a new Dutch Kraton Letter of Credit, except that delivery of a new
Dutch Kraton LC Application shall be required at the discretion of the
applicable Dutch Fronting Bank. No Dutch Fronting Bank shall renew or extend any
Dutch Kraton Letter of Credit if it receives written notice from the Agent or
the Required Borrower Group Lenders of the existence of a Default or Event of
Default.

(iii) Dutch Kraton Borrowers assume all risks of the acts, omissions or misuses
of any Dutch Kraton Letter of Credit by the beneficiary. In connection with
issuance of any Dutch Kraton Letter of Credit, none of the Agent, any Dutch
Fronting Bank or any Lender

 

78

--------------------------------------------------------------------------------

shall be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any
Documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of any goods from that expressed in any
Documents; the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Documents or of any endorsements thereon; the time, place, manner
or order in which shipment of goods is made; partial or incomplete shipment of,
or failure to ship, any goods referred to in a Dutch Kraton Letter of Credit or
Documents; any deviation from instructions, delay, default or fraud by any
shipper or other Person in connection with any goods, shipment or delivery; any
breach of contract between a shipper or vendor and a Dutch Kraton Borrower;
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or
otherwise; errors in interpretation of technical terms; the misapplication by a
beneficiary of any Dutch Kraton Letter of Credit or the proceeds thereof; or any
consequences arising from causes beyond the control of any Dutch Fronting Bank,
the Agent or any Dutch Kraton Lender, including any act or omission of a
Governmental Authority. The rights and remedies of each Dutch Fronting Bank
under the Loan Documents shall be cumulative. Each Dutch Fronting Bank shall be
fully subrogated to the rights and remedies of each beneficiary whose claims
against Borrowers are discharged with proceeds of any Dutch Kraton Letter of
Credit issued by such Dutch Fronting Bank.

(iv) In connection with its administration of and enforcement of rights or
remedies under any Dutch Kraton Letters of Credit or Dutch Kraton LC Documents,
each Dutch Fronting Bank shall be entitled to act, and shall be fully protected
in acting, upon any certification, documentation or communication in whatever
form believed by such Dutch Fronting Bank, in good faith, to be genuine and
correct and to have been signed, sent or made by a proper Person. Each Dutch
Fronting Bank may consult with and employ legal counsel, accountants and other
experts to advise it concerning its obligations, rights and remedies, and shall
be entitled to act upon, and shall be fully protected in any action taken in
good faith reliance upon, any advice given by such experts. Each Dutch Fronting
Bank may employ agents and attorneys-in-fact in connection with any matter
relating to Dutch Kraton Letters of Credit or Dutch Kraton LC Documents, and
shall not be liable for the gross negligence or misconduct of agents and
attorneys-in-fact selected with reasonable care.

2.2.2. Dutch Kraton LC Reimbursement; Dutch Kraton LC Participations.

(a) If a Dutch Fronting Bank honors any request for payment under a Dutch Kraton
Letter of Credit, the Applicable Dutch Kraton Borrower shall pay to such Dutch
Fronting Bank, on the same day (“Dutch Kraton Reimbursement Date”), the amount
paid by such Dutch Fronting Bank under such Letter of Credit, together with
interest at the interest rate for European Base Rate Loans from the Dutch Kraton
Reimbursement Date until payment by Dutch Kraton Borrower. The obligation of the
Applicable Dutch Kraton Borrower to reimburse each Dutch Fronting Bank for any
payment made under a Dutch Kraton Letter of Credit issued by such Dutch Fronting
Bank shall be absolute, unconditional, irrevocable, and shall be paid without
regard to any lack of validity or enforceability of any Dutch Kraton Letter of
Credit or the existence of any claim, setoff, defense or other right that the
Applicable Dutch Kraton Borrower or Loan Parties may have at any time against
the beneficiary. Whether or not the Applicable Dutch Kraton Borrower submits a
Notice of Borrowing, the Applicable Dutch Kraton Borrower shall be deemed to
have requested a Borrowing of European Base Rate Loans, as applicable, in an
amount necessary to pay all amounts due to a Dutch Fronting Bank in the currency
in which the underlying Dutch Kraton Letter of Credit was issued on any Dutch
Kraton Reimbursement Date and each Dutch Kraton Lender agrees to fund its Pro
Rata share of such Borrowing whether or not the Commitments have terminated, an
Overadvance exists or is created thereby, or the conditions in Section 6 are
satisfied.

 

79

--------------------------------------------------------------------------------

(b) Upon issuance of a Dutch Kraton Letter of Credit, each Dutch Kraton Lender
shall be deemed to have irrevocably and unconditionally purchased from the Dutch
Fronting Bank that issued such Dutch Kraton Letter of Credit, without recourse
or warranty, an undivided Pro Rata interest and participation in all Dutch
Kraton LC Obligations relating to the Dutch Kraton Letter of Credit. If the
applicable Dutch Fronting Bank makes any payment under a Dutch Kraton Letter of
Credit and the Applicable Dutch Kraton Borrower does not reimburse such payment
on the Dutch Kraton Reimbursement Date, the Agent shall promptly notify Dutch
Kraton Lenders and each Dutch Kraton Lender shall promptly (within one Business
Day) and unconditionally pay to the Agent in the currency of the payment made
under such Dutch Kraton Letter of Credit, for the benefit of the Dutch Fronting
Bank, the Dutch Kraton Lender’s Pro Rata share of such payment. Upon request by
a Dutch Kraton Lender, the applicable Dutch Fronting Bank shall furnish copies
of any Dutch Kraton Letters of Credit and Dutch Kraton LC Documents in its
possession at such time.

(c) The obligation of each Dutch Kraton Lender to make payments to the Agent for
the account of the applicable Dutch Fronting Bank in connection with such Dutch
Fronting Bank’s payment under a Dutch Kraton Letter of Credit shall be absolute,
unconditional and irrevocable, not subject to any counterclaim, setoff,
qualification or exception whatsoever, and shall be made in accordance with this
Agreement under all circumstances, irrespective of any lack of validity or
unenforceability of any Loan Documents; any draft, certificate or other document
presented under a Dutch Kraton Letter of Credit having been determined to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or the existence of any
setoff or defense that any Loan Party may have with respect to any Obligations.
No Dutch Fronting Bank assumes any responsibility for any failure or delay in
performance or any breach by any Dutch Kraton Borrower or other Person of any
obligations under any Dutch Kraton LC Documents. No Dutch Fronting Bank makes
any express or implied warranty, representation or guarantee to Dutch Kraton
Lenders with respect to the Dutch Facility Collateral, Dutch Kraton LC Documents
or any Dutch Facility Loan Party. No Dutch Fronting Bank shall be responsible to
any Dutch Lender for any recitals, statements, information, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of any Dutch Kraton LC Documents; the validity,
genuineness, enforceability, collectability, value or sufficiency of any Dutch
Facility Collateral or the perfection of any Lien therein; or the assets,
liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Dutch Facility Loan Party.

(d) No Dutch Fronting Bank Indemnitee shall be liable to any Loan Party or other
Person for any action taken or omitted to be taken in connection with any Dutch
Kraton LC Documents except as a result of such Dutch Fronting Bank’s actual
gross negligence, willful misconduct or bad faith, as determined by a final,
nonappealable judgment of a court of competent jurisdiction. No Dutch Fronting
Bank shall have any liability to any Lender if such Dutch Fronting Bank refrains
from any action under any Dutch Kraton Letter of Credit or Dutch Kraton LC
Documents until it receives written instructions from Required Borrower Group
Lenders.

2.2.3. Dutch Kraton LC Cash Collateral. If any Dutch Kraton LC Obligations,
whether or not then due or payable, shall for any reason be outstanding at any
time (a) that an Event of Default exists, (b) that a Dutch Kraton Overadvance
exists, (c) after the Dutch Kraton Revolver Commitment Termination Date, or
(d) within 20 Business Days prior to the Facility Termination Date, then Dutch
Kraton Borrowers shall, within three (3) Business Days of the Dutch Fronting
Bank’s or the Agent’s request, Cash Collateralize the stated amount of all
outstanding Dutch Kraton Letters of Credit and pay to each Dutch Fronting Bank
the amount of all other Dutch Kraton LC Obligations to such Dutch Fronting Bank.
If the reallocation described in Section 4.2.1 cannot, or can only be partially
effected, the Dutch Kraton Borrowers shall, within three (3) Business Days of
demand by the Dutch Fronting Bank or the Agent from time to time, Cash
Collateralize the LC Obligations of any Defaulting Lender that is a

 

80

--------------------------------------------------------------------------------

Dutch Kraton Lender. If as a result of fluctuations in Exchange Rates or
otherwise the Dollar Equivalent of the Dutch Kraton LC Obligations exceeds the
Dutch Kraton Letter of Credit Sublimit, the excess amount shall be payable by
the Dutch Kraton Borrowers within three (3) Business Days following demand by
the Agent or the Dutch Fronting Bank. If Dutch Kraton Borrowers fail to provide
any Cash Collateral as required hereunder, Dutch Kraton Lenders may (and shall
upon direction of the Agent) advance, as Dutch Kraton Revolver Loans, the amount
of the Cash Collateral required (whether or not the Dutch Kraton Revolver
Commitments have terminated, any Dutch Kraton Overadvance exists or would result
therefrom or the conditions in Section 6 are satisfied).

2.3. U.S. Letters of Credit.

2.3.1. Issuance of U.S. Letters of Credit. Each U.S. Fronting Bank agrees to
issue U.S. Letters of Credit for the account of any U.S. Borrower or Restricted
Subsidiary; (provided that each U.S. Borrower agrees that it is jointly and
severally liable with respect to, and guarantees payment under Section 5.10.1
with respect to, any U.S. Letter of Credit issued for the account of a
Restricted Subsidiary that is not a U.S. Borrower from time to time until the
Facility Termination Date (or until the U.S. Revolver Commitment Termination
Date, if earlier), on the terms set forth herein, including the following:

(a) Each U.S. Borrower acknowledges that each U.S. Fronting Bank’s willingness
to issue any U.S. Letter of Credit is conditioned upon such U.S. Fronting Bank’s
receipt of a U.S. LC Application with respect to the requested U.S. Letter of
Credit, as well as such other instruments and agreements as such U.S. Fronting
Bank may customarily require for issuance of a letter of credit of similar type
and amount. No U.S. Fronting Bank shall have any obligation to issue any U.S.
Letter of Credit unless (i) such U.S. Fronting Bank and the Bank of America
(London) Agent receive a U.S. LC Request and U.S. LC Application at least two
(2) Business Days prior to the requested date of issuance; (ii) each U.S. LC
Condition is satisfied; and (iii) if a Defaulting Lender that is a U.S. Lender
exists, U.S. Borrowers have entered into arrangements reasonably satisfactory to
the Agent and such U.S. Fronting Bank to eliminate any funding risk associated
with such Defaulting Lender. If a U.S. Fronting Bank receives written notice
from a U.S. Lender at least two (2) Business Days before issuance of a U.S.
Letter of Credit that any U.S. LC Condition has not been satisfied, such U.S.
Fronting Bank shall have no obligation to issue the requested U.S. Letter of
Credit (or any other) until such notice is withdrawn in writing by the Required
Borrower Group Lenders or until the Required Borrower Group Lenders have waived
such condition in accordance with this Agreement. Prior to receipt of any such
notice, a U.S. Fronting Bank shall not be deemed to have knowledge of any
failure of U.S. LC Conditions.

(b) Letters of Credit may be requested by the North American Loan Party Agent to
support obligations incurred in the Ordinary Course of Business, or as otherwise
approved by Agent. The renewal or extension of any U.S. Letter of Credit shall
be treated as the issuance of a new U.S. Letter of Credit, except that delivery
of a new U.S. LC Application shall be required at the discretion of the
applicable U.S. Fronting Bank. No U.S. Fronting Bank shall renew or extend any
U.S. Letter of Credit if it receives written notice from the Agent or the
Required Borrower Group Lenders of the existence of a Default or Event of
Default.

(c) U.S. Borrowers assume all risks of the acts, omissions or misuses of any
U.S. Letter of Credit by the beneficiary. In connection with issuance of any
U.S. Letter of Credit, none of the Agent, any U.S. Fronting Bank or any Lender
shall be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any
Documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of any goods from that expressed in any
Documents; the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Documents or of any endorsements thereon; the time, place, manner
or

 

81

--------------------------------------------------------------------------------

order in which shipment of goods is made; partial or incomplete shipment of, or
failure to ship, any goods referred to in a U.S. Letter of Credit or Documents;
any deviation from instructions, delay, default or fraud by any shipper or other
Person in connection with any goods, shipment or delivery; any breach of
contract between a shipper or vendor and a U.S. Borrower; errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any
U.S. Letter of Credit or the proceeds thereof; or any consequences arising from
causes beyond the control of any U.S. Fronting Bank, the Agent or any U.S.
Lender, including any act or omission of a Governmental Authority. The rights
and remedies of each U.S. Fronting Bank under the Loan Documents shall be
cumulative. Each U.S. Fronting Bank shall be fully subrogated to the rights and
remedies of each beneficiary whose claims against Borrowers are discharged with
proceeds of any U.S. Letter of Credit issued by such U.S. Fronting Bank.

(d) In connection with its administration of and enforcement of rights or
remedies under any U.S. Letters of Credit or U.S. LC Documents, each U.S.
Fronting Bank shall be entitled to act, and shall be fully protected in acting,
upon any certification, documentation or communication in whatever form believed
by such U.S. Fronting Bank, in good faith, to be genuine and correct and to have
been signed, sent or made by a proper Person. Each U.S. Fronting Bank may
consult with and employ legal counsel, accountants and other experts to advise
it concerning its obligations, rights and remedies, and shall be entitled to act
upon, and shall be fully protected in any action taken in good faith reliance
upon, any advice given by such experts. Each U.S. Fronting Bank may employ
agents and attorneys-in-fact in connection with any matter relating to U.S.
Letters of Credit or U.S. LC Documents, and shall not be liable for the gross
negligence or misconduct of agents and attorneys-in-fact selected with
reasonable care.

2.3.2. U.S. LC Reimbursement; U.S. LC Participations.

(a) If a U.S. Fronting Bank honors any request for payment under a U.S. Letter
of Credit, U.S. Borrowers shall pay to such U.S. Fronting Bank, on the same day
(“U.S. Reimbursement Date”), the amount paid by such U.S. Fronting Bank under
such U.S. Letter of Credit, together with interest at the interest rate for U.S.
Base Rate Loans from the U.S. Reimbursement Date until payment by U.S.
Borrowers. The obligation of U.S. Borrowers to reimburse each U.S. Fronting Bank
for any payment made under a U.S. Letter of Credit issued by such U.S. Fronting
Bank shall be absolute, unconditional, irrevocable, and joint and several among
U.S. Borrowers, and shall be paid without regard to any lack of validity or
enforceability of any U.S. Letter of Credit or the existence of any claim,
setoff, defense or other right that U.S. Borrowers or Loan Parties may have at
any time against the beneficiary. Whether or not the North American Loan Party
Agent submits a Notice of Borrowing, U.S. Borrowers shall be deemed to have
requested a Borrowing of U.S. Base Rate Loans in an amount necessary (based on
the Dollar Equivalent thereof) to pay all amounts due to a U.S. Fronting Bank on
any U.S. Reimbursement Date and each U.S. Lender agrees to fund its Pro Rata
share of such Borrowing whether or not the Commitments have terminated, an
Overadvance exists or is created thereby, or the conditions in Section 6 are
satisfied.

(b) Upon issuance of a U.S. Letter of Credit, each U.S. Lender shall be deemed
to have irrevocably and unconditionally purchased from the U.S. Fronting Bank
that issued such U.S. Letter of Credit, without recourse or warranty, an
undivided Pro Rata interest and participation in all U.S. LC Obligations
relating to the U.S. Letter of Credit. If the applicable U.S. Fronting Bank
makes any payment under a U.S. Letter of Credit and U.S. Borrowers do not
reimburse such payment on the U.S. Reimbursement Date, the Agent shall promptly
notify U.S. Lenders and each U.S. Lender shall promptly (within one Business
Day) and unconditionally pay to the Agent in Dollars, for the benefit of U.S.
Fronting Bank, the U.S. Lender’s Pro Rata share of such payment (based on the
Dollar Equivalent thereof). Upon request by a U.S. Lender, the applicable U.S.
Fronting Bank shall furnish copies of any U.S. Letters of Credit and U.S. LC
Documents in its possession at such time.

 

82

--------------------------------------------------------------------------------

(c) The obligation of each U.S. Lender to make payments to the Agent for the
account of the applicable U.S. Fronting Bank in connection with such U.S.
Fronting Bank’s payment under a U.S. Letter of Credit shall be absolute,
unconditional and irrevocable, not subject to any counterclaim, setoff,
qualification or exception whatsoever, and shall be made in accordance with this
Agreement under all circumstances, irrespective of any lack of validity or
unenforceability of any Loan Documents; any draft, certificate or other document
presented under a U.S. Letter of Credit having been determined to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or the existence of any setoff or
defense that any Loan Party may have with respect to any Obligations. No U.S.
Fronting Bank assumes any responsibility for any failure or delay in performance
or any breach by any U.S. Borrower or other Person of any obligations under any
U.S. LC Documents. No U.S. Fronting Bank makes any express or implied warranty,
representation or guarantee to U.S. Lenders with respect to the U.S. Facility
Collateral, U.S. LC Documents or any U.S. Facility Loan Party. No U.S. Fronting
Bank shall be responsible to any U.S. Lender for any recitals, statements,
information, representations or warranties contained in, or for the execution,
validity, genuineness, effectiveness or enforceability of any U.S. LC Documents;
the validity, genuineness, enforceability, collectability, value or sufficiency
of any U.S. Facility Collateral or the perfection of any Lien therein; or the
assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any U.S. Facility Loan Party.

(d) No U.S. Fronting Bank Indemnitee shall be liable to any Loan Party or other
Person for any action taken or omitted to be taken in connection with any U.S.
LC Documents except as a result of each U.S. Fronting Bank’s gross negligence,
willful misconduct or bad faith, as determined by a final, nonappealable
judgment of a court of competent jurisdiction. No U.S. Fronting Bank shall have
any liability to any Lender if such U.S. Fronting Bank refrains from any action
under any U.S. Letter of Credit or U.S. LC Documents until it receives written
instructions from Required Borrower Group Lenders of the Borrower Group
consisting of U.S. Borrowers.

2.3.3. U.S. LC Cash Collateral. If any U.S. LC Obligations, whether or not then
due or payable, shall for any reason be outstanding at any time (a) that an
Event of Default exists, (b) that a U.S. Overadvance exists, (c) after the U.S.
Revolver Commitment Termination Date, or (d) within five Business Days prior to
the Facility Termination Date, then U.S. Borrowers shall, within one Business
Day of U.S. Fronting Bank’s or the Agent’s request, Cash Collateralize the
stated amount of all outstanding U.S. Letters of Credit (based on the Dollar
Equivalent thereof) and pay to each U.S. Fronting Bank the amount of all other
U.S. LC Obligations to such U.S. Fronting Bank. If the reallocation described in
Section 4.2.1 cannot, or can only partially be effected, the U.S. Borrowers
shall, within one Business Day of demand by U.S. Fronting Bank’s or the Agent,
Cash Collateralize the U.S. LC Obligations of any Defaulting Lender that is a
U.S. Lender. If as a result of fluctuations in Exchange Rates or otherwise the
Dollar Equivalent of the U.S. LC Obligations exceeds the U.S. Letter of Credit
Sublimit, the excess amount shall be payable by the U.S. Borrowers within three
(3) Business Days following demand by the Agent or the U.S. Fronting Bank. If
U.S. Borrowers fail to provide any Cash Collateral as required hereunder,
Lenders may (and shall upon direction of the Agent) advance, as U.S. Revolver
Loans, the amount of the Cash Collateral required (whether or not the U.S.
Revolver Commitments have terminated, any U.S. Overadvance exists or would
result therefrom or the conditions in Section 6 are satisfied).

2.4. Resignation of Fronting Banks. A Fronting Bank may resign at any time upon
notice to the Agent and the applicable Loan Party Agent. On and after the
effective date of such resignation, such Fronting Bank shall have no obligation
to issue, amend, renew, extend or otherwise modify any Letter of Credit, but
shall continue to have all rights and other obligations of a Fronting Bank
hereunder relating to

 

83

--------------------------------------------------------------------------------

any Letter of Credit issued by it prior to such date. The Agent shall promptly
appoint a replacement Fronting Bank as soon as practicable, which, so long as no
Default or Event of Default exists, shall be reasonably acceptable to the
relevant Loan Party Agent.

2.5. Applicable Foreign Borrower Sublimits. Notwithstanding anything to the
contrary contained in this Section 2, in no event shall any Applicable Foreign
Borrower be entitled to receive a Revolver Loan or the issuance of a Letter of
Credit (and no Lender shall be required to make or support the same) if at the
time of the proposed funding of such Revolver Loan or the issuance of such
Letter of Credit (and after giving effect thereto and all pending requests for
Revolver Loans and Letters of Credit by or on behalf of such Borrower), the sum
of (a) the Dollar Equivalent of the outstanding amount of all Revolver Loans
made to such Borrower on such date and (b) the LC Obligations of such Borrower
on such date exceeds the lesser of such Borrower’s individual Borrowing Base or
the Applicable Foreign Borrower Commitment. If as a result of fluctuations in
Exchange Rates or otherwise the Dollar Equivalent of the sum of all outstanding
Revolver Loans made to an Applicable Foreign Borrower and the LC Obligations of
such Borrower exceed such Borrower’s Applicable Foreign Borrower Commitment, the
excess amount shall be payable by the Applicable Foreign Borrower within three
(3) Business Days following written demand by the Agent. In no event shall the
aggregate Applicable Foreign Borrower Commitments for all members of a Foreign
Borrower Group exceed the Foreign Revolver Commitments for such Foreign Borrower
Group.

SECTION 3. INTEREST, FEES AND CHARGES

3.1. Interest.

3.1.1. Rates and Payment of Interest.

(a) The Obligations shall bear interest as follows:

(i) in the case of a U.S. Base Rate Loan, at the U.S. Base Rate in effect from
time to time, plus the Applicable Margin for such U.S. Base Rate Loan;

(ii) in the case of a European Base Rate Loan, at the European Base Rate in
effect from time to time, plus the Applicable Margin for European Base Rate
Loans;

(iii) in the case of a LIBOR Base Loan, at LIBOR for the applicable Interest
Period, plus the Applicable Margin for LIBOR Loans;

(iv) in the case of any other Dutch Facility Obligation (other than Secured Bank
Product Obligations) that is then due and payable (including, to the extent
permitted by law, interest not paid when due), at the European Base Rate in
effect from time to time, plus the Applicable Margin for European Rate Loans;
and

(v) in the case of any other U.S. Facility Obligation (other than Secured Bank
Product Obligations) that is then due and payable (including, to the extent
permitted by law, interest not paid when due), at the U.S. Base Rate in effect
from time to time, plus the Applicable Margin for the related U.S. Base Rate
Loans.

Interest shall accrue from the date the Loan is advanced or the Obligation
becomes payable, until paid by the Applicable Borrower(s). If a Loan is repaid
on the same day made, one Business Day’s interest shall accrue.

 

84

--------------------------------------------------------------------------------

(b) Interest on the Revolver Loans shall be payable in the currency of the
underlying Revolver Loan.

(c) If all or a portion of (i) the principal amount of any Loan, (ii) any
interest payable thereon or (iii) following notice from the Agent, any other
amounts payable hereunder, in each case, shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest (including post-petition interest during the pendency of any
Insolvency Proceeding) at a rate per annum that is (x) in the case of overdue
principal, the Default Rate or (y) in the case of any overdue interest, to the
extent permitted by Applicable Law, the Default Rate, from and including the
date of such non-payment to but excluding the date on which such amount is paid
in full (after as well as before judgment). Payment or acceptance of the
increased rates of interest provided for in this Section 3.1.1(c) is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of the
Agent, any Security Trustee or any Lender.

(d) Interest accrued on the Loans shall be due and payable in arrears, (i) for
any Base Rate Loan or on the first day of each month; (ii) for any LIBOR Loan,
on the last day of its Interest Period (and, if its Interest Period exceeds
three months, at the end of each period of three months) and (iii) on any date
of prepayment, with respect to the principal amount of Loans being prepaid. In
addition, interest accrued on the (1) U.S. Revolver Loans shall be due and
payable on the U.S. Revolver Commitment Termination Date and (2) Dutch Kraton
Revolver Loans shall be due and payable on the Dutch Kraton Revolver Commitment
Termination Date. Interest accrued on any other Obligations shall be due and
payable as provided in the Loan Documents and, if no payment date is specified,
shall be due and payable on demand. Notwithstanding the foregoing, interest
accrued at the Default Rate shall be due and payable on demand.

3.1.2. Application of LIBOR to Outstanding Loans.

(a) Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation and the other terms hereof, elect to convert any portion
of any Base Rate Loan funded in Dollars, Euros or Sterling (as applicable) to,
or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan. During any Event of Default, the Agent may (and shall at the direction of
Required Lenders) declare that no Loan may be made, converted or continued as a
LIBOR Loan.

(b) Whenever Borrowers within a Borrower Group desire to convert or continue
Loans as LIBOR Loans, the relevant Loan Party Agent shall give the Agent (and in
the case of any such request by Dutch Borrowers Bank of America (London)) a
Notice of Conversion/Continuation, no later than 11:00 a.m. (Local Time) or 1:00
pm (local time) in the case of a request on behalf of U.S. Borrowers at least
three (3) Business Days prior to the requested conversion or continuation date.
Promptly after receiving any such notice, the Agent shall notify each Applicable
Lender thereof. Each Notice of Conversion/Continuation shall be irrevocable, and
shall specify the amount of Loans to be converted or continued, the conversion
or continuation date (which shall be a Business Day), and the duration of the
Interest Period (which shall be deemed to be thirty (30) days if not specified).
If, upon the expiration of any Interest Period in respect of any LIBOR Loans,
the relevant Loan Party Agent shall have failed to deliver a Notice of
Conversion/Continuation with respect thereto as required above, Borrowers shall
be deemed to have elected to convert such Loans into Base Rate Loans.

3.1.3. Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans, the relevant Loan Party Agent, on behalf of the
applicable Borrower(s), shall select an interest period to apply (the “Interest
Period”), which interest period shall be a one, two, three, six (or if available
to all Applicable Lenders as determined by such Applicable Lenders in good faith
based upon prevailing market conditions) twelve month period; provided, however,
that:

(a) the Interest Period shall commence on the date the Loan is made or continued
as, or converted into, a LIBOR Loan, and shall expire on the numerically
corresponding day in the calendar month at its end;

 

85

--------------------------------------------------------------------------------

(b) if any Interest Period commences on a day for which there is no
corresponding day in the calendar month at its end or if such corresponding day
falls after the last Business Day of such month, then the Interest Period shall
expire on the last Business Day of such month;

(c) if any Interest Period would expire on a day that is not a Business Day, the
period shall expire on the next Business Day; and

(d) no Interest Period shall extend beyond the Facility Termination Date (or, in
the case of any Loan owing by (i) any U.S. Borrower, the U.S. Revolver
Commitment Termination Date, or (ii) any Dutch Kraton Borrower, the Dutch Kraton
Revolver Commitment Termination Date, in each case if earlier).

3.2. Fees.

3.2.1. Unused Line Fee.

(a) Dutch Unused Line Fee. Dutch Kraton Borrowers shall pay to the Agent for the
Pro Rata benefit of Dutch Kraton Lenders, a fee equal to 0.375% per annum times
the average daily amount by which the Dutch Kraton Revolver Commitments exceed
the Dutch Kraton Revolver Exposure during any month. Notwithstanding anything to
the contrary set forth herein, outstanding Dutch Kraton Swingline Loans shall
not be taken into account when determining Dutch Kraton Revolver Exposure for
purposes of this Section 3.2.1(a). Such fee shall be payable in arrears, on the
first day of each month and on the Dutch Kraton Revolver Commitment Termination
Date.

(b) U.S. Unused Line Fee. U.S. Borrowers shall pay to the Agent, for the Pro
Rata benefit of U.S. Lenders, a fee equal to 0.375% per annum times the average
daily amount by which the U.S. Revolver Commitments exceed the U.S. Revolver
Exposure during any month. Notwithstanding anything to the contrary set forth
herein, outstanding U.S. Swingline Loans shall not be taken into account when
determining U.S. Revolver Exposure for purposes of this Section 3.2.1(b). Such
fee shall be payable in arrears, on the first day of each month and on the U.S.
Revolver Commitment Termination Date.

3.2.2. Dutch Letters of Credit Fees. Each Applicable Dutch Kraton Borrower shall
pay (i) to the Agent, for the Pro Rata benefit of Dutch Kraton Lenders, a fee
equal to the per annum rate of the Applicable Margin in effect for Letter of
Credit Fees times the average daily stated amount of such Applicable Dutch
Kraton Borrower’s Dutch Letters of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; (ii) to each Dutch Fronting Bank, for
its own account, a fronting fee equal to 0.125% per annum on the stated amount
of each Dutch Kraton Letter of Credit issued by it, which fee shall be payable
monthly in arrears, on the first day of each month; and (iii) to each Dutch
Fronting Bank, for its own account, all customary charges associated with the
issuance, amending, negotiating, payment, processing, transfer and
administration of Dutch Kraton Letters of Credit issued by it, which charges
shall be paid as and when incurred.

 

86

--------------------------------------------------------------------------------

3.2.3. U.S. Letters of Credit Fees. U.S. Borrowers shall pay (i) to the Agent,
for the Pro Rata benefit of U.S. Lenders, a fee equal to the per annum rate of
the Applicable Margin in effect for Letter of Credit Fees times the average
daily stated amount of U.S. Letters of Credit (based on the Dollar Equivalent
thereof), which fee shall be payable monthly in arrears, on the first day of
each month; (ii) to each U.S. Fronting Bank, for its own account, a fronting fee
equal to 0.125% per annum on the stated amount of each U.S. Letter of Credit
issued by it, which fee shall be payable monthly in arrears, on the first day of
each month; and (iii) to each U.S. Fronting Bank, for its own account, all
customary charges associated with the issuance, amending, negotiating, payment,
processing, transfer and administration of U.S. Letters of Credit issued by it,
which charges shall be paid as and when incurred.

3.2.4. Other Fees. The Borrowers shall pay such other fees as described in the
Fee Letters.

3.3. Computation of Interest and Fees. All interest, as well as fees and other
charges calculated on a per annum basis, shall be computed for the actual days
elapsed, based on a year of 360 days, or, in the case of interest on U.S. Base
Rate Loans (unless U.S. Base Rate is being determined based on clause (c) of the
definition thereof) or Loans denominated in Sterling, on the basis of a 365 day
year. Each determination by the Agent of any interest, fees or interest rate
hereunder shall be final, conclusive and binding for all purposes, absent
manifest error. All fees shall be fully earned when due and shall not be subject
to rebate, refund or proration. All fees payable under Section 3.2 are
compensation for services and are not, and shall not be deemed to be, interest
or any other charge for the use, forbearance or detention of money, except to
the extent such treatment is inconsistent with any Applicable Law. A certificate
setting forth in reasonable detail amounts payable by any Borrower under
Section 3.4, 3.7or 3.10 and the basis therefor, submitted to a Loan Party Agent
by the Agent or the affected Lender or Fronting Bank shall be final, conclusive
and binding for all purposes, absent manifest error, and Borrowers shall pay
such amounts to the appropriate party within ten (10) Business Days following
receipt of the certificate.

3.4. Reimbursement Obligations. Borrowers shall reimburse the Agent and Security
Trustees for all Extraordinary Expenses. In addition to such Extraordinary
Expenses, Borrowers shall also reimburse the Agent and Security Trustees for all
reasonable and documented legal, accounting, appraisal and other reasonable and
documented fees, costs and expenses, without duplication, incurred by them in
connection with (a) negotiation and preparation of any Loan Documents, including
any amendment or other modification thereof; (b) administration of and actions
relating to any Collateral, Loan Documents and transactions contemplated
thereby, including any actions taken to perfect or maintain priority of the
Agent’s or any Security Trustee’s Liens on any such Collateral, to maintain any
insurance required hereunder or to verify such Collateral; and (c) each
inspection, field exam, audit or appraisal with respect to any Loan Party or
Collateral, whether prepared by the Agent’s personnel or a third party (subject
to the limitations of Section 10.1.1). All reasonable and documented legal and
accounting fees incurred by Agent Professionals or any applicable Security
Trustee shall be charged to Borrowers at the actual rate charged by such Agent
Professionals or such Security Trustee; provided that Borrower’s obligation to
reimburse Agent and Security Trustees for legal fees shall be limited to the
reasonable and documented legal fees and expenses of Holland & Knight LLP, U.S.
counsel to the Agent, Norton Rose Fulbright LLP, as foreign counsel to the Agent
and Security Trustees, and if necessary, of one local counsel in each other
relevant jurisdiction (which may include a local counsel acting in each of
multiple jurisdictions, so long as no Event of Default then exists, with the
written consent of Parent, such consent not to be unreasonably withheld). In
addition to the Extraordinary Expenses of Agent and Security Trustees, upon the
occurrence and during the continuance of an Event Default, Borrowers shall
reimburse Fronting Banks and Lenders for the reasonable and documented fees,
charges and disbursements of one counsel (and if necessary, of one local counsel
in each other relevant jurisdiction (which may include a local counsel acting in
each of multiple jurisdictions)) for the Fronting Banks and

 

87

--------------------------------------------------------------------------------

Lenders, as a whole, in connection with the enforcement, collection or
protection of their respective rights under the Loan Documents, including all
such expenses incurred during any workout, restructuring or Insolvency
Proceeding; provided, that, notwithstanding anything to the contrary herein, in
the event that there is a conflict of interest amongst the Lenders on the one
hand or the Agent and the Lenders on the other hand, the Lenders may engage and
be reimbursed for one additional counsel, subject to the foregoing limitations.
If, for any reason (including inaccurate reporting on financial statements), it
is determined that a higher Applicable Margin should have applied to a period
than was actually applied, then the proper margin shall be applied retroactively
and Borrowers shall pay to the Agent, for the Pro Rata benefit of Lenders, an
amount equal to the difference between the amount of interest and fees that
would have accrued using the proper margin and the amount actually paid. All
amounts payable by Borrowers under this Section 3.4 shall be due and payable
within ten (10) Business Days of demand.

3.5. Illegality. If any Lender in good faith determines that any Applicable Law
has made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund LIBOR Loans, or to determine or charge interest rates based upon the
European Base Rate, LIBOR, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell bills of
exchange denominated in, or to take deposits of, a currency in the London
interbank market, or then, on notice thereof by such Lender to the Agent and
Parent, any obligation of such Lender to make or continue affected LIBOR Loans
or to convert Base Rate Loans to affected LIBOR Loans shall be suspended until
such Lender notifies the Agent that the circumstances giving rise to such
determination no longer exist. Upon delivery of such notice, Borrowers of the
affected Borrower Group may revoke any pending request for a Borrowing of,
conversion to or continuation of any Loans and shall upon demand from such
Lender (with a copy to the Agent), prepay or, if applicable, convert all
affected LIBOR Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such LIBOR Loans to such day, or promptly, if such Lender may not
lawfully continue to maintain such LIBOR Loans. Upon any such prepayment or
conversion, Borrowers of the affected Borrower Group shall also pay accrued
interest on the amount so prepaid or converted. If any Lender invokes this
Section 3.5, such Lender shall use commercially reasonable efforts to notify a
Loan Party Agent and the Agent when the conditions giving rise to such action no
longer exists, provided, however, that such Lender shall have no liability to
Borrowers or to any other Person for its failure to provide such notice. Each
Lender (solely to the extent having multiple Lending Offices) agrees to
designate a different Lending Office if such designation will avoid the need for
such notice and will not, in the good faith judgment of such Lender, otherwise
be materially disadvantageous to such Lender.

3.6. Inability to Determine Rates. If Required Lenders notify the Agent for any
reason in connection with a request for a Borrowing of, or conversion to or
continuation of, an LIBOR Loan that (a) deposits are not being offered to banks
in the London interbank market, for the applicable amount and Interest Period of
such Loan, (b) adequate and reasonable means do not exist for determining LIBOR,
for the requested Interest Period, or (c) LIBOR for the requested Interest
Period does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, then the Agent will promptly so notify a Loan Party Agent and
each Applicable Lender. Thereafter, the obligation of the Applicable Lenders to
make or maintain affected LIBOR Loans shall be suspended until the Agent (upon
instruction by Required Lenders) revokes such notice. Upon receipt of such
notice, a Loan Party Agent may revoke any pending request for a Borrowing of,
conversion to or continuation of an LIBOR Loan or, failing that, will be deemed
to have submitted a request for a Base Rate Loan. If any Lender invokes this
Section 3.6, such Lender shall use reasonable efforts to notify the relevant
Loan Party Agent and the Agent when the conditions giving rise to such action no
longer exists, provided, however, that such Lender shall have no liability to
Borrowers or to any other Person for its failure to provide such notice.

 

88

--------------------------------------------------------------------------------

3.7. Increased Costs; Capital Adequacy.

3.7.1. Change in Law. If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, liquidity, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in LIBOR) or Fronting Bank;

(b) subject any Lender or Fronting Bank to any Taxes (other than (i) Indemnified
Taxes, which shall be covered solely by Section 5.8.1, (ii) Excluded Taxes,
(iii) Other Taxes, which shall be covered solely by Section 5.8.1, or (iv) Taxes
described in Section 5.8.2(b)(ii)) on its Loans, Letters of Credit, Commitments
or other Obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or

(c) impose on any Lender or Fronting Bank or the London interbank market or any
other condition, cost or expense affecting any Loan, Loan Document, Letter of
Credit or participation in LC Obligations;

and the result thereof shall be to increase the cost to such Lender of making,
converting or continuing or maintaining any Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
Fronting Bank of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or Fronting Bank hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or Fronting Bank, the Borrower Group
to which such Lender or Fronting Bank has a Commitment shall pay to such Lender
or Fronting Bank such additional amount or amounts as will compensate such
Lender or Fronting Bank for such additional costs incurred or reduction
suffered; provided, further, however, that the Borrowers will only be required
to pay such additional amounts as a result of a Change in Law if it is the
general policy or practice of such Lender or Fronting Bank to pass on such costs
to similarly situated borrowers under similar credit facilities (to the extent
such Lender or such Fronting Bank has the right under such similar credit
facilities to do so).

3.7.2. Capital Adequacy. If any Lender or Fronting Bank determines that any
Change in Law affecting such Lender or Fronting Bank or any Lending Office of
such Lender or such Lender’s or Fronting Bank’s holding company, if any,
regarding capital, liquidity or leverage requirements has or would have the
effect of reducing the rate of return on such Lender’s, Fronting Bank’s or
holding company’s capital as a consequence of this Agreement, or such Lender’s
or Fronting Bank’s Commitments, Loans, Letters of Credit or participations in LC
Obligations to a level below that which such Lender, Fronting Bank or holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s, Fronting Bank’s and holding company’s policies with
respect to capital adequacy and liquidity), then from time to time the Borrower
Group to which such Lender or Fronting Bank has a Commitment will pay to such
Lender or Fronting Bank, as the case may be, such additional amount or amounts
as will compensate it or its holding company for any such reduction suffered, in
each case, in accordance with Section 3.3 provided, further, however, that the
Borrowers will only be required to pay such additional amounts as a result of a
Change in Law if it is the general policy or practice of such Lender or Fronting
Bank to pass on such costs to similarly situated borrowers under similar credit
facilities (to the extent such Lender or such Fronting Bank has the right under
such similar credit facilities to do so).

3.7.3. Compensation. Failure or delay on the part of any Lender or Fronting Bank
to demand compensation pursuant to this Section 3.7 shall not constitute a
waiver of its right to demand such compensation, but Borrowers of a Borrower
Group shall not be required to compensate a Lender to

 

89

--------------------------------------------------------------------------------

such Borrower Group or Fronting Bank for any increased costs incurred or
reductions suffered more than six (6) months prior to the date that the Lender
or Fronting Bank notifies a Loan Party Agent of the Change in Law giving rise to
such increased costs or reductions and of such Lender’s or Fronting Bank’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the six
(6) month period referred to above shall be extended to include the period of
retroactive effect thereof).

3.8. [Reserved].

3.9. Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if any Borrower is required to pay additional
amounts or indemnity payments with respect to a Lender under Section 5.8, then
such Lender shall use reasonable efforts to designate a different Lending Office
or to assign its rights and obligations hereunder to another of its offices,
branches or Affiliates, if, in the judgment of such Lender, such designation or
assignment (a) would eliminate the need for such notice or reduce amounts
payable or to be withheld in the future, as applicable; and (b) in each case,
would not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender or unlawful. The Borrower or
Borrowers of each affected Borrower Group shall pay all reasonable costs and
expenses incurred by any Lender that has issued a Commitment to such Borrower
Group in connection with any such designation or assignment.

3.10. Funding Losses. Upon written demand of any Lender (with a copy to the
Agent), which demand shall set forth in reasonable detail the basis for
requesting such amount, the Borrowers shall promptly compensate such Lender for
and hold such Lender harmless from any loss, cost or expense reasonably incurred
if for any reason (other than a default by a Lender) (a) any Borrowing of, or
conversion to or continuation of, an LIBOR Loan does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation
(whether or not withdrawn), (b) any repayment or conversion of an LIBOR Loan
occurs on a day other than the end of its Interest Period, or (c) any Borrower
of any Borrower Group fails to repay an LIBOR Loan when required hereunder, then
Borrowers of such Borrower Group shall pay to the Agent its customary
administrative charge and to each Lender all losses and expenses that it
sustains as a consequence thereof, including any loss or expense arising from
liquidation or redeployment of funds or from fees payable to terminate deposits
of matching funds, but excluding loss of margin. All amounts payable by
Borrowers under this Section 3.10 shall be due and payable in accordance with
Section 3.3. Lenders shall not be required to purchase deposits in the London
interbank market or any other applicable market to fund any LIBOR Loan, but the
provisions hereof shall be deemed to apply as if each Lender had purchased such
deposits to fund such Loans.

3.11. Maximum Interest. Notwithstanding anything to the contrary contained in
any Loan Document, the interest paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by Applicable Law (“maximum rate”). If the Agent or any Lender shall receive
interest in an amount that exceeds the maximum rate, the excess interest shall
be applied to the principal of the Obligations of the Borrower Group to which
such excess interest relates or, if it exceeds such unpaid principal, refunded
to such Borrower Group. In determining whether the interest contracted for,
charged or received by the Agent or a Lender exceeds the maximum rate, such
Person may, to the extent permitted by Applicable Law, (a) characterize any
payment that is not principal as an expense, fee or premium rather than
interest; (b) exclude voluntary prepayments and the effects thereof; and
(c) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.

 

90

--------------------------------------------------------------------------------

SECTION 4. LOAN ADMINISTRATION

4.1. Manner of Borrowing and Funding Loans.

4.1.1. Notice of Borrowing.

(a) U.S. Revolver Loans. Whenever any U.S. Borrower desires funding of a
Borrowing of Revolver Loans, the North American Loan Party Agent shall give the
Agent a Notice of Borrowing. Such notice must be received by the Agent no later
than 11:00 a.m. (Local Time) (i) on the Business Day of the requested funding
date, in the case of Base Rate Loans and (ii) at least three (3) Business Days
prior to the requested funding date, in the case of LIBOR Loans. Notices
received after 11:00 a.m. (Local Time) shall be deemed received on the next
Business Day. Each Notice of Borrowing shall be irrevocable and shall specify
(A) the amount of the Borrowing, (B) the requested funding date (which must be a
Business Day), (C) whether the Borrowing is to be made as a U.S. Base Rate Loan
or a LIBOR Revolver Loan, in the case of a U.S. Borrower, (D) in the case of
LIBOR Loans, the duration of the applicable Interest Period (which shall be
deemed to be one (1) month if not specified) and (E) the Borrower Group
Commitment under which such Borrowing is proposed to be made.

(b) Dutch Kraton Revolver Loans. Whenever any Dutch Kraton Borrower desires
funding of a Borrowing of Revolver Loans, the Foreign Loan Party Agent shall
give the Agent and Bank of America (London) a Notice of Borrowing. Such notice
must be received by the Agent and Bank of America (London) no later than 11:00
a.m. (Local Time) (i) at least two (2) Business Days prior to the requested
funding date, in the case of Base Rate Loans; provided that a Notice of
Borrowing that requests a Revolver Loan denominated other than in Euros must be
received no later than 11:00 a.m. (Local Time) three (3) Business Days prior to
the requested funding date (or such shorter time as may be agreed to by the
Agent and Dutch Kraton Lenders) and (ii) at least three (3) Business Days prior
to the requested funding date in the case of LIBOR Loans. Notices received after
11:00 a.m. (Local Time) shall be deemed received on the next Business Day. Each
Notice of Borrowing shall be irrevocable and shall specify (u) the amount of the
Borrowing, (v) the requested funding date (which must be a Business Day),
(w) whether the Borrowing is to be made as a European Base Rate Loan or a LIBOR
Loan, (x) in the case of LIBOR Loans, the duration of the applicable Interest
Period (which shall be deemed to be one month if not specified), (y) the name of
the Applicable Dutch Kraton Borrower and (z) the currency in which such Loan
will be denominated (which must be a currency permitted under this Agreement for
such Loan).

(c) Dutch Kraton Swingline Loans. Whenever any Dutch Kraton Borrower desires
funding of a Borrowing of Swingline Loans, the Foreign Loan Party Agent shall
give the Agent and Bank of America (London) a Notice of Borrowing. Such notice
must be received by the Agent and Bank of America (London) no later than 11:00
a.m. (Local Time) on the Business Day of the requested funding date provided
that a Notice of Borrowing that requests a Swingline Loan denominated in Dollars
or Sterling must be received no later than 11:00 a.m. (Local Time) three
(3) Business Days prior to the requested funding date (or such shorter time as
may be agreed to by the Agent). Notices received after 11:00 a.m. (Local Time)
shall be deemed received on the next Business Day. Each Notice of Borrowing
shall be irrevocable and shall specify (A) the amount of the Borrowing, (B) the
requested funding date (which must be a Business Day), (C) the name of the
Applicable Dutch Kraton Borrower and (D) the currency in which such Loan will be
denominated (which must be a currency permitted under this Agreement for such
Loan).

(d) U.S. Swingline Loans. Whenever any U.S. Borrower desires funding of a
Borrowing of Swingline Loans, the North American Loan Party Agent shall give the
Agent a Notice of Borrowing. Such notice must be received by the Agent no later
than 11:00 a.m. (Local Time) on the Business Day of the requested funding date.
Notices received after 11:00 a.m. (Local Time) shall be

 

91

--------------------------------------------------------------------------------

deemed received on the next Business Day. Each Notice of Borrowing shall be
irrevocable and shall specify (A) the amount of the Borrowing and (B) the
requested funding date (which must be a Business Day).

(e) Deemed Requests for Revolver Loans. Unless payment is otherwise timely made
by each Borrower within a Borrower Group, the becoming due of any amount
required to be paid with respect to any of the Obligations of the Loan Party
Group to which such Borrower Group belongs (whether principal, interest, fees or
other charges, including unused line fees payable under Section 3.2.1,
Extraordinary Expenses, LC Obligations and Cash Collateral) shall be deemed to
be a request for Revolver Loans by such Borrower Group on the due date in the
amount of such Obligations and shall bear interest at the per annum rate
applicable hereunder to Base Rate Loans, in the case of such Obligations (other
than Secured Bank Product Obligations) owing by any Loan Party. The proceeds of
such Revolver Loans shall be disbursed as direct payment of the relevant
Obligation.

(f) Controlled Disbursement Accounts. If any Borrower within a Borrower Group
establishes a controlled disbursement account with Bank of America or any branch
or Affiliate of Bank of America, then the presentation for payment of any check,
ACH or electronic debit or other payment item drawn on such account at a time
when there are insufficient funds to cover it shall be deemed to be a request
for Revolver Loans by such Borrower Group on the date of such presentation, in
the amount of such payment item, and shall bear interest at the per annum rate
applicable hereunder to Base Rate Loans, in the case of insufficient funds owing
by any Loan Party. The proceeds of such Revolver Loans may be disbursed directly
to the controlled disbursement account or other appropriate account.

4.1.2. Fundings by Lenders; Settlement.

(a) Each Applicable Lender shall timely honor its Borrower Group Commitment by
funding its Pro Rata share of each Borrowing of Revolver Loans under such
Borrower Group Commitment that is properly requested hereunder. The Agent shall
endeavor to notify the Applicable Lenders of each Notice of Borrowing (or deemed
request for a Borrowing) by (i) 12:00 noon (Local Time) on the proposed funding
date for Base Rate Loans to U.S. Borrowers, (ii) 12:00 noon (Local Time) two
(2) Business Days before any proposed funding date for Base Rate Loans to
Foreign Borrowers, or (iii) 12:00 noon (Local Time) at least two (2) Business
Days before any proposed funding of LIBOR Loans. Each Applicable Lender shall
fund to the Agent such Lender’s Pro Rata share of the Borrowing to the account
specified by the Agent in immediately available funds not later than 2:00 p.m.
(Local Time) on the requested funding date, unless the Agent’s notice is
received after the times provided above, in which event each Applicable Lender
shall fund its Pro Rata share by 11:00 a.m. (Local Time) on the next Business
Day. Subject to its receipt of such amounts from the Applicable Lenders, the
Agent shall disburse the proceeds of the Revolver Loans as directed by the
applicable Loan Party Agent. Unless the Agent shall have received (in sufficient
time to act) written notice from an Applicable Lender that it does not intend to
fund its Pro Rata share of a Borrowing, the Agent may assume that such
Applicable Lender has deposited or promptly will deposit its share with the
Agent, and the Agent may disburse a corresponding amount to the Borrower or
Borrowers within such Borrower Group. If an Applicable Lender’s share of any
Borrowing is not received by the Agent, then the Borrower or Borrowers within
the Borrower Group jointly and severally agree to repay to the Agent on demand
the amount of such share, together with interest thereon from the date disbursed
until repaid, at the rate applicable to such Borrowing. Notwithstanding the
foregoing, the Agent may, in its discretion, fund any request for a Borrowing of
Revolver Loans as Swingline Loans. Each Applicable Lender at its option may make
any LIBOR Loan by causing any domestic or foreign branch or Affiliate of such
Applicable Lender to make such LIBOR Loan; provided that any exercise of such
option shall not affect the obligation of the applicable Borrowers to repay such
LIBOR Loan in accordance with the terms of this Agreement.

 

92

--------------------------------------------------------------------------------

(b) To facilitate administration of the Revolver Loans, the Lenders, the
Swingline Lenders and the Agent agree (which agreement is solely among them, and
not for the benefit of or enforceable by any Borrower or any other Loan Party)
that settlement among them with respect to Swingline Loans and other Revolver
Loans may take place on a date determined from time to time by the Agent, which
shall occur at least once every (i) five (5) Business Days with respect to U.S.
Swingline Loans and any other Revolver Loans and (ii) ten (10) Business Days
with respect to Dutch Swingline Loans. On each settlement date, settlement shall
be made with each Lender in accordance with the Settlement Report delivered by
the Agent to the Lenders. Between settlement dates, the Agent may in its
discretion (but is not obligated to) apply payments on Revolver Loans to
Swingline Loans, regardless of any designation by a Loan Party Agent or any
Borrower or any provision herein to the contrary. Each Lender’s obligation to
make settlements with the Agent is absolute and unconditional, without offset,
counterclaim or other defense, and whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied.
If, due to an Insolvency Proceeding with respect to any Borrower or any other
Loan Party or otherwise, any Swingline Loan may not be settled among the Lenders
hereunder, then each Applicable Lender shall be deemed to have purchased from
the applicable Swingline Lender a Pro Rata participation in each unpaid
Swingline Loan and shall transfer the amount of such participation to the
applicable Swingline Lender, in immediately available funds, within one Business
Day after the Agent’s request therefor.

4.1.3. Notices. Each Borrower authorizes the Agent and Lenders to extend Loans,
convert or continue Revolver Loans, effect selections of interest rates, and
transfer funds to or on behalf of applicable Borrowers based on telephonic or
e-mailed instructions by Loan Party Agents to the Agent. Each Loan Party Agent
shall confirm each such request by prompt delivery to the Agent of a Notice of
Borrowing or Notice of Conversion/Continuation, if applicable, but if it differs
in any material respect from the action taken by the Agent or Lenders, the
records of the Agent and Lenders shall govern. Neither the Agent nor any Lender
shall have any liability for any loss suffered by a Borrower as a result of the
Agent or any Lender acting upon its understanding of telephonic or e-mailed
instructions from a person believed in good faith by the Agent or any Lender to
be a person authorized to give such instructions on a Loan Party Agent’s behalf.

4.2. Defaulting Lender.

4.2.1. Reallocation of Pro Rata Share; Amendments. For purposes of determining
Lenders’ obligations to fund or participate in Loans or Letters of Credit, the
Agent may exclude the Commitments and Loans of any Defaulting Lender from the
calculation of Pro Rata shares. If any Loan or Letter of Credit is outstanding
at the time a Lender becomes a Defaulting Lender, then all or any part of such
Loan or Letter of Credit shall be reallocated among the non-Defaulting Lenders
in accordance with their Pro Rata Shares, but only to the extent that such
reallocation would not cause such non-Defaulting Lenders’ Dutch Revolver Loan
Exposure or U.S. Revolver Loan Exposure, as applicable, to exceed such
non-Defaulting Lender’s Commitment. A Defaulting Lender shall have no right to
vote on any amendment, waiver or other modification of a Loan Document, except
as provided in Section 14.1.1(c).

4.2.2. Payments; Fees. The Agent may, in its discretion, receive and retain any
amounts payable to a Defaulting Lender under the Loan Documents, and a
Defaulting Lender shall be deemed to have assigned to the Agent such amounts
until all Obligations owing to the Agent, non-Defaulting Lenders and other
Secured Parties have been paid in full. The Agent may apply such amounts to the
Defaulting Lender’s defaulted obligations, use the funds to Cash Collateralize
such Lender’s LC Obligations, or readvance the amounts to Borrowers hereunder. A
Lender shall not be entitled to receive any fees accruing hereunder during the
period in which it is a Defaulting Lender, and the unfunded portion of its
Commitment shall be disregarded for purposes of calculating the unused line fee
under

 

93

--------------------------------------------------------------------------------

Section 3.2.1. If any LC Obligations owing to a Defaulting Lender are
reallocated to other Lenders, fees attributable to such LC Obligations under
Sections 3.2.2 or 3.2.3 shall be paid to such Lenders. The Agent shall be paid
all fees attributable to LC Obligations that are not reallocated.

4.2.3. Cure. Borrowers, the Agent and each Fronting Bank may agree in writing
that a Lender is no longer a Defaulting Lender. At such time, Pro Rata shares
shall be reallocated without exclusion of such Lender’s Commitment and Loans,
and all outstanding Revolver Loans, LC Obligations and other exposures under the
Commitments shall be reallocated among Lenders and settled by the Agent (with
appropriate payments by the reinstated Lender) in accordance with the readjusted
Pro Rata shares. Unless expressly agreed by Borrowers, the Agent and each
Fronting Bank, no reinstatement of a Defaulting Lender shall constitute a waiver
or release of claims against such Lender. The failure of any Lender to fund a
Loan, to make a payment in respect of LC Obligations or otherwise to perform its
obligations hereunder shall not relieve any other Lender of its obligations, and
no Lender shall be responsible for default by another Lender.

4.3. Number and Amount of LIBOR Loans; Determination of Rate. For ease of
administration, all LIBOR Loans of the same Type to a Borrower Group having the
same length and beginning date of their Interest Periods and the same currency
shall be aggregated together, and such Loans shall be allocated among the
Applicable Lenders on a Pro Rata basis. With respect to any Borrower Group, no
more than six (6) Borrowings of LIBOR Loans may be outstanding at any time, and
each Borrowing of LIBOR Loans when made, continued or converted shall be in a
minimum amount of $1,000,000, or an increment of $100,000 in excess thereof.
Upon determining LIBOR for any Interest Period requested by Borrowers within a
Borrower Group, the Agent shall promptly notify the applicable Loan Party Agent
thereof by telephone or electronically and, if requested by such Loan Party
Agent, shall confirm any telephonic notice in writing.

4.4. Loan Party Agents.

4.4.1. North American Loan Party Agent. Each U.S. Domiciled Loan Party hereby
designates Kraton Polymers U.S. LLC (“North American Loan Party Agent”) as its
representative and agent for all purposes under the Loan Documents, including
requests for Loans and Letters of Credit, designation of interest rates,
delivery or receipt of communications, preparation and delivery of any Borrowing
Base and financial reports, receipt and payment of Obligations, requests for
waivers, amendments or other accommodations, actions under the Loan Documents
(including in respect of compliance with covenants), and all other dealings with
the Agent, any Fronting Bank or any Lender. North American Loan Party Agent
hereby accepts such appointment.

4.4.2. Foreign Loan Party Agent. Each Dutch Domiciled Loan Party hereby
designates each of Kraton Polymers U.S. LLC and Kraton Polymers Nederland B.V.
(each, a “Foreign Loan Party Agent”) as its representative and agent for all
purposes under the Loan Documents, including requests for Loans and Letters of
Credit, designation of interest rates, delivery or receipt of communications,
preparation and delivery of any Borrowing Base and financial reports, receipt
and payment of Obligations, requests for waivers, amendments or other
accommodations, actions under the Loan Documents (including in respect of
compliance with covenants), and all other dealings with the Agent, any Security
Trustee, any Fronting Bank or any Lender. Each Foreign Loan Party Agent hereby
accepts such appointment.

4.4.3. Loan Party Agents Generally. The Agent, each Security Trustee, each
Fronting Bank and each Lender shall be entitled to rely upon, and shall be fully
protected in relying upon, any notice or communication (including any Notice of
Borrowing) delivered by a Loan Party Agent on behalf of any Loan Party. The
Agent, any Security Trustee, any Fronting Bank and any Lender may give

 

94

--------------------------------------------------------------------------------

any notice or communication with a Loan Party hereunder to a Loan Party Agent on
behalf of such Loan Party. Each of the Agent, any Security Trustee, any Fronting
Bank and any Lender shall have the right, in its discretion, to deal exclusively
with a Loan Party Agent for any or all purposes under the Loan Documents. Each
Loan Party agrees that any notice, election, communication, representation,
agreement or undertaking made on its behalf by the applicable Loan Party Agent
shall be binding upon and enforceable against it.

4.5. One Obligation. Without in any way limiting any Guarantee of the Secured
Obligations, (a) the U.S. Facility Secured Obligations owing by each U.S.
Facility Loan Party shall constitute one general obligation of the U.S. Facility
Loan Parties and (unless otherwise expressly provided in any Loan Document)
shall be secured by the Agent’s Lien upon all Collateral of each U.S. Facility
Loan Party, provided that each Credit Party shall be deemed to be a creditor of,
and the holder of a separate claim against, each U.S. Facility Loan Party to the
extent of any U.S. Facility Secured Obligations owed by such U.S. Facility Loan
Party to such Credit Party and (b) the Dutch Facility Secured Obligations owing
by each Dutch Facility Loan Party shall constitute one general obligation of the
Dutch Facility Loan Parties and (unless otherwise expressly provided in any Loan
Document) shall be secured by the Agent’s Lien upon all Collateral of each Dutch
Facility Loan Party, provided that each Credit Party shall be deemed to be a
creditor of, and the holder of a separate claim against, each Dutch Facility
Loan Party to the extent of any Dutch Facility Secured Obligations owed by such
Dutch Facility Loan Party to such Credit Party.

4.6. Effect of Termination. On the effective date of termination of the
Commitments, all Obligations shall be immediately due and payable, and any
Lender may terminate its and its Affiliates’ Secured Bank Product Obligations
(including, only with the consent of the Agent, any Treasury Management
Services). All undertakings of Loan Parties contained in the Loan Documents
shall survive, and the Agent and Security Trustees shall retain their Liens in
the Collateral and all of their rights and remedies under the Loan Documents
until Full Payment of the Secured Obligations. Notwithstanding Full Payment of
the Secured Obligations, the Agent and Security Trustees shall not be required
to terminate their Liens in any Collateral unless, with respect to any damages
the Agent may incur as a result of the dishonor or return of Payment Items
applied to Secured Obligations, the Agent receives (a) a written agreement,
executed by the relevant Loan Party Agent and any Person whose advances are used
in whole or in part to satisfy the Secured Obligations, indemnifying the Agent
and Lenders from any such damages; or (b) such Cash Collateral as the Agent, in
its Permitted Discretion, deems necessary to protect against any such damages.
Sections 2.2, 2.3, 3.4, 3.7, 3.10, 5.4, 5.8, 5.9, 12, 14.2 and this Section 4.6,
and the obligation of each Loan Party and Lender with respect to each indemnity
given by it in any Loan Document, shall survive Full Payment of the Secured
Obligations and any release relating to this credit facility.

SECTION 5. PAYMENTS

5.1. General Payment Provisions. All payments of Obligations shall be made
without offset, counterclaim or defense of any kind, (other than for Taxes, as
to which Section 5.8 applies), and in immediately available funds, not later
than 1:00 p.m. (Local Time) on the due date. Any payment after such time shall
be deemed made on the next Business Day. If any payment under the Loan Documents
shall be stated to be due on a day other than a Business Day, the due date shall
be extended to the next Business Day and such extension of time shall be
included in any computation of interest and fees. Any payment of an LIBOR Loan
prior to the end of its Interest Period shall be accompanied by all amounts due
under Section 3.10. Any prepayment of Loans made by a Borrower Group shall be
applied first to costs and expenses of the Agent and Security Trustees
(including any Extraordinary Expenses) relating to such Borrower Group, second
to Base Rate Loans (and the Agent may, in its discretion, apply such prepayment
to Swingline Loans before other Revolver Loans) of such Borrower Group, and then
to

 

95

--------------------------------------------------------------------------------

LIBOR Loans of such Borrower Group; provided, however, that as long as no
Default or Event of Default exists, prepayments of LIBOR Loans may, at the
option of Borrowers of the applicable Borrower Group and the Agent, be held by
the Agent as Cash Collateral and applied to such Loans at the end of their
Interest Periods (in which case no compensation under Section 3.10 hereof shall
be payable with respect to such prepayment). All payments with respect to any
U.S. Facility Obligations shall be made in Dollars and all payments with respect
to any other Obligation shall be made in the currency of the underlying
Obligation. Any payment made contrary to the requirements of the preceding
sentence shall be subject to the terms of Section 5.11.

5.2. Repayment of Obligations.

(a) All (i) U.S. Facility Obligations shall be immediately due and payable in
full on the U.S. Revolver Commitment Termination Date, and (ii) Dutch Kraton
Facility Obligations shall be immediately due and payable in full on the Dutch
Kraton Revolver Commitment Termination Date, in each case, unless payment of
such Obligations is sooner required hereunder. Revolver Loans may be prepaid
from time to time, without penalty or premium, subject to, in the case of LIBOR
Loans, the payment of costs set forth in Section 3.10 (except to the extent
provided in Section 5.1).

(b) If any Disposition in excess of $5,000,000 is comprised of proceeds from any
U.S. Facility Collateral which is ABL Priority Collateral not in the Ordinary
Course of Business, then 100% of the Net Proceeds of such Disposition of such
U.S. Facility Collateral, shall be either applied to the U.S. Revolver Loans or
used to Cash Collateralize the U.S. Letters of Credit, provided, that, such
application to the U.S. Revolver Loans shall only occur in the event U.S.
Availability (after giving pro forma effect to such proposed Disposition) is
less than 15% of the U.S. Line Cap; provided, further, that the consideration
for the U.S. Facility Collateral shall be 100% in cash. If any Disposition is
comprised of proceeds from any Dutch Facility Collateral not in the Ordinary
Course of Business, then 100% of the Net Proceeds of such Disposition shall be
either applied to the Dutch Revolver Loans or used to Cash Collateralize the
Dutch Letters of Credit. Revolver Loans may be prepaid from time to time without
penalty or premium. Notwithstanding anything herein to the contrary, if an
Overadvance exists, Borrowers of the Borrower Group owing such Overadvance
shall, on the sooner of the Agent’s demand or the first Business Day after any
Borrower of such Borrower Group has knowledge thereof (or, in the event such
Overadvance is the result of fluctuations in Exchange Rates, within three
(3) Business Days of the Agent’s demand or of any Borrower of such Borrower
Group’s knowledge thereof), repay the outstanding Loans in an amount sufficient
to reduce the principal balance of the related Overadvance Loan to zero. If as a
result of fluctuations in Exchange Rates or otherwise the sum of all outstanding
U.S. Revolver Loans and U.S. LC Obligations exceeds the U.S. Revolver
Commitments, the excess amount shall be payable by the U.S. Borrowers within
three (3) Business Days following demand by the Agent.

5.3. Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided
in the Loan Documents, or, if no payment date is specified, within ten
(10) Business Days of demand therefor by Agent.

5.4. Marshaling; Payments Set Aside. None of the Agent, Security Trustees,
Fronting Banks or Lenders shall be under any obligation to marshal any assets in
favor of any Loan Party or against any Secured Obligations. If any payment by or
on behalf of any Borrower or Borrowers is made to the Agent, any Security
Trustee, any Fronting Bank, or any Lender, or the Agent, any applicable Security
Trustee, any Fronting Bank or any Lender exercises a right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Agent, such Security
Trustee, such Fronting Bank or such Lender in its discretion) to be repaid to a
Creditor Representative or any other Person, then to the extent of such
recovery, the Secured Obligation originally intended to be satisfied, and all
Liens, rights and remedies relating thereto, shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred.

 

96

--------------------------------------------------------------------------------

5.5. Post-Default Allocation of Payments.

5.5.1. Allocation. Notwithstanding anything herein to the contrary, during an
Event of Default, monies to be applied to the Secured Obligations, whether
arising from payments by or on behalf of any Loan Party, realization on
Collateral, setoff or otherwise, shall be allocated as follows:

(a) with respect to monies, payments, Property or Collateral of or from the U.S.
Domiciled Loan Parties, together with any allocations pursuant to subclause
(a)(ix) of any other clause of this Section 5.5.1:

(i) first, to all costs and expenses, including Extraordinary Expenses, owing to
the Agent or any Security Trustee, to the extent owing by any U.S. Domiciled
Loan Party;

(ii) second, to all amounts owing to U.S. Swingline Lender on U.S. Swingline
Loans;

(iii) third, to all amounts owing to any U.S. Fronting Bank on U.S. LC
Obligations;

(iv) fourth, to all U.S. Facility Obligations constituting fees owing by the
U.S. Domiciled Loan Parties (exclusive of any Foreign Facility Secured
Obligations which are guaranteed by the U.S. Domiciled Loan Parties);

(v) fifth, to all U.S. Facility Obligations constituting interest owing by the
U.S. Domiciled Loan Parties (exclusive of any Foreign Facility Secured
Obligations which are guaranteed by the U.S. Domiciled Loan Parties);

(vi) sixth, to Cash Collateralization of U.S. LC Obligations;

(vii) seventh, to the principal amount of all U.S. Revolver Loans and all
Qualified Secured Bank Product Obligations of any U.S. Domiciled Loan Party
(exclusive of any Qualified Secured Bank Product Obligations which are
guaranteed by the U.S. Domiciled Loan Parties as guarantors of the Foreign
Facility Obligations) to the extent a U.S. Bank Product Reserve has been
established with respect thereto up to and including (with respect to Secured
Bank Product Providers other than Bank of America and its Affiliates) the amount
most recently specified to the Agent pursuant to the terms hereof;

(viii) eighth, to all other U.S. Facility Secured Obligations (exclusive of any
Foreign Facility Secured Obligations which are guaranteed by the U.S. Domiciled
Loan Parties); and

(ix) ninth, to be applied to clause (b) below, to the extent there are
insufficient funds for the Full Payment of all Secured Obligations under such
clause.

 

97

--------------------------------------------------------------------------------

(b) with respect to monies, payments, Property or Collateral of or from any
Dutch Domiciled Loan Party, together with any allocations pursuant to subclause
(ix) of any clause of this Section 5.5.1:

(i) first, to all costs and expenses, including Extraordinary Expenses, owing to
the Agent and the Security Trustees, to the extent owing by such Dutch Domiciled
Loan Party;

(ii) second, to all amounts owing to Dutch Swingline Lender on Dutch Swingline
Loans to such Dutch Domiciled Loan Party;

(iii) third, to all amounts owing by such Dutch Domiciled Loan Party to any
Dutch Fronting Bank on Dutch LC Obligations of such Dutch Domiciled Loan Party;

(iv) fourth, to all Dutch Facility Obligations of such Dutch Domiciled Loan
Party constituting fees (exclusive of any other Foreign Facility Obligations
which are guaranteed by such Dutch Domiciled Loan Party);

(v) fifth, to all Dutch Facility Obligations of such Dutch Domiciled Loan Party
constituting interest (exclusive of any other Foreign Facility Obligations which
are guaranteed by such Dutch Domiciled Loan Party);

(vi) sixth, to Cash Collateralization of Dutch LC Obligations of such Dutch
Domiciled Loan Party;

(vii) seventh, to the principal amount of all Dutch Revolver Loans and all
Qualified Secured Bank Product Obligations of such Dutch Domiciled Loan Party
(exclusive of any Qualified Secured Bank Product Obligations which are
guaranteed by such Dutch Domiciled Loan Party) to the extent a Dutch Bank
Product Reserve has been established with respect thereto up to and including
(with respect to Secured Bank Product Providers other than Bank of America and
its Affiliates) the amount most recently specified to the Agent pursuant to the
terms hereof;

(viii) eighth, to all other Dutch Facility Secured Obligations of such Dutch
Domiciled Loan Party (exclusive of any other Foreign Facility Secured
Obligations which are guaranteed by such Dutch Domiciled Loan Party); and

(ix) ninth, to be applied ratably to the Secured Obligations of other Loan
Parties that are the subject of a Guarantee by such Dutch Domiciled Loan Party
in accordance with this Section 5.5.1 to the extent there are insufficient funds
for the Full Payment of all such Secured Obligations.

Amounts shall be applied to each category of Secured Obligations set forth
within subsection (a) through (b) above, as applicable, until Full Payment
thereof and then to the next category. If amounts are insufficient to satisfy a
category, they shall be applied on a pro rata basis among the Secured
Obligations in the category. Amounts distributed with respect to any Secured
Bank Product Obligations or Qualified Secured Bank Product Obligations shall be
the lesser of the Secured Bank Product Obligations or Qualified Secured Bank
Product Obligations, as the case may be, last reported to the Agent or the
actual Secured Bank Product Obligations or Qualified Secured Bank Product
Obligations, as the case may be, as calculated by the Secured Bank Product
Provider and reported to the Agent for determining the amount due. The Agent
shall have no obligation to calculate the amount to be distributed with respect
to any Secured Bank Product Obligations or Qualified Secured Bank Product
Obligations, and may request a reasonably detailed calculation of such amount
from the applicable Secured Party. If a Secured Party fails to deliver such
calculation within five (5) Business Days following request by the Agent, the
Agent may assume the amount to be distributed is zero (0). The allocations set
forth in this Section 5.5.1 are solely to determine the rights and priorities of
the Agent and Secured Parties as among themselves, and any allocation within
subsection (a) through (b) of proceeds of the realization of Collateral may be
changed by agreement among them without the consent of any Loan Party. This
Section 5.5.1 is not for the benefit of or enforceable by any Borrower.

 

98

--------------------------------------------------------------------------------

(c) Notwithstanding subsections (a) and (b) above, Excluded Swap Obligations
with respect to any Guarantor shall not be paid with amounts received from such
Guarantor or, for the avoidance of doubt, with proceeds of any Collateral
pledged by such Guarantor, but appropriate adjustments shall be made with
respect to payments from other Loan Parties to preserve the allocation to
Obligations otherwise set forth above in this Section 5.5.1.

5.5.2. Erroneous Application. The Agent shall not be liable for any application
of amounts made by it in good faith and, if any such application is subsequently
determined to have been made in error, the sole recourse of any Lender or other
Person to which such amount should have been made shall be to recover the amount
from the Person that actually received it (and, if such amount was received by
any Lender, such Lender hereby agrees to return it).

5.6. Application of Payments. The ledger balance in the Dominion Accounts of
each Borrower Group as of the end of a Business Day shall be applied to the Loan
Party Group Obligations of such Borrower Group at the beginning of the next
Business Day during the existence of any Cash Dominion Event; provided that the
Agent may, in its discretion, either apply the ledger balance in any Dominion
Account of any Dutch Borrower to the respective Loan Party Group Obligations of
such Borrower Group or direct such balances to an operating account of a member
of such Borrower Group, whether or not a Cash Dominion Event exists. If, as a
result of such application, a credit balance exists, the balance shall not
accrue interest in favor of Borrowers and shall be made available to Borrowers
of the applicable Borrower Group as long as no Event of Default exists. If
application thereof is not otherwise specified herein or in any other Loan
Documents, each Borrower irrevocably waives the right to direct the application
of any payments or Collateral proceeds, and agrees that the Agent shall have the
continuing, exclusive right to apply and reapply same against the Obligations,
in such manner as the Agent deems advisable; provided, however, that, unless an
Event of Default has occurred and is continuing or otherwise directed by a Loan
Party Agent, the Agent shall not apply any payments to any LIBOR Loans prior to
the last day of the applicable Interest Period.

5.7. Loan Account; Account Stated.

5.7.1. Loan Account. The Agent shall maintain in accordance with its usual and
customary practices an account or accounts (“Loan Account”) evidencing the
Obligations of Borrowers within each Borrower Group resulting from each Loan
made to such Borrowers or issuance of a Letter of Credit for the account of
Borrowers from time to time. Any failure of the Agent to record anything in the
Loan Account, or any error in doing so, shall not limit or otherwise affect the
obligation of any Borrower to pay any amount owing hereunder. With respect to
U.S. Borrowers, the Agent may maintain a single Loan Account in the name of the
North American Loan Party Agent, and each U.S. Borrower confirms that such
arrangement shall have no effect on the joint and several character of its
liability for the Secured Obligations including its guarantee of the Secured
Obligations of the Foreign Borrowers.

5.7.2. Entries Binding. Entries made in the Loan Account shall constitute
presumptive evidence of the information contained therein. If any information
contained in the Loan Account is provided to or inspected by any Person, then
such information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies the Agent in
writing within forty-five (45) days after receipt or inspection that specific
information is subject to dispute.

 

99

--------------------------------------------------------------------------------

5.8. Taxes.

5.8.1. U.S. Tax Matters.

(a) Payments Free of Taxes. All payments of any U.S. Facility Obligation by or
on behalf of any U.S. Facility Loan Party shall be free and clear of and without
deduction or withholding for any Taxes, unless required by Applicable Law. If
Applicable Law requires any U.S. Facility Loan Party or the Agent to withhold or
deduct any Tax (including backup withholding or withholding Tax) from any
payment in respect of the U.S. Facility Obligations, the U.S. Facility Loan
Party or the Agent shall pay the amount withheld or deducted to the relevant
Governmental Authority in accordance with Applicable Law. If the withholding or
deduction is made on account of Indemnified Taxes or Other Taxes, the sum
payable by the applicable U.S. Facility Loan Party shall be increased so that
the applicable Credit Parties and Security Trustees receive an amount equal to
the sum they would have received if no such withholding or deduction (including
deductions for Indemnified Taxes and Other Taxes applicable to additional sums
payable under this Section 5.8.1) had been made. Without limiting the foregoing,
U.S. Borrowers shall timely pay all Other Taxes imposed in respect of the U.S.
Facility to the relevant Governmental Authorities.

(b) Payment. The U.S. Facility Loan Parties shall indemnify, hold harmless and
reimburse (within ten (10) days after demand therefor) each Credit Party and
each Security Trustee for the full amount of any Indemnified Taxes or Other
Taxes (including those attributable to amounts payable under this Section)
withheld or deducted by any U.S. Facility Loan Party or the Agent, or paid by
such Credit Party or such Security Trustee, with respect to any U.S. Facility
Obligations, whether or not such Taxes were properly asserted by the relevant
Governmental Authority, and including all reasonable expenses relating thereto.
A certificate as to the amount of any such payment or liability delivered to a
Loan Party Agent by a Credit Party or Security Trustee (with a copy to the
Agent), shall be conclusive, absent manifest error. As soon as practicable after
any payment of Indemnified Taxes or Other Taxes by a Borrower, the relevant Loan
Party Agent shall deliver to the Agent a receipt from the Governmental Authority
or other evidence of payment reasonably satisfactory to the Agent.

(c) Treatment of Certain Refunds. If any party hereto determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 5.8.1 (including by
the payment of additional amounts pursuant to this Section 5.8.1(c)), it shall
pay to the indemnifying party an amount equal to such refund (but only to the
extent of indemnity payments made under this Section with respect to the Taxes
giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (c) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (c), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph the payment of
which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the indemnification
payments or additional amounts giving rise to such refund had never been paid.
This paragraph shall not be construed to require any indemnified party to make
available its Tax returns (or any other information relating to its Taxes that
it deems confidential) to the indemnifying party or any other Person.

5.8.2. Dutch and Foreign Domiciled Loan Party Tax Matters. For the purposes of
this Section 5.8.2 a “Relevant Borrower” shall mean the Dutch Borrowers and any
other Foreign Domiciled Loan Party that is required to make a Tax Deduction in
accordance with Applicable Law.

 

100

--------------------------------------------------------------------------------

(a) Tax Gross-Up.

(i) All payments of any Foreign Facility Obligation by or on behalf of any
Foreign Domiciled Loan Party shall be made without any Tax Deduction, unless
required by Applicable Law.

(ii) The Dutch Borrowers shall promptly upon becoming aware that a Foreign
Domiciled Loan Party is required by Applicable Law to make a Tax Deduction (or
that there is any change in the rate or the basis of a Tax Deduction) notify the
Agent accordingly. Similarly a Lender shall notify the Agent on becoming so
aware in respect of a payment made payable to that Lender. If the Agent receives
such notification from a Lender it shall notify the Dutch Borrowers and that
Foreign Domiciled Loan Party.

(iii) If a Tax Deduction is required by Applicable Law to be made by a Foreign
Domiciled Loan Party, the amount of the payment due from that Foreign Domiciled
Loan Party shall be increased to an amount which (after making any Tax
Deduction) leaves an amount equal to the payment which would have been due if no
Tax Deduction had been required.

(b) Tax Indemnity.

(i) The Relevant Borrowers shall (within three (3) Business Days of demand by
the Agent) pay to a Lender an amount equal to the loss, liability or cost which
that Lender determines will be or has been (directly or indirectly) suffered for
or on account of Taxes by that Lender in respect of a Loan Document.

(ii) Clause (b)(i) above shall not apply:

(A) with respect to any Taxes assessed on a Lender:

(1) under the law of the jurisdiction in which such Lender is incorporated or,
if different, the jurisdiction (or jurisdictions) in which such Lender is
treated as resident for tax purposes; or

(2) under the law of the jurisdiction in which such Lender’s Lending Office is
located in respect of amounts received or receivable in such jurisdiction,

if such Taxes are imposed on or calculated by reference to the net income
received or receivable by such Lender; or

(B) to a loss, liability or cost that is compensated for by an increased payment
under clause 5.8.2(a) above, or would have been compensated for by such an
increased payment, but was not so compensated solely because the Lender failed
to comply with Section 5.9; or

(C) any United States federal withholding Tax imposed by FATCA.

(iii) A Lender making, or intending to make a claim under Section 5.8.2(b)(i)
above shall promptly notify Agent of the event which will give, or has given,
rise to the claim, following which Agent shall notify the Borrowers.

 

101

--------------------------------------------------------------------------------

(iv) A Lender shall, on receiving a payment from the Relevant Borrowers under
this Section 5.8.2(b), notify Agent.

(c) Tax Credit. If a Relevant Borrower makes a Tax Payment and the relevant
Lender determines that:

(i) a Tax Credit is attributable either to an increased payment of which that
Tax Payment forms part, or to that Tax Payment; and

(ii) that Lender has obtained, utilized and retained that Tax Credit,

the Lender shall promptly following receipt of such Tax Credit pay an amount to
the Relevant Borrower which that Lender determines will leave it (after that
payment) in the same after-Tax position as it would have been in had the Tax
Payment not been required to be made by the Relevant Borrower.

(d) Value Added Tax.

(i) All amounts set out or expressed in a Loan Document to be payable by any
party to any Lender which (in whole or in part) constitute the consideration for
a supply or supplies for VAT purposes shall be deemed to be exclusive of any VAT
which is chargeable on such supply or supplies, and accordingly, subject to
clause (ii) below, if VAT is or becomes chargeable on any supply made by any
Lender to any party under a Loan Document, that party shall pay to the Lender
(in addition to and at the same time as paying any other consideration for such
supply) an amount equal to the amount of such VAT (and such Lender shall
promptly provide an appropriate VAT invoice to such party).

(ii) If VAT is or becomes chargeable on any supply made by any Lender (the
“Supplier”) to any other Lender (the “Recipient”) under a Loan Document, and any
party other than the Recipient (the “Relevant Party”) is required by the terms
of any Loan Document to pay an amount equal to the consideration for such supply
to the Supplier (rather than being required to reimburse the Recipient in
respect of that consideration),

(A) (where the Supplier is the person required to account to the relevant tax
authority for the VAT), the Relevant Party must also pay to the Supplier (at the
same time as paying that amount) an additional amount equal to the amount of
VAT; the Recipient must (where this subsection (ii)(A) applies) promptly pay to
the Relevant Party an amount equal to any credit or repayment the Recipient
receives from the relevant tax authority which the Recipient reasonably
determines relates to the VAT chargeable on that supply; and

(B) (where the Recipient is the person required to account to the relevant tax
authority for the VAT), the Relevant Party must promptly, following demand from
the Recipient, pay to the Recipient an amount equal to the VAT chargeable on
that supply. The Recipient must (where this subsection (ii)(B) applies) promptly
pay to the Relevant Party an amount equal to any credit or repayment from the
relevant tax authority which the Recipient reasonably determines relates to the
VAT chargeable on that supply.

(iii) Where a Loan Document requires any party to reimburse or indemnify a
Lender for any cost or expense incurred in connection with such Loan Document,
the

 

102

--------------------------------------------------------------------------------

reimbursement or indemnity (as the case may be) shall be for the full amount of
such cost or expense, including such part thereof as represents VAT, save to the
extent that such Lender reasonably determines that it is entitled to credit or
repayment in respect of such VAT from the relevant tax authority.

(iv) Any reference in this Section 5.8.2(d) to any party shall, at any time when
such party is treated as a member of a group for VAT purposes, include (where
appropriate and unless the context otherwise requires) a reference to the
representative member of such group at such time (the term “representative
member” to have the same meaning as in the Dutch Value Added Tax Code).

(v) In relation to any supply made by a Lender to any party under a Loan
Document, if reasonably requested by such Lender, that party must as promptly as
reasonably practicable provide such Lender with details of that party’s VAT
registration and such other information as is reasonably requested in connection
with such Lender’s VAT reporting requirements in relation to such supply.

(e) Except as otherwise expressly provided in Section 5.8.2, a reference to
“determines” or “determined” in connection with tax provisions contained in
Section 5.8.2 means a determination made in the absolute discretion of the
person making the determination, acting reasonably.

5.9. Lender Tax Information. For purposes of this Section 5.9, the term “Lender”
includes any Fronting Bank.

5.9.1. Generally. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding Tax under the law of the jurisdiction in which a
relevant Loan Party is resident for Tax purposes, or under any treaty to which
such jurisdiction is a party, with respect to payments under any Loan Document
shall deliver to the Agent and the relevant Loan Party Agent, at the time or
times prescribed by Applicable Law or reasonably requested by the Agent or the
relevant Loan Party Agent, such properly completed and executed documentation or
such other evidence as prescribed by Applicable Law as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition
and only to the extent applicable, any Lender, if requested by the Agent or a
Loan Party Agent, shall deliver such other documentation prescribed by
Applicable Law or reasonably requested by the Agent or such Loan Party Agent as
will enable the Agent and such Loan Party Agent to determine whether or not such
Lender is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 5.9.2) shall not be required if in the
Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

5.9.2. U.S. Borrowers. If a Borrower is a U.S. Person, (a) any Recipient that is
a U.S. Person shall deliver to the Agent and North American Loan Party Agent IRS
Form W-9 or such other documentation or information prescribed by Applicable Law
or reasonably requested by the Agent or North American Loan Party Agent to
determine whether such Recipient is subject to information reporting
requirements and to establish that such Recipient is not subject to backup
withholding and (b) any Recipient that is not a U.S. Person shall, to the extent
it is legally entitled to do so, deliver to the Agent and the North American
Loan Party Agent (or, in the case of a Participant, to the Lender from which the
related participation shall have been purchased) on or before the date it
becomes a party hereunder (or, in the case of any Participant, on or before the
date such Participant purchases the related participation), whichever of the
following is applicable:

(i) in the case of a Recipient claiming the benefits of an applicable treaty to
which the United States is a party (A) with respect to payments of interest (or
amounts deemed to be payments interest for U.S. federal income tax purposes)
under any Loan Document, executed originals of IRS Form W-8BEN establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“interest” article of such treaty and (B) with respect to any other applicable
payments under any Loan Document, IRS Form W-8BEN establishing an exemption
from, or reduction of, U.S. federal withholding Tax pursuant to the “business
profits” or “other income” article of such treaty;

 

103

--------------------------------------------------------------------------------

(ii) executed originals of IRS Form W-8ECI;

(iii) in the case of a Recipient claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (A) a certificate
substantially in the form of Exhibit H-1 to the effect that such Recipient is
not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of any U.S. Borrower within the meaning of
Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Certificate”) and
(B) executed originals of IRS Form W-8BEN; and

(iv) to the extent a Recipient is not the beneficial owner, executed originals
of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax
Compliance Certificate substantially in the form of Exhibit H-2 or Exhibit H-3,
IRS Form W-9, and/or other certification documents from each beneficial owner,
as applicable; provided that if such Recipient is a partnership and one or more
direct or indirect partners of such Recipient are claiming the portfolio
interest exemption, such Recipient may provide a U.S. Tax Certificate
substantially in the form of Exhibit H-4 on behalf of each such direct and
indirect partner.

In addition, upon request of the North American Loan Party Agent, each Recipient
shall deliver such forms promptly upon the obsolescence, expiration, or
invalidity of any form previously delivered by such Recipient. Each Recipient
shall promptly notify the North American Loan Party Agent at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the North American Loan Party Agent (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).

5.9.3. FATCA. If a payment made to a Recipient under any Loan Document would be
subject to United States federal withholding Tax imposed by FATCA if such
Recipient were to fail to comply with the applicable reporting requirements of
FATCA, such Recipient shall deliver to the Borrowers and the Agent at the time
or times prescribed by Applicable Law and at such time or times reasonably
requested by the Borrowers or the Agent such documentation prescribed by
Applicable Law and such additional documentation reasonably requested by the
Borrowers or the Agent as may be necessary for the Borrowers and the Agent to
comply with their obligations under FATCA and to determine that such Recipient
has complied with its obligations under FATCA, or to determine the amount to
deduct and withhold from such payment. Solely for purposes of this
Section 5.9.3, “FATCA” shall include any amendments made to FATCA after the date
of this Agreement.

5.10. Guarantees.

5.10.1. Joint and Several Liability of U.S. Domiciled Loan Parties. Each U.S.
Domiciled Loan Party agrees that it is jointly and severally liable for, and
absolutely and unconditionally guarantees to the Agent and the other Secured
Parties the prompt payment and performance of, all Secured Obligations and all
agreements of each other Loan Party under the Loan Documents. Each U.S.

 

104

--------------------------------------------------------------------------------

Domiciled Loan Party agrees that its guarantee obligations as a Guarantor of the
Secured Obligations hereunder constitute a continuing guarantee of payment and
not of collection, that such guarantee obligations shall not be discharged until
Full Payment of the Secured Obligations, and that such guarantee obligations are
absolute and unconditional, irrespective of (a) the genuineness, validity,
regularity, enforceability, subordination or any future modification of, or
change in, any Secured Obligations or Loan Document, or any other document,
instrument or agreement to which any Loan Party is or may become a party or be
bound; (b) the absence of any action to enforce this Agreement (including this
Section 5.10) or any other Loan Document, or any waiver, consent or indulgence
of any kind by the Agent or any other Secured Party with respect thereto;
(c) the existence, value or condition of, or failure to perfect a Lien or to
preserve rights against, any security or guarantee for the Secured Obligations
or any action, or the absence of any action, by the Agent or any other Secured
Party in respect thereof (including the release of any security or guarantee);
(d) the insolvency of any Loan Party; (e) any election by the Agent or any other
Secured Party in an Insolvency Proceeding for the application of
Section 1111(b)(2) of the U.S. Bankruptcy Code; (f) any borrowing or grant of a
Lien by any other Loan Party, as debtor-in-possession under Section 364 of the
U.S. Bankruptcy Code or otherwise; (g) the disallowance of any claims of the
Agent or any other Secured Party against any Loan Party for the repayment of any
Secured Obligations under Section 502 of the U.S. Bankruptcy Code or otherwise;
or (h) any other action or circumstances that might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor, except Full Payment
of all Secured Obligations.

5.10.2. Waivers by U.S. Domiciled Loan Parties.

(a) Each U.S. Domiciled Loan Party hereby expressly waives all rights that it
may have now or in the future under any statute, at common law, in equity or
otherwise, to compel the Agent or the other Secured Parties to marshal assets or
to proceed against any Loan Party, other Person or security for the payment or
performance of any Secured Obligations before, or as a condition to, proceeding
against such Loan Party. To the extent permitted by Applicable Law, each U.S.
Domiciled Loan Party waives all defenses available to a surety, guarantor or
accommodation co-obligor other than Full Payment of all Secured Obligations. It
is agreed among each U.S. Domiciled Loan Party, the Agent and the other Secured
Parties that the provisions of this Section 5.10 are of the essence of the
transaction contemplated by the Loan Documents and that, but for such
provisions, the Agent, Fronting Banks and Lenders would decline to make Loans
and issue Letters of Credit. Each U.S. Domiciled Loan Party acknowledges that
its guarantee pursuant to this Section 5.10 is necessary to the conduct and
promotion of its business, and can be expected to benefit such business.

(b) The Agent and the other Secured Parties may, in their discretion, pursue
such rights and remedies as they deem appropriate, including realization upon
the Collateral of the U.S. Domiciled Loan Parties by judicial foreclosure or
non-judicial sale or enforcement, without affecting any rights and remedies
under this Section 5.10. If, in taking any action in connection with the
exercise of any rights or remedies, the Agent or any other Secured Party shall
forfeit any other rights or remedies, including the right to enter a deficiency
judgment against any U.S. Domiciled Loan Party or other Person, whether because
of any Applicable Laws pertaining to “election of remedies” or otherwise, each
U.S. Domiciled Loan Party consents to such action and, to the extent permitted
under Applicable Law, waives any claim based upon it, even if the action may
result in loss of any rights of subrogation that any U.S. Domiciled Loan Party
might otherwise have had. To the extent permitted under Applicable Law, any
election of remedies that results in denial or impairment of the right of the
Agent or any other Secured Party to seek a deficiency judgment against any U.S.
Domiciled Loan Party shall not impair any other U.S. Domiciled Loan Party’s
obligation to pay the full amount of the Secured Obligations. To the extent
permitted under Applicable Law, each U.S. Domiciled Loan Party waives all rights
and defenses arising out of an election of remedies, such as nonjudicial
foreclosure with respect to any security for the Secured Obligations, even
though that election of remedies destroys such U.S. Domiciled Loan Party’s
rights of

 

105

--------------------------------------------------------------------------------

subrogation against any other Person. To the extent permitted under Applicable
Law, the Agent may bid all or a portion of the Secured Obligations at any
foreclosure or trustee’s sale or at any private sale, and the amount of such bid
need not be paid by the Agent but shall be credited against the Secured
Obligations in accordance with the terms of this Agreement.

5.10.3. Extent of Liability of U.S. Domiciled Loan Parties; Contribution;
Keepwell.

(a) Notwithstanding anything herein to the contrary, each U.S. Domiciled Loan
Party’s liability under this Section 5.10 shall be limited to the greater of
(i) all amounts for which such U.S. Domiciled Loan Party is primarily liable, as
described below, and (ii) such U.S. Domiciled Loan Party’s Allocable Amount.

(b) If any U.S. Domiciled Loan Party makes a payment under this Section 5.10 of
any Secured Obligations (other than amounts for which such U.S. Domiciled Loan
Party is primarily liable) (a “Guarantor Payment”) that, taking into account all
other Guarantor Payments previously or concurrently made by any other U.S.
Domiciled Loan Party, exceeds the amount that such U.S. Domiciled Loan Party
would otherwise have paid if each U.S. Domiciled Loan Party had paid the
aggregate Secured Obligations satisfied by such Guarantor Payments in the same
proportion that such U.S. Domiciled Loan Party’s Allocable Amount bore to the
total Allocable Amounts of all U.S. Domiciled Loan Parties, then such U.S.
Domiciled Loan Party shall be entitled to receive contribution and
indemnification payments from, and to be reimbursed by, each other U.S.
Domiciled Loan Party for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor
Payment. The “Allocable Amount” for any U.S. Domiciled Loan Party shall be the
maximum amount that could then be recovered from such U.S. Domiciled Loan Party
under this Section 5.10 without rendering such payment voidable under
Section 548 of the U.S. Bankruptcy Code or under any applicable state fraudulent
transfer or conveyance act, or similar statute or common law.

(c) Nothing contained in this Section 5.10 shall limit the liability of any Loan
Party to pay Loans made directly or indirectly to that Loan Party (including
Loans advanced to any other Loan Party and then re-loaned or otherwise
transferred to, or for the benefit of, such Loan Party), LC Obligations relating
to Letters of Credit issued to support such Loan Party’s business, and all
accrued interest, fees, expenses and other related Secured Obligations with
respect thereto, for which such Loan Party shall be primarily liable for all
purposes hereunder.

(d) Each Qualified ECP Guarantor hereby jointly and severally absolutely,
unconditionally and irrevocably undertakes to provide such funds or other
support as may be needed from time to time by each other U.S. Domiciled Loan
Party to honor all of its obligations under this Guarantee in respect of Swap
Obligations provided, however, that each Qualified ECP Guarantor shall only be
liable under this Section 5.10.3 for the maximum amount of such liability that
can be hereby incurred without rendering its obligations under this
Section 5.10.3, or otherwise under this Guarantee, as it relates to such other
U.S. Domiciled Loan Party, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount. The
obligations of each Qualified ECP Guarantor under this Section shall remain in
full force and effect until a Full Payment. Each Qualified ECP Guarantor intends
that this Section 5.10.3 constitute, and this Section 5.10.3 shall be deemed to
constitute, a “keepwell, support, or other agreement” for the benefit of each
other for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange
Act.

 

106

--------------------------------------------------------------------------------

5.10.4. Joint and Several Liability of Foreign Domiciled Loan Parties.

(a) Each Foreign Domiciled Loan Party agrees that it is jointly and severally
liable for, and absolutely, irrevocably and unconditionally guarantees to the
Agent and the other Foreign Facility Secured Parties the prompt payment and
performance of, all Foreign Facility Secured Obligations and all agreements of
each other Foreign Domiciled Loan Party under the Loan Documents (but excluding
for the avoidance of doubt, any U.S. Facility Secured Obligations) (the “Foreign
Cross-Guarantee”). Each Foreign Domiciled Loan Party agrees that its guarantee
obligations as a Guarantor of the Foreign Facility Secured Obligations of other
Foreign Domiciled Loan Parties hereunder constitute a continuing guarantee of
payment and not of collection, that such guarantee obligations shall not be
discharged until Full Payment of the Foreign Facility Secured Obligations, and
that such guarantee obligations are absolute and unconditional, irrespective of
(i) the genuineness, validity, regularity, enforceability, subordination or any
future modification of, or change in, any Foreign Facility Secured Obligations
or Loan Document, or any other document, instrument or agreement to which any
Loan Party is or may become a party or be bound; (ii) the absence of any action
to enforce this Agreement (including this Section 5.10) or any other Loan
Document, or any waiver, consent or indulgence of any kind by the Agent or any
other Foreign Facility Secured Party with respect thereto; (iii) the existence,
value or condition of, or failure to perfect, register, stamp or terminate a
Lien or to preserve rights against, any security or guarantee for the Foreign
Facility Secured Obligations or any action, or the absence of any action, by the
Agent or any other Foreign Facility Secured Party in respect thereof (including
the release, variation or discharge (except upon Full Payment of all Foreign
Facility Secured Obligations) of any security or guarantee of, or the release
of, any Foreign Domiciled Loan Party or any other Person (other than a release
of such Foreign Domiciled Loan Party) whether under the terms of any composition
or arrangement with any creditor of any Foreign Domiciled Loan Party or any
other Person or otherwise); (iv) the insolvency of any Loan Party or any
Insolvency Proceeding in relation to any Loan Party; (v) any election by the
Agent or any other Secured Party in an Insolvency Proceeding for the application
of Section 1111(b)(2) of the U.S. Bankruptcy Code (or the equivalent under any
other Applicable Law); (vi) any borrowing or grant of a Lien by any other Loan
Party, as debtor-in-possession under Section 364 of the U.S. Bankruptcy Code (or
the equivalent under any other Applicable Law) or otherwise; (vii) the
disallowance of any claims of the Agent or any other Secured Party against any
Loan Party for the repayment of any Secured Obligations under Section 502 of the
U.S. Bankruptcy Code (or the equivalent under any other Applicable Law) or
otherwise; (viii) any incapacity or lack of power, authority or legal
personality of, or dissolution or change in the members or status of, any
Foreign Domiciled Loan Party or any other Person; or (ix) any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, except Full Payment of all Foreign Facility
Secured Obligations.

(b) Without prejudice to the generality of Section 5.10.4(a) above, each Foreign
Domiciled Loan Party expressly confirms that it intends that the guarantee
created by this Section 5.10.4 shall extend from time to time to any (however
fundamental) variation, increase, extension or addition of or to any of the Loan
Documents and/or any facility or amount made available under any of the Loan
Documents for the purposes of or in connection with (i) acquisitions of any
nature; (ii) increasing working capital; (iii) enabling investor distributions
to be made; (iv) carrying out restructurings; (v) refinancing existing credit
facilities; (vi) refinancing any other Debt; (vii) making credit available to
new Borrowers; (viii) any other variation or extension of the purposes for which
any such facility or amount might be made available from time to time; and
(ix) any fees, costs and/or expenses associated with any of the foregoing.

 

107

--------------------------------------------------------------------------------

5.10.5. Waivers by Foreign Domiciled Loan Parties.

(a) Each Foreign Domiciled Loan Party hereby expressly waives all rights that it
may have now or in the future under any statute, at common law, in equity or
otherwise, to compel the Agent or the other Foreign Facility Secured Parties to
marshal assets or to proceed against any Loan Party, other Person or security
for the payment or performance of any Foreign Facility Secured Obligations
before, or as a condition to, proceeding against such Loan Party. To the extent
permitted by Applicable Law, each Foreign Domiciled Loan Party waives all
defenses available to a surety, guarantor or accommodation co-obligor other than
Full Payment of all Foreign Facility Secured Obligations. It is agreed among
each Foreign Domiciled Loan Party, the Agent and the other Foreign Facility
Secured Parties that the provisions of this Section 5.10 are of the essence of
the transaction contemplated by the Loan Documents and that, but for such
provisions, the Agent, Fronting Banks and Lenders (as applicable) would decline
to make Loans and issue Letters of Credit to Foreign Domiciled Loan Parties.
Each Foreign Domiciled Loan Party acknowledges that its guarantee pursuant to
this Section 5.10 is necessary to the conduct and promotion of its business and
those of its direct or indirect holding companies, and can be expected to
benefit such business.

(b) The Agent and the other Foreign Facility Secured Parties may, in their
discretion, pursue such rights and remedies as they deem appropriate, including
realization upon the Collateral by judicial foreclosure or non-judicial sale or
enforcement, to the extent permitted under Applicable Law, without affecting any
rights and remedies under this Section 5.10. If, in taking any action in
connection with the exercise of any rights or remedies, the Agent or any other
Foreign Facility Secured Party shall forfeit any other rights or remedies,
including the right to enter a deficiency judgment against any Foreign Domiciled
Loan Party or other Person, whether because of any Applicable Laws pertaining to
“election of remedies” or otherwise, each Foreign Domiciled Loan Party consents
to such action and waives, to the extent permitted under Applicable Law, any
claim based upon it, even if the action may result in loss of any rights of
subrogation that any Foreign Domiciled Loan Party might otherwise have had. To
the extent permitted under Applicable Law, any election of remedies that results
in denial or impairment of the right of the Agent or any other Foreign Facility
Secured Party to seek a deficiency judgment against any Foreign Domiciled Loan
Party shall not impair any other Foreign Domiciled Loan Party’s obligation to
pay the full amount of the Foreign Facility Secured Obligations. To the extent
permitted under Applicable Law, each Foreign Domiciled Loan Party, waives all
rights and defenses arising out of an election of remedies, such as nonjudicial
foreclosure with respect to any security for the Foreign Facility Secured
Obligations, even though that election of remedies destroys such Foreign
Domiciled Loan Party’s rights of subrogation against any other Person. To the
extent permitted under Applicable Law, the Agent may bid all or a portion of the
Foreign Facility Secured Obligations at any foreclosure or trustee’s sale or at
any private sale or sale as a result of an enforcement action, and the amount of
such bid need not be paid by the Agent but shall be credited against the Foreign
Facility Secured Obligations in accordance with the terms of this Agreement.

5.10.6. [Reserved].

5.10.7. U.S. Limitations. To the extent that an adverse Tax consequence would
result, the Foreign Cross-Guarantee shall not require any Foreign Domiciled Loan
Party (that is a “controlled foreign corporation” within the meaning of
Section 957 of the Code) or any Subsidiary of any such Foreign Domiciled Loan
Party to guarantee any Secured Obligations of any other Foreign Domiciled Loan
Party that is disregarded as an entity separate from any U.S. Subsidiary for
U.S. federal income Tax purposes.

5.10.8. [Reserved].

5.10.9. Subordination. Each Loan Party hereby subordinates any claims, including
any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution, indemnification or set off, that it may have at any
time against any other Loan Party, howsoever arising, to the Full Payment of all
Secured Obligations.

 

108

--------------------------------------------------------------------------------

5.11. Currency Matters. Dollars are the currency of account and payment for each
and every sum at any time due from Borrowers hereunder unless otherwise
specifically provided in this Agreement, any other Loan Document or otherwise
agreed to by the Agent; provided that:

(a) each repayment of a Revolver Loan, LC Obligation or a part thereof shall be
made in the currency in which such Revolver Loan or LC Obligation is denominated
at the time of that repayment;

(b) each payment of interest shall be made in the currency in which the
principal or other sum in respect of which such interest is denominated;

(c) (i) each payment of fees pursuant to Section 3.2.1(a) shall be in Dollars,
Euros or Sterling, as applicable, which payment currency shall be at the option
of the North American Loan Party Agent, and the amount of any such payment made
in a currency other than Dollars determined by the Agent based on the Exchange
Rate, and (ii) each payment of fees pursuant to 3.2.1(b) shall be in Dollars;

(d) each payment of fees pursuant to Sections 3.2.2 through 3.2.3 (other than
Section 3.2.3(e)) shall be in the currency of the underlying Letter of Credit;
and

(e) each payment in respect of Extraordinary Expenses and any other costs,
expenses and indemnities shall be made in the currency in which the same were
incurred by the party to whom payment is to be made.

No payment to any Credit Party or any Security Trustee (whether under any
judgment or court order or otherwise) shall discharge the obligation or
liability of the Loan Party in respect of which it was made unless and until
such Credit Party or such Security Trustee shall have received Full Payment in
the currency in which such obligation or liability is payable pursuant to the
above provisions of this Section 5.11. The Agent has the right, at the expense
of the applicable Loan Party, to convert any payment made in an incorrect
currency into the applicable currency required under this Agreement. To the
extent that the amount of any such payment shall, on actual conversion into such
currency, fall short of such obligation or liability actual or contingent
expressed in that currency, such Loan Party (together with the other Loan
Parties within its Loan Party Group or other obligors pursuant to any Guarantee
of the Obligations of such Loan Party Group) agrees to indemnify and hold
harmless such Credit Party or such Security Trustee, with respect to the amount
of the shortfall with respect to amounts payable by such Loan Party hereunder,
with such indemnity surviving the termination of this Agreement and any legal
proceeding, judgment or court order pursuant to which the original payment was
made which resulted in the shortfall. To the extent that the amount of any such
payment to a Credit Party or a Security Trustee shall, upon an actual conversion
into such currency, exceed such obligation or liability, actual or contingent,
expressed in that currency, such Credit Party or such Security Trustee shall
return such excess to the members of the affected Borrower Group.

 

109

--------------------------------------------------------------------------------

SECTION 6. CONDITIONS PRECEDENT

6.1. Conditions Precedent to Loans on the Closing Date. The Lenders and Fronting
Banks shall not be required to fund any requested Loan, issue any Letter of
Credit, or otherwise extend credit to Borrowers hereunder, until the date
(“Closing Date”) on which each of the following conditions has been satisfied
(or waived by the Agent) and with respect to deliveries of Loan Documents, each
such delivery shall be fully-executed (where applicable) and in form and
substance reasonably satisfactory to the Agent and its counsel:

(a) Loan Documents. Each Loan Document to which a Loan Party is a party (other
than any Foreign Security Agreements, Deposit Account Control Agreement,
Commodity Account Control Agreement, Securities Account Control Agreement, and
Lien Acknowledgment that is permitted to be delivered on a post-closing basis
pursuant to Section 8.4 or 10.1.18 (and in the latter case, is described on
Schedule 10.1.18 hereof) shall have been duly executed (where applicable) by
each of the signatories thereto and delivered to the Agent, and each Loan Party
shall be in compliance with all terms thereof.

(b) Confirmation Agreement. The Agent shall have received the Confirmation
Agreement, duly executed by Initial Dutch Kraton Borrower.

(c) Perfected First-Priority Liens. The Agent shall have received (i) subject to
Section 10.1.18, reasonably satisfactory evidence that the Agent and/or Security
Trustees shall have a valid and perfected first priority (except as otherwise
permitted hereunder) Lien, security interest and hypothecation in the U.S.
Facility Collateral (including acknowledgments of all filings or recordations
necessary to perfect its Liens in the U.S. Facility Collateral) in each case
under the law of the applicable U.S. state and (ii) releases, satisfactions and
payoff letters terminating all Liens on the Collateral not permitted under
Section 10.2.2. The Agent shall have received a termination and release of the
U.S. Pledge Agreement, dated March 27, 2013, among the Initial U.S. Borrower,
Parent, the other pledgors party thereto and the Agent.

(d) Closing Certificates. The Agent shall have received a certificate of each
Loan Party, dated the Closing Date, in form and substance reasonably
satisfactory to the Agent, executed by a Senior Officer of such Loan Party, and
attaching the documents referred to in Section 6.1(e).

(e) Organization Documents; Incumbency. The Agent shall have received a copy of
(i) each Organization Document of each Loan Party certified, to the extent
applicable, as of a recent date by the applicable Governmental Authority,
(ii) signature and incumbency certificates of the Senior Officers of each Loan
Party executing the Loan Documents to which it is a party; (iii) resolutions of
the board of directors or similar governing body of each Loan Party
(A) approving and authorizing the execution, delivery and performance of the
Loan Documents to which it is a party and (B) in the case of each Borrower, the
extensions of credit contemplated hereunder, certified as of the Closing Date by
its secretary or an assistant secretary as being in full force and effect
without modification or amendment; and (iv) a good standing certificate (or
other similar instrument) from the applicable Governmental Authority of each
Loan Party’s jurisdiction of incorporation, organization or formation (to the
extent a good standing certificate or similar instrument may be obtained in such
jurisdiction).

(f) Fees. (i) The Agent shall have received the fees to be paid on the Closing
Date set forth in the Fee Letter; (ii) the Lenders shall have received the fees
to be paid on the Closing Date set forth in the Fee Letter; and (iii) all
reasonable and documented out-of-pocket expenses of the Agent and Security
Trustees (including the reasonable and documented fees, disbursements and other
charges of counsel (which shall be limited to the reasonable and documented
out-of-pocket legal fees and expenses of Holland & Knight LLP, U.S. counsel to
the Agent and Security Trustees, Norton Rose Fulbright, foreign counsel to the
Agent and Security Trustees, and, if necessary, of one local counsel in each
other relevant jurisdiction) for which invoices have been presented at least
three (3) Business Days prior to the Closing Date shall have been paid.

 

110

--------------------------------------------------------------------------------

(g) Certificates. On the Closing Date, the Agent shall have received (i) a
certificate from a Senior Officer of the North American Loan Party Agent
certifying that as of the Closing Date, after giving effect to the Transactions,
(A) the Specified Acquisition Agreement Representations are true and correct to
the extent required by the Closing Date Conditions Provisions (as defined in the
Commitment Letter), (B) the Specified Representations are true and correct in
all material respects (except in the case of any Specified Representation which
expressly relates to a given date or period, such representation and warranty
shall be true and correct in all material respects as of the respective date or
for the respective period, as the case may be) and (C) no part of the proceeds
of the Loans made on the Closing Date will be used, directly or indirectly, in
violation of applicable Sanctions, and (ii) a Solvency Certificate from a Senior
Officer of the Initial U.S. Borrower in the form of Exhibit J attached hereto.

(h) Historical Financial Statements. Lenders shall have received the Historical
Financial Statements.

(i) Pro Forma Financial Statements. The Agent shall have received a pro forma
consolidated balance sheet of the Parent and its Subsidiaries as at a date of
the most recent consolidated balance sheet delivered pursuant to the preceding
paragraph (i) and a pro forma statement of income for the four Fiscal Quarters
most recently ended for which financial statements were delivered to the Agent
pursuant to the preceding paragraph (k), in each case adjusted to give effect to
the consummation of the Transactions and the financings contemplated hereby as
if such transactions, with respect to the pro forma balance sheet, had occurred
on such date or with respect to the pro forma statements of income, had occurred
on the first day of such period, prepared in accordance with Regulation S-X of
the Securities Act of 1933, as amended (“Regulation S-X”) (subject to exceptions
customary for any offering under Rule 144A, unless the Senior Notes are proposed
to be offered and sold in a registered offering.

(j) Borrowing Base Certificate. The Agent shall have received (i) Borrowing Base
Certificate with respect to the Dutch Kraton Borrowing Base, effective as of
November 30, 2015, and (ii) a certificate (or if desired by North American Loan
Party, certificates) duly executed by a Senior Officer of North American Loan
Party setting forth the U.S. Borrowing Base; provided, however, for the purposes
of this Section 6.1(j), the U.S. Borrowing Base shall be broken down as to the
specific assets of Initial U.S. Borrower in the U.S. Borrowing Base effective as
of November 30, 2015, and as to the specific assets of Added U.S. Borrower in
the U.S. Borrowing Base, effective as September 30, 2015.

(k) Perfection Certificate. Each Loan Party shall deliver to the Agent a
completed Perfection Certificate, executed and delivered by a Senior Officer of
such Loan Party, together with all attachments contemplated thereby.

(l) Arizona Chemical Acquisition. The Arizona Chemical Acquisition shall have
been consummated or substantially simultaneously with the execution of this
Agreement, shall be consummated, in all material respects in accordance with the
Arizona Chemical Acquisition Agreement without giving effect to any waivers,
consents, amendments, supplements or modifications that are in any respect
materially adverse to the Commitment Parties (which, for purposes of this
paragraph (m) shall include the Initial Lenders (as defined in the Commitment
Letter) and the Lead Arrangers (as defined in the Commitment Letter) without
approval of the Commitment Parties (not to be unreasonably withheld, delayed or
conditioned).

(m) Legal Opinions. The Agent shall have received reasonably satisfactory
opinion of Cleary Gottlieb Steen & Hamilton LLP, New York counsel to the Loan
Parties, customary for transactions of this type (which shall cover, among other
things, authority, validity, binding effect and enforceability of the Loan
Documents and the creation and perfection of Liens in the Collateral) and of
Delaware counsel.

 

111

--------------------------------------------------------------------------------

(n) Payment of Existing Debt. The Refinancing (as defined in the Commitment
Letter) shall have been consummated or will be consummated substantially
simultaneously with the Closing Date.

(o) Know Your Customer. The Agent and the Commitment Parties (as defined in the
Commitment Letter) shall have received, at least three (3) Business Days prior
to the Closing Date, all documentation and other information that they
reasonably determine is required by regulatory authorities under “know your
customer” and anti-money laundering rules and regulations, including the PATRIOT
ACT, to the extent reasonably requested at least ten (10) Business Days prior to
the Closing Date.

(p) No Company Material Adverse Effect. Except as contemplated by the Arizona
Chemical Acquisition Agreement or as set forth on Schedule 4.22 thereto,
(i) since December 31, 2014 until and through the date of the Arizona Chemical
Acquisition Agreement, there has not been any Company Material Adverse Effect
and (ii) since the date of the Arizona Chemical Acquisition Agreement, there
shall not have been any Company Material Adverse Effect.

(q) Closing and Funding of Term Loan Debt. The Term Loan Agreement shall have
been executed and the term loans thereunder funded substantially concurrently
with the initial funding on the Closing Date.

(r) ABL Intercreditor Agreement. The Agent shall have received the ABL
Intercreditor Agreement, duly executed by all the parties thereto.

(s) Closing and Funding of The Senior Notes. The Senior Notes shall have been
issued or shall be issued substantially concurrently with the initial funding on
the Closing Date.

For purposes of determining compliance with the conditions specified in this
Section 6.1, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
to a Lender or the Agent unless the Agent shall have received notice from such
Lender prior to the proposed Closing Date specifying its objection thereto.

6.2. Conditions Precedent to All Subsequent Credit Extensions. The Agent,
Fronting Banks and Lenders shall not be required to fund any Loans, arrange for
issuance of any Letters of Credit or grant any other accommodation to or for the
benefit of Borrowers (including the initial Loans on the Closing Date), unless
the following conditions are satisfied:

(a) No Default or Event of Default shall exist at the time of, or result from,
such funding, issuance or grant;

(b) The representations and warranties of each Loan Party in the Loan Documents
shall be true and correct in all material respects (or, with respect to
representations and warranties qualified by materiality, in all respects) on the
date of, and upon giving effect to, such funding, issuance or grant (except for
representations and warranties that expressly relate to an earlier date);

(c) Availability of not less than the amount of the proposed Borrowing shall
exist;

(d) [Reserved]

(e) With respect to the issuance of a Letter of Credit, the applicable LC
Conditions shall be satisfied; and

 

112

--------------------------------------------------------------------------------

(f) With respect to the funding of any Revolver Loan or arrangement for issuance
of any Letter of Credit to a Foreign Borrower, or grant of any other
accommodation to or for the benefit of any Foreign Borrower, the requirements of
Section 2.5 are satisfied.

Each request (or any deemed request, except a deemed request in connection with
a Protective Advance or pursuant to Sections 2.2.2(a) or 2.3.2(a)) by a Loan
Party Agent or any Borrower for funding of a Loan, issuance of a Letter of
Credit or grant of an accommodation shall constitute a representation by all
Borrowers that the foregoing conditions are satisfied on the date of such
request and on the date of such funding, issuance or grant.

SECTION 7. COLLATERAL

7.1. Grant of Security Interest.

7.1.1. Grant of Security Interest by U.S. Domiciled Loan Parties. As security
for the payment or performance, as the case may be, in full of the Secured
Obligations when due (whether at the stated maturity, by acceleration or
otherwise), each U.S. Domiciled Loan Party hereby grants to the Agent, for the
benefit of the Secured Parties, a security interest in and continuing lien on
all of such U.S. Domiciled Loan Party’s right, title and interest in,, to and
under all personal property of such Loan Party, including all of such Loan
Party’s right, title and interest in, to and under any and all of the following
assets, in each case whether now owned or hereafter acquired and wherever
located:

(a) Until the Term Debt Priority Collateral Release Date:

(i) Accounts and Payment Intangibles;

(ii) Chattel Paper (including Tangible Chattel Paper and Electronic Chattel
Paper);

(iii) Commercial Tort Claims now or hereafter described on Schedule 7.1.1;

(iv) Contracts, together with all Contract Rights arising thereunder;

(v) Copyrights, Patents, Trademarks and Trade Secrets;

(vi) Deposit Accounts, Securities Accounts, and Commodity Accounts;

(vii) Documents;

(viii) Domain Names;

(ix) Equipment

(x) Fixtures;

(xi) General Intangibles;

(xii) Instruments;

(xiii) Inventory;

(xiv) Investment Property;

 

113

--------------------------------------------------------------------------------

(xv) letters of credit and Letter-of-Credit Rights;

(xvi) Licenses;

(xvii) Money, cash and cash equivalents;

(xviii) Pledged Equity Interests;

(xix) Receivables;

(xx) Software and all recorded data of any kind or nature, regardless of the
medium of recording;

(xxi) Goods not otherwise described above;

(xxii) Supporting Obligations relating to any of the foregoing;

(xxiii) to the extent not otherwise included above, all personal property of any
kind, including, without limitation, any other contract rights or rights to the
payment of money, insurance claims and proceeds and tort claims relating to the
foregoing; and

(xxiv) to the extent not otherwise included above, all Proceeds, products,
accessions, rents and profits of or in respect of any of the foregoing, together
with all books and records, ledger cards, customer lists, credit files, computer
files, programs, printouts and other computer materials and records related
thereto and any General Intangibles at any time evidencing or relating to any of
the foregoing and all collateral security and guarantees given by any Person
with respect to any of the foregoing.

(b) Beginning with the Term Debt Priority Collateral Release Date and
thereafter:

(i) all Accounts;

(ii) all Inventory;

(iii) all Chattel Paper, including electronic chattel paper, in each case, to
the extent relating to Accounts or Inventory;

(iv) all Instruments to the extent relating to Accounts or Inventory;

(v) all letters of credit (as defined in the UCC) and all Letter-of-Credit
Rights, in each case, to the extent relating to Accounts or Inventory;

(vi) all Documents, customs receipts, insurance certificates, shipping documents
and other written materials related to the purchase or import of any Inventory;

(vii) all Investment Property to the extent (i) consisting of Equity Interests
in any Borrower or Guarantor, subject to the limitation set forth below in
Section 7.1.3 as to such pledge of Equity Interests in a Foreign Subsidiary or
(ii) purchased with the proceeds of any of the above-described Collateral;

 

114

--------------------------------------------------------------------------------

(viii) all General Intangibles (other than Intellectual Property) and all rights
under Hedge Agreements and other Secured Bank Product Documents, in each case,
to the extent relating to Accounts or Inventory;

(ix) all Commodity Accounts, Deposit Accounts and Securities Accounts, including
all cash, checks and other evidences of payment, marketable securities,
securities entitlements, financial assets and other funds or Property held in or
on deposit in any of the foregoing, in each case if any of the proceeds of the
above-described Collateral are deposited therein;

(x) all Records, Supporting Obligations and related letters of credit (as
defined in the UCC), in each case to the extent related to the foregoing;

(xi) the proceeds of business interruption insurance;

(xii) all monies, cash and deposits, whether or not in the possession or under
the control of the Agent, a Lender, or a bailee or Affiliate of the Agent or a
Lender, including any Cash Collateral to the extent related to the foregoing;
and

(xiii) all accessions to, substitutions for, and all replacements, products, and
cash and non-cash proceeds of the foregoing, including proceeds of and unearned
premiums with respect to insurance policies, and claims against any Person for
loss, damage or destruction of any Collateral.

The parties hereto agree that nothing above is intended, nor shall it be
construed, to affect, replace, impair or extinguish the creation, attachment,
perfection or priority of the security interests in, and other Liens on, any
Collateral covered both under Section 7.1.1(a) and Section 7.1.1(b).

7.1.2. Grant of Security Interest by Dutch Domiciled Loan Parties. To secure the
prompt payment and performance of all Dutch Facility Secured Obligations, each
Dutch Domiciled Loan Party hereby grants to the Agent, for the benefit of the
Dutch Facility Secured Parties, a continuing security interest in and Lien upon
all of the following Property of such Loan Party, whether now owned or hereafter
acquired, and wherever located:

(a) all Accounts;

(b) all Inventory;

(c) all Chattel Paper, including electronic chattel paper, in each case, to the
extent relating to Accounts or Inventory;

(d) all Instruments to the extent relating to Accounts or Inventory;

(e) all letters of credit (as defined in the UCC) and all Letter-of-Credit
Rights, in each case, to the extent relating to Accounts or Inventory;

(f) all Documents, customs receipts, insurance certificates, shipping documents
and other written materials related to the purchase or import of any Inventory;

(g) all Investment Property to the extent (i) consisting of Equity Interests in
any Borrower or Guarantor, subject to the limitation set forth below in
Section 7.1.3 as to such pledge of Equity Interests in a Foreign Subsidiary or
(ii) purchased with the proceeds of any of the above-described Collateral;

 

115

--------------------------------------------------------------------------------

(h) all General Intangibles (other than Intellectual Property) and all rights
under Hedge Agreements and other Secured Bank Product Documents, in each case,
to the extent relating to Accounts or Inventory;

(i) all Commodity Accounts, Deposit Accounts and Securities Accounts, including
all cash, checks and other evidences of payment, marketable securities,
securities entitlements, financial assets and other funds or Property held in or
on deposit in any of the foregoing, in each case, if any of the proceeds of the
above-described Collateral are deposited therein;

(j) all Records, Supporting Obligations and related letters of credit (as
defined in the UCC), in each case to the extent related to the foregoing;

(k) the proceeds of business interruption insurance;

(l) all monies, cash and deposits, whether or not in the possession or under the
control of the Agent, a Lender, or a bailee or Affiliate of the Agent or a
Lender, including any Cash Collateral to the extent related to the foregoing;
and

(m) all accessions to, substitutions for, and all replacements, products, and
cash and non-cash proceeds of the foregoing, including proceeds of and unearned
premiums with respect to insurance policies, and claims against any Person for
loss, damage or destruction of any Collateral.

7.1.3. Excluded Collateral. Notwithstanding anything herein to the contrary, in
no event shall the Collateral subject to this Agreement include or the security
interest or lien granted under Section 7.1.1 or Section 7.1.2 attach to (a) any
of the outstanding voting capital stock of a Foreign Subsidiary that is a
“controlled foreign corporation” within the meaning of Section 957 of the Code
(or in any Subsidiary that is classified as a disregarded entity for U.S.
federal income Tax purposes and that holds directly, or through other
disregarded entities, Equity Interests of a Foreign Subsidiary that is a
“controlled foreign corporation” within the meaning of Section 957 of the Code)
in excess of 65% of the voting power of all classes of capital stock of such
Foreign Subsidiary entitled to vote; provided that immediately upon the
amendment of the Internal Revenue Code to allow the pledge of a greater
percentage of the voting power of capital stock in such a Foreign Subsidiary
without adverse tax consequences to Parent and its Subsidiaries, the Collateral
shall include, and such security interest and lien shall attach to, such greater
percentage of capital stock of each such Foreign Subsidiary, (b) all Commercial
Tort Claims in an individual amount of less than or equal to $10,000,000,
(c) Margin Stock, (d) any asset to the extent and for so long as the grant of a
security interest therein would be prohibited by Applicable Law or would require
any Governmental Approval (other than to the extent that any such prohibition or
requirement would be rendered ineffective pursuant to the anti-non-assignment
provisions of the UCC or other applicable law), (e) Equity Interests in any
Person other than the Loan Parties to the extent not permitted by the terms of
such Person’s organizational or joint venture documents (other than to the
extent that any such restriction would be rendered ineffective pursuant to the
anti-non- assignment provisions of the UCC or other applicable law), (f) Equity
Interests in Unrestricted Subsidiaries, (g) in the case of assets consisting of
Licenses, leases, agreements or other contracts or assets that are subject to
Purchase Money Debt or Capital Leases, to the extent and for so long as the
grant of security therein is prohibited or restricted by any Applicable Law or
by the terms of such License, lease, agreement or other contract (including
anti-assignment provisions of any such contract) or would require the consent of
a Governmental Authority or a third party that is party to such contract (unless
such consent has already been received or the applicable third party has agreed
to cooperate with the establishment of any secured

 

116

--------------------------------------------------------------------------------

financing) or would trigger termination of (or a right to terminate) any such
contract pursuant to any “change of control” or similar provision or the ability
for any third party to amend any rights, benefits and/or obligations of the Loan
Parties in respect of those assets, or which would require any Loan Party or any
Subsidiary of any Loan Party to take any action materially adverse to the
interests of such Loan Party or such Subsidiary (in each case, to the extent
applicable and other than to the extent that any of the foregoing would be
rendered ineffective pursuant to the anti-non-assignment provisions of the UCC
or other applicable law), (h) any other asset to the extent that the cost,
burden, difficulty or consequence (including any effect on the ability of the
relevant Loan Party to conduct its operations and business in the ordinary
course) of obtaining or perfecting a security interest therein outweighs the
benefit of the security afforded thereby, as reasonably determined by the
applicable Borrower and the Agent (it being acknowledged that the maximum
guaranteed or secured amount may be limited to minimize stamp duty,
notarization, registration or other applicable fees, taxes and duties where the
applicable Borrower and the Agent reasonably determine that the benefit to the
Lenders of increasing the guaranteed or secured amount is disproportionate to
the level of such fee, taxes and duties), (i) any asset to the extent that the
grant of a security interest therein would result in materially adverse tax
consequences to Parent and its Subsidiaries, as reasonably determined by the
Borrowers in consultation with the Agent, (j) any “intent-to-use” trademark
applications prior to the accepted filing of a “Statement of Use” or “Amendment
to Allege Use” and any other Intellectual Property in any jurisdiction where,
with respect thereto, the grant of a security interest therein would cause the
invalidation or abandonment or unenforceability of such Intellectual Property
under applicable law, (k) Property that is sold or subjected to a Lien pursuant
to a Supplier Financing Transaction; (l) Property described on Schedule 7.1.3;
(m) any asset upon which a Lien is granted by way of any Dutch Security
Agreement and (n) until the earlier to occur of (x) January 31, 2016 (or such
later date as the Agent may agree in its Permitted Discretion), and (y) the date
on which a Dutch Security Agreement is entered into in respect of the Equity
Interests in Arizona Chemical Aktiebolag, the Equity Interests in Arizona
Chemical Aktiebolag; provided that, for the avoidance of doubt, as of the date
in (x) or (y), as applicable, such security interest and lien shall attach to
the Equity Interests in Arizona Chemical Aktiebolag subject to the other clauses
of this Section 7.1; provided, however, that any Proceeds, products,
substitutions or replacements of Excluded Assets shall not constitute Excluded
Assets unless such Proceeds, products, substitutions or replacements would
themselves constitute Excluded Assets.

Further, (a) no foreign Intellectual Property filings or searches shall be
required and (b) no actions shall be required to perfect the grant of the
security interest in vehicles and any other assets subject to certificates of
title or ownership, commercial tort claims and letter of credit rights, in each
case except to the extent perfection of a security interest therein may be
accomplished by the filing of financing statements under the UCC.

7.2. Cash Collateral. Any Cash Collateral may be invested, at the Agent’s
discretion (and with the consent of the applicable Loan Party Agent, as long as
no Event of Default exists), but the Agent shall have no duty to do so,
regardless of any agreement or course of dealing with any Loan Party, and shall
have no responsibility for any investment or loss. To further secure the prompt
payment and performance of all (a) Secured Obligations, each U.S. Domiciled Loan
Party hereby grants to the Agent, for the benefit of the Secured Parties and
(b) Dutch Facility Secured Obligations, each Dutch Domiciled Loan Party hereby
grants to the Agent and the Security Trustee, for the benefit of the Dutch
Facility Secured Parties, in each case, a continuing security interest and Lien
on all Cash Collateral of such Loan Party from time to time and all proceeds
thereof, whether such Cash Collateral is held in a Cash Collateral Account or
otherwise. Loan Parties organized or incorporated outside of the U.S. shall
grant Liens to the applicable Security Trustee on Cash Collateral pursuant to
the relevant Security Documents. The Agent and each Security Trustee may apply
Cash Collateral of (i) a U.S. Domiciled Loan Party to the payment of any Secured
Obligations and (ii) a Dutch Domiciled Loan Party to the payment of any Dutch
Facility Secured Obligations, in each case, in accordance with Section 5.5.1, as
they become due and payable.

 

117

--------------------------------------------------------------------------------

Each Cash Collateral Account and all Cash Collateral shall be under the sole
dominion and control of the Agent and the Security Trustees. No U.S. Domiciled
Loan Party or other Person claiming through or on behalf of any U.S. Domiciled
Loan Party shall have any right to any Cash Collateral, until Full Payment of
all Secured Obligations. No Dutch Domiciled Loan Party or other Person claiming
through or on behalf of any Dutch Domiciled Loan Party shall have any right to
any Cash Collateral, until Full Payment of all Dutch Facility Secured
Obligations.

7.3. Administration.

7.3.1. After-Acquired Collateral. If after the Closing Date, any Loan Party
acquires an interest with a Value in excess of $2,000,000 in (a) Chattel Paper
(other than pre-buy agreements or in the Ordinary Course of Business),
(b) negotiable Documents (other than in the Ordinary Course of Business),
(c) Investment Property, (d) Letter-of-Credit Rights (that are not Supporting
Obligations), (e) promissory notes (other than in the Ordinary Course of
Business) and other Instruments (in each case, other than checks or other
Instruments provided for in the ordinary course of business), in each case
constituting Collateral, the applicable Loan Party Agent will notify the Agent
in writing within thirty (30) days of such acquisition. Upon the Agent’s
request, such Loan Party shall use commercially reasonable efforts to take such
actions as the Agent or its Security Trustee reasonably deems appropriate to
effect a duly perfected, first priority Lien upon such Collateral, including
obtaining any appropriate possession or control agreement, as appropriate,
and/or executing such additional Security Documents as may be reasonably
requested by the Agent or a Security Trustee. Notwithstanding the foregoing,
nothing in this Section 7.3.1 shall require any Loan Party to effectuate a
security interest in any after-acquired Collateral if such security interest
would violate Section 14.20 of this Agreement.

7.3.2. Commodity Account, Deposit Account or Securities Account. If after the
Closing Date, any Loan Party opens or closes a Commodity Account, Deposit
Account or Securities Account (in each case, other than any Excluded Account) in
a Perfection Jurisdiction, in each case constituting or holding Collateral, the
applicable Loan Party Agent shall notify the Agent or Security Trustee in
writing within forty-five (45) days thereof and amend Schedule 8.4 to reflect
the same. Upon the Agent’s or Security Trustee’s request, the Loan Party shall
deliver a fully-executed Deposit Account Control Agreement, Securities Account
Control Agreement or Commodity Account Control Agreement (as applicable) within
forty-five (45) days (or such longer period with the prior consent of the Agent
or Security Trustee (such consent not to be unreasonably withheld)) of the
Agent’s or Security Trustee’s request and amend Schedule 8.4 to reflect the
same; provided that with respect to Securities Accounts or Commodity Accounts,
any such control agreement shall only be requested by Agent or the Security
Trustee for Securities Accounts or Commodity Accounts, in each case, with an
average monthly balance or Value in excess of $2,000,000.

7.3.3. Collateral in Possession of a Third Party. If, after the Closing Date,
any Collateral constituting Inventory in a Perfection Jurisdiction with an
aggregate Value exceeding $2,000,000 is in the possession of a warehouse or
bailee, such Loan Party shall notify the Agent within ninety (90) days of such
warehouse or bailee obtaining possession of such Inventory.

7.4. No Assumption of Liability. The Lien on Collateral granted hereunder is
given as security only and shall not subject the Agent, any Security Trustee or
any Lender to, or in any way modify, any obligation or liability of Loan Parties
relating to any Collateral.

7.5. Further Assurances. Each Loan Party will promptly execute any and all
further documents, financing statements, agreements, title certificates,
assignments and instruments, and take all such further actions (including the
filing and recording of financing statements and other documents), which may be
required under any Applicable Law, or which the Agent, any Security Trustee or
the

 

118

--------------------------------------------------------------------------------

Required Lenders may reasonably request, in order to grant, preserve, protect
and perfect the validity and priority of the Liens created or intended to be
created by the Security Documents, or otherwise to give effect to the intent of
this Agreement, all at the expense of the Loan Parties. Each U.S. Domiciled Loan
Party authorizes the Agent to file any financing statement that accurately
describes the Collateral.

7.6. Termination of Security Interest.

7.6.1. All security interests granted hereby shall automatically terminate upon
the Full Payment of the Secured Obligations; provided that with respect to the
LC Obligations, the aggregate amount available to be drawn under any Letters of
Credit has been reduced to zero (or the applicable Fronting Bank has consented
to the termination as a result of the Cash Collateralization of the Letters of
Credit or other arrangement satisfactory to the applicable Fronting Bank) and no
Fronting Bank has any further obligation to issue or amend Letters of Credit
under this Agreement.

7.6.2. All security interests granted hereby shall also terminate and be
released at the time or times and in the manner set forth in Section 12.3.1 of
this Agreement.

7.6.3. In connection with any termination or release pursuant to Sections 7.6.1
or 7.6.2, the Agent or Security Trustee shall execute and deliver to any Loan
Party, at such Loan Party’s expense, all documents that such Loan Party shall
reasonably request to evidence such termination or release so long as the
applicable Loan Party shall have provided the Agent such certifications or
documents as the Agent shall reasonably request in order to demonstrate
compliance with this Section 7.6. The covenants contained in this Section 7.6
shall survive the Full Payment of the Secured Obligations.

7.7. Real Estate Collateral

7.7.1. In accordance with the timing and procedures set forth in Section 7.7.2
below, the Obligations shall also be secured by Mortgages upon all Mortgaged
Property. The Mortgages shall be duly recorded at U.S. Borrowers’ expense, in
each office where such recording is required to constitute a fully perfected
second-priority Lien on the Mortgaged Property covered thereby.

7.7.2. Simultaneously with the execution and delivery of any “Mortgage” (as
defined in the Term Loan Agreement) against any Mortgaged Property for the
benefit of Term Loan Lenders, the relevant Loan Party shall execute and deliver
to Agent a Mortgage against such Mortgaged Property, substantially in the same
form and substance as such “Mortgage” (except with respect to priority). In
addition, such Loan Party shall timely deliver to Agent upon request by Agent,
such information and materials necessary in order for federally regulated U.S.
lenders to comply with the requirements of the Flood Program (as defined in the
Term Loan Agreement) and if the Mortgaged Property is in a Flood Zone (as
defined in the Term Loan Agreement), shall deliver evidence to Agent that such
Loan Party has obtained a policy of flood insurance relating to such Mortgaged
Property that is in compliance with applicable regulations.

SECTION 8. COLLATERAL ADMINISTRATION

8.1. Borrowing Base Certificates. As soon as available but in any event within
twenty (20) days after the end of each calendar month (or such longer period as
the Agent may agree in its Permitted Discretion), the Loan Party Agents shall
deliver to the Agent Borrowing Base Certificates covering each Borrowing Base
and supporting information in connection therewith (including information
regarding any retention of title from vendors to any Dutch Borrower), provided
that (a) the Loan Party Agents will be required to furnish Borrowing Base
Certificates for each calendar week and supporting information in

 

119

--------------------------------------------------------------------------------

connection therewith within two (2) Business Days after the end of each such
calendar week after an Increased Reporting Trigger, and (b) within five
(5) Business Days after consummation of any sale or disposition of Accounts or
Inventory that are a part of the Collateral not in the Ordinary Course of
Business resulting in net proceeds exceeding $5,000,000 (individually or in the
aggregate for all such sales and dispositions since the date of the most recent
Borrowing Base Certificates), the Loan Party Agents shall deliver an updated
Borrowing Base Certificate giving effect to any such sale or disposition.
Borrowing Base Certificates for Foreign Borrowers shall calculate an individual
Borrowing Base for each Foreign Borrower on a stand-alone basis. All
calculations of Availability in any Borrowing Base Certificate shall originally
be made by the Borrowers and certified by a Senior Officer of the applicable
Loan Party Agent, provided that the Agent may from time to time review and
adjust any such calculation (x) to reflect its reasonable estimate of declines
in value of any Collateral, due to collections received in the Dominion Account
or otherwise; (y) to adjust advance rates and to impose additional reserves in
its Permitted Discretion to reflect changes in dilution, quality, mix and other
factors affecting Collateral; and (z) to the extent the calculation is not made
in accordance with this Agreement or does not accurately reflect the Reserves.

8.2. Administration of Accounts.

8.2.1. Records and Schedules of Accounts. Each Borrower shall keep accurate and
complete records of its Accounts, including all payments and collections
thereon, and shall submit to the Agent sales, collection, reconciliation and
other reports in form reasonably satisfactory to the Agent, on such periodic
basis as the Agent may request. Each Borrower shall provide to the Agent, on or
before the 20th day of each month, a detailed aged trial balance of all Accounts
as of the end of the preceding month, specifying each Account’s Account Debtor
name and address, amount, invoice date and due date, and, upon request by the
Agent during the existence of an Event of Default, showing any discount,
allowance, credit, authorized return or dispute, and including such proof of
delivery, copies of invoices and invoice registers, copies of related documents,
repayment histories, status reports and other information as the Agent may
reasonably request. If Accounts of a Borrower in an aggregate face amount of
$5,000,000 or more cease to be Eligible Accounts, then such Borrower or a Loan
Party Agent shall notify the Agent of such occurrence promptly (and in any event
within five (5) Business Days) after such Borrower or Loan Party Agent has
knowledge thereof.

8.2.2. Taxes. If an Account of any Borrower includes a charge for any Taxes, the
Agent is authorized, in its discretion, if such Borrower has not paid such Taxes
when due, to pay the amount thereof to the proper Governmental Authority for the
account of such Borrower and to charge the Loan Parties therefor; provided,
however, that neither the Agent nor any other Secured Party shall be liable for
any Taxes that may be due from the Loan Parties or with respect to any
Collateral.

8.2.3. Account Verification. During the continuance of an Event of Default the
Agent shall have the right at any time, in the name of the Agent, any designee
of the Agent or any Borrower, to verify the validity, amount or any other matter
relating to any Accounts of the Borrowers by mail, telephone or otherwise. Loan
Parties shall cooperate fully with the Agent in an effort to facilitate and
promptly conclude any such verification process.

8.2.4. Maintenance of Dominion Accounts. Except as otherwise provided in this
Section 8.2.4, (a) the Loan Parties shall maintain Dominion Accounts pursuant to
lockbox or other arrangements reasonably acceptable to the Agent, (b) other than
(until required in accordance with the other provisions of this Section 8.2.4)
in relation to the Dutch Kraton Excluded Dominion Accounts, the Loan Parties
shall obtain a Deposit Account Control Agreement from each lockbox servicer (if
applicable) and Dominion Account bank, establishing the Agent’s (or a Security
Trustee’s) control over and Lien on the lockbox or Dominion Account, requiring
prompt deposit of all remittances received in the

 

120

--------------------------------------------------------------------------------

lockbox (or otherwise) to a Dominion Account and waiving offset rights of such
servicer or bank, except for customary administrative and other charges and
returned items, (c) other than (until required in accordance with the other
provisions of this Section 8.2.4) in relation to the Dutch Kraton Excluded
Dominion Accounts, the Dutch Kraton Dominion Accounts shall be under the sole
dominion and exclusive control of the Agent (or its Security Trustee) whether or
not a Cash Dominion Event exists; provided that collected funds will, in the
discretion of Agent, either be disbursed from such Dominion Accounts to an
operating account of one of such Loan Parties or be applied to the Loans of such
Loan Parties, (d) at any time after the occurrence of a Cash Dominion Event, and
while the same is continuing, the Initial Dutch Kraton Borrower shall
(i) execute and deliver a duly perfected and enforceable Lien over each Dutch
Kraton Excluded Dominion Account in accordance with the relevant Applicable Law
and (ii) ensure that each Dutch Kraton Excluded Dominion Account is the subject
of a Deposit Account Control Agreement, (e) if, with the prior consent of the
Agent, a Dutch Kraton Dominion Account is not maintained with Bank of America,
the applicable Dutch Domiciled Loan Parties, whether or not a Cash Dominion
Event exists, shall ensure that such account is the subject of a Deposit Account
Control Agreement which provides for all cash receipts in any such account to be
swept on a daily basis to a Dominion Account maintained with Bank of America,
and (f) if a U.S. Dominion Account is not maintained with Bank of America, the
Agent (or its Security Trustee) may, during the existence of any Cash Dominion
Event, require immediate transfer of all cash receipts in such account to a
Dominion Account maintained with Bank of America. The Agent, Security Trustees
and Lenders assume no responsibility to Loan Parties for any lockbox arrangement
or Dominion Account, including any claim of accord and satisfaction or release
with respect to any Payment Items accepted by any bank.

8.2.5. Proceeds of Collateral. Loan Parties shall request in writing and
otherwise take all necessary steps to instruct that all payments on Accounts or
otherwise relating to Collateral of Account Debtors in any Eligible Account
Debtor Jurisdiction are made directly to a Dominion Account (or a lockbox
relating to a Dominion Account). If any Loan Party receives cash or Payment
Items with respect to any Collateral, it shall hold same in trust for the Agent
and the Security Trustees and within five (5) Business Days deposit same into a
Dominion Account.

8.3. Administration of Inventory.

8.3.1. Records and Reports of Inventory. Each Borrower shall keep accurate and
complete records of its Inventory, and, when submitting a Borrowing Base
Certificate to the Agent, shall submit to the Agent inventory and reconciliation
reports in form reasonably satisfactory to the Agent, on such periodic basis as
the Agent may reasonably request. Each Borrower shall conduct periodic cycle
counts consistent with historical practices, and shall provide to the Agent a
copy of any report produced based on such count, together with supporting
information, in each case, as the Agent may reasonably request. The Agent may
observe each physical count at its own expense or as part of an inspection,
audit or field exam under Section 10.1.1.

8.3.2. Returns of Inventory. No Borrower shall return any Inventory to a
supplier, vendor or other Person, whether for cash, credit or otherwise during
the existence of a Cash Dominion Event, unless (a) such return is a return of
defective Inventory in the Ordinary Course of Business or (b) the aggregate
Value of all such returned Inventory does not exceed during any calendar month
(i) $10,000,000 so long as no Event of Default has occurred and is continuing
and (ii) $5,000,000 at any time an Event of Default has occurred and is
continuing.

8.3.3. Acquisition, Sale and Maintenance. No Borrower shall acquire or accept
any Inventory on consignment or approval, except in the Ordinary Course of
Business, and shall take all steps to assure that all Inventory is produced in
accordance with the FLSA and otherwise in all material respects with Applicable
Law. No Borrower shall sell any Inventory on consignment or approval or any

 

121

--------------------------------------------------------------------------------

other basis under which the customer may return or require a Borrower to
repurchase such Inventory, except in the Ordinary Course of Business. Borrowers
shall use, store and maintain all Inventory with reasonable care and caution, in
the Ordinary Course of Business and in conformity in all material respects with
all Applicable Law, and shall make current rent payments (within applicable
grace periods provided for in leases) at all locations where any Collateral is
located.

8.4. Administration of Deposit Accounts, Securities Accounts and Commodity
Accounts. Schedule 8.4 sets forth all Deposit Accounts, Securities Accounts and
Commodity Accounts (other than Excluded Accounts) in a Perfection Jurisdiction
maintained by the Loan Parties as of the Closing Date, including all Dominion
Accounts. Each such U.S. Loan Party shall take commercially reasonable steps to
establish the Agent’s or its Security Trustee’s control of each such Deposit
Account, Securities Account or Commodity Account through a Deposit Account
Control Agreement, Securities Account Control Agreement or Commodity Account
Control Agreement, as applicable, within ninety (90) days following the Closing
Date; provided, that with respect to Securities Accounts or Commodity Accounts,
such control agreements should only be required for Securities Accounts or
Commodity Accounts, in each case, with an average monthly balance or Value in
excess of $2,000,000. A Loan Party Agent shall notify the Agent of any opening
or closing of a Deposit Account, Securities Account or Commodity Account in
accordance with Section 7.3.2 and will amend Schedule 8.4 to reflect the same.

8.5. General Provisions.

8.5.1. Location of Collateral. All Inventory with an aggregate Value exceeding
$2,000,000 located at a location in a Perfection Jurisdiction and constituting
Collateral (other than such Inventory in transit) is kept by the Loan Parties at
the locations set forth in Schedule 8.5.1. Upon providing any notice required
under Section 7.3.3, such Loan Party or the applicable Loan Party Agent shall
amend Schedule 8.5.1 to reflect the same.

8.5.2. Certain Organizational Changes. No Loan Party may change its name,
charter or other organizational number, form or jurisdiction of organization
without at least fifteen (15) days prior written notice to the Agent (or such
shorter period to which the Agent may agree) and taking such actions (including
entering into supplemental documentation) as the Agent may reasonably request to
maintain the perfection and priority of its security interest in the Collateral.

8.5.3. [Reserved].

8.5.4. Protection of Collateral. All reasonable expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral of a
Loan Party Group, all Taxes payable with respect to any Collateral of a Loan
Party Group (including any sale thereof), and all other reasonable payments
required to be made by the Agent or a Security Trustee to any Person to realize
upon any Collateral of a Loan Party Group, shall be borne and paid by Loan
Parties of such Loan Party Group. Neither the Agent nor any Security Trustee
shall be liable or responsible in any way for the safekeeping of any Collateral,
for any loss or damage thereto (except for reasonable care in its custody while
Collateral is in the Agent’s or such Security Trustee’s actual possession), for
any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency or other Person whatsoever, but the
same shall be at Loan Parties’ sole risk.

8.5.5. Defense of Title to Collateral. Each Loan Party shall at all times defend
its title to Collateral (if such defense is required by Agent or the applicable
Security Trustee in its Permitted Discretion) and the Agent’s or Security
Trustees’ Liens therein against all Persons, claims and demands whatsoever,
except Permitted Liens.

 

122

--------------------------------------------------------------------------------

8.6. Power of Attorney. Each of the U.S. Domiciled Loan Parties hereby
irrevocably constitutes and appoints the Agent (and all Persons designated by
the Agent) as such Loan Party’s true and lawful attorney (and agent-in-fact),
coupled with an interest, for the purposes provided in this Section. The Agent,
or the Agent’s designee, may, without notice and in either its or such U.S.
Domiciled Loan Party’s name, but at the cost and expense of such Loan Parties
within such Loan Party’s Loan Party Group:

(a) Endorse a U.S. Domiciled Loan Party’s name on any Payment Item or other
proceeds of Collateral (including proceeds of insurance) that come into the
Agent’s possession or control; and

(b) During the continuance of an Event of Default, (i) notify any Account
Debtors of a U.S. Domiciled Loan Party of the assignment of their Accounts,
demand and enforce payment of such Accounts by legal proceedings or otherwise,
and generally exercise any rights and remedies with respect to such Accounts;
(ii) settle, adjust, modify, compromise, discharge or release any Accounts or
other Collateral of the U.S. Domiciled Loan Parties, or any legal proceedings
brought to collect Accounts or Collateral of the U.S. Domiciled Loan Parties;
(iii) sell or assign any Accounts and other Collateral of the U.S. Domiciled
Loan Parties upon such terms, for such amounts and at such times as the Agent
deems advisable; (iv) collect, liquidate and receive balances in Deposit
Accounts or Securities Accounts of the U.S. Domiciled Loan Parties which
constitute or contain the proceeds of Collateral, and take control, in any
manner, of proceeds of Collateral of the U.S. Domiciled Loan Parties;
(v) prepare, file and sign a U.S. Domiciled Loan Party’s name to a proof of
claim or other document in a bankruptcy of an Account Debtor, or to any notice,
assignment or satisfaction of Lien or similar document; (vi) receive, open and
dispose of mail addressed to a U.S. Domiciled Loan Party, and notify postal
authorities to deliver any such mail to an address designated by the Agent;
(vii) endorse any Chattel Paper, Document, Instrument, bill of lading, or other
document or agreement relating to any Accounts, Inventory or other Collateral of
the U.S. Domiciled Loan Parties; (viii) use a U.S. Domiciled Loan Party’s
stationery and sign its name to verifications of Accounts and notices to Account
Debtors of the U.S. Domiciled Loan Parties; (ix) use information contained in
any data processing, electronic or information systems relating to Collateral of
the U.S. Domiciled Loan Parties; (x) make and adjust claims under insurance
policies of the U.S. Domiciled Loan Parties; (xi) take any action as may be
necessary or appropriate to obtain payment under any letter of credit, banker’s
acceptance or other instrument for which a U.S. Domiciled Loan Party is a
beneficiary; and (xii) take all other actions as the Agent reasonably deems
appropriate to fulfill any U.S. Domiciled Loan Party’s obligations under the
Loan Documents.

SECTION 9. REPRESENTATIONS AND WARRANTIES

9.1. General Representations and Warranties. In order to induce the Lenders to
enter into this Agreement, to make the Loans and issue or participate in Letters
of Credit as provided for herein, each Loan Party (with respect to itself and
its Restricted Subsidiaries) makes the following representations and warranties
to, and agreements with, the Lenders, all of which shall survive the execution
and delivery of this Agreement and the making of the Loans and the issuance of
the Letters of Credit:

9.1.1. Organization and Qualification. Each of the Loan Parties and its
Restricted Subsidiaries (a) is a duly organized or incorporated and validly
existing corporation or other entity in good standing under the laws of the
jurisdiction of its organization or incorporation (to the extent such
jurisdiction provides for the designation of entities organized or incorporated
thereunder as existing in good standing) and has the corporate or other
organizational power and authority to own its property and assets and to
transact the business in which it is engaged and (b) has duly qualified and is
authorized to do business and in good standing in all jurisdictions where it is
required to be so qualified, except, in each case, where the failure to be so
qualified could not reasonably be expected to result in a Material Adverse
Effect.

 

123

--------------------------------------------------------------------------------

9.1.2. Power and Authority. Each Loan Party is duly authorized to execute,
deliver and perform under the Loan Documents to which it is a party. The
execution, delivery and performance of the Loan Documents have been duly
authorized by all necessary corporate or other organizational action, and do not
(a) require the consent or approval of any holders of Equity Interests in any
Loan Party, except for such consents as have been obtained and are in full force
and effect; (b) contravene the Organization Documents of any Loan Party;
(c) violate or cause a default under any Applicable Law or Material Contract or
(d) conflict with or result in any breach or contravention of, or the creation
of any Lien under (i) any contractual obligation to which such Person is a party
or (ii) any order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject, except in
each case referred to in clauses (b), (c) or (d), where such violation or
default could not reasonably be expected to result in a Material Adverse Effect.

9.1.3. Enforceability. Each Loan Document is a legal, valid and binding
obligation of each Loan Party party thereto, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

9.1.4. Subsidiaries; Capital Structure. Schedule 9.1.4 lists each Subsidiary of
Parent (and the direct and indirect ownership interest of Parent therein), in
each case existing on the Closing Date. As of the Closing Date, Schedule 9.1.4
shows, for each Loan Party, its name, jurisdiction of organization and issued
Equity Interests. Except as disclosed on Schedule 9.1.4, in the five years
preceding the Closing Date, no Loan Party has acquired any substantial assets
from any other Person nor been the surviving entity in a merger or combination.
As of the Closing Date, each Loan Party has good title to its Equity Interests
in its Subsidiaries, and all such Equity Interests are duly issued, fully paid
and non-assessable to the extent applicable. As of the Closing Date, except as
disclosed on Schedule 9.1.4, there are no outstanding purchase options,
warrants, subscription rights, agreements to issue or sell, convertible
interests, phantom rights or powers of attorney relating to Equity Interests of
any Loan Party or Subsidiary.

9.1.5. Title to Properties; Priority of Liens. Each of the Loan Parties and its
Restricted Subsidiaries has good and marketable title to (or valid leasehold
interests in) all of its Real Estate, and good title to all of its personal
Property, including all Property reflected in any financial statements delivered
to the Agent or Lenders, in each case free of Liens except Permitted Liens and
except where the failure to have such good title or such leasehold interest
could not reasonably be expected to have a Material Adverse Effect. Each of the
Loan Parties and its Restricted Subsidiaries has paid and discharged all
material lawful claims that, if unpaid, are being Properly Contested or that,
could become a Lien on its Properties, other than Permitted Liens, except where
the failure to have such good title or such leasehold interest could not
reasonably be expected to have a Material Adverse Effect or as otherwise set
forth in Section 9.1.6 or 9.1.29, as applicable. All Liens of the Agent in the
Collateral in a Perfection Jurisdiction are duly perfected, first priority Liens
subject only to Permitted Liens; provided that no such representation is given
with respect to any such Collateral that requires a notice to or agreement of a
third party that is not required to be obtained hereunder.

9.1.6. Accounts. The Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrowers in writing
with respect thereto. Each Borrower warrants with respect to each of its
Accounts at the time it is shown as an Eligible Account in a Borrowing Base
Certificate that to such Borrower’s knowledge in all material respects:

(a) it is genuine and what it purports to be, and is not evidenced by a
judgment;

 

124

--------------------------------------------------------------------------------

(b) it arises out of a completed, bona fide sale and delivery of goods or
rendition of services in the Ordinary Course of Business, and substantially in
accordance with any purchase order, contract or other document relating thereto;

(c) it is for a sum certain, maturing as stated in the invoice covering such
sale or rendition of services, a copy of which has been furnished or is
available to the Agent on request;

(d) it is not subject to any offset, Lien (other than the Agent’s or Security
Trustee’s Liens and Liens permitted under the definition of Dutch Kraton
Eligible Accounts or U.S. Eligible Accounts hereto), deduction, defense,
dispute, counterclaim or other adverse condition except as arising in the
Ordinary Course of Business; and it is otherwise absolutely owing by the Account
Debtor, without contingency in any respect;

(e) no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to the Agent or a Security Trustee unless (i) under
the UCC, other Applicable Law or public policy, the restriction is ineffective
or (ii) such restriction does not prevent any Loan Party from granting a
security interest in such Account under the UCC or any Applicable Law, and the
applicable Borrower is the sole payee or remittance party shown on the invoice;

(f) no extension, compromise, settlement, modification, credit, deduction or
return has been authorized with respect to the Account, except discounts or
allowances granted in the Ordinary Course of Business for prompt payment that
are reflected in the reports submitted to the Agent hereunder; and

(g) (i) there are no facts or circumstances that are reasonably likely to impair
the enforceability or collectability of such Account; (ii) the Account Debtor,
to the applicable Loan Party’s knowledge, had the capacity to contract when the
Account arose, continues to meet the applicable Borrower’s customary credit
standards, is, to the applicable Loan Party’s knowledge, Solvent and, to the
applicable Loan Party’s knowledge, has not failed, or suspended or ceased doing
business; and (iii) to the applicable Loan Party’s knowledge, there are no
proceedings or actions pending against any Account Debtor that could reasonably
be expected to have a material adverse effect on the Account Debtor’s financial
condition.

9.1.7. Financial Statements. The consolidated balance sheets, and related
statements of income, cash flow and shareholder’s equity, of Parent and its
Subsidiaries that have been and are hereafter delivered to the Agent and Lenders
in accordance with Section 6.1 and clauses (a) and (b) of Section 10.1.2, are
prepared in accordance with GAAP (except with respect to Section 10.1.2(c)), and
fairly present in all material respects the financial position and results of
operations of Parent and its Subsidiaries at the dates and for the periods
indicated, and for unaudited financial statements, subject to normal year-end
adjustments and the absence of footnotes. As of the date of delivery thereof,
all projections delivered from time to time to the Agent and Lenders have been
prepared in good faith, based on reasonable assumptions in light of the
circumstances at such time. Since December 31, 2014, there has been no change in
the condition, financial or otherwise, of any Loan Party or Subsidiary that
could reasonably be expected to have a Material Adverse Effect. Each Loan Party
is Solvent on a consolidated basis.

9.1.8. Supplier Financing Transaction. As of the Closing Date, no Loan Party or
Restricted Subsidiary is party to any Supplier Financing Transaction, except
those listed on Schedule 9.1.8.

 

125

--------------------------------------------------------------------------------

9.1.9. Taxes. Each of the Loan Parties and its Restricted Subsidiaries has filed
all material federal, state and other Tax returns and other material tax reports
that it is required by law to file, and has paid, or made reasonably adequate
provision for the payment of, all Taxes upon it, its income and its Properties
that are shown due and payable on such returns, except to the extent being
Properly Contested.

9.1.10. [Reserved].

9.1.11. Intellectual Property. To the knowledge of each Loan Party, the conduct
of the business as currently conducted of each of the Loan Parties and its
Restricted Subsidiaries does not infringe or misappropriate any third party
Intellectual Property of any third party, except where such infringement or
misappropriation could not be reasonably expected to have a Material Adverse
Effect. There is no pending or, to any Loan Party’s knowledge, threatened
Intellectual Property written Claim with respect to any Loan Party, any
Restricted Subsidiary or any of their Property (including any Intellectual
Property). To the knowledge of each Loan Party, except as disclosed on Schedule
9.1.11, no Loan Party or Restricted Subsidiary pays or owes any Royalty or other
compensation to any Person with respect to any Intellectual Property. All
material registered and applied for Intellectual Property owned by, or otherwise
subject to any interests of, any Loan Party or Restricted Subsidiary and all
material Intellectual Property Licenses which License any Loan Party or
Restricted Subsidiary has the right to use Intellectual Property owned by a
third party on the Closing Date is shown on Schedule 9.1.11.

9.1.12. Governmental Approvals. Each of the Loan Parties has, is in compliance
with, and is in good standing with respect to, all Governmental Approvals
necessary to conduct its business and to own, lease and operate its Properties,
except as could not be reasonably expected to have a Material Adverse Effect.
All necessary import, export or other licenses, permits or certificates for the
import or handling of any Inventory or other Collateral have been procured and
are in effect, and Loan Parties and their Restricted Subsidiaries have complied
with all foreign and domestic laws with respect to the shipment and importation
of any Inventory or Collateral, except where the noncompliance or failure to
procure or maintain in effect could not reasonably be expected to have a
Material Adverse Effect.

9.1.13. Compliance with Laws. Each of the Loan Parties and its Restricted
Subsidiaries has duly complied, and its Properties and business operations are
in compliance with all Applicable Law, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect. There have been no
citations, notices or orders of material noncompliance issued to any Loan Party
or Restricted Subsidiary under any Applicable Law, except where noncompliance
could not reasonably be expected to have a Material Adverse Effect.

9.1.14. Compliance with Environmental Laws. Except as disclosed on Schedule
9.1.14, as of the Closing Date to the knowledge of each Loan Party, neither such
Loan Party’s nor any Restricted Subsidiary’s past or present operations, Real
Estate or other Properties are subject to any federal, state or local
investigation to determine whether any remedial action is needed to address any
environmental pollution, hazardous material or environmental clean-up. Except as
could not be reasonably expected to have a Material Adverse Effect, no Loan
Party or Subsidiary has received any Environmental Notice. No Loan Party or
Restricted Subsidiary has any material contingent liability with respect to any
Environmental Release, environmental pollution or hazardous material on any Real
Estate now or previously owned, leased or operated by it that could reasonably
be expected to have a Material Adverse Effect.

9.1.15. Restrictive Agreements. As of the Closing Date, no Loan Party or
Restricted Subsidiary is party or subject to any Restrictive Agreement, except
as shown on Schedule 9.1.15.

 

126

--------------------------------------------------------------------------------

9.1.16. Litigation. Except as shown on Schedule 9.1.16, there are no material
proceedings or investigations pending or, to any Loan Party’s knowledge,
threatened against any Loan Party or Restricted Subsidiary, or any of their
businesses, operations, Properties, prospects or conditions, that (a) relate to
any Loan Documents or transactions contemplated thereby; or (b) could reasonably
be expected to have a Material Adverse Effect if determined adversely to any
Loan Party or Restricted Subsidiary. No Loan Party or Restricted Subsidiary is
in default with respect to any order, injunction or judgment of any Governmental
Authority, except where such default could not be reasonably expected to have a
Material Adverse Effect.

9.1.17. Insurance. The insurance coverage of the Loan Parties and the Restricted
Subsidiaries as in effect on the Closing Date in excess of $10,000,000 is
outlined as to carrier, policy number, type and deductible on Schedule 9.1.17.
As of the Closing Date, all premiums due and payable in respect insurance
covering a material portion of the Collateral have been paid.

9.1.18. No Defaults. No event or circumstance has occurred and is continuing or
exists that constitutes a Default or Event of Default. No Loan Party or
Restricted Subsidiary is in default, and no event or circumstance has occurred
or exists that with the passage of time or giving of notice would constitute a
default, under and with respect to any Material Contract (excluding Material
Debt), except where such default could not reasonably be expected to have a
Material Adverse Effect.

9.1.19. Employee Benefit Plans.

(a) ERISA. No ERISA Event has occurred or is reasonably expected to occur that,
when taken with all other such ERISA Events for which liability is reasonably
expected to occur, could be reasonably likely to have a Material Adverse Effect.
No Loan Party nor any ERISA Affiliate has incurred or reasonably expects to
incur, any liability (and no event has occurred which, after the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, which has
resulted or could reasonably be expected to result in a Material Adverse Effect.
Each Loan Party and each ERISA Affiliate (i) has fulfilled its obligations under
the minimum funding standards of ERISA and the Code with respect to each U.S.
Employee Plan and (ii) is in compliance with the presently applicable provisions
of ERISA, the Code and any Applicable Law with respect to each “employee benefit
plan” (as defined in Section 3(3) of ERISA, but excluding any Multiemployer
Plan) maintained or contributed to for employees in the United States and in
respect of which any Loan Party or any ERISA Affiliate could reasonably be
expected to have liability, except as could not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect. Except as has
not or could not reasonably be expected to result in a Material Adverse Effect,
neither any Loan Party nor any ERISA Affiliate has failed to make any required
contribution or payment to any U.S. Employee Plan or Multiemployer Plan, or made
any amendment to any U.S. Employee Plan that has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code. No Loan Party nor any ERISA Affiliate has engaged in any non-exempt
prohibited transaction, as that term is defined in Section 406 of ERISA or
Section 4975 of the Code, except as has not or could not reasonably be expected
to results in a Material Adverse Effect.

(b) Foreign Plans. All Foreign Plans are in compliance with, and have been
established, administered and operated in accordance with, the terms of such
Foreign Plans and applicable law, except for any failure to so comply,
establish, administer or operate the Foreign Plans as would not reasonably be
expected to have a Material Adverse Effect. All required contributions or other
payments which are due with respect to each Foreign Plan have been or will
timely be made in full and there are no funding deficiencies thereunder, except
to the extent any such events would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

127

--------------------------------------------------------------------------------

(c) Except as disclosed on the Parent’s Annual Report on Form 10-K as
promulgated by the SEC, or any successor form thereof, no Loan Party or ERISA
Affiliate maintains or is required to contribute to any plan which provides
health, accident, or life insurance benefits to former employees, their spouses
or dependents, other than in accordance with Code Section 4980B.

9.1.20. Labor Relations. Except as described on Schedule 9.1.20, as of the
Closing Date, no Loan Party or Subsidiary is party to or bound by any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or other organization of any Loan Party’s or
Restricted Subsidiary’s employees, or, to any Loan Party’s knowledge, any
asserted or threatened strikes, work stoppages or demands for collective
bargaining within the last five (5) years, except as could not be expected to
have a Material Adverse Effect.

9.1.21. Investment Company Act. No Borrower is an “investment company” within
the meaning of the Investment Company Act of 1940.

9.1.22. Margin Stock. No Loan Party nor any of its Restricted Subsidiaries is
engaged, principally or as one of its important activities, in the business of
purchasing or carrying any Margin Stock (within the meaning of Regulation U).

9.1.23. Inactive Subsidiaries. No Inactive Subsidiary (i) owns or holds any
material assets, (ii) has any material liabilities, and (iii) conducts any
business operations, and will not do any of the foregoing after the Closing Date
without the prior written consent of Agent.

9.1.24. Centre of Main Interests and Establishments. For the purposes of the
Insolvency Regulation, each of the Dutch Domiciled Loan Parties’ centre of main
interest (as that term is used in Article 3(1) of the Insolvency Regulation) is
situated in its jurisdiction of incorporation and none of them have an
“establishment” (as that term is used in Article 2(h) of the Insolvency
Regulation) in any other jurisdiction.

9.1.25. Pari Passu Ranking. Each Dutch Borrower’s payment obligations under the
Loan Documents rank at least pari passu under the laws of the Netherlands or
other applicable jurisdictions with the claims of all its other unsecured and
unsubordinated creditors, except for obligations mandatorily preferred by law
applying to companies generally.

9.1.26. Ranking. Each Foreign Security Agreement has or will have the ranking in
priority which it is expressed to have in the relevant Security Document and,
other than as permitted under or contemplated by the Loan Documents, it is not
subject to any prior ranking or pari passu ranking Lien.

9.1.27. OFAC. No Loan Party (a) is a Person whose Property or interest in
Property is blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)), (b) engages in any dealings or transactions prohibited by
Section 2 of such executive order, or is otherwise associated with any such
Person in any manner violative of Section 2, or (c) is a Person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.

9.1.28. Patriot Act. Each Loan Party is in compliance, in all material respects,
with (a) the Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) and any other enabling

 

128

--------------------------------------------------------------------------------

legislation or executive order relating thereto, and (b) the Uniting And
Strengthening America By Providing Appropriate Tools Required To Intercept And
Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the
Loans will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

9.1.29. Eligible Inventory. As to each item of Inventory that is identified as
Eligible Inventory in a Borrowing Base Certificate submitted to the Agent, as of
the date of such Borrowing Base Certificate, such Inventory is (a) to the
knowledge of the Loan Parties, of good and merchantable quality, free from known
defects, and (b) to the knowledge of the Loan Parties, not excluded as
ineligible by virtue of one or more of the excluding criteria (other than any
such criteria requiring Agent’s discretion) set forth in the relevant
definitions of Eligible Inventory (and in the case of U.S. Eligible In-Transit
Inventory or Dutch Kraton Eligible In-Transit Inventory, as applicable, after
giving effect to any exclusions therefrom specified in the related definitions
therefor).

9.2. Complete Disclosure. The factual information and data (taken as a whole)
furnished by or on behalf of the Parent or its Subsidiaries in writing to the
Agent and/or any Lender (including information and data included in the Loan
Documents) in connection with the Transactions does not contain any material
misstatement of fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were or
are made, not misleading as of the date any such information and data was
furnished and as updated from time to time, it being understood and agreed that
for purposes of this Section 9.2, such information and data shall not include
any financial information forecast or projection.

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

10.1. Affirmative Covenants. The Loan Parties, jointly and severally, hereby
covenant and agree that on the Closing Date and thereafter until the Commitments
have terminated and Full Payment of all Obligations has occurred:

10.1.1. Inspections; Field Examinations and Appraisals.

(a) The Loan Parties will permit the Agent (including, without limitation, the
Agent’s employees, agents and designated representatives) from time to time at
the Loan Parties’ reasonable expense, subject (except when a Default or Event of
Default exists) to reasonable advance notice and at such reasonable times during
normal business hours, to visit and inspect the Properties of any Loan Party,
inspect, audit and make extracts from any Loan Party’s books and records, and
discuss with its officers, employees, agents, advisors and independent
accountants such Loan Party’s business, financial condition, assets, prospects
and results of operations; provided that, excluding any such visits and
inspections during the continuation of an Event of Default, only the Agent, on
behalf of the Lenders may exercise rights of the Agent and the Lenders under
this Section 10.1.1(a) and the Agent shall not exercise such rights more often
than two (2) times during any calendar year absent the existence of an Event of
Default and only one (1) such time shall be at the Parent’s expense; provided
further that when an Event of Default exists, the Agent or any Lender (or any of
their respective representatives or independent contractors) may do any of the
foregoing at the expense of the Parent at any time during normal business hours
and upon reasonable advance notice. Notwithstanding the foregoing, nothing
contained herein shall prohibit the Agent or any Lender from exercising such
inspection rights more often at their own expense; provided however that any
such additional inspections must be during normal business hours and upon
reasonable advance notice. Neither the Agent nor any Lender shall have any

 

129

--------------------------------------------------------------------------------

duty to any Loan Party to make any inspection, nor to share any results of any
inspection, appraisal or report with any Loan Party. Loan Parties acknowledge
that all inspections, appraisals and reports are prepared by the Agent and
Lenders for their purposes, and Loan Parties shall not be entitled to rely upon
them.

(b) The Borrowers will permit Agent (including the Agent’s employees, agents and
designated representatives reasonably acceptable to Parent) to conduct, and will
reimburse the Agent for all reasonable and documented charges, costs and
expenses of the Agent in connection with (i) examinations of any Loan Party’s
books and records or any other financial or Collateral matters as the Agent
deems appropriate; and (ii) appraisals of Inventory; provided, however, that if
no Default or Event of Default shall have occurred and be continuing, only one
such appraisal and one such examination per Fiscal Year shall be conducted at
the Borrowers’ expense (exclusive of any appraisals and field examinations
conducted pursuant to Section 10.1.9); provided, further, that during an
Enhanced Reporting Trigger, one additional appraisal and one additional
examination per Fiscal Year may be conducted at the Borrowers’ expense
(exclusive of any appraisals and field examinations conducted pursuant to
Section 10.1.9); provided, further, that after an Increased Reporting Trigger, a
total of up to three (3) such examinations per Fiscal Year may be conducted at
the Borrowers’ expense (exclusive of any appraisals and field examinations
conducted pursuant to Section 10.1.9). The foregoing shall not limit the Agent’s
ability to perform additional appraisals or examinations at the sole expense of
the Borrowers upon the occurrence and continuance of a Default or Event of
Default (or if a Default or Event of Default was in existence at the time such
appraisal or examination was initiated). Subject to the limitations set forth
herein, Borrowers agree to pay the Agent’s then standard charges for examination
and appraisal activities, including the standard charges of the Agent’s internal
examination and appraisal groups, as well as the reasonable and documented
charges of any third party used for such purposes. Regardless of the limitations
set forth above, the Added U.S. Borrower Field Exam and Inventory Appraisal will
not be subject to limitations set forth above nor count toward the appraisals
and examination limits set forth above. Notwithstanding anything to the contrary
in this Section 10.1.1, none of the Parent or any of the Restricted Subsidiaries
will be required to disclose, permit the inspection, examination or making
copies or abstracts of, or discussion of, any document, information or other
matter that (i) in respect of which disclosure to the Agent or any Lender (or
their respective representatives or contractors) is prohibited by Applicable Law
or any binding agreement or (ii) is subject to attorney-client or similar
privilege or constitutes attorney work product.

10.1.2. Financial and Other Information. Each Loan Party will, and will cause
its Restricted Subsidiaries to, keep adequate records and books of account with
respect to its business activities, in which proper entries are made in
accordance with GAAP reflecting all financial transactions; and will furnish to
the Agent and Lenders:

(a) as soon as available and in any event on or before the date on which such
financial statements are required to be filed with the SEC (or, if such
financial statements are not required to be filed with the SEC, on or before the
date that is ninety (90) days after the end of each such Fiscal Year), the
consolidated balance sheet of Parent and its Restricted Subsidiaries as of the
end of such Fiscal Year and the related consolidated statements of income, cash
flow and shareholders’ equity for such Fiscal Year, on a consolidated basis for
Parent and its Restricted Subsidiaries, which consolidated statements shall be
audited and certified (without qualification other than a qualification with
respect to Debt under this Agreement becoming due and payable by its terms
within one year of such opinion with regard to the opinion for Fiscal Year 2019)
by a firm of independent certified public accountants of recognized standing
selected by Parent and acceptable to the Agent, and shall set forth in
comparative form corresponding figures for the preceding Fiscal Year and other
information acceptable to the Agent;

 

130

--------------------------------------------------------------------------------

(b) as soon as available, and in any event within forty-five (45) days (or
ninety (90) days, for the Fiscal Quarter Ending December 31st) after the end of
each of the first three Fiscal Quarters of Parent, an unaudited balance sheet as
of the end of such Fiscal Quarter and the related statements of income and cash
flow for such Fiscal Quarter and for the portion of the Fiscal Year then
elapsed, on a consolidated basis for Parent and its Restricted Subsidiaries,
setting forth in comparative form corresponding figures for the preceding Fiscal
Year and certified by the chief financial officer of Parent as prepared in
accordance with GAAP and fairly presenting the financial position and results of
operations for such Fiscal Quarter and period, subject to normal year-end
adjustments and the absence of footnotes;

(c) as soon as available, and in any event within thirty (30) days after the end
of each month (other than the third, sixth, ninth and last months of each Fiscal
Year), consolidated management unaudited financial statements consisting of a
balance sheet, income statement and cash flows without footnotes as of the end
of such month and for the portion of the Fiscal Year then elapsed, for Parent
and its Subsidiaries, setting forth in comparative form corresponding figures
for the preceding Fiscal Year which financial statements are not required to be
in conformity with GAAP;

(d) concurrently with delivery of financial statements under clauses (a) and
(b) above, a Compliance Certificate executed by a Senior Officer of the North
American Loan Party Agent;

(e) [Reserved];

(f) not later than ninety (90) days after the beginning of each Fiscal Year,
projections of Parent’s and its Restricted Subsidiaries consolidated balance
sheets, results of operations, cash flow, budgets and Availability for the next
Fiscal Year, month by month;

(g) promptly after the sending or filing thereof, copies of any regular,
periodic and special reports or registration statements or prospectuses that
Parent or any Restricted Subsidiary files with the SEC or any other Governmental
Authority, or any securities exchange (it being agreed by the parties hereto
filings of a Form 10-K or 10-Q as promulgated by the SEC and in accordance with
Applicable Laws will satisfy the requirements of Sections 10.1.2(a) and
10.1.2(b), respectively, if filed with the SEC in the time periods for each set
forth therein);

(h) promptly after the sending or filing thereof, copies of any annual
information report (including all actuarial reports and other schedules and
attachments thereto) required to be filed with a Governmental Authority in
connection with each U.S. Employee Plan or any Foreign Plan that is required by
Applicable Law to be funded; promptly upon receipt, copies of any notice,
demand, inquiry or subpoena received in connection with any U.S. Employee Plan
from a Governmental Authority (other than routine inquiries in the course of
application for a favorable IRS determination letter); and at the Agent’s
request, copies of any annual report required to be filed with a Governmental
Authority in connection with any other U.S. Employee Plan; and

(i) such other reports and information (financial or otherwise) as the Agent may
reasonably request from time to time in connection with any Collateral or
Parent’s, any Loan Party’s or any Restricted Subsidiary’s financial condition or
business.

10.1.3. Notices. The Loan Parties will notify the Agent in writing, promptly
after a Loan Party’s obtaining knowledge thereof, of any of the following that
affects a Loan Party: (a) the threat or commencement of any proceeding, lawsuit
or investigation, whether or not covered by insurance that could reasonably be
expected to have a Material Adverse Effect; (b) any pending or threatened labor
dispute, strike or walkout, or the expiration of any material labor contract;
(c) any default under or termination of a Material Contract that has not been
cured; (d) the existence of any Default or Event of

 

131

--------------------------------------------------------------------------------

Default; (e) any judgment in an amount exceeding $5,000,000; (f) any violation
or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any
Environmental Laws), that could reasonably be expected to have a Material
Adverse Effect; (g) any default notices received under or with respect to any
material leased location or material public warehouse or storage yard where
Collateral is located; (h) any opening of a new office holding Eligible
Inventory in an amount exceeding $2,000,000 in Value at the time of delivery of
the next Borrowing Base Certificate; and (i) any casualty or other physical loss
of Collateral with a fair market value of $10,000,000 or more.

10.1.4. Landlord and Storage Agreements. Each Loan Party will, upon reasonable
request of the Agent, provide the Agent with copies of all existing agreements,
and upon Agent’s reasonable request, provide the Agent with copies of all future
agreements, between such Loan Party and any landlord, warehouseman, processor,
shipper, bailee or other Person that owns any premises at which any Collateral
may be kept or that otherwise may possess or handle any Collateral.

10.1.5. Compliance with Laws. Each Loan Party will, and will cause each of its
Restricted Subsidiaries to, comply with all Applicable Laws, including ERISA,
Environmental Laws, OSHA, Anti-Terrorism Laws (in each case to the extent
applicable), and laws regarding collection and payment of Taxes, and maintain
all Governmental Approvals necessary to the ownership of its Properties or
conduct of its business, unless (a) such requirement of Applicable Law is being
Properly Contested or (b) failure to comply (other than failure to comply with
Anti-Terrorism Laws) or maintain could not reasonably be expected to have a
Material Adverse Effect. Without limiting the generality of the foregoing, if
any Environmental Release occurs at or on any Properties of any Loan Party or
Restricted Subsidiary, it shall act promptly and diligently to investigate and
report to all appropriate Governmental Authorities (and in the case of a
material Environmental Release, the Agent) the extent of, and to take
appropriate remedial action to eliminate, such Environmental Release to the
extent required by Environmental Laws, whether or not directed to do so by any
Governmental Authority.

10.1.6. Taxes. Each Loan Party will, and will cause each of its Restricted
Subsidiaries to, pay and discharge all material Taxes prior to the date on which
they become delinquent or penalties attach, unless such Taxes are being Properly
Contested.

10.1.7. Insurance. Each Loan Party will, and will cause its Restricted
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies or reinsurance with respect to any captive insurance, in
each case with respect to the Properties and business of Loan Parties and
Restricted Subsidiaries of such type (including business interruption, product
liability, workers’ compensation and casualty), in such amounts, and with such
coverages and deductibles as are customary for companies similarly situated, as
to insurance covering Collateral, will cause to be delivered to the Collateral
Agent or the Security Trustee, as applicable, (a) certificates of insurance
evidencing the existence of insurance to be maintained by the Loan Parties
pursuant to this Section 10.1.7, (b) an additional insured endorsement with
respect to the Loan Parties’ liability insurance with a coverage amount in
excess of $10,000,000 naming Collateral Agent or Security Trustee, as applicable
as an additional insured thereunder, and (c) lender loss payable endorsement
naming Collateral Agent or Security Trustee, as applicable, as lender loss payee
with respect to Loan Parties’ casualty insurance with a coverage amount in
excess of $10,000,000, in each case, in the form and substance reasonably
satisfactory to the Collateral Agent and Security Trustee.

10.1.8. Licenses. Each Loan Party will, and will cause each of its Restricted
Subsidiaries to, keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) of such Loan Party or its
Restricted Subsidiaries in full force and effect; (other than the expiration or
termination of Licenses in the Ordinary Course of Business that do not
materially adversely affect the manufacture, distribution or disposition of
Inventory) and pay all Royalties when due with respect thereto except to the
extent being contested by appropriate proceedings and for which adequate
reserves have been set aside.

 

132

--------------------------------------------------------------------------------

10.1.9. Additional Loan Parties. (a) Any Subsidiary (other than Arizona Chemical
B.V. which is covered below by clause (b) of this Section 10.1.9) may, at the
election of the North American Loan Party Agent or the Foreign Loan Party Agent,
as applicable, become a Borrower hereunder within the applicable Borrower Group
for its jurisdiction of organization (and if its jurisdiction of organization is
the Netherlands, as a Dutch Borrower) upon (i) the execution and delivery to the
Agent and/or Security Trustees (A) by such Subsidiary of a supplement or joinder
to this Agreement, substantially in the form of Exhibit G, (B) by such
Subsidiary of Security Documents in form and substance reasonably satisfactory
to the Agent and the relevant Security Trustee as may be required for the
relevant jurisdiction; provided that any such new Security Document shall be in
substantially the same form as the comparable Security Documents to which the
existing Loan Parties of the Loan Party Group of the New Loan Party (if any) are
party, (C) by a Senior Officer of the applicable Loan Party Agent for such
Subsidiary of a (i) Borrowing Base Certificate for such Subsidiary effective as
of not more than sixty (60) days preceding the date on which such Subsidiary
becomes a Foreign Borrower and (B) written notice of such Subsidiary’s
Applicable Foreign Borrower Commitment and (D) by such Subsidiary of a
certificate (including delivery of related attachments) of the type described in
Section 6.1(g) and such other documents, instruments and agreements as Agent may
reasonably require, and (ii) the completion of the Agent’s and each applicable
Lender’s due diligence to its reasonable satisfaction and of compliance
procedures for applicable “know your customer” and anti-money laundering rules;
provided that, prior to permitting such Subsidiary to borrow any Revolver Loans
or obtain the issuance of any Letters of Credit hereunder, the Agent, in its
discretion, shall have the right to conduct an appraisal and field examination
with respect to such Subsidiary, including, without limitation, of (x) such
Subsidiary’s practices in the computation of its Borrowing Base and (y) the
assets included in such Subsidiary’s Borrowing Base and related financial
information such as, but not limited to, sales, gross margins, payables,
accruals and reserves, in each case, prepared on a basis reasonably satisfactory
to the Agent and at the sole expense of such Subsidiary, and (b) Arizona
Chemical B.V. may, at the election of Foreign Loan Party Agent and pursuant to
the documentation and conditions precedent hereinafter specified (A) become a
Dutch Borrower hereunder and be its own Borrower Group and have its own Foreign
Revolver Commitment, separate from the Dutch Kraton Revolver Commitment, in the
amount specified in writing to Agent (provided that such Foreign Revolver
Commitment as to Arizona Chemical B.V. shall not increase the then aggregate
amount of the Commitments and the U.S. Revolver Commitments must equal at least
60% of the aggregate Commitments) and have its own Borrowing Base, separate from
the Dutch Kraton Borrowing Base, provided that the components of and advance
rates relating to the Arizona Chemical B.V. Borrowing Base, including
eligibility provisions as to Accounts and Inventory, relevant Eligible Account
Debtor Jurisdictions and relevant Perfection Jurisdictions, shall be
substantially the same as those relating to the Dutch Kraton Borrowing Base, and
be subject to the increase in Revolver Commitments and reallocation in Revolver
Commitments described in Section 2.1.7 hereof, upon (i) the execution and
delivery to the Agent and/or Security Trustees (A) by Arizona Chemical B.V., the
Loan Parties and Agent of a joinder-amendment agreement substantially in the
form of Exhibit K to this Agreement (and each Lender hereby consents to the
amendments to this Agreement contemplated in Exhibit K and each Lender hereby
authorizes Agent to execute such a joinder–amendment agreement on behalf of
Lenders), (B) by Arizona Chemical B.V. of (1) a Dutch share pledge, (2) a Dutch
omnibus pledge agreement (covering the pledge of bank account rights, moveables
and receivables), and (3) a completed Perfection Certificate, executed and
delivered by a Senior Officer of Arizona Chemical B.V., together with all
attachments contemplated thereby, in each case in form and substance reasonably
satisfactory to the Agent and the relevant Security Trustee as may be required
for the relevant jurisdiction; provided that any such new documents shall be in
substantially the same form as the comparable documents to which Initial Dutch
Kraton Borrower is party (but subject to such changes as shall be reasonably
required by Agent’s foreign counsel), (C) by a Senior Officer of the Foreign
Loan Party Agent

 

133

--------------------------------------------------------------------------------

for Arizona Chemical B.V. of a (1) Borrowing Base Certificate for Arizona
Chemical B.V. effective as of the date on which Arizona Chemical B.V. becomes a
Foreign Borrower and (2) written notice of Arizona Chemical B.V.’s Applicable
Foreign Borrower Commitment and (D) by Arizona Chemical B.V. of a certificate
(including delivery of related attachments) of the type described in
Section 6.1(g) and such other documents, instruments and agreements as Agent may
reasonably require, and (ii) the completion of the Agent’s and each Lender’s
compliance procedures for applicable “know your customer” and anti-money
laundering rules; provided that, prior to permitting Arizona Chemical B.V. to
borrow any Revolver Loans or obtain the issuance of any Letters of Credit
hereunder, the Agent shall have conducted an appraisal and field examination
with respect to Arizona Chemical B.V., including, without limitation, of
(A) Arizona Chemical B.V.’s practices in the computation of its Borrowing Base
and (B) the assets included in such Borrowing Base and related financial
information such as, but not limited to, sales, gross margins, payables,
accruals and reserves, in each case, prepared on a basis reasonably satisfactory
to the Agent and at the sole expense of Arizona Chemical B.V., and (iii) the
Agent shall have received satisfactory opinions of Dutch counsel (and, if
reasonably required and requested by Agent, of French, English, Belgian, and
German counsel) to Arizona Chemical B.V. or the Agent, in each case, customary
for transactions of this type (which shall cover, among other thing, authority,
validity, binding effect and enforceability of the Loan Documents to which it is
a party and the creation and perfection of Liens in the Collateral).

10.1.10. ERISA. The North American Loan Party Agent will deliver to each Lender
(i) promptly upon becoming aware of the occurrence of any ERISA Event a written
notice signed by a Senior Officer of the North American Loan Party Agent
specifying the nature thereof, what action the Loan Party or the ERISA Affiliate
is taking or proposes to take with respect thereto, and, when known, any action
taken or proposed by the IRS, the Department of Labor, the PBGC or other
Governmental Authority with respect thereto, and (ii) promptly upon receipt
thereof, copies of any notice of the PBGC’s intention to terminate or to have a
trustee appointed to administer any U.S. Employee Plan or Multiemployer Plan.
The Loan Parties will timely pay an amount at least equal to the quarterly
minimum funding requirement in accordance with Applicable Law and the IRS, the
Department of Labor, the PBGC or other applicable Governmental Authority with
respect thereto.

10.1.11. Dutch Pension Plans. Each Dutch Borrower will comply with all laws and
regulations in respect of all its pension liabilities.

10.1.12. Use of Proceeds. The Borrowers will use the proceeds of all Revolver
Loans solely (a) to refinance the Existing Credit Agreement; (b) to pay fees and
transaction expenses associated with the Transactions; (c) to issue Letters of
Credit; (d) to finance Capital Expenditures and ongoing working capital needs;
and (e) for other lawful corporate purposes of the Loan Parties and their
Subsidiaries permitted hereunder. Without limiting the foregoing, to the extent
the Mohawk Availability Reserve has been instituted and is continuing and, after
the establishment of such Mohawk Availability Reserve a U.S. Revolver Loan has
been advanced to the U.S. Borrowers, then the U.S. Borrowers shall, no later
than three (3) Business Days after the making of such U.S. Revolver Loan, use
the proceeds of such U.S. Revolver Loan to satisfy the Mohawk Final Judgment
(together with any related court recording charges).

10.1.13. Preservation of Existence. Each Loan Party will do, and will cause each
Restricted Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its legal existence, corporate rights
and authority under the Applicable Law of the jurisdiction of its organization;
provided, however, that any Loan Party and its Restricted Subsidiaries may
consummate any transaction permitted under Section 10.2.5 and 10.2.8.

 

134

--------------------------------------------------------------------------------

10.1.14. Maintenance of Properties. Each Loan Party will, and will cause each
Restricted Subsidiary to, keep and maintain all property material to the conduct
of its business in good working order and condition, subject to ordinary wear
and tear, casualty and condemnation, and except to the extent that the failure
to do so could not reasonably be expected to have a Material Adverse Effect.

10.1.15. Payment of Obligations. Each Loan Party will, and will cause each
Restricted Subsidiary to, pay or discharge all Material Debt and all other
material liabilities and obligations, before the same shall become delinquent or
in default, except where the validity or amount thereof is being Properly
Contested.

10.1.16. Material Contracts. Each Loan Party will, and will cause each
Restricted Subsidiary to, comply in all respects with each term, condition and
provision of all Material Contracts, except as could not reasonably be expected
to have a Material Adverse Effect.

10.1.17. Designations with Respect to Subsidiary.

(a) Subject to clause (c) below, any Subsidiary of Parent that is formed or
acquired after the Closing Date shall be deemed a Restricted Subsidiary unless
at such time (or promptly thereafter) the North American Loan Party Agent
designates such Subsidiary an Unrestricted Subsidiary in a written notice to the
Agent.

(b) Subject to clause (c) below, the North American Loan Party Agent may
designate any Restricted Subsidiary (other than a Borrower or any parent company
of a Borrower) as an Unrestricted Subsidiary by a written notice to the Agent.

(c) Neither the Parent nor any Restricted Subsidiary may form or acquire any new
Unrestricted Subsidiary after the Closing Date, nor may the North American Loan
Party Agent designate any existing Restricted Subsidiary as an Unrestricted
Subsidiary, unless each of the following conditions is satisfied in connection
with such acquisition or formation or such designation (as applicable):

(i) any Investment in such Unrestricted Subsidiary is permitted under
Section 10.2.4(u);

(ii) except as permitted by Section 10.2.15, the Subsidiary being formed,
acquired or designated as an Unrestricted Subsidiary, as applicable, is not a
party to any agreement, contract, arrangement or understanding with Parent or
any Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to Parent or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of Parent;

(iii) the Subsidiary being formed, acquired or designated as an Unrestricted
Subsidiary, as applicable, is a Person with respect to which none of the Parent
or any of the Restricted Subsidiaries has any direct or indirect obligation
(A) to subscribe for additional Equity Interests or (B) to maintain or preserve
such Person’s financial condition or to cause such Person to achieve any
specified levels of operating results; and

(iv) No Default or Event of Default shall result and be continuing from such
acquisition, formation or designation (as applicable).

(d) Any designation or re-designation of a Subsidiary as an Unrestricted
Subsidiary shall be deemed to be an Investment on the date of such designation
or re-designation in an Unrestricted Subsidiary in an amount equal to the Fair
Market Value of the outstanding Investments of Parent and the Restricted
Subsidiaries in such Unrestricted Subsidiary.

 

135

--------------------------------------------------------------------------------

(e) The North American Loan Party Agent may designate any Unrestricted
Subsidiary as a Restricted Subsidiary by a written notice to the Agent, provided
that no Default or Event of Default would result from such designation. An
Unrestricted Subsidiary which has been re-designated as a Restricted Subsidiary
may not be subsequently redesignated as an Unrestricted Subsidiary. The
designation of an Unrestricted Subsidiary as a Restricted Subsidiary shall
constitute the incurrence at the time of designation of any Debt or Liens of
such Subsidiary existing at such time.

(f) All “Unrestricted Subsidiaries” designated in this Agreement and under the
applicable provisions of the Term Loan Agreement must be the same persons.

(g) All “Unrestricted Subsidiaries” designated under this Agreement and under
the applicable provisions of the Senior Notes Indenture must be the same
Persons.

10.1.18. Post-Closing. Each Loan Party will, and will cause each Restricted
Subsidiary to, complete each of the actions applicable to it that is described
in Schedule 10.1.18 as soon as commercially reasonable, but in any event no
later than the date set forth in Schedule 10.1.18 with respect to such action,
or such later date as the Agent may agree.

10.2. Negative Covenants. The Loan Parties, jointly and severally, hereby
covenant and agree that on the Closing Date and thereafter until the Commitments
have terminated and Full Payment of all Obligations has occurred:

10.2.1. Permitted Debt. The Loan Parties will not, and will not permit any of
the Restricted Subsidiaries to, create, incur, guarantee or suffer to exist any
Debt, except:

(a) the Obligations;

(b) Guarantees by a Borrower of Debt of a Loan Party to the extent such Debt is
otherwise permitted by the provisions of this Agreement;

(c) Debt existing on the date hereof and set forth in Schedule 10.2.1(c) and any
Refinancing Debt in respect thereof, so long as each Refinancing Conditions is
satisfied;

(d) Permitted Purchase Money Debt;

(e) (i) Debt arising under Capital Leases entered into in connection with sale
and leaseback transactions permitted by Section 10.2.6 and (ii) Debt arising
under Capital Leases other than those entered into pursuant to subclause (i) of
this clause (e) or those existing on the date hereof and, in each case, any
Refinancing Debt thereof, so long as each Refinancing Conditions is satisfied;
provided that the aggregate principal amount of Debt at any one time outstanding
pursuant to this clause (e) shall not exceed the greater of $150,000,000 and 5%
of Consolidated Total Assets;

(f) Permitted Contingent Obligations;

(g) without duplication, Refinancing Debt as long as each Refinancing Condition
is satisfied;

 

136

--------------------------------------------------------------------------------

(h) Debt of any Loan Party and any Restricted Subsidiary to any other Loan Party
or Restricted Subsidiary; provided that (i) all such Debt of any Loan Party owed
to any other Loan Party shall be evidenced by the Global Intercompany Note
except as otherwise set forth on Schedule 10.2.1(h), (ii) all such Debt of any
Loan Party to any Restricted Subsidiary which is not a Loan Party shall be
Subordinated Debt, (iii) all such Debt of a Restricted Subsidiary that is not a
Loan Party owed to any Loan Party shall be evidenced by a promissory note (which
may be the Global Intercompany Note) pledged to the Agent or a Security Trustee
except as otherwise set forth on Schedule 10.2.1(h) and (iv) such Debt is
permitted by Section 10.2.4;

(i) the Term Debt, subject to the limitations, if any, set forth in the ABL
Intercreditor Agreement and any Refinancing Debt in respect thereof, so long as
each Refinancing Conditions is satisfied;

(j) Debt with respect to Bank Products incurred in the Ordinary Course of
Business, including Debt arising from time to time by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds, but only to the extent such Debt on account of a check,
draft or similar instrument drawn against insufficient funds is repaid within
three (3) Business Days;

(k) Contingent Obligations by any Loan Party or Restricted Subsidiary of Debt of
any other Loan Party or Restricted Subsidiary that was permitted to be incurred
under another clause of this Section 10.2.1 (both as to the obligor thereunder
and as if the guarantor had incurred such Debt directly); provided that if the
Debt being guaranteed is subordinated to or pari passu with the Obligations,
then the guarantee shall be subordinated or pari passu, as applicable, to the
same extent as the Debt guaranteed;

(l) Debt constituting reimbursement obligations with respect to letters of
credit, performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations, in each case provided in the Ordinary Course of Business and any
Refinancing Debt in respect thereof, so long as each Refinancing Conditions is
satisfied;

(m) Debt owed to any Person providing workers’ compensation, health, disability
or other employee benefits or property, casualty or liability insurance,
pursuant to reimbursement or indemnification obligations to such Person or
insurance premium financing provided by such Person, in each case incurred in
the Ordinary Course of Business;

(n) Debt (other than the Foreign Facility Obligations) of Foreign Subsidiaries
in an aggregate principal amount not to exceed the greater of $100,000,000 and
5% of Consolidated Total Assets at any time outstanding, and any Refinancing
Debt in respect thereof, so long as each Refinancing Conditions is satisfied;

(o) Debt in connection with the repurchase, redemption or other acquisition or
retirement of Equity Interests held by any current or former officer, director
or employee of a Loan Party or a Restricted Subsidiary; provided that such
repurchase, redemption or other acquisition or retirement is permitted by
Section 10.2.3, and any Refinancing Debt in respect thereof, so long as each
Refinancing Conditions is satisfied;

(p) Debt of Persons that are acquired by the Parent or a Restricted Subsidiary
or merged into the Parent or a Restricted Subsidiary as part of a Permitted
Acquisition in an aggregate principal amount, not to exceed the greater of
$150,000,000 and 5% of Consolidated Total Assets at any time outstanding;
provided that (i) such Debt exists at the time such Person becomes a Subsidiary
or is merged into the Parent or a Restricted Subsidiary and is not created in
contemplation of or in connection with such merger or such Person becoming a
Subsidiary and (ii) no other Loan Party becomes liable for any such Debt;

 

137

--------------------------------------------------------------------------------

(q) Debt arising from agreements providing for indemnification, adjustment of
purchase price, earnout or other similar obligations, in each case, incurred or
assumed in connection with the acquisition or disposition of any business,
assets or a Restricted Subsidiary, other than guarantees of Debt incurred by any
Person acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition;

(r) all premiums (if any), fees, expenses, charges and interest on Debt incurred
in compliance with this Section 10.2.1;

(s) Debt and any guarantees thereof with respect to the HSBC Asian Production
Facility not to exceed $200,000,000 at any time outstanding;

(t) Debt of Restricted Subsidiaries that are not Loan Parties arising under
Hedge Agreements entered into in the Ordinary Course of Business;

(u) to the extent not included in any of the other clauses of this
Section 10.2.1, unsecured Debt and guarantees thereof permitted by the
provisions of the Term Loan Agreement, as such provisions are in effect as of
the Closing Date, and any Refinancing Debt in respect thereof, so long as each
Refinancing Conditions is satisfied;

(v) Third Party Bank Product Debt (excluding such Debt that is Secured Bank
Product Obligations), solely to the extent not secured in nature;

(w) earnest money deposits required in connection with a purchase agreement,
letter of intent, or other acquisitions to the extent not otherwise prohibited
by this Agreement;

(x) Debt in respect of any EXIM Program;

(y) Debt in respect of the Senior Notes and any Refinancing Debt in respect
thereof, so long as each Refinancing Conditions is satisfied;

(z) to the extent not included in any of the other clauses of this
Section 10.2.1, secured Debt and guarantees thereof permitted by the provisions
of the Term Loan Agreement, as such provisions are in effect as of the Closing
Date and any Refinancing Debt in respect thereof, so long as each of the
Refinancing Conditions is satisfied; provided, however, such Debt shall not be
secured by Liens against ABL Priority Collateral unless such Liens are
subordinated to the Liens of Agent in a manner and pursuant to documentation
satisfactory to Agent, including an intercreditor agreement on the same terms as
the ABL Intercreditor Agreement or otherwise in form and substance satisfactory
to the Agent, in its Permitted Discretion, and any Refinancing Debt in respect
thereof, so long as each Refinancing Conditions is satisfied; and

(aa) Debt that is not included in any of the preceding clauses of this
Section 10.2.1 in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding not to exceed the greater of $150,000,000
and 5.5% of Consolidated Total Assets.

 

138

--------------------------------------------------------------------------------

10.2.2. Permitted Liens. The Loan Parties will not, and will not permit any of
their Restricted Subsidiaries to, create or suffer to exist any Lien upon any of
its Property, except the following (collectively, “Permitted Liens”):

(a) Liens created pursuant to any Credit Documents;

(b) [Reserved];

(c) Liens in favor of a Loan Party or any Restricted Subsidiary;

(d) Liens on Property of a Person existing at the time such Person is merged
with or into or consolidated with the Parent or any Restricted Subsidiary of
Parent and securing Debt permitted under Section 10.2.1(p); provided that such
Liens were in existence prior to the contemplation of, and were not incurred in
contemplation of, such merger or consolidation and do not extend to any assets
other than those the Person merged into or consolidated with the Parent or the
Restricted Subsidiary;

(e) Liens on Property existing at the time of acquisition of the Property by the
Parent or any Restricted Subsidiary of Parent and securing Debt permitted under
Section 10.2.1(p); provided that such Liens were in existence prior to, and were
not incurred in contemplation of, such acquisition;

(f) Liens in respect of performance bonds, surety bonds or like obligations in
respect of performance guarantees or similar commitments of the Parent or
Restricted Subsidiaries in the Ordinary Course of Business;

(g) Purchase Money Liens securing Permitted Purchase Money Debt;

(h) any Lien on any Property of any Loan Party or Restricted Subsidiary existing
on the date hereof that is not otherwise permitted by this Section 10.2.2 and
set forth in Schedule 10.2.2; provided that (i) such Lien shall not apply to any
other Property of such Loan Party or Restricted Subsidiary (or Property of any
other Loan Party or Restricted Subsidiary) after the date hereof and (ii) such
Lien shall secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof and is otherwise permitted under
Section 10.2.1(g);

(i) Liens for Taxes not yet due or being Properly Contested;

(j) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising
in the Ordinary Course of Business (including carriers’, warehousemen’s,
mechanic’s, materialman’s, repairmen’s and other like Liens imposed by law), but
only if payment of the obligations secured thereby is not yet due or is being
Properly Contested;

(k) easements, rights-of-way, restrictions, covenants or other agreements of
record, and other similar charges or encumbrances on Real Estate, that do not
secure any monetary obligation and do not interfere with the Ordinary Course of
Business and, with respect to any Real Estate located in Canada, the
qualifications, limitations, reservations and provisos contained in the original
grant from the Crown, as varied by statutes;

(l) Liens arising by virtue of a judgment or judicial order against any Loan
Party or Restricted Subsidiary, or any Property of a Loan Party or Restricted
Subsidiary, not giving rise to an Event of Default;

 

139

--------------------------------------------------------------------------------

(m) Liens upon specific items of Inventory or other goods and proceeds of the
Parent or any Restricted Subsidiary securing such Person’s obligations in
respect of bankers’ acceptances and trade letters of credit issued or created
for the account of such Person to facilitate the purchase, shipment or storage
of such Inventory or other goods;

(n) Liens on the Properties (other than Collateral) of Foreign Subsidiaries
securing Debt of such Foreign Subsidiaries permitted to be incurred pursuant to
Section 10.2.1(n) provided that such Liens do not attach to any Collateral
unless the Agent in its discretion obtains a satisfactory intercreditor
agreement with respect thereto;

(o) any provision for the retention of title to an asset by the vendor or
transferor of such asset (including any lessor) which asset is acquired by the
Parent or a Restricted Subsidiary in a transaction entered into in the Ordinary
Course of Business;

(p) any extension, renewal or replacement in whole or in part of any Lien
described in clauses (d), (e), (f), (g), or (h); provided that (i) any such
extension, renewal or replacement is no more restrictive in any material respect
than the Lien so extended, renewed or replaced and does not extend to any
additional Property and (ii) the Debt secured by such Lien at such time is not
increased to any amount greater than the outstanding principal amount of the
Debt described under such clauses (d), (e), (f), (g), or (h) at such time the
original Lien became a Permitted Lien;

(q) leases, licenses, subleases or sublicenses (including with respect to
Intellectual Property) granted to others in the Ordinary Course of Business that
do not (i) interfere in any material respect with the business of the Parent or
the Restricted Subsidiaries or (ii) secure any Debt;

(r) Liens (i) of a collection bank arising under Section 4-210 of the UCC on
items in the course of collection, and (ii) that are contractual rights of
setoff (A) relating to the establishment of depository relations with banks not
given in connection with the issuance of Debt, (B) relating to sweep accounts of
the Parent or any Restricted Subsidiaries to permit satisfaction of overdraft or
similar obligations and other cash management activities incurred in the
Ordinary Course of Business or (C) relating to purchase orders and other
agreements entered into with customers of the Parent or any Restricted
Subsidiaries in the Ordinary Course of Business;

(s) Liens arising from UCC financing statements filed regarding (i) operating
leases entered into by the Parent or a Restricted Subsidiary in the Ordinary
Course of Business and (ii) goods consigned or entrusted to or bailed to a
Person in connection with the processing, reprocessing, recycling or tolling of
such goods;

(t) Liens encumbering customary initial deposits and margin deposits and similar
liens attaching to brokerage accounts incurred in the Ordinary Course of
Business and not for speculative purposes;

(u) Liens securing reimbursement obligations with respect to letters of credit
or bankers’ acceptances issued in the Ordinary Course of Business or pledges and
deposits in respect of workers’ compensation claims, health, disability or other
employee benefits or property, casualty or liability insurance or self-insurance
or other similar reimbursement-type obligations permitted under
Section 10.2.1(l) or (m) respectively; provided that upon the drawing of such
letters of credit or bankers’ acceptances such obligations are reimbursed and
extinguished within thirty (30) days following drawing;

(v) Liens in favor of customs or revenue authorities to secure payment of
customs duties in connection with the importation of goods;

 

140

--------------------------------------------------------------------------------

(w) Liens solely on any cash earnest money deposits made by the Parent or any
Restricted Subsidiary in connection with any letter of intent or purchase
agreement permitted under this Agreement;

(x) Liens on insurance policies and proceeds thereof, or other deposits, to
secure insurance premium financings or to secure liability to insurance
carriers;

(y) Liens on cash, cash equivalents or other Property arising in connection with
the defeasance, discharge or redemption of Debt otherwise permitted under this
Agreement;

(z) Liens constituting customary restrictions on assets pursuant to merger
agreements, stock or asset purchase agreements and similar agreements in respect
of the disposition of such assets otherwise permitted under this Agreement for
so long as such agreements are in effect;

(aa) Liens arising on any Real Estate as a result of eminent domain,
condemnation or similar proceedings against such Property;

(bb) any provisions in joint venture agreements, partnership agreements, limited
liability company operating agreements and other similar agreements which
(i) are customary or (ii) do not materially and adversely affect the Parent’s or
the Restricted Subsidiaries’ ability to make payments with respect to the
Obligations when due;

(cc) ground leases in respect of Real Estate on which facilities owned or leased
by Parent or any of its Restricted Subsidiaries are located;

(dd) Liens securing Hedge Agreements permitted hereunder that do not attach to
any Collateral;

(ee) Liens arising out of (i) Capital Leases permitted by Section 10.2.1(e)(ii)
and (ii) sale and leaseback transactions permitted by Section 10.2.6;

(ff) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 10.2.4;

(gg) Liens securing an EXIM Program; provided that such Liens with respect to
any Collateral are junior to the Lien of the Agent hereunder and are subject to
a subordination agreement satisfactory to the Agent;

(hh) Liens securing the Debt that is permitted under Section 10.2.1(i);

(ii) Liens securing the Debt that is permitted under Section 10.2.1(z), provided
that such Liens are at all times subject to the terms of an intercreditor
agreement on the same terms as the ABL Intercreditor Agreement or otherwise in
form and substance satisfactory to the Agent in its Permitted Discretion; and

(jj) Liens that are not included in any of the preceding clauses of this
Section 10.2.2 that do not attach to any Collateral securing Debt and other
obligations in an aggregate principal amount not to exceed the greater of
(x) 2.75% of Consolidated Total Assets and (y) $82,500,000 at any one time
outstanding; provided that, to the extent such Liens relate to Collateral, the
Agent, in its discretion, obtains a satisfactory intercreditor agreement with
respect thereto.

 

141

--------------------------------------------------------------------------------

10.2.3. Limitation on Distributions. The Loan Parties will not, and will not
permit any of their Restricted Subsidiaries to, declare or pay any Distributions
or redeem, retire, purchase or otherwise acquire, directly or indirectly, the
Equity Interests or Equity Interest Equivalents of any direct or indirect parent
now or hereafter outstanding, or set aside any funds for any of the foregoing
purposes, except:

(a) Parent or any Restricted Subsidiary may make Distributions payable solely in
their respective Equity Interests (other than Disqualified Equity Interests);

(b) Parent may make any Distribution (i) of Equity Interests (other than
Disqualified Equity Interests) in exchange for Equity Interests of Parent (other
than Disqualified Equity Interests) and (ii) out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of Parent) of Equity
Interests (other than Disqualified Equity Interests) or from the substantially
concurrent cash contributions of common equity capital to Parent;

(c) any Restricted Subsidiary of Parent may pay any dividend (or in the case of
any partnership or limited liability company, any similar distribution) to the
holders of its Equity Interests (other than Disqualified Equity Interests) on a
pro rata basis;

(d) so long as no Default or Event of Default exists or would result therefrom,
Parent or any Restricted Subsidiary may repurchase, redeem, acquire or retire
for value any Equity Interests or Equity Interest Equivalents of the Parent or
any Restricted Subsidiary held by any current or former officer, director or
employee of the Parent or any Restricted Subsidiary pursuant to any equity
subscription agreement, stock option agreement, shareholders’ agreement or other
agreement (or may make Distributions to permit any direct or indirect parent
thereof to do so); provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests and Equity Interest
Equivalents may not exceed the sum of (i) $10,000,000 in any twelve-month period
(plus the net cash proceeds from the issuance of Equity Interests to officers,
directors or employees) (with unused amounts in any twelve-month period being
carried over to succeeding twelve-month periods and added to such amount and
(ii) the net cash proceeds of “key-man” life insurance policies on officers,
directors or employees received by the Parent and the Restricted Subsidiaries
after the date hereof;

(e) Parent or any Restricted Subsidiary may make Distributions constituting the
payment of dividends or the consummation of any irrevocable redemption within
sixty (60) days after the date of declaration of the dividend or the giving of
the redemption notice, as the case may be, if at the date of declaration or
notice, such Distribution would have complied with and been permitted pursuant
to the other provisions of this Section 10.2.3;

(f) Parent may make Distributions constituting the repurchase of Equity
Interests deemed to occur upon the exercise of stock options, warrants or other
similar stock-based awards under equity plans of Parent to the extent such
Equity Interests represent a portion of the exercise price of those stock
options, warrants or other similar stock-based awards under equity plans of
Parent or made in lieu of withholding Taxes resulting from the exercise or
exchange of options, warrants, other rights to purchase or acquire Equity
Interests or Equity Interest Equivalents;

(g) Parent or any Restricted Subsidiary may make Distributions constituting cash
payments in lieu of issuance of fractional shares in connection with the
exercise of Equity Interest Equivalents;

(h) Parent or any Restricted Subsidiary may make Permitted Payments;

 

142

--------------------------------------------------------------------------------

(i) Parent or any Restricted Subsidiary may make further payments directly or
indirectly to AZC Holding Company LLC on account of earn-outs, “true-up” or
purchase price adjustments pursuant to the terms of the Arizona Chemical
Acquisition Agreement;

(j) provided that the Payment Conditions are satisfied, Parent or any Restricted
Subsidiary may make other Distributions; and

(k) so long as no Default or Event of Default exists or would not result
therefrom, Parent or any Restricted Subsidiary may make Distributions not
otherwise permitted pursuant to this Section 10.2.3 not to exceed the greater of
$127,500,000 and 4.25% of Consolidated Total Assets in the aggregate since the
date of this Agreement.

10.2.4. Limitation on Investments. Each Loan Party will not, and will not permit
any of the Restricted Subsidiaries to, make any advance, loan, extensions of
credit or capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of or any assets of, or make any other Investment
in, any Person, except:

(a) (i) any Investment by a U.S. Domiciled Loan Party in any other U.S.
Domiciled Loan Party (other than Parent), (ii) any Investment by a Foreign
Domiciled Loan Party in any other Foreign Domiciled Loan Party, (iii) any
Investment by a Subsidiary that is not a Loan Party in any other Subsidiary that
is not a Loan Party, (iv) any Investment by a U.S. Domiciled Loan Party in a
Foreign Domiciled Loan Party if, immediately prior to and after giving effect
thereto, no (A) Default or Event of Default exists or has or would result from
such Investment and (B) Excess Availability shall be at least 25.0% of the Total
Line Cap on a pro forma basis for each day during the consecutive thirty
(30)-day period immediately preceding such Investment and (v) any Investment by
a Foreign Domiciled Loan Party in a U.S. Domiciled Loan Party;

(b) extensions of trade credit and asset purchases in the Ordinary Course of
Business;

(c) any Cash Equivalents;

(d) to the extent not prohibited by Applicable Law, loans and advances to
officers, directors and employees of any Loan Party or any of its Restricted
Subsidiaries in an aggregate principal amount outstanding not to exceed
$15,000,000;

(e) Investments existing on, or contemplated as of, the Closing Date and listed
on Schedule 10.2.4 and any extensions, renewals or reinvestments thereof, so
long as the amount of any such Investment pursuant to this clause (e) is not
increased at any time above the amount of such Investment existing on the date
hereof, unless such increase is otherwise permitted by this Section 10.2.4;

(f) Investments received in connection with the bankruptcy or reorganization of
suppliers or customers and in settlement of delinquent obligations of, and other
disputes with, customers arising in the Ordinary Course of Business or upon
foreclosure with respect to any secured Investment or other transfer of title
with respect to any secured Investment;

(g) Investments to the extent that payment for such Investments is made solely
with Equity Interests or Equity Interest Equivalents (other than Disqualified
Equity Interests) of the Parent;

(h) Provided that the Payment Conditions are satisfied, Permitted Acquisitions;
provided, however, notwithstanding anything to the contrary in the foregoing,
the Loan Parties may consummate Acquisitions when the Payment Conditions are not
satisfied in an aggregate amount not to exceed $75,000,000 in any calendar year;

 

143

--------------------------------------------------------------------------------

(i) Investments constituting non-cash proceeds of sales, transfers and other
dispositions of assets to the extent permitted by Section 10.2.5;

(j) Investments permitted under Section 10.2.3;

(k) Investments represented by Hedge Agreements entered into in compliance with
Section 10.2.13;

(l) Loans and advances to any direct or indirect parent of any Loan Party in
lieu of, and not in excess of the amount of, Distributions to the extent
permitted to be made to such parent in accordance with Section 10.2.3;

(m) Investments in the Ordinary Course of Business consisting of UCC Article 3
endorsements for collection or deposit;

(n) Contingent Obligations of any Loan Party or any Restricted Subsidiary of
leases (other than Capital Leases) or of other obligations that do not
constitute Debt, in each case entered into in the Ordinary Course of Business;

(o) Investments constituting Contingent Obligations in respect of Debt permitted
under Section 10.2.1 that could have been incurred by such Loan Party or
Restricted Subsidiary;

(p) pledges and deposits made in the Ordinary Course of Business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations or letters of credit or guarantees issued in lieu thereof;

(q) pledges or deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds,
utilities and other obligations of a like nature, in each case in the Ordinary
Course of Business or letters of credit or guarantees issued in lieu thereof;

(r) any Investment to the extent that payment for such Investment is made solely
with the proceeds of any equity investments in Parent by Persons who are not
Loan Parties (other than Disqualified Equity Interests), provided that such
proceeds are used substantially contemporaneously to make such Investment and
designated as being for the purpose of making such Investment by written notice
to the Agent;

(s) Investments of any Person existing at such time such Person becomes a
Restricted Subsidiary of a Loan Party or consolidates or merges with a Loan
Party or any of the Restricted Subsidiaries so long as such Investments were not
made in contemplation thereof;

(t) Investments with respect to Supplier Financing Transactions permitted
pursuant to Section 10.2.5(i);

(u) provided that the Payment Conditions are satisfied, other Investments not
otherwise permitted by this Section 10.2.4;

 

144

--------------------------------------------------------------------------------

(v) provided that no Event of Default exists or would result therefrom
Investments in the HSBC Asian Production Facility in an aggregate principal
amount not to exceed $125,000,000 at any time; and

(w) Investments having an aggregate fair market value, not to exceed the greater
of $165,000,000 and 5.5% of Consolidated Total Assets.

10.2.5. Asset Sales. The Loan Parties will not, and will not permit any of the
Restricted Subsidiaries to, sell, transfer, lease or otherwise dispose of any
Property, including any Equity Interest owned by it, nor will any Loan Party
permit any Restricted Subsidiary to issue any additional Equity Interest or
Equity Interest Equivalent in such Restricted Subsidiary (other than to another
Loan Party or another Restricted Subsidiary in compliance with Section 10.2.4),
except:

(a) sales, transfers and other dispositions of assets that are not permitted by
any other paragraph of this Section (each a “Disposition”) for fair value,
provided that (i) with respect to any Disposition pursuant to this clause
(a) for a purchase price in excess of $25,000,000, Parent or a Restricted
Subsidiary shall receive not less than 75% of such consideration in the form of
cash or Cash Equivalents; provided that for the purposes of this clause (i),
(A) any liabilities (as shown on Parent’s or such Restricted Subsidiary’s most
recent balance sheet provided hereunder or in the footnotes thereto) of Parent
or such Restricted Subsidiary, other than liabilities that are by their terms
subordinated to the payment in cash of the Obligations, that are assumed by the
transferee with respect to the applicable Disposition and for which Parent and
all of the Restricted Subsidiaries shall have been validly released by all
applicable creditors in writing, (B) any securities received by Parent or such
Restricted Subsidiary from such transferee that are converted by Parent or such
Restricted Subsidiary into cash (to the extent of the cash received) within 180
days following the closing of the applicable Disposition, and (C) any Designated
Non-Cash Consideration received by Parent or such Restricted Subsidiary in
respect of such Disposition having an aggregate fair market value, taken
together with all other Designated Non-Cash Consideration received pursuant to
this Section 10.2.5(a) that is at that time outstanding, not in excess of the
greater of $82,500,000 and 2.75% of Consolidated Tangible Assets at the time of
the receipt of such Designated Non-Cash Consideration, with the fair market
value of each item of Designated Non-Cash Consideration being measured at the
time received and without giving effect to subsequent changes in value, shall in
each case under this clause (i) be deemed to be cash; and (ii) after giving
effect to any such sale, transfer or disposition, no Default or Event of Default
shall have occurred and be continuing;

(b) sales, transfers and dispositions of (i) Inventory in the Ordinary Course of
Business, (ii) cash and Cash Equivalents in the Ordinary Course of Business,
(iii) used, obsolete, worn out or surplus Property or the abandonment of
Intellectual Property rights in the Ordinary Course of Business and
(iv) Collateral outside the Ordinary Course of Business in accordance with
Section 5.2(b);

(c) sales, transfers and dispositions to another Loan Party or Restricted
Subsidiary; provided that any such sales, transfers or dispositions shall be
made in compliance with Section 10.2.15 unless such transactions are solely
among members of a Loan Party Group and no other Person; provided further that
all such sales, transfers, leases or other dispositions shall be made for fair
value and 75% of such consideration will be in the form of cash or Cash
Equivalents;

(d) sales, transfers and dispositions of delinquent Accounts in connection with
the compromise, settlement or collection thereof;

(e) any transactions permitted by Sections 10.2.2, 10.2.3, 10.2.4, 10.2.6 or
10.2.8;

 

145

--------------------------------------------------------------------------------

(f) dispositions resulting from any casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any Property of any Loan Party or any Restricted Subsidiary;

(g) sales, transfers and other dispositions of assets that are not permitted by
any other paragraph of this Section, provided that the aggregate fair market
value of all assets sold, transferred or otherwise disposed of in reliance upon
this paragraph (g) shall not exceed the greater of $300,000,000 and 10% of
Consolidated Total Assets during any Fiscal Year of the Parent;

(h) non-exclusive licensing agreements for any Intellectual Property, leases or
subleases, in each case in the Ordinary Course of Business;

(i) a sale or other disposition of Accounts in connection with a Supplier
Financing Transaction upon prior written notice to the Agent for each such
Supplier Financing Transaction (or series of Supplier Financing Transactions)
with a corresponding account debtor; provided that at the time of such sale or
other disposition and having given effect thereto, no Cash Dominion Event shall
have occurred and continue to exist unless otherwise consented to in writing by
the Agent, and provided further Liens on receivables disposed of and paid for in
full by the applicable account debtor to the applicable Kraton SPV pursuant to
and accordance with this Agreement and this Section 10.2.5(i) shall be
automatically and unconditionally released as provided in this Agreement and
evidenced by a release confirmation letter substantially the form of Exhibit I
with blanks appropriately completed in conformity with the terms of each such
Supplier Financing Transaction, which confirmation letter shall be executed by
the Collateral Agent, the Borrower and the applicable Investor (as defined in
Exhibit I)); provided further that that (x) if any such Lien release made
pursuant to this Section 10.2.5(i) is evidenced by the filing of a Uniform
Commercial Code amendment, such Uniform Commercial Code amendment shall be in a
form previously provided and reasonably acceptable to the Agent and (y) for the
avoidance of doubt, upon entry into any Supplier Financing Transaction, the
applicable Borrower shall be deemed to represent and warrant that such Supplier
Financing Transaction and any Dispositions in connection therewith are made in
accordance with the terms and conditions of this Agreement (including this
Section 10.2.5(i)); and

(j) sales, transfers and dispositions of Term Loan Priority Collateral provided
such sales, transfers and dispositions are authorized pursuant to the provisions
of the Term Loan Agreement as in effect on the Closing Date and comply with the
provisions of the ABL Intercreditor Agreement.

10.2.6. Sale and Leaseback Transactions. The Loan Parties will not, and will not
permit any of the Restricted Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any Property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such Property or other Property that it
intends to use for substantially the same purpose or purposes as the Property
sold or transferred, except for any such sale of any fixed or capital assets by
any Loan Party or any Restricted Subsidiary that is made for cash consideration
in an amount not less than the fair value of such fixed or capital asset and is
consummated within 270 days after such Loan Party or such Restricted Subsidiary
acquires or completes the construction of such fixed or capital asset.

10.2.7. Restrictions on Payment of Certain Debt. The Loan Parties will not, and
will not permit any of the Restricted Subsidiaries to, make, directly or
indirectly, any payment or other distribution (whether in cash, securities or
other Property) of or in respect of principal of or interest on any Debt, or any
payment or other distribution (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any Debt,
except:

 

146

--------------------------------------------------------------------------------

(a) payment of Debt created under the Credit Documents;

(b) payment of regularly scheduled interest and principal payments (including
earnouts or similar obligations) and mandatory prepayments (including
prepayments under the Term Loan Agreement in respect of Excess Cash Flow) as and
when due in respect of any Debt permitted by Section 10.2.1, other than payments
in respect of Subordinated Debt prohibited by the subordination provisions
thereof;

(c) extensions, refinancings, refundings, substitutions, replacements and
renewals of (x) the Term Debt, (y) the Senior Notes and (z) other Debt to the
extent permitted by Section 10.2.1(g);

(d) payment of secured Debt that becomes due as a result of the voluntary sale
or transfer of the Property securing such Debt;

(e) provided that the Payment Conditions are satisfied, other prepayments of
Debt (including optional prepayment of Debt) (it being understood and agreed
that, if an irrevocable notice or contractual obligations is given in, made or
arises in respect of any payment of Debt, the foregoing conditions only need to
be satisfied at the time of the giving of such irrevocable notice or entering
into (or effectiveness of) any such contractual obligation);

(f) payment of Debt of any Loan Party or Restricted Subsidiary to any other Loan
Party or Restricted Subsidiary; provided that, if such Debt is owed by a Loan
Party to a Restricted Subsidiary that is not a Loan Party, no Default or Event
of Default has occurred which is continuing or would result after giving effect
to such payment;

(g) optional prepayment of Debt (in addition to any prepayment permitted by
clause (e)) in exchange for or from (x) the net cash proceeds of Equity
Interests of Parent or (y) the proceeds of any issuance of Equity Interests of
Parent (other than Disqualified Equity Interests) or capital contribution in
respect of Equity Interests of Parent from Persons who are not Loan Parties or
Restricted Subsidiaries; provided that (i) no Default has occurred which is
continuing or would result after giving effect to such prepayment, (ii) both
immediately prior to and after giving effect to such prepayment, no FCCR Test
Event shall be in effect and (iii) such prepayment is made substantially
simultaneous with the receipt of the proceeds of such Equity Interests or
capital contribution;

(h) payments with respect to the Debt incurred pursuant to Section 10.2.1(u) and
10.2.1(z); and

(i) other payments on Debt after the Closing Date not to exceed the aggregate
amount of $50,000,000.

10.2.8. Fundamental Changes. Each Loan Party will not, and will not permit any
of the Restricted Subsidiaries to, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), except:

(a) so long as no Default or Event of Default would result therefrom, any
Subsidiary of Parent or any other Person may be merged or consolidated with or
into a Borrower, provided that (i) a Borrower shall be the continuing or
surviving entity or (ii) if the Person formed by or surviving any such merger,
amalgamation or consolidation is not a Borrower (such Person, the “Successor
Borrower”), (A)the Successor Borrower shall be an entity organized or existing
under the laws of the country in which the non-surviving Borrower was organized
or existing or the laws of any state or province thereof, (B) the Successor
Borrower shall expressly assume all the obligations of a Borrower under this
Agreement and

 

147

--------------------------------------------------------------------------------

the other Loan Documents pursuant to a supplement hereto or thereto in form
reasonably satisfactory to the Agent, (C) each applicable Guarantor, unless it
is the other party to such merger, amalgamation or consolidation, shall have by
a supplement hereto confirmed that its Guarantee shall apply to the Successor
Borrower’s obligations under this Agreement, (D) each U.S. Domiciled Loan Party
and each Foreign Domiciled Loan Party, as applicable, unless it is the other
party to such merger or consolidation, shall have by a supplement to this
Agreement confirmed that its obligations thereunder shall apply to the Successor
Borrower’s obligations under this Agreement, and (E) such Borrower shall have
delivered to the Agent (1) an officer’s certificate stating that such merger,
amalgamation or consolidation and such supplements to this Agreement and the
other Loan Documents preserve the enforceability of the Guarantee and the
perfection and priority of the Liens under the Security Documents and (2) if
reasonably requested by the Agent, an opinion of counsel to the effect that such
merger, amalgamation or consolidation does not violate this Agreement or any
other Loan Document, and provided, further, that if the foregoing are satisfied,
the Successor Borrower will succeed to, and be substituted for, such Borrower
under this Agreement;

(b) any Subsidiary of Parent (other than a Borrower) or any other Person may be
merged, amalgamated or consolidated with or into any one or more Subsidiaries of
Parent, provided that (i) in the case of any merger, amalgamation or
consolidation involving one or more Restricted Subsidiaries, (A) a Restricted
Subsidiary shall be the continuing or surviving entity or (B) Parent shall take
all steps necessary to cause the Person formed by or surviving any such merger,
amalgamation or consolidation (if other than a Restricted Subsidiary) to become
a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or
consolidation involving one or more Guarantors, a Guarantor shall be the
continuing or surviving entity or the Person formed by or surviving any such
merger, amalgamation or consolidation (if other than a Guarantor) shall execute
a supplement or joinder to this Agreement, substantially in the form of Exhibit
G, in order to become a Guarantor under Section 5.10 and a grantor under
Section 7.1 (or in the case of a Guarantor not organized in the U.S. enter into
other Security Documents) to the extent required under Section 10.1.9, (iii) no
Default or Event of Default would result from the consummation of such merger,
amalgamation or consolidation and (iv) such Guarantor(s) shall have delivered to
the Agent an officer’s certificate stating that such merger, amalgamation or
consolidation and such supplements and/or joinders to any Security Document
preserve the enforceability of the Guarantee and the perfection and priority of
the Liens under the Security Documents;

(c) any merger, consolidation or amalgamation in connection with a Permitted
Acquisition;

(d) any Disposition of a Restricted Subsidiary permitted pursuant to
Section 10.2.5;

(e) any Restricted Subsidiary (other than KPLLC and Elastomers) may liquidate or
dissolve if (i) the North American Loan Party Agent determines in good faith
that such liquidation or dissolution is in the best interests of the Borrowers
and is not materially disadvantageous to the Lenders and (ii) to the extent such
Restricted Subsidiary is a Loan Party, any assets or business not otherwise
disposed of or transferred in accordance with Section 10.2.4 or 10.2.5, or, in
the case of any such business, discontinued, shall be transferred to, or
otherwise owned or conducted by, another Loan Party after giving effect to such
liquidation or dissolution; and

(f) so long as no Event of Default would result therefrom (including, without
limitation, a Change of Control), Parent may merge with any other Person;
provided (i) Parent shall be the continuing or surviving corporation or (ii) if
the Person formed by or surviving any such merger or consolidation is not Parent
(any such Person, the “Successor Parent”), (A) the Successor Parent shall be an
entity organized or existing under the laws of the United States, any state
thereof, the District of Columbia or any territory thereof, (B) the Successor
Parent shall expressly assume all the obligations of

 

148

--------------------------------------------------------------------------------

Parent under this Agreement and the other Loan Documents to which Parent is a
party pursuant to a supplement hereto or thereto in form reasonably satisfactory
to the Agent, and (C) Parent shall have delivered to the Agent an officer’s
certificate and an opinion of counsel, each stating that such merger or
consolidation and any such supplement to this Agreement complies with this
Agreement; provided, further, that if the foregoing are satisfied, the Successor
Parent will succeed to, and be substituted for, Parent under this Agreement.

(g) A Guarantor (other than a Borrower) may be merged, amalgamated or
consolidated with or into another Guarantor (other than a Borrower), provided
that (i) a Guarantor shall be the surviving entity, (ii) each such Guarantor
shall be an entity organized or existing under the laws of the same country,
(iii) no Default or Event of Default would result from the consummation of such
merger, amalgamation or consolidation, and (iv) such surviving Guarantor shall
have delivered to the Agent an officer’s certificate stating that such merger,
amalgamation or consolidation preserves the enforceability of the Guarantee and
the perfection and priority of the Liens under the Security Documents.

To the extent necessary to effectuate any liquidation or dissolution of a
Restricted Subsidiary that is a Loan Party permitted under Section 10.2.8(f),
the North American Loan Party Agent may request that the Agent and any
applicable Security Trustee release such Loan Party from all of its obligations
under the Loan Documents, and the Agent and such Security Trustee shall release
such Loan Party, provided that each of the following conditions is satisfied:
(i) the North American Loan Party Agent certifies in writing that such
liquidation or dissolution is permitted under the terms of this Agreement and
the other Loan Documents and that no Event of Default exists or would result
therefrom; (ii) such Loan Party shall have made Full Payment of all Secured
Obligations (other than contingent Guarantee Obligations in respect of the
Secured Obligations of the other Loan Parties) incurred directly by such Loan
Party prior to its release; and (iii) the Loan Parties shall have provided such
further documentation, agreements and certifications relating to the proposed
liquidation or dissolution of such Loan Party as the Agent or such Security
Trustee may reasonably request.

10.2.9. Amendment of Material Documents. The Loan Parties will not, and will not
permit any of the Restricted Subsidiaries to, amend, modify or waive any of its
rights under (a) any agreement relating to any Subordinated Debt, except as
permitted below, or the Term Debt Documents that is not expressly permitted
under the ABL Intercreditor Agreement, (b) its Organization Documents to the
extent any such amendment, modification or waiver would be adverse to the
Lenders or (c) the Senior Notes Documents, except as permitted below.
Notwithstanding the foregoing, amendments and modifications of the Notes
Documents and agreements related to such Subordinated Debt shall be permitted to
the extent that such amendment or modification does not (i) shorten the
scheduled maturity, add amortization, accelerate the dates upon which any
amortization or other mandatory prepayments or interest payments are due, or add
additional redemption, put or prepayment provisions (it being understood that
acceleration or mandatory repayment, prepayment, redemption or repurchase of
such Debt upon the occurrence of an event of default, asset sale or a change in
control shall not be deemed to constitute a change in the stated final maturity
thereof), (ii) add any Events of Default, (iii) revise any subordination or
collateral provisions in a manner materially adverse to the Agent or Lenders, or
(iv) collectively with all other amendments, increase materially the obligations
of the obligors thereunder or confer additional rights on the holders of such
Debt which are materially adverse to the rights of the Agent or Lenders. For the
avoidance of doubt, the preceding sentence shall not prohibit an amendment or
modification to the Senior Notes Documents or agreements related to Subordinated
Debt entered into to effectuate a repayment or increase thereof otherwise
permitted under this Agreement and the terms of which (other than those
necessary to effectuate such repayment or increase) are not otherwise prohibited
under clauses (i) through (iv) of the preceding sentence.

 

149

--------------------------------------------------------------------------------

10.2.10. Supplier Financing Transactions. During a Cash Dominion Event, the Loan
Parties will not, and will not permit any of the Restricted Subsidiaries to
enter into any programs relating to Supplier Financing Transactions with new
customers without the prior written consent of Agent after fifteen (15) days’
prior written notice.

10.2.11. Accounting Changes. The Loan Parties will not, and will not permit any
of the Restricted Subsidiaries to, make any material change in accounting
treatment or reporting practices, except as required by GAAP.

10.2.12. Restrictive Agreements. The Loan Parties will not, and will not permit
any Restricted Subsidiary to, become a party to any Restrictive Agreement,
except a Restrictive Agreement (a) in effect on the Closing Date (or any
agreement evidencing any permitted renewal, extension or refinancing of an
agreement relating to Debt in effect on the Closing Date); (b) relating to Debt
permitted hereunder, so long as if such Debt is secured Debt such Debt complies
with the terms herein; (c) constituting customary restrictions on assignment in
leases and other contracts; (d) which is binding on a Restricted Subsidiary at
the time such Restricted Subsidiary first becomes a Restricted Subsidiary, so
long as such contractual obligations were not entered into solely in
contemplation of such Person becoming a Restricted Subsidiary; (e) which
represents Debt of a Restricted Subsidiary which is not a Loan Party which is
permitted by Section 10.2.1; (f) which arises in connection with any Disposition
permitted by Section 10.2.5 with respect to the assets subject to such
Disposition; (g) which are customary provisions in joint venture agreements and
other similar agreements applicable to joint ventures permitted under
Section 10.2.4 and applicable solely to such joint venture entered into in the
Ordinary Course of Business; and (h) which are restrictions on cash or other
deposits imposed by customers under contracts entered into in the Ordinary
Course of Business.

10.2.13. Hedge Agreements. The Loan Parties will not, and will not permit any of
the Restricted Subsidiaries to, enter into any Hedge Agreement, except to hedge
risks arising in the Ordinary Course of Business and not for speculative
purposes.

10.2.14. Conduct of Business. The Loan Parties will not, and will not permit any
of the Restricted Subsidiaries to, engage in any business, other than its
business as conducted on the Closing Date and any line of business or activities
substantially similar, reasonably related or ancillary, complimentary or
incidental thereto.

10.2.15. Transactions with Affiliates. The Loan Parties will not, and will not
permit any of the Restricted Subsidiaries to, sell, lease or otherwise transfer
any Property to, or purchase, lease or otherwise acquire any Property from, or
otherwise engage in any other transactions with, any of its Affiliates (other
than transactions solely among Loan Parties, except (a) transactions the
consideration for which consists solely of Equity Interests of Parent,
(b) transactions that are at prices and on terms and conditions not less
favorable to such Loan Party or Restricted Subsidiary than could be obtained on
an arm’s-length basis from unrelated third parties, (c) any Investment permitted
by Section 10.2.4, (d) any Debt permitted under Section 10.2.1(h) or (i),
(e) any Distributions permitted by Section 10.2.3, (f) the payment of reasonable
fees to directors of any Loan Party or any Restricted Subsidiary, and
compensation and employee benefit arrangements paid to, and indemnities provided
for the benefit of, directors, officers or employees of the Loan Parties or
their Restricted Subsidiaries in the Ordinary Course of Business, (g) any
issuances of securities of Parent or other payments, awards or grants in cash,
securities of Parent or otherwise pursuant to, or the funding of, employment
agreements, stock options and stock ownership plans approved by a Loan Party’s
board of directors, (h) any contribution to the capital of Parent by any holder
of its Equity Interests or any purchase of Equity Interests of Parent and
(i) transactions among Loan Parties and Restricted Subsidiaries that are based
on a reasonable allocation of overhead and administrative expenses or transfers
in accordance with Tax transfer pricing rules.

 

150

--------------------------------------------------------------------------------

10.2.16. Inactive Affiliates. The Loan Parties will not, and will not permit any
of the Restricted Subsidiaries to, cause or permit Inactive Subsidiaries at any
time to (a) own any assets, (b) incur or suffer to exist any liabilities, or
(c) engage in any business activity. For the avoidance of doubt nothing
contained in this Agreement shall restrict the ability of any Inactive
Subsidiaries to cease to exist.

10.3. Financial Covenants. Until the Commitments have terminated and Full
Payment of all Obligations has occurred:

10.3.1. Fixed Charge Coverage Ratio. Parent and its Restricted Subsidiaries
shall maintain, for each Test Period while a FCCR Test Event is in effect, a
Fixed Charge Coverage Ratio of at least 1.0 to 1.0 commencing with the most
recent Fiscal Quarter for which financial statements were, or were required to
be, delivered hereunder prior to the occurrence of the FCCR Test Event.

SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1. Events of Default. Each of the following shall be an “Event of Default” if
it occurs for any reason whatsoever, whether voluntary or involuntary, by
operation of law or otherwise:

(a) Payments. Any Borrower shall (i) default in the payment when due of any
principal of the Loans or (ii) default in the payment when due of any interest
on the Loans or any fees or any other amounts owing hereunder or under any other
Loan Document and, so long as no Cash Dominion Event exists, such default shall
continue for five (5) or more days;

(b) Representations, etc. Any representation, warranty or statement made or
deemed made by any Loan Party herein or in any other Loan Document or any
certificate, statement, report or other document delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made;

(c) Covenants. Any Loan Party shall:

(i) breach or fail to perform any covenant applicable to it and contained in
Section 8.1, 8.2.4, 8.2.5, 8.5.2, 10.1.1, 10.1.2(d), 10.1.12, 10.1.13 (with
respect to preservation of existence of a Borrower), 10.2 or 10.3;

(ii) breach or fail to perform any other covenant applicable to it and contained
in any Loan Documents, and such breach or failure is not cured within thirty
(30) days after a Senior Officer of such Loan Party has knowledge thereof or
receives notice thereof from the Agent, whichever is sooner (unless a longer
grace period is provided for by applicable securities laws applicable to such
Person, including the Securities Act of 1933, as amended; provided, however,
that such notice and opportunity to cure shall not apply if the breach or
failure to perform is not capable of being cured within such period or is a
willful breach by a Loan Party;

(d) Repudiation, etc. A Guarantor repudiates, revokes or attempts to revoke its
Guarantee; a Loan Party denies or contests the validity or enforceability of any
Loan Documents or Obligations, or the perfection or priority of any Lien granted
to the Agent or any Security Trustee; or any Loan Document ceases to be in full
force or effect for any reason (other than a waiver or release by the Agent and
Lenders or as a result of a transaction permitted under Section 10.2.5 and
10.2.8);

(e) Default Under Other Agreements. Any breach or default of a Loan Party occurs
under any Material Debt or, to the extent not Material Debt, the Term Debt, if
the maturity of or any payment with respect to such Debt may be accelerated or
demanded due to such breach;

 

151

--------------------------------------------------------------------------------

(f) Judgments. Any (i) judgment or order for the payment of money is entered
against any of the Loan Parties or any Restricted Subsidiary in an amount that
exceeds, individually or cumulatively with all unsatisfied judgments or orders
against all Loan Parties and Restricted Subsidiaries, $50,000,000 (net of
insurance coverage therefor that has not been denied by the insurer) or
(ii) other non-monetary judgment or order is entered against any Loan Party or
Restricted Subsidiary that will or would be reasonably likely to have a Material
Adverse Effect, and in each case such judgments or orders shall not have been
satisfied, vacated, discharged or stayed or bonded pending approval within sixty
(60) days from the entry thereof;

(g) Bankruptcy, etc. Any Loan Party or any Restricted Subsidiary (other than an
Immaterial Subsidiary) shall commence a voluntary Insolvency Proceeding; any
Foreign Subsidiary that is a Loan Party or Restricted Subsidiary (other than an
Immaterial Subsidiary) shall commence a voluntary case, proceeding or action
under domestic or foreign law relating to bankruptcy, judicial management,
insolvency reorganization or relief of debtors legislation of its jurisdiction
of incorporation, in each case as now or hereafter in effect, or any successor
thereto; an involuntary Insolvency Proceeding is commenced against any Loan
Party or any Restricted Subsidiary (other than an Immaterial Subsidiary) and the
petition is not controverted within ten (10) days after commencement thereof; an
involuntary Insolvency Proceeding is commenced against any Loan Party or any
Restricted Subsidiary (other than an Immaterial Subsidiary) and the petition is
not dismissed within sixty (60) days after commencement thereof; a Creditor
Representative or similar Person is appointed for, or takes charge of, all or
substantially all of the property of any Loan Party or any Restricted Subsidiary
(other than an Immaterial Subsidiary); any Loan Party or any Restricted
Subsidiary (other than an Immaterial Subsidiary) commences any other proceeding
or action under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Loan Party or
any Restricted Subsidiary (other than an Immaterial Subsidiary); there is
commenced against any Loan Party or any Restricted Subsidiary (other than an
Immaterial Subsidiary) any such proceeding or action that remains undismissed
for a period of sixty (60) days; any Loan Party or any Restricted Subsidiary
(other than an Immaterial Subsidiary) is adjudicated insolvent or bankrupt; any
order of relief or other order approving any such case or proceeding or action
is entered; any Loan Party or any Restricted Subsidiary (other than an
Immaterial Subsidiary) suffers any appointment of any Creditor Representative or
the like for it or any substantial part of its Property to continue undischarged
or unstayed for a period of sixty (60) days; any Loan Party or any Restricted
Subsidiary (other than an Immaterial Subsidiary) makes a general assignment for
the benefit of creditors; any corporate action is taken by any Loan Party or any
Restricted Subsidiary (other than an Immaterial Subsidiary) for the purpose of
effecting any of the foregoing; any Loan Party (i) is unable or admits inability
to pay its debts as they fall due or (ii) by reason of actual or anticipated
financial difficulties, commences negotiations with one or more of its creditors
with a view to rescheduling any of its Debt; and in respect of any Dutch
Borrower, a suspension of payments (surseance van betaling) is granted;

(h) ERISA. An ERISA Event shall have occurred that, when taken together with all
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Loan Parties and the ERISA Affiliates in an aggregate amount
exceeding $50,000,000 at any time;

(i) Subordination. The subordination provisions of any document or instrument
evidencing any Subordinated Debt that constitutes Material Debt shall be
invalidated or otherwise cease to be legal, valid and binding obligations of the
holders of such Subordinated Debt, enforceable in accordance with their terms;
or

(j) Change of Control. A Change of Control occurs.

 

152

--------------------------------------------------------------------------------

11.2. Remedies upon Default. If an Event of Default described in Section 11.1(g)
occurs with respect to any Borrower or Loan Party or Restricted Subsidiary to
the extent such Loan Party or Restricted Subsidiary is not an Immaterial
Subsidiary, then to the extent permitted by Applicable Law, all Obligations
(other than Secured Bank Product Obligations) shall become automatically due and
payable and all Commitments shall terminate, without any action by the Agent or
notice of any kind. In addition, or if any other Event of Default exists, the
Agent may in its discretion (and shall upon written direction of Required
Lenders) do any one or more of the following from time to time:

(a) declare any Obligations (other than Secured Bank Product Obligations)
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest or notice of any kind, all of which are
hereby waived by Borrowers to the fullest extent permitted by law;

(b) terminate, reduce or condition any Commitment, or make any adjustment to any
Borrowing Base;

(c) require Loan Parties to Cash Collateralize LC Obligations, Secured Bank
Product Obligations and other Obligations that are contingent or not yet due and
payable, and, if Loan Parties fail promptly to deposit such Cash Collateral, the
Agent may (and shall upon the direction of Required Lenders) advance the
required Cash Collateral as Revolver Loans (whether or not an Overadvance exists
or is created thereby, or the conditions in Section 6 are satisfied); and

(d) together with the Security Trustees (as applicable), exercise any other
rights or remedies afforded under any agreement, by law, at equity or otherwise,
including the rights and remedies of a secured party under the UCC or other
similar domestic or foreign statutes. Such rights and remedies include the
rights to (i) take possession of any Collateral; (ii) require Loan Parties to
assemble Collateral, at Loan Parties’ expense, and make it available to the
Agent and Security Trustees at a place designated by any of them; (iii) enter
any premises where Collateral is located and store Collateral on such premises
until sold (and if the premises are owned or leased by a Loan Party, the Loan
Parties agree not to charge for such storage); (iv) sell or otherwise dispose of
any Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale, with such notice as may be
required by Applicable Law, in lots or in bulk, at such locations, all as the
Agent and the Security Trustees, in their discretion, deem advisable, and
(v) upon three Business Days’ prior written notice to the Loan Parties, transfer
and register in its name or in the name of its nominee the whole or any part of
the Pledged Equity Interests, exchange certificates or instruments representing
or evidencing Pledged Equity Interests or Pledged Collateral for certificates of
smaller or larger denominations, exercise the voting and all other rights as a
holder with respect thereto (including, without limitation, exchange,
subscription or any other rights, privileges, or options pertaining to any
Pledged Equity Interests), collect and receive all cash dividends, interest,
principal and other distributions made thereon and otherwise act with respect to
the Pledged Equity Interests as though the Agent or Security Trustee, as the
case may be, was the outright owner thereof. Each Loan Party agrees that ten
(10) days’ notice of any proposed sale or other disposition of Collateral by the
Agent or Security Trustees shall be reasonable. The Agent and Security Trustees
may conduct sales on any Loan Party’s premises, without charge, and any sale may
be adjourned from time to time in accordance with Applicable Law. The Agent and
Security Trustees shall have the right to sell, lease or otherwise dispose of
any Collateral for cash, credit or any combination thereof, and the Agent and
Security Trustees may purchase any Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of the purchase price, may credit
bid and set off the amount of such price against the Secured Obligations. Each
Loan Party recognizes that the Agent or applicable Security Trustee, as the case
may be, may be unable to effect a public sale of any or all the Pledged Equity
Interests and may be compelled to resort to one or more private sales thereof.
Each Loan Party also acknowledges that any private sale may result in prices and
other terms less favorable to the seller than if

 

153

--------------------------------------------------------------------------------

such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by virtue of such sale being private.
The Agent or applicable Security Trustee, as the case may be, shall be under no
obligation to delay a sale of any of the Pledged Equity Interests for the period
of time necessary to permit any Loan Party or the issuer of the Pledged Equity
Interests to register such securities for public sale under the Securities Act
of 1933, as amended, or any applicable securities laws of the United States or
any applicable securities laws of any other country or governmental unit, or
under applicable state securities laws, even if any Loan Party and the issuer
would agree to do so.

11.3. License. The Agent and the Security Trustees are hereby granted an
irrevocable, non-exclusive, royalty free, paid-up License, effective only upon
and during an Event of Default if the Agent elects to exercise its remedies
pursuant to Section 11.2(d), to use, license or sub-license (only if the License
governing such licensed Intellectual Property of a third party permits such
sub-license without payment to such third party) any or all Intellectual
Property of Loan Parties, computer hardware and software, trade secrets,
brochures, customer lists, promotional and advertising materials, labels,
packaging materials and other Property, in advertising for sale, marketing,
selling, collecting, completing manufacture of, or otherwise exercising any
rights or remedies with respect to any Collateral to the extent necessary to
sell assets that make up the applicable Borrowing Base as permitted under
Section 11.2(d) of this Agreement.

11.4. Setoff. At any time during an Event of Default, each of the Agent, any
Security Trustee, any Fronting Bank, any Lender, and any of their Affiliates is
authorized, to the fullest extent permitted by Applicable Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by the Agent, such Security Trustee, such Fronting
Bank, such Lender or such Affiliate to or for the credit or the account of a
Loan Party against any Secured Obligations, irrespective of whether or not the
Agent, such Security Trustee, such Fronting Bank, such Lender or such Affiliate
shall have made any demand under this Agreement or any other Loan Document and
although such Secured Obligations may be contingent or unmatured or are owed to
a branch or office of the Agent, such Security Trustee, such Fronting Bank, such
Lender or such Affiliate different from the branch or office holding such
deposit or obligated on such indebtedness. The rights of the Agent, each
Security Trustee, each Fronting Bank, each Lender and each such Affiliate under
this Section 11.4 are in addition to other rights and remedies (including other
rights of setoff) that such Person may have. Each Lender agrees promptly to
notify Parent and the Agent after any such setoff and application made by such
Lender; provided, however, that failure to give such notice shall not affect the
validity of such setoff and application; provided further, that notwithstanding
anything to the contrary herein, the Secured Bank Product Provider shall have
the right to setoff in accordance with the terms of its Bank Product Documents.

11.5. Remedies Cumulative; No Waiver.

11.5.1. Cumulative Rights. All agreements, warranties, guaranties, indemnities
and other undertakings of Loan Parties under the Loan Documents are cumulative
and not in derogation of each other. The rights and remedies of the Agent,
Security Trustees and Lenders are cumulative, may be exercised at any time and
from time to time, concurrently or in any order, and are not exclusive of any
other rights or remedies available by agreement, by law, at equity or otherwise.
All such rights and remedies shall continue in full force and effect until Full
Payment of all Secured Obligations.

11.5.2. Waivers. No waiver or course of dealing shall be established by (b) the
failure or delay of the Agent, any Security Trustee or any Lender to require
strict performance by Loan Parties with any terms of the Loan Documents, or to
exercise any rights or remedies with respect to Collateral or otherwise; (c) the
making of any Loan or issuance of any Letter of Credit during a Default,

 

154

--------------------------------------------------------------------------------

Event of Default or other failure to satisfy any conditions precedent; or
(d) acceptance by the Agent or any Lender of any payment or performance by a
Loan Party under any Loan Documents in a manner other than that specified
therein. It is expressly acknowledged by Loan Parties that any failure to
satisfy a financial covenant on a measurement date shall not be cured or
remedied by satisfaction of such covenant on a subsequent date.

11.6. Judgment Currency. If, for the purpose of obtaining judgment in any court
or obtaining an order enforcing a judgment, it becomes necessary to convert any
amount due under this Agreement or any other Loan Document in any a currency
(hereinafter in this Section 11.6 called the “first currency”) into any other
currency (hereinafter in this Section 11.6 called the “second currency”), then
the conversion shall be made at the Agent’s spot rate of exchange for buying the
first currency with the second currency prevailing at the Agent’s close of
business on the Business Day next preceding the day on which the judgment is
given or (as the case may be) the order is made. Any payment made by an Loan
Party to any Credit Party or any Security Trustee pursuant to this Agreement or
any other Loan Document in the second currency shall constitute a discharge of
the obligations of any applicable Loan Parties to pay to such Credit Party or
such Security Trustee any amount originally due to the Credit Party or Security
Trustee in the first currency under this Agreement or any other Loan Document
only to the extent of the amount of the first currency which such Credit Party
or such Security Trustee is able, on the date of the receipt by it of such
payment in any second currency, to purchase, in accordance with such Credit
Party’s or such Security Trustee’s normal banking procedures, with the amount of
such second currency so received. If the amount of the first currency falls
short of the amount originally due to such Credit Party or such Security Trustee
in the first currency under this Agreement or any other Loan Document, Loan
Parties agree that they will indemnify each Credit Party and each Security
Trustee against and save such Credit Party and such Security Trustee harmless
from any shortfall so arising. This indemnity shall constitute an obligation of
each such Loan Party separate and independent from the other obligations
contained in this Agreement or any other Loan Document, shall give rise to a
separate and independent cause of action and shall continue in full force and
effect notwithstanding any judgment or order for a liquidated sum or sums in
respect of amounts due to any Credit Party or any Security Trustee under any
Loan Documents or under any such judgment or order. Any such shortfall shall be
deemed to constitute a loss suffered by such Credit Party or such Security
Trustee and Loan Parties shall not be entitled to require any proof or evidence
of any actual loss. If the amount of the first currency exceeds the amount
originally due to a Credit Party or a Security Trustee in the first currency
under this Agreement or any other Loan Document, such Credit Party or such
Security Trustee shall promptly remit such excess to Loan Parties. The covenants
contained in this Section 11.6 shall survive the Full Payment of the Secured
Obligations.

SECTION 12. AGENT AND SECURITY TRUSTEES

12.1. Appointment, Authority and Duties of Agent.

12.1.1. Appointment and Authority. Each Secured Party appoints and designates
Bank of America as the Agent under all Loan Documents. The Agent may, and each
Secured Party authorizes the Agent to, on behalf of the Secured Parties, enter
into all Loan Documents to which the Agent is intended to be a party and accept
all Security Documents, for the Agent’s benefit and the Pro Rata benefit of the
Secured Parties. Each Secured Party agrees that any action taken by the Agent,
Super-Majority Lenders or Required Lenders (as applicable) in accordance with
the provisions of the Loan Documents, and the exercise by the Agent,
Super-Majority Lenders or Required Lenders (as applicable) of any rights or
remedies set forth therein, together with all other powers reasonably incidental
thereto, shall be authorized by and binding upon all Secured Parties. Without
limiting the generality of the foregoing, the Agent, together with the Security
Trustees, as applicable, shall have the sole and exclusive authority to (i) act
as the disbursing and collecting agent for Lenders with respect to all payments
and

 

155

--------------------------------------------------------------------------------

collections arising in connection with the Loan Documents; (ii) execute and
deliver as the Agent each Loan Document, including the ABL Intercreditor
Agreement and any other intercreditor or subordination agreement (or joinder
thereto), and accept delivery of each Loan Document from any Loan Party or other
Person; (iii) act as collateral agent and security trustee, as applicable, for
Secured Parties for purposes of perfecting and administering Liens under the
Loan Documents, and for all other purposes stated therein; (iv) manage,
supervise or otherwise deal with Collateral; and (v) take any Enforcement Action
or otherwise exercise any rights or remedies with respect to any Collateral
under the Loan Documents, Applicable Law or otherwise. The duties of the Agent
shall be ministerial and administrative in nature only, and the Agent shall not
have a fiduciary relationship with any Secured Party, Participant or other
Person, by reason of any Loan Document or any transaction relating thereto. The
Agent alone shall be authorized by the Lenders to determine whether any Accounts
or Inventory constitute Eligible Accounts or Eligible Inventory, whether to
impose or release any reserve, or whether any conditions to funding or to
issuance of a Letter of Credit have been satisfied, which determinations and
judgments, if exercised in good faith, shall exonerate the Agent from liability
to any Lender or other Person for any error in judgment.

12.1.2. Duties. The Agent shall not have any duties except those expressly set
forth in the Loan Documents. The conferral upon the Agent of any right shall not
imply a duty to exercise such right, unless instructed to do so by Lenders in
accordance with this Agreement.

12.1.3. Agent Professionals. The Agent may perform its duties through agents and
employees. The Agent may consult with and employ Agent Professionals, and shall
be entitled to act upon, and shall be fully protected in any action taken in
good faith reliance upon, any advice given by an Agent Professional. The Agent
shall not be responsible for the negligence or misconduct of any agents,
employees or Agent Professionals selected by it with reasonable care.

12.1.4. Instructions of Lenders. The rights and remedies conferred upon the
Agent under the Loan Documents may be exercised without the necessity of joinder
of any other party, unless required by Applicable Law. The Agent may request
instructions from Required Lenders or other Secured Parties with respect to any
act (including the failure to act) in connection with any Loan Documents or
Collateral, and may seek assurances to its satisfaction from the Secured Parties
of their indemnification obligations against all Claims that could be incurred
by the Agent in connection with any act. The Agent shall be entitled to refrain
from any act until it has received such instructions or assurances, and the
Agent shall not incur liability to any Person by reason of so refraining.
Instructions of Required Lenders shall be binding upon all Secured Parties, and
no Secured Party shall have any right of action whatsoever against the Agent as
a result of the Agent acting or refraining from acting in accordance with the
instructions of Required Lenders. Notwithstanding the foregoing, instructions by
and consent of specific parties shall be required to the extent provided in
Section 14.1.1. In no event shall the Agent be required to take any action that,
in its opinion, is contrary to Applicable Law or any Loan Documents or could
subject any Agent Indemnitee to personal liability.

12.2. Dutch Security Trustee.

12.2.1. Appointment of the Dutch Security Trustee.

(a) The Dutch Facility Secured Parties appoint the Dutch Security Trustee to
hold (i) any security interest created by any Foreign Security Agreement; and
(ii) the covenants and undertakings of the relevant Foreign Security Agreements,
with respect to any jurisdiction where the concept of trust is appropriate, on
trust for the Dutch Facility Secured Parties and with respect to any
jurisdiction where the concept of trust is not appropriate, as security agent
for the Dutch Facility Secured Parties, and, in each case, the Dutch Security
Trustee accepts that appointment.

 

156

--------------------------------------------------------------------------------

(b) Each Dutch Facility Secured Party (other than the Dutch Security Trustee)
hereby appoints the Dutch Security Trustee as its representative
(vertegenwoordiger / représentant) within the meaning of article 5 of the
Belgian Financial Collateral Act of 15 December 2004 in respect of each Belgian
Security Agreement relating to financial instruments and cash on account.

(c) The Dutch Security Trustee, its subsidiaries and associated companies may
each retain for its own account and benefit any fee, remuneration and profits
paid to it in connection with (i) its activities under the Loan Documents and
(ii) its engagement in any kind of banking or other business with any Loan
Party.

12.2.2. Delegation. The Dutch Security Trustee may delegate to any Person on
such terms (which may include the power to sub-delegate) and subject to such
conditions as it thinks fit, all or any of the rights, powers, authorities and
discretions vested in it by any of the Loan Documents.

12.2.3. Separate Security Trustees.

(a) The Dutch Security Trustee may (whether for the purpose of complying with
any law or regulation of any overseas jurisdiction, or for any other reason)
appoint any Person to act jointly with the Dutch Security Trustee either as a
separate trustee or as a co-trustee (each an “Appointee”) on such terms and
subject to such conditions as the Dutch Security Trustee thinks fit and with
such of the rights, powers, authorities and discretions vested in the Dutch
Security Trustee by any Loan Document as may be conferred by the instrument of
appointment of the Appointee.

(b) The Dutch Security Trustee may pay reasonable remuneration to any Appointee,
together with any costs and expenses (including legal fees) reasonably incurred
by the Appointee in connection with its appointment. All such remuneration,
costs and expenses shall be treated, for the purposes of this Agreement, as paid
or incurred by the European Security Trustee.

12.2.4. The Foreign Security Agreements.

(a) Each Dutch Facility Secured Party confirms its approval of the relevant
Foreign Security Agreements and of any security interest intended to be created
under it, and authorizes and instructs the Dutch Security Trustee to execute and
deliver the relevant Foreign Security Agreements.

(b) The Dutch Security Trustee may accept without inquiry the title (if any)
which any Person may have to any assets over which security interest is intended
to be created by the relevant Foreign Security Agreements, and shall not be
liable to any other party for any defect in or failure of any such title.

(c) The Dutch Security Trustee shall not be (i) liable or responsible to any
Dutch Facility Secured Party for any failure to perfect, protect, register, make
any filing or give notice in respect of the security interest intended to be
created by the relevant Foreign Security Agreements, unless that failure arises
directly from its own gross negligence or willful misconduct; (ii) obliged to
insure any assets over which security interest is intended to be created by the
relevant Foreign Security Agreements, to require any other person to maintain
any such insurance, or to make any inquiry or conduct any investigation into the
legality, validity, effectiveness, adequacy or enforceability of any insurance
existing over any such asset; or (iii) obliged to hold in its own possession the
relevant Foreign Security Agreements, title deed or other document relating to
any assets over which security interest is intended to be created by the
relevant Foreign Security Agreements.

 

157

--------------------------------------------------------------------------------

12.2.5. Security Trustee as Proprietor. Each Dutch Facility Secured Party
confirms that it does not wish to be registered as a joint proprietor of any
mortgage or charge created pursuant to the relevant European Security Agreements
and accordingly (a) authorizes the Dutch Security Trustee to hold such mortgages
and charges in its sole name as trustee for the Dutch Facility Secured Parties;
and (b) requests the land registry (or other relevant registry) to register the
Dutch Security Trustee as a sole proprietor (or heritable creditor, as the case
may be) of any such mortgage or charge.

12.2.6. Investments. Except to the extent that a Foreign Security Agreement
otherwise requires, any moneys received by the Dutch Security Trustee under or
pursuant to a Foreign Security Agreement may be (a) invested in any investments
which it may select and which are authorized by Applicable Law; or (b) placed on
deposit at any bank or institution (including itself) on such terms as it may
think fit, in each case in the name or under the control of the Dutch Security
Trustee, and those moneys, together with any accrued income (net of any
applicable Tax) shall be held by the Dutch Security Trustee to the order of the
Agent, and shall be payable to the Agent on demand.

12.2.7. Dutch Facility Secured Parties’ Indemnity to the Dutch Security Trustee.
Each Dutch Facility Secured Party shall indemnify the Dutch Security Trustee,
its delegates and sub-delegates and Appointees (each an “Indemnified Party”),
within three (3) Business Days of demand, against any cost, loss or liability
incurred by the Dutch Security Trustee or the relevant Indemnified Party
(otherwise than by reason of the gross negligence or willful misconduct of the
Dutch Security Trustee or that Indemnified Party) in acting as Dutch Security
Trustee or its delegate, sub-delegate or Appointee under the relevant Foreign
Security Agreements (except to the extent that the Dutch Security Trustee, or
the relevant Indemnified Party has been reimbursed by any Loan Party pursuant to
the relevant Foreign Security Agreements).

12.2.8. Conduct of Business by the Dutch Security Trustee. No provision of this
Agreement will (a) interfere with the right of the Dutch Security Trustee to
arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b) oblige the Dutch Security Trustee to investigate or claim any credit,
relief, remission or repayment available to it or the extent, order and manner
of any claim; or (c) oblige the Dutch Security Trustee to disclose any
information relating to its affairs (tax or otherwise) or any computations in
respect of tax.

12.2.9. Liability of Dutch Security Trustee.

(a) The Dutch Security Trustee shall not nor shall any of its officers,
employees or agents from time to time be responsible for: (i) the adequacy,
accuracy and/or completeness of any information (whether oral or written)
supplied by any Loan Party or any other person given in or in connection with
the relevant Foreign Security Agreements; or (ii) the legality, validity,
effectiveness, adequacy or enforceability of the relevant Foreign Security
Agreements or any other agreement, arrangement or document entered into, made or
executed in anticipation of or in connection with the relevant Foreign Security
Agreements.

(b) Without limiting Section 12.2.9(a), the Dutch Security Trustee shall not be
liable for any action taken by it or not taken by it under or in connection with
the relevant Foreign Security Agreements, unless directly caused by its gross
negligence or willful misconduct.

(c) No party (other than the Dutch Security Trustee) may take any proceedings
against any officer, employee or agent of the Dutch Security Trustee in respect
of any claim it might have against the Dutch Security Trustee or in respect of
any act or omission of any kind by that officer, employee or agent in relation
to the relevant Foreign Security Agreements and any officer, employee or agent
of the Dutch Security Trustee may rely on this Section 12.2.9 and the provisions
of the Contracts (Rights of Third Parties) Act 1999.

 

158

--------------------------------------------------------------------------------

(d) The Dutch Security Trustee shall not be liable for any delay (or any related
consequences) in crediting an account with an amount required under the Loan
Documents to be paid by the Dutch Security Trustee, if the Dutch Security
Trustee has taken all necessary steps as soon as reasonably practicable to
comply with the regulations or operating procedures of any recognized clearing
or settlement system used by the Dutch Security Trustee for that purpose.

(e) Without affecting the responsibility of the Loan Parties for information
supplied by them or on their behalf in connection with any Loan Document, each
Dutch Facility Secured Party confirms to the Dutch Security Trustee that it has
been, and shall continue to be, solely responsible for making its own
independent appraisal and investigation of all risks arising under or in
connection with the relevant Foreign Security Agreements including but not
limited to: (i) the financial condition, status and nature of the Loan Parties;
(ii) the legality, validity, effectiveness, adequacy or enforceability of the
relevant Foreign Security Agreements and any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in
connection with the relevant Foreign Security Agreements; (iii) whether such
Dutch Facility Secured Party has recourse, and the nature and extent of that
recourse, against any party or any of its respective assets under or in
connection with any Loan Document, the transactions contemplated by the Foreign
Security Agreements or any other agreement, arrangement or document entered
into, made or executed in anticipation of, under or in connection with the
relevant Foreign Security Agreements; and (iv) the adequacy, accuracy and/or
completeness of any information provided by any person under or in connection
with the relevant Foreign Security Agreements, the transactions contemplated by
the relevant Foreign Security Agreements or any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in
connection with the relevant Foreign Security Agreements.

12.2.10. Foreign Security Agreements.

(a) The Dutch Security Trustee shall accept without investigation, requisition
or objection, such title as any person may have to the assets which are subject
to the relevant Foreign Security Agreements and shall not (i) be bound or
concerned to examine or enquire into the title of any person; (ii) be liable for
any defect or failure in the title of any person, whether that defect or failure
was known to the Dutch Security Trustee or might have been discovered upon
examination or enquiry and whether capable of remedy or not; or (iii) be liable
for any failure on its part to give notice of the relevant Foreign Security
Agreements to any third party or otherwise perfect or register the security
interests created by the relevant Foreign Security Agreements (unless such
failure arises directly from the Dutch Security Trustee’s gross negligence or
willful misconduct).

(b) The Dutch Security Trustee shall hold the relevant Foreign Security
Agreements and all proceeds of enforcement of them on trust for the Dutch
Facility Secured Parties on the terms and conditions of this Agreement.

(c) For the purposes of the French Security Agreements, the Security Trustee
shall be deemed to act as mandataire in the name and on behalf of each of the
secured parties under the French Security Agreements.

(d) The relevant Foreign Security Agreements shall rank as continuing security
interest for the discharge of the liabilities secured by it.

12.2.11. [Reserved];

 

159

--------------------------------------------------------------------------------

12.2.12. Trust. The perpetuity period for each trust created by this Agreement
shall be 125 years.

12.2.13. Parallel Debt Obligations. In order to ensure the continuing validity
of the security interests governed by Dutch law, German law or Belgian law
(a) each Dutch Domiciled Loan Party irrevocably and unconditionally undertakes
(that undertaking in respect of any amount, a “Parallel Debt Obligation” and in
respect of all of them, the “Parallel Debt Obligations”) to pay to the Dutch
Security Trustee an amount equal to and in the same currency as all amounts from
time to time due and payable by that Dutch Domiciled Loan Party to the Lenders
under the Credit Documents (the obligations to the Lenders in respect of any
amount and a certain currency, an “Original Obligation” and its obligations to
the Lenders in respect of all of them, the “Original Obligations”); (b) the
Parallel Debt Obligations shall be separate from and independent of the Original
Obligations, so that the Dutch Security Trustee will have an independent right
to demand performance of any Parallel Debt Obligation; (c) the Parallel Debt
Obligations shall be owed to the Dutch Security Trustee in its own name and any
Foreign Security Agreement governed by Dutch law or Belgian law shall also be
expanded to secure the Parallel Debt Obligations; (d) the Lenders, the Loan
Parties and the Dutch Security Trustee acknowledge that the Dutch Security
Trustee acts in its own name and not as an agent or representative of the
Lenders and the security interests governed by Dutch law or Belgian law created
in favor of the Dutch Security Trustee will not be held on trust; (e) other than
as set out in Section 12.2.13(f), the Parallel Debt Obligations shall not limit
or affect the existence of the Original Obligations, for which the Lenders shall
have an independent right to demand performance (to the extent permitted by this
Agreement); (f) payment by the Loan Parties of any Parallel Debt Obligation
shall to the same extent decrease and be a good discharge of the corresponding
Original Obligation owing to the Lenders and payment by the Loan Parties of any
Original Obligations to the Lenders shall to the same extent decrease and be a
good discharge of the corresponding Parallel Debt Obligation owing by it to the
Dutch Security Trustee; and (g) without limiting or affecting the Dutch Security
Trustee’s right to protect, preserve or enforce its rights under any Foreign
Security Agreements governed by Dutch law or Belgian law, the Dutch Security
Trustee undertakes to the Lenders not to exercise its rights in respect of any
Parallel Debt Obligation without the consent of the Agent. Notwithstanding
clause (f) above, no Loan Party may pay any Parallel Debt Obligation other than
at the instruction of, and in the manner determined by, the Dutch Security
Trustee. For the avoidance of doubt, the Parallel Debt Obligations will become
due and payable (opeisbaar) at the same time as the corresponding Original
Obligations.

12.2.14. Appointment and Retirement of Dutch Security Trustee. The Dutch
Security Trustee (a) subject to the appointment of a successor (in consultation
with the Foreign Loan Party Agent) may, and must if the Agent requires, retire
at any time from its position as Dutch Security Trustee under the Loan Documents
without assigning any reason, and (b) must give notice of its intention to
retire by giving to the other Dutch Facility Secured Parties and the Foreign
Loan Party Agent not less than thirty (30) days’ nor more than sixty (60) days’
notice.

12.2.15. Appointment of Successor. The Agent may, with the approval of the
Foreign Loan Party Agent (such approval not to be unreasonably withheld) other
than during the continuation of an Event of Default, appoint a successor to the
Dutch Security Trustee, during the period of notice in Section 12.2.14. If no
successor is appointed by the Agent, the Dutch Security Trustee may appoint
(after consultation with the Agent and the Foreign Loan Party Agent) its
successor. The Foreign Facility Secured Parties shall promptly enter into any
agreements that the successor may reasonably require to effect its appointment.

12.2.16. Discharge of Dutch Security Trustee. From the date that the appointment
of the successor is effected under Section 12.2.14, the retiring Dutch Security
Trustee must be discharged from any further obligations under the Loan Documents
as Dutch Security Trustee, and the successor to

 

160

--------------------------------------------------------------------------------

the Dutch Security Trustee and each of the other Dutch Facility Secured Parties
have the same rights and obligations between themselves as they would have had
if the successor had been a party to those Loan Documents.

12.3. Agreements Regarding Collateral and Field Examination Reports.

12.3.1. Lien Release. It is acknowledged that the Loan Parties will be
automatically released from their Guarantee or Foreign Cross-Guarantee, as
applicable, hereunder and from the security interests pledged by them under the
Security Documents upon consummation of transactions permitted hereunder
(including a merger, consolidation or liquidation or a permitted Disposition)
and (i) Liens to secure the Secured Obligations hereunder will be automatically
released upon sales, dispositions or other transfers by Loan Parties permitted
(x) hereunder and (y) with respect to Term Debt Priority Collateral, when
permitted pursuant to the provisions of the Term Loan Agreement and (ii) upon
the Loan Parties’ notification to the Agent, which notification may only be made
after the date on which all Obligations (as defined in the Term Loan Agreement)
(other than unasserted contingent indemnity claims) have been paid in full and
all Commitments (as defined in the Term Loan Agreement) have been terminated or
expired (the date of such request, the “Term Debt Priority Collateral Release
Date”), Liens to secure the Term Debt Priority Collateral. In the event that any
action is necessary or required to evidence any such release, the Secured
Parties irrevocably authorize the Agent and the Security Trustee to take any
such action, including,

(a) to release any Lien on any property granted to or held by the Agent or
Security Trustee under any Loan Document (i) upon termination of all Commitments
and Full Payment of all Secured Obligations, (ii) that is transferred or to be
transferred as part of or in connection with any sales, dispositions or other
transfers by Loan Parties not prohibited hereunder or under any other Loan
Document or (iii) if approved, authorized or ratified in writing in accordance
with Section 14.1;

(b) to release any Guarantor from its obligations under any Guaranty if such
Person ceases to be a Subsidiary or a Guarantor as a result of a transaction
permitted hereunder;

(c) to subordinate any Lien on any property granted to or held by the Agent or
Security Trustee under any Loan Document to the holder of any Purchase Money
Lien or other Lien entitled to priority hereunder or by operation of law on such
property; and

(d) to deliver to the applicable Loan Party (or as directed by such Loan Party)
any certificates or Instruments in the possession of the Agent or the Security
Trustee or the termination of any control agreement for which its Lien is
released or subordinated.

Upon request by the Agent or the Security Trustee at any time, the Required
Lenders will confirm in writing the Agent’s authority to release or subordinate
its interest in particular types or items of property, or to release any
Guarantor from its obligations under the Guarantee, pursuant to this
Section 12.3.1. In each case as specified in this Section 12.3.1, the Agent or
the Security Trustee (as applicable) will, at the applicable Loan Parties’
expense, execute and deliver to such Loan Party such documents as such Loan
Party may reasonably request to evidence the release of such item of Collateral
from the assignment and security interest granted under the Security Documents
or to subordinate its interest in such item, or to release such Guarantor from
its obligations under any Guaranty, in each case in accordance with the terms of
the Loan Documents and this Section 12.3.1.

 

161

--------------------------------------------------------------------------------

12.3.2. Lien Releases; Care of Collateral.

(a) Dutch Facility Secured Parties authorize the Agent to release or subordinate
(if applicable) any Lien with respect to any Dutch Facility Collateral (i) as
required under Section 12.3.1(a) in connection with a liquidation or dissolution
permitted under Section 10.2.8(f); (ii) that does not constitute a material part
of the Dutch Facility Collateral; (iii) following an Event of Default, in
connection with an enforcement action and realization on Dutch Facility
Collateral; or (iv) with the written consent of all Dutch Lenders. Subject to
Section 14.1.1, the Dutch Security Trustee is authorized by each of the Dutch
Facility Secured Parties to execute on behalf of itself and each such Dutch
Facility Secured Party any release of the security interests created by the
relevant Foreign Security Agreements in accordance herewith. Each Dutch Facility
Secured Party undertakes to execute such releases and other documents as may be
necessary to give effect to the releases specified herein.

(b) U.S. Facility Secured Parties authorize the Agent to release or subordinate
(if applicable) any Lien with respect to any U.S. Facility Collateral (i) as
required by Section 12.3.1. or in connection with a liquidation or dissolution
permitted under Section 10.2.8(c); (ii) that does not constitute a material part
of the U.S. Facility Collateral; (iii) following an Event of Default, in
connection with an enforcement action and realization on U.S. Facility
Collateral; or (iv) with the written consent of all U.S. Lenders. Subject to
Section 14.1.1, the Agent is authorized by each of the U.S. Facility Secured
Parties to execute on behalf of itself and each such U.S. Facility Secured Party
any release of the security interests created by the relevant Security Document
in accordance with herewith. Each U.S. Facility Secured Party undertakes to
execute such releases and other documents as may be necessary to give effect to
the releases specified herein.

(c) The Agent shall have no obligation to assure that any Collateral exists or
is owned by a Loan Party, or is cared for, protected or insured, nor to assure
that the Agent’s or any Security Trustee’s Liens have been properly created,
perfected or enforced, or are entitled to any particular priority, nor to
exercise any duty of care with respect to any Collateral.

12.3.3. Possession of Collateral.

(a) The Agent and Dutch Facility Secured Parties appoint each Dutch Lender as
agent (for the benefit of Dutch Facility Secured Parties) for the purpose of
perfecting Liens in any Dutch Facility Collateral held or controlled by such
Dutch Lender, to the extent such Liens are perfected by possession or control.

(b) The Agent and U.S. Facility Secured Parties appoint each U.S. Lender as
agent (for the benefit of U.S. Facility Secured Parties) for the purpose of
perfecting Liens in any U.S. Facility Collateral held or controlled by such U.S.
Lender, to the extent such Liens are perfected by possession or control.

(c) If any Lender obtains possession or control of any Collateral, it shall
notify the Agent thereof and, promptly upon the Agent’s request, deliver such
Collateral to the Agent or the applicable Security Trustee or otherwise deal
with it in accordance with the Agent’s instructions.

12.3.4. Reports. The Agent shall promptly provide to each Applicable Lender,
when complete, copies of any field audit, examination or appraisal report
prepared by or for the Agent with respect to any Loan Party or Collateral
(“Report”). Reports and other Borrower Materials may be made available to
Lenders by providing access to them on the Platform, but Agent shall not be
responsible for system failures or access issues that may occur from time to
time. Each Lender agrees (a) that neither Bank of America nor the Agent makes
any representation or warranty as to the accuracy or completeness of any Report,
and shall not be liable for any information contained in or omitted from any
Report; (b) that the Reports are not intended to be comprehensive audits or
examinations, and that the

 

162

--------------------------------------------------------------------------------

Agent or any other Person performing any audit or examination will inspect only
specific information regarding the Obligations or Collateral and will rely
significantly upon the applicable Loan Parties’ books and records and
representations as well as upon representations of the applicable Loan Parties’
officers and employees; and (c) to keep all Reports and Borrower Materials
confidential and strictly for such Lender’s internal use, and not to distribute
any Report or Borrower Materials (or the contents thereof) to any Person (except
to such Lender’s Participants, attorneys and accountants provided such persons
are informed of the confidential nature of such Reports and Borrower Materials
and instructed to keep them confidential and strictly for such Lender’s use) or
use any Report in any manner other than administration of the Loans and other
Obligations. Each Lender shall indemnify and hold harmless the Agent and any
other Person preparing a Report from any action such Lender may take as a result
of or any conclusion it may draw from any Report or other Borrower Materials, as
well as from any Claims arising as a direct or indirect result of the Agent
furnishing a Report or any Borrower Materials to such Lender.

12.4. Reliance By Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it in good faith to be genuine and correct and to have been signed, sent or made
by the proper Person and upon the advice and statement of Agent Professionals.
The Agent shall have a reasonable and practicable amount of time to act upon any
instruction, notice or other communication under any Loan Document, and shall
not be liable for any delay in acting.

12.5. Action Upon Default. The Agent shall not be deemed to have knowledge of
any Default or Event of Default, or of any failure to satisfy any conditions in
Section 6, unless it has received written notice from a Loan Party Agent or
Required Lenders specifying the occurrence and nature thereof. Each Secured
Party agrees that, except as otherwise provided in any Loan Documents or with
the written consent of the Agent and Required Lenders, it will not take any
Enforcement Action (other than the exercise of setoff rights which setoff rights
are subject to Section 12.6), accelerate Obligations, or exercise any right that
it might otherwise have under Applicable Law to credit bid at foreclosure sales,
UCC sales or other similar dispositions of Collateral or to assert any rights
relating to any Collateral.

12.6. Ratable Sharing. If any Lender shall obtain any payment or reduction of
any Secured Obligation, whether through setoff or otherwise, in excess of its
share of such Secured Obligation, determined on a Pro Rata basis or in
accordance with Section 5.5.1, as applicable, such Lender shall immediately
(a) notify the Agent of such fact and (b) purchase from the Agent, any Fronting
Bank and the other Applicable Lenders such participations in the affected
Obligation as are necessary to cause the purchasing Lender to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.5.1, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the amount thereof to the Agent for
application under Section 4.2 and it shall provide a written statement to the
Agent describing the Obligation affected by such payment or reduction. No Lender
shall set off against any Dominion Account without the prior consent of the
Agent.

12.7. Indemnification. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES AND FRONTING BANK INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY LOAN
PARTIES (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF LOAN PARTIES
UNDER ANY CREDIT DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE
INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THAT ANY CLAIM
AGAINST AN AGENT INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR THE
AGENT (IN THE CAPACITY OF THE AGENT). In no event shall any Lender have any
obligation hereunder to indemnify or hold

 

163

--------------------------------------------------------------------------------

harmless an Agent Indemnitee or a Fronting Bank Indemnitee with respect to a
Claim that is determined in a final, non-appealable judgment by a court of
competent jurisdiction to result from the gross negligence, willful misconduct
or bad faith of such Agent Indemnitee or Fronting Bank Indemnitee (as
applicable). In the Agent’s discretion, it may reserve for any Claims made
against an Agent Indemnitee or Fronting Bank Indemnitee, and may satisfy any
judgment, order or settlement relating thereto, from proceeds of Collateral
prior to making any distribution of Collateral proceeds to the Secured Parties.
If the Agent is sued by any Creditor Representative, debtor-in-possession or
other Person for any alleged preference or fraudulent transfer, then any monies
paid by the Agent in settlement or satisfaction of such proceeding, together
with all interest, costs and expenses (including attorneys’ fees) incurred in
the defense of same, shall be promptly reimbursed to the Agent by each Lender to
the extent of its Pro Rata share.

12.8. Limitation on Responsibilities of Agent. The Agent shall not be liable to
any Secured Party for any action taken or omitted to be taken under the Credit
Documents, except for losses directly and solely caused by the Agent’s gross
negligence or willful misconduct. The Agent does not assume any responsibility
for any failure or delay in performance or any breach by any Loan Party, Lender
or other Secured Party of any obligations under the Credit Documents. The Agent
does not make any express or implied representation, warranty or guarantee to
the Secured Parties with respect to any Secured Obligations, Collateral, Credit
Documents or Loan Party. No Agent Indemnitee shall be responsible to the Secured
Parties for any recitals, statements, information, representations or warranties
contained in any Credit Documents; the execution, validity, genuineness,
effectiveness or enforceability of any Credit Documents; the genuineness,
enforceability, collectability, value, sufficiency, location or existence of any
Collateral, or the validity, extent, perfection or priority of any Lien therein;
the validity, enforceability or collectability of any Secured Obligations; or
the assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Loan Party or Account Debtor. No Agent
Indemnitee shall have any obligation to any Secured Party to ascertain or
inquire into the existence of any Default or Event of Default, the observance or
performance by any Loan Party of any terms of the Credit Documents, or the
satisfaction of any conditions precedent contained in any Credit Documents,
except that Agent shall confirm receipt of the items required to be delivered to
Agent pursuant to Section 6 of this Agreement.

12.9. Successor Agent and Co-Agents.

12.9.1. Resignation; Successor Agent. The Agent may resign as the Agent upon ten
(10) days’ notice to the Lenders and the Borrowers. If the Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless such
successor agent is a Lender) be consented to by the Borrowers at all times other
than during the existence of an Event of Default under Section 11.1(a) or
Section 11.1(g) (which consent of the Borrowers shall not be unreasonably
withheld or delayed). If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after consulting
with the Lenders and the Borrowers, a successor agent from among the Lenders.
Upon the acceptance of its appointment as successor agent hereunder, the Person
acting as such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent, and the term “Agent” shall mean such successor
administrative agent and/or supplemental administrative agent, as the case may
be, and the retiring Agent’s appointment, powers and duties as the
Administrative Agent shall be terminated but shall continue to have the benefits
of the indemnification set forth in Sections 12.7, 12.15 and 14.2. If no
successor agent has accepted appointment as the Agent by the date which is
fifteen (15) Business Days following the retiring Agent’s notice of resignation,
the retiring Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above. Upon the acceptance of any appointment as the Agent hereunder by a
successor and upon the execution and filing

 

164

--------------------------------------------------------------------------------

or recording of such financing statements, or amendments thereto, and such
amendments or supplements to such instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, the Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges, and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under the
Loan Documents. Notwithstanding any Agent’s resignation, the provisions of this
Section 12 shall continue in effect for its benefit with respect to any actions
taken or omitted to be taken by it while the Agent. Any successor to Bank of
America by merger or acquisition of stock or this loan shall continue to be the
Agent hereunder without further act on the part of the parties hereto, unless
such successor resigns as provided above.

12.9.2. Separate Collateral Agent. It is the intent of the parties that there
shall be no violation of any Applicable Law denying or restricting the right of
financial institutions to transact business in any jurisdiction. If the Agent
believes that it may be limited in the exercise of any rights or remedies under
the Loan Documents due to any Applicable Law, the Agent may appoint an
additional Person who is not so limited, as a separate security trustee,
collateral agent or co-collateral agent. If the Agent so appoints a security
trustee, collateral agent or co-collateral agent, each right and remedy intended
to be available to the Agent under the Loan Documents shall also be vested in
such separate agent. The Secured Parties shall execute and deliver such
documents as the Agent deems appropriate to vest any rights or remedies in such
agent. If any security trustee, collateral agent or co-collateral agent shall
die or dissolve, become incapable of acting, resign or be removed, then all the
rights and remedies of such agent, to the extent permitted by Applicable Law,
shall vest in and be exercised by the Agent until appointment of a new agent.

12.10. Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that
it has, independently and without reliance upon the Agent or any other Lenders,
and based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Loan Party and its own
decision to enter into this Agreement and to fund Loans and participate in LC
Obligations hereunder. Each Secured Party has made such inquiries as it deems
necessary concerning the Loan Documents, the Collateral and each Loan Party.
Each Secured Party further acknowledges and agrees that the other Secured
Parties and the Agent have made no representations or warranties concerning any
Loan Party, any Collateral or the legality, validity, sufficiency or
enforceability of any Loan Documents or Secured Obligations. Each Secured Party
will, independently and without reliance upon any other Secured Party or the
Agent, and based upon such financial statements, documents and information as it
deems appropriate at the time, continue to make and rely upon its own credit
decisions in making Loans and participating in LC Obligations, and in taking or
refraining from any action under any Loan Documents. Except for notices, reports
and other information expressly requested by a Lender, the Agent shall have no
duty or responsibility to provide any Secured Party with any notices, reports or
certificates furnished to the Agent by any Loan Party or any credit or other
information concerning the affairs, financial condition, business or Properties
of any Loan Party (or any of its Affiliates) which may come into possession of
the Agent or any of the Agent’s Affiliates.

12.11. Remittance of Payments and Collections.

12.11.1. Remittances Generally. All payments by any Lender to the Agent shall be
made by the time and on the day set forth in this Agreement, in immediately
available funds. If no time for payment is specified or if payment is due on
demand by the Agent and request for payment is made by the Agent by 11:00 a.m.
(Local Time) on a Business Day, payment shall be made by Lender not later than
2:00 p.m. (Local Time) on such day, and if request is made after 11:00 a.m.
(Local Time), then payment shall be made by 11:00 a.m. (Local Time) on the next
Business Day. Payment by the Agent to any Secured Party shall be made by wire
transfer, in the type of funds received by the Agent. Any such payment shall be
subject to the Agent’s right of offset for any amounts due from such payee under
the Loan Documents.

 

165

--------------------------------------------------------------------------------

12.11.2. Failure to Pay. If any Secured Party fails to pay any amount when due
by it to the Agent pursuant to the terms hereof, such amount shall bear
interest, from the due date until paid in full, at the rate determined by the
Agent as customary for interbank compensation for two Business Days and
thereafter at the Default Rate for U.S. Base Rate Loans. In no event shall Loan
Parties be entitled to receive credit for any interest paid by a Secured Party
to the Agent, nor shall any Defaulting Lender be entitled to interest on any
amounts held by the Agent pursuant to Section 4.2.

12.11.3. Recovery of Payments. If the Agent pays any amount to a Secured Party
in the expectation that a related payment will be received by the Agent from a
Loan Party and such related payment is not received, then the Agent may recover
such amount from each Secured Party that received it. If the Agent determines at
any time that an amount received under any Loan Document must be returned to a
Loan Party or paid to any other Person pursuant to Applicable Law or otherwise,
then, notwithstanding any other term of any Loan Document, the Agent shall not
be required to distribute such amount to any Lender. If any amounts received and
applied by the Agent to any Secured Obligations are later required to be
returned by the Agent pursuant to Applicable Law, each Lender shall pay to the
Agent, on demand, such Lender’s Pro Rata share of the amounts required to be
returned.

12.12. Agent in its Individual Capacity. As a Lender, Bank of America shall have
the same rights and remedies under the other Loan Documents as any other Lender,
and the terms “Lenders,” “Required Lenders”, “Super-Majority Lenders” or any
similar term shall include Bank of America and its Affiliates in their
capacities as Lenders. Each of Bank of America and its Affiliates may accept
deposits from, lend money to, provide Bank Products to, act as financial or
other advisor to, and generally engage in any kind of business with, the Loan
Parties and their Affiliates, as if Bank of America was not the Agent hereunder,
without any duty to account therefor to Lenders. In their individual capacities,
Bank of America and its Affiliates may receive information regarding the Loan
Parties, their Affiliates and their Account Debtors (including information
subject to confidentiality obligations), and each Secured Party agrees that Bank
of America and its Affiliates shall be under no obligation to provide such
information to any Secured Party, if acquired in such individual capacity.

12.13. Agent Titles. Each Lender or Affiliate thereof, other than Bank of
America, that is designated (on the cover page of this Agreement or otherwise)
by Bank of America as an “Agent”, “Arranger”, “Joint Lead Arranger”, “Joint Book
Manager”, “Syndication Agent” or “Documentation Agent” of any type shall not
have any right, power, responsibility or duty under any Loan Documents other
than those applicable to all Lenders, and shall in no event be deemed to have
any fiduciary relationship with any other Lender.

12.14. Bank Product Providers. Each Secured Bank Product Provider that is not a
Lender, by delivery of a joinder agreement in form and substance reasonably
satisfactory to the Agent and the applicable Loan Party Agent, or as otherwise
agreed by the Agent and such Loan Party Agent, shall agree to be bound by
Section 5.3 and this Section 12. Each Secured Bank Product Provider shall
indemnify and hold harmless Agent Indemnitees, to the extent not reimbursed by
Loan Parties, against all Claims that may be incurred by or asserted against any
Agent Indemnitee in connection with such provider’s Secured Bank Product
Obligations (except those Claims determined in a final, non-appealable judgment
by a court of competent jurisdiction to result from the gross negligence or
willful misconduct of such Agent Indemnitee).

12.15. Withholding Taxes. To the extent required by any Applicable Law, the
Agent may withhold from any payment to any Lender an amount equivalent to any
applicable withholding Tax. If

 

166

--------------------------------------------------------------------------------

the IRS or any other Governmental Authority asserts a claim that the Agent did
not properly withhold Tax from amounts paid to or for the account of any Lender
because (a) the appropriate form was not delivered or was not properly executed
by such Lenders (b) such Lender failed to notify the Agent of a change in
circumstance which rendered the exemption from, or reduction of, withholding Tax
ineffective or for any other reason, or (c) such Lender otherwise failed to
comply with Section 5.9, or if the Agent reasonably determined that a payment
was made to a Lender pursuant to this Agreement without deduction or applicable
withholding Tax from such payment, such Lender shall indemnify the Agent fully
for all amounts paid, directly or indirectly, by the Agent as Tax or otherwise,
including any expenses (including legal expenses) incurred.

12.16. No Third Party Beneficiaries. This Section 12 is an agreement solely
among the Secured Parties and the Agent, and shall survive Full Payment of the
Secured Obligations. This Section 12 does not confer any rights or benefits upon
Loan Parties or any other Person. As between Loan Parties and the Agent, any
action that the Agent may take under any Loan Documents or with respect to any
Secured Obligations shall be conclusively presumed to have been authorized and
directed by the Secured Parties.

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

13.1. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Loan Parties, the Agent, Secured Parties, and their respective
successors and permitted assigns, except that (a) no Loan Party shall have the
right to assign its rights or delegate its obligations under any Loan Documents;
and (b) any assignment by a Lender must be made in compliance with Section 13.3.
The Agent may treat the Person which made any Loan as the owner thereof for all
purposes until such Person makes an assignment in accordance with Section 13.3.
Any authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender. The Agent, acting solely for
this purpose as a non-fiduciary agent of the Borrowers, shall maintain a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders and Fronting Banks, and
the Commitments of, and principal amounts (and stated interest) of the Loans,
Letters of Credit and other obligations owing to, each Lender or Fronting Bank
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive absent manifest error; provided that a failure
to make any such recordation, or any error in such recordation, shall not affect
the Borrowers’ obligations in respect of such Loans, Letters of Credit or other
obligations, and the Borrowers, the Agent, the Lenders and the Fronting Banks
shall treat each Person whose name is recorded in the Register pursuant to the
terms hereof as the owner of the Commitments, Loans, Letters of Credit and other
obligations recorded in the Register as owing to such Person, for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrowers and any Lender or Fronting Bank, at any reasonable time and from time
to time upon reasonable prior notice.

13.2. Participations.

13.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary course
of its business and in accordance with Applicable Law, at any time sell to a
financial institution (“Participant”) a participating interest in the rights and
obligations of such Lender under any Loan Documents without notice to or consent
of the Agent or any Loan Party. Despite any sale by a Lender of participating
interests to a Participant, such Lender’s obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for performance of such obligations, such Lender shall remain the
holder of its Loans and Borrower Group Commitments for all purposes, all amounts
payable by Loan Parties within the applicable Loan Party Group shall be
determined as if such Lender had not sold such participating interests, and Loan
Parties within the applicable Loan Party Group and the Agent shall continue to
deal solely and directly with such Lender in

 

167

--------------------------------------------------------------------------------

connection with the Loan Documents. Each Lender shall be solely responsible for
notifying its Participants of any matters under the Loan Documents, and the
Agent and the other Lenders shall not have any obligation or liability to any
such Participant. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.7 or 5.8 unless Loan
Party Agent agrees otherwise to the grant of such participating Interest. Each
Lender that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the applicable Borrower, maintain a register on which it
enters the name and address of each Participant and the principal amounts (and
stated interest) of each Participant’s interest in the Loans, Letters of Credit
or other obligations under the Loan Documents (the “Participant Register”);
provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register to any Person (including the identity of any
Participant or any information relating to a Participant’s interest in any
Commitments, Loans, Letters of Credit or its other obligations under any Loan
Document) except to the extent that such disclosure is necessary to establish
that such Commitment, Loan, Letter of Credit or other obligation is in
registered form under Section 5f.103 1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be conclusive absent
manifest error, and such Lender shall treat each Person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary.

13.2.2. Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents; provided that a Lender may agree with its
Participant that such Lender will not, without the consent of such Participant,
consent to any amendment, waiver or other modification which (a) forgives
principal, interest or fees, (b) reduces the stated interest rate or fees
payable with respect to any Loan or Borrower Group Commitment in which such
Participant has an interest, (c) postpones the Revolver Commitment Termination
Date in respect of a Borrower Group in which such Participant has an interest,
or any date fixed for any regularly scheduled payment of principal, interest or
fees on such Loan or Commitment, or (d) releases any Loan Party, Guarantor or
substantial portion of the Collateral.

13.2.3. Benefit of Setoff. Loan Parties agree that each Participant shall have a
right of setoff in respect of its participating interest to the same extent as
if such interest were owing directly to a Lender, and each Lender shall also
retain the right of setoff with respect to any participating interests sold by
it. By exercising any right of setoff, a Participant agrees to share with
Lenders all amounts received through its setoff, in accordance with Section 12.6
as if such Participant were a Lender.

13.3. Assignments.

13.3.1. Permitted Assignments. Subject to Section 13.3.3 below, a Lender may
assign to an Eligible Assignee any of its rights and obligations under the Loan
Documents, as long as (a) each assignment is of a constant, and not a varying,
percentage of the transferor Lender’s rights and obligations under the Loan
Documents and, in the case of a partial assignment, is in a minimum principal
amount of $5,000,000 (unless otherwise agreed by the Agent in its discretion)
and integral multiples of $1,000,000 in excess of that amount; (b) except in the
case of an assignment in whole of a Lender’s rights and obligations, the
aggregate amount of the Commitments retained by the transferor Lender is at
least $5,000,000 (unless otherwise agreed by the Agent in its discretion);
(c) (i) with respect to Dutch Revolver Loans and Dutch LC Obligations, each
applicable Dutch Fronting Bank and applicable Dutch Swingline Lender have
consented thereto (which consent shall not otherwise be unreasonably withheld or
delayed) and (ii) with respect to U.S. Revolver Loans and U.S. LC Obligations,
each U.S. Fronting Bank and U.S. Swingline Lender have consented thereto (which
consent shall not otherwise be unreasonably withheld or delayed); and (d) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording, an Assignment and Acceptance. Nothing herein shall
limit the right of a Lender to pledge or assign any rights under the Loan
Documents as collateral security to any Federal

 

168

--------------------------------------------------------------------------------

Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, provided, however, (1) such Lender shall remain the holder
of its Loans and owner of its interest in any Letter of Credit for all purposes
hereunder, (2) no such pledge or assignment of a security interest shall
substitute any such pledgee or assignee for such Lender as a party hereto,
(3) Borrowers, the Agent, the other Lenders and Fronting Bank shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement, (4) any payment by Loan Parties to
the assigning Lender in respect of any Obligations assigned as described in this
sentence shall satisfy Loan Parties’ obligations hereunder to the extent of such
payment, (5) no such assignment shall release the assigning Lender from its
obligations hereunder and (6) the Eligible Assignee will not be entitled to
greater benefits under Section 5.8.2 (Dutch Tax Matters) than the assigning
Lender would have been entitled unless the Loan Party Agent agrees otherwise to
the grant of such assignment.

13.3.2. Effect; Effective Date. Upon delivery to the Agent of an assignment
notice in the form of Exhibit A-2 and a processing fee of $3,500 (unless
otherwise agreed by the Agent in its sole discretion), the assignment shall
become effective as specified in the notice, if it complies with this
Section 13.3.2. From such effective date, the Eligible Assignee shall for all
purposes be a Lender under the Loan Documents, and shall have all rights and
obligations of a Lender thereunder. Upon consummation of an assignment, the
transferor Lender, the Agent and Loan Parties shall make appropriate
arrangements for issuance of replacement and/or new Revolver Notes, as
applicable. The transferee Lender shall comply with Sections 5.8 and 5.9 and
deliver, upon request, an administrative questionnaire satisfactory to the
Agent.

13.3.3. Certain Assignees. No assignment or participation may be made to any
Loan Party, Affiliate of any Loan Party, Defaulting Lender or natural person. In
connection with any assignment by a Defaulting Lender, such assignment shall be
effective only upon payment by the Eligible Assignee or Defaulting Lender to the
Agent of an aggregate amount sufficient, upon distribution (through direct
payment, purchases of participations or other compensating actions as the Agent
deems appropriate), (a) to satisfy all funding and payment liabilities then
owing by the Defaulting Lender hereunder, and (b) to acquire its Pro Rata share
of all Loans and LC Obligations. If an assignment by a Defaulting Lender shall
become effective under Applicable Law for any reason without compliance with the
foregoing sentence, then the assignee shall be deemed a Defaulting Lender for
all purposes until such compliance occurs.

13.3.4. Replacement of Certain Lenders. If (a) a Lender (i) fails to give its
consent to any amendment, waiver or action for which consent of either all
Lenders or all affected Lenders was required and, in each case, Required Lenders
consented (any such Lender, a “Non-Consenting Lender”), (ii) is a Defaulting
Lender, or (iii) gives a notice under Section 3.5 or requests compensation under
Section 3.7 or (b) if any Borrower is required to pay additional amounts or
indemnity payments with respect to a Lender under Section 5.8, then, in addition
to any other rights and remedies that any Person may have, the Agent or a Loan
Party Agent may, by notice to such Lender within 120 days after such event,
require such Lender to assign all of its rights and obligations under the Loan
Documents to one or more Eligible Assignees, pursuant to appropriate Assignment
and Acceptances, within twenty (20) days after the notice. The Agent is
irrevocably appointed as attorney-in-fact to execute any such Assignment and
Acceptance if the Lender fails to execute it. Such Lender shall be entitled to
receive, in cash, concurrently with such assignment, all amounts owed to it
under the Loan Documents at par, including all principal, interest and fees
through the date of assignment (but excluding any prepayment charge).

 

169

--------------------------------------------------------------------------------

SECTION 14. MISCELLANEOUS

14.1. Consents, Amendments and Waivers.

14.1.1. Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of the Required Lenders
and each Loan Party to such Loan Document; provided, however, that:

(a) without the prior written consent of the Agent, no modification shall be
effective with respect to any provision in a Loan Document that relates to any
rights, duties or discretion of the Agent;

(b) (i) without the prior written consent of each affected U.S. Fronting Bank
(such consent not to be unreasonably withheld), no modification shall be
effective with respect to any U.S. LC Obligations or Sections 2.3.1, 2.3.2 or
2.3.3 or any other provision in a Loan Document that relates to any rights,
duties or discretion of any U.S. Fronting Bank and (ii) without the prior
written consent of each affected Dutch Fronting Bank (such consent not to be
unreasonably withheld), no modification shall be effective with respect to any
Dutch LC Obligations or Sections 2.2.1, 2.2.2 or 2.2.3 or any other provision in
a Loan Document that relates to any rights, duties or discretion of the Dutch
Fronting Bank;

(c) without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall be effective that would (i) increase
the Borrower Group Commitment of such Lender; (ii) reduce the amount of, or
waive or delay payment of, any principal, interest or fees payable to such
Lender (except as provided in Section 4.2), (iii) extend any Revolver Commitment
Termination Date or the Facility Termination Date; or (iv) change the currency
in which any Loan is denominated;

(d) without the prior written consent of all (i) Lenders (except any Defaulting
Lender as provided in Section 4.2), no modification shall be effective that
would (A) alter Section 5.3 or waive any condition in Section 6.1; (B) amend the
definitions of Pro Rata, Required Lenders or Super-Majority Lenders; (C) amend
this Section 14.1.1 or Section 5.5.1 or 12.6; (D) increase the Maximum Facility
Amount; (E) except as permitted under Section 10.2.2 subordinate the Agent’s
Lien on any Collateral or subordinate any Obligation in right payment to any
other Debt; or (F) except as permitted under Section 12.3, release all or
substantially all of the Collateral; or (G) except as permitted under
Section 12.3, release any Loan Party from liability for any Obligations except
in connection with a merger, consolidation, amalgamation or dissolution
expressly permitted in this Agreement; and (ii) U.S. Lenders (in each case
except any Defaulting Lender as provided in Section 4.2), no modification shall
be effective that would alter Section 7.1 (except to add Collateral); and

(e) without the prior written consent of the Super-Majority Lenders, no
amendment or waiver shall be effective that would (i) amend any definition of a
Borrowing Base (and the defined terms used in such definitions) or to increase
the advance rates applicable to any of the Borrowing Bases if the effect of such
amendment is to make more credit available or to add new types of Collateral
thereunder or (ii) amend the definition of Excess Availability or any definition
of Availability.

(f) Notwithstanding anything to the contrary in this Agreement, pursuant to one
or more offers (each, an “Extension Offer”) made from time to time by the
applicable Loan Party Agent to all applicable Revolving Lenders having
Commitments with a like commitment termination date, in each case on a pro rata
basis (based on the aggregate amounts of Commitments) and on the same terms to
each such Lender within the relevant class, the applicable Borrower are hereby
permitted to consummate from

 

170

--------------------------------------------------------------------------------

time to time transactions with individual Lenders that accept the terms
contained in such Extension Offers to extend the maturity date and/or commitment
termination of each such Lender’s Commitments of such class, and, subject to the
terms hereof, otherwise modify the terms of such Commitments pursuant to the
terms of the relevant Extension Offer (including by increasing the interest rate
and/or fees payable in respect of such Commitments (and related outstandings))
(each, an “Extension”; and each group of Commitments, as applicable, in each
case as so extended, as well as the original Revolving Commitments (in each case
not so extended), being a separate “tranche”), so long as the following terms
are satisfied:

(i) no Event of Default shall have occurred and be continuing at the time the
Extension Offer is delivered to the Lenders;

(ii) except as to interest rates, fees and final commitment termination date
(which shall be determined by the applicable Loan Party Agent and set forth in
the relevant Extension Offer, subject to acceptance by the Extended Lenders (as
hereinafter defined)), the Commitment of any Lender that agrees to an Extension
with respect to such Commitment (an “Extended Lender”) extended pursuant to an
Extension (an “Extended Commitment”) and the related outstandings shall be a
Commitment (or related outstandings, as the case may be) with the same terms (or
terms not less favorable to existing Lenders) as the original Commitments (and
related outstandings); provided that (1) the borrowing and payments (except for
(A) payments of interest and fees at different rates on Extended Commitments
(and related outstandings), (B) repayments required upon the commitment
termination date of the non-extending tranche of Commitments and (C) repayment
made in connection with a permanent repayment and termination of commitments) of
Revolving Loans with respect to Extended Commitments after the applicable
extension date shall be made on a pro rata basis with all other Commitments of
such Borrower Group, (2) all applicable Swingline Loans and Letters of Credit
shall be participated on a pro rata basis by all applicable Lenders with
Commitments (including Extended Commitments) in accordance with their percentage
of the Commitments, (3) assignments and participations of Extended Commitments
and related Loans shall be governed by the same assignment and participation
provisions applicable to the other Commitments and Loans to the same Borrower
Group and (4) at no time shall there be Commitments hereunder (including
Extended Commitments and any existing Revolving Commitments) which have more
than four (4) different maturity dates;

(iii) if the aggregate principal amount of Commitments in respect of which
Lenders shall have accepted the relevant Extension Offer shall exceed the
maximum aggregate principal amount of Commitments offered to be extended by the
applicable Loan Party Agent pursuant to such Extension Offer, then the Loans of
Lenders respectively shall be extended ratably up to such maximum amount based
on the respective commitment amounts with respect to which such Lenders have
accepted such Extension Offer.

(iv) With respect to all Extensions consummated by the Borrowers pursuant to
this Section, (A) such Extensions shall not constitute voluntary or mandatory
payments or prepayments for purposes of Section 2.1.1 or 5.2(b) and (B) no
Extension Offer is required to be in any minimum amount or any minimum
increment; provided that, the applicable Loan Party Agent may at its election
specify as a condition to consummating any such Extension that a minimum amount
(to be determined and specified in the relevant Extension Offer in such Loan
Party Agent’s sole discretion and may be waived by such Person) of Commitments
of any or all applicable tranches be tendered. The Lenders hereby consent to the
transactions contemplated by this Section (including, for the avoidance of
doubt, payment of any interest, fees or premium in respect of any Extended
Commitments on the such terms as may be set forth in the relevant Extension
Offer) and hereby waive the requirements of any provision of this Agreement or
any other Loan Document that may otherwise prohibit or conflict with any such
Extension or any other transaction contemplated by this Section.

 

171

--------------------------------------------------------------------------------

(v) No consent of any Lender shall be required to effectuate any Extension,
other than (A) the consent of each Lender agreeing to such Extension with
respect to its Commitments (or a portion thereof) and (B) with respect to any
Extension of the Commitments, the consent of the Fronting Bank and Swingline
Lender. All Extended Commitments and all obligations in respect thereof shall be
Obligations of the applicable Borrower Group under this Agreement and the other
Loan Documents and secured by the applicable Collateral on a pari passu basis
with all other applicable Obligations of such Borrower Group. The Lenders hereby
irrevocably authorize Agent to enter into amendments to this Agreement and the
other Loan Documents with the applicable Loan Party Agent (on behalf of the
applicable Loan Parties) as may be necessary in order to establish new tranches
or sub-tranches in respect of Commitments so extended and such technical
amendments as may be necessary in the reasonable opinion of Agent and the
applicable Loan Party Agent in connection with the establishment of such new
tranches or sub-tranches, in each case on terms consistent with this Section. In
addition, if so provided in such amendment and with the consent of each Fronting
Bank, participations in Letters of Credit expiring on or after the applicable
commitment termination date shall be re-allocated from the applicable Lenders
holding non-extended Commitments to Lenders holding Extended Commitments in
accordance with the terms of such amendment; provided, however, that such
participation interests shall, upon receipt thereof by the relevant Lenders
holding Commitments, be deemed to be participation interests in respect of such
Commitments and the terms of such participation interests shall be adjusted
accordingly. The Agent shall promptly notify each Lender of the effectiveness of
each such amendment.

(vi) In connection with any Extension, the applicable Loan Party Agent shall
provide Agent at least five (5) Business Days prior written notice thereof, and
shall agree to such procedures (including, without limitation, regarding timing,
rounding and other adjustments and to ensure reasonable administrative
management of the credit facilities hereunder after such Extension), if any, as
may be established by, or acceptable to, Agent, in each case acting reasonably
to accomplish the purposes of this subsection 14.1.1(f). This subsection
14.1.1(f) shall supersede any provisions of this Section 14.1.1 or Section 12.6
to the contrary.

Notwithstanding anything to the contrary herein, (i) the Fee Letters may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto, (ii) no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder (any amendment,
waiver or consent which by its terms requires the consent of all Lenders or each
affected Lender may be effected with the consent of the applicable Lenders other
than Defaulting Lenders), except that (A) the Commitment of such Lender may not
be increased or extended without the consent of such Lender and (B) any waiver,
amendment or modification requiring the consent of all Lenders or each affected
Lender that by its terms affects any Defaulting Lender disproportionately
adversely relative to other affected Lenders shall require the consent of such
Defaulting Lender, (iii) each Lender is entitled to vote as such Lender sees fit
on any bankruptcy reorganization plan that affects the Loans, and each Lender
acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code of
the United States supersedes the unanimous consent provisions set forth herein
and (iv) the Required Lenders shall determine whether or not to allow a Loan
Party to use cash collateral in the context of a bankruptcy or insolvency
proceeding and such determination shall be binding on all of the Lenders.

Notwithstanding anything in this Section 14.1.1 to the contrary, (1) if the
Agent and the North American Loan Party Agent shall have jointly identified an
obvious error or any error or omission of a typographical nature, in each case,
in any provision of the Loan Documents, then the Agent and the North

 

172

--------------------------------------------------------------------------------

American Loan Party Agent shall be permitted to amend such provision, and, in
each case, such amendment shall become effective without any further action or
consent of any other party to any Loan Document if the same is not objected to
in writing by the Required Lenders to the Agent within ten Business Days
following receipt of notice thereof and (2) this Agreement may be amended (or
amended and restated) with the written consent of only the Agent, the North
American Loan Party Agent and each Lender participating in such additional
credit facility to add one or more additional credit facilities to this
Agreement for a new jurisdiction and to permit the extensions of credit from
time to time outstanding thereunder and the accrued interest and fees in respect
thereof to share in the benefits of this Agreement and the other Loan Documents,
provided that the consent of all Lenders is required for an increase in the
Maximum Facility Amount, subject in each case to Sections 14.1.1(a) through (f).

14.1.2. Limitations. The agreement of Loan Parties shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the
rights and duties of Lenders, the Agent, the Security Trustees and/or any
Fronting Bank as among themselves. Only the consent of the parties to the Fee
Letters or any agreement relating to a Bank Product shall be required for any
modification of such agreement. No party to a Secured Bank Product Document that
is not a Lender shall have any right to participate in any manner in
modification of any Loan Document. The making of any Loans during the existence
of a Default or Event of Default shall not be deemed to constitute a waiver of
such Default or Event of Default, nor to establish a course of dealing. Any
waiver or consent granted by the Agent or Lenders hereunder shall be effective
only if in writing and only for the matter specified.

14.1.3. Payment for Consents. After the Closing Date, no Loan Party will,
directly or indirectly, pay any remuneration or other thing of value, whether by
way of additional interest, fee or otherwise, to any Lender (in its capacity as
a Lender hereunder) as consideration for agreement by such Lender with any
modification of any Loan Documents, unless such remuneration or value is
concurrently paid, on the same terms, on a Pro Rata basis to all Lenders
providing their consent.

14.2. Indemnity. IN ADDITION TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN
SECTION 5.8 OR ANY OTHER PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
EACH LOAN PARTY SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY
CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING
CLAIMS ASSERTED BY ANY LOAN PARTY OR OTHER PERSON OR ARISING FROM THE NEGLIGENCE
OF AN INDEMNITEE. In no event shall any party to a Loan Document have any
obligation thereunder to indemnify or hold harmless an Indemnitee with respect
to a Claim that is determined in a final, non-appealable judgment by a court of
competent jurisdiction to result from the gross negligence, willful misconduct
or bad faith of such Indemnitee, and no Loan Party shall have any obligation to
indemnify or hold harmless an Indemnitee for disputes solely among Indemnitees
and not relating to any act or omission of any Loan Party or its Affiliates
(other than any action involving the Agent, any Security Trustee, any Fronting
Bank or any Swingline Lender, in each case in its capacity as such, in which
case this indemnity shall apply with respect to each such Person, as applicable,
to the extent otherwise available). The indemnity under this Section 14.2 shall
not apply to any Taxes, other than Taxes arising with respect to a non-Tax
Claim.

14.3. Notices and Communications.

14.3.1. Notice Address. Subject to Section 4.4, all notices and other
communications by or to a party hereto shall be in writing and shall be given to
any Loan Party, at the applicable Loan Party Agent’s address shown on the
signature pages hereof, and to any other Person at its address shown on the
signature pages hereof (or, in the case of a Person who becomes a Lender after
the Closing Date, at the address shown on its Assignment and Acceptance), or at
such other address as a party may hereafter specify by notice in accordance with
this Section 14.3. Each such notice or other

 

173

--------------------------------------------------------------------------------

communication shall be effective only (b) if given by facsimile transmission or
electronic mail, when transmitted to the applicable facsimile number or
electronic mail address, as applicable, if confirmation of receipt is received;
(c) if given by mail, three (3) Business Days after deposit in the local mail
system of the recipient, with first-class postage pre-paid, addressed to the
applicable address; or (d) if given by personal delivery (including overnight
and courier service), when duly delivered to the notice address with receipt
acknowledged. Notwithstanding the foregoing, no notice to the Agent pursuant to
Sections 2.1.4, 2.2, 2.3, 3.1.1, 3.1.2 or 4.1.1 shall be effective until
actually received by the individual to whose attention at the Agent such notice
is required to be sent. Any written notice or other communication that is not
sent in conformity with the foregoing provisions shall nevertheless be effective
on the date actually received by the noticed party. Any notice received by North
American Loan Party Agent shall be deemed received by all Loan Parties.

14.3.2. Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as Borrower
Materials, administrative matters, distribution of Loan Documents for execution,
and matters permitted under Section 4.1.3. The Agent and Lenders make no
assurances as to the privacy and security of electronic communications.
Electronic mail and voice mail may not be used as effective notice under the
Loan Documents.

14.3.3. Platform. Borrower Materials shall be delivered pursuant to procedures
approved by the Agent, including electronic delivery (if possible) upon request
by the Agent to an electronic system maintained by the Agent (the “Platform”). A
Loan Party Agent shall notify the Agent of each posting of Borrower Materials on
the Platform and the materials shall be deemed received by the Agent only upon
its receipt of such notice. Borrower Materials and other information relating to
this Agreement may be made available to Lenders on the Platform. The Platform is
provided “as is” and “as available.” The Agent does not warrant the accuracy or
completeness of any information on the Platform nor the adequacy or functioning
of the Platform, and expressly disclaims liability for any errors or omissions
in the Borrower Materials or any issues involving the Platform. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING 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 THE
AGENT WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM. Lenders acknowledge
that Borrower Materials may include material non-public information of Loan
Parties and their Restricted Subsidiaries and should not be made available to
any personnel who do not wish to receive such information or who may be engaged
in investment or other market-related activities with respect to any Loan
Party’s or Restricted Subsidiary’s securities. No Agent Indemnitee shall have
any liability to Loan Parties, Lenders or any other Person for losses, claims,
damages, liabilities or expenses of any kind (whether in tort, contract or
otherwise) relating to use by any Person of the Platform or delivery of Borrower
Materials and other information through the Platform, except for such losses,
claims, damages, liabilities or expenses that are determined in a final,
non-appealable judgment by a court of competent jurisdiction to result from the
gross negligence, willful misconduct or bad faith of such Agent Indemnitee.

14.3.4. Non-Conforming Communications. The Agent and Lenders may rely upon any
communications purportedly given by or on behalf of any Loan Party even if they
were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Loan Party shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
electronic or telephonic communication purportedly given by or on behalf of a
Loan Party.

14.4. Performance of Loan Parties’ Obligations. Subject to Sections 2.1.5 and
2.1.6, the Agent may, in its discretion at any time and from time to time, at
the expense of the Loan Parties of the

 

174

--------------------------------------------------------------------------------

applicable Loan Party Group, pay any amount or do any act required of a Loan
Party under any Loan Documents or otherwise lawfully requested by the Agent to
(b) enforce any Loan Documents or collect any Obligations; (c) protect, insure,
maintain or realize upon any Collateral; or (d) defend or maintain the validity
or priority of the Agent’s or any Security Trustee’s Liens in any Collateral,
including any payment of a judgment, insurance premium, warehouse charge,
finishing or processing charge, or landlord claim, or any discharge of a Lien.
All payments, costs and expenses (including Extraordinary Expenses) of the Agent
under this Section 14.4 shall be reimbursed to the Agent by Loan Parties, on
demand, with interest from the date incurred until paid in full, at the Default
Rate applicable to U.S. Base Rate Loans. Any payment made or action taken by the
Agent under this Section 14.4 shall be without prejudice to any right to assert
an Event of Default or to exercise any other rights or remedies under the Loan
Documents.

14.5. Credit Inquiries. The Agent and Lenders may (but shall have no obligation
to) respond to usual and customary credit inquiries from third parties
concerning any Loan Party or Subsidiary.

14.6. Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.

14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations, tests or measurements to regulate similar matters, and they agree
that these are cumulative and that each must be performed as provided. Except as
otherwise provided in another Loan Document (by specific reference to the
applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document, the provision
herein shall govern and control.

14.8. Counterparts. Any Loan Document may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement shall become effective when the
Agent has received counterparts bearing the signatures of all parties hereto and
Section 6.1 is satisfied. Delivery of a signature page of any Loan Document by
telecopy or other electronic means shall be effective as delivery of a manually
executed counterpart of such agreement.

14.9. Entire Agreement. Time is of the essence with respect to all Loan
Documents and Obligations. The Loan Documents constitute the entire agreement,
and supersede all prior understandings and agreements, oral or written, among
the parties relating to the subject matter thereof.

14.10. Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for the Agent or any
other Lender to be joined as an additional party in any proceeding for such
purposes. Nothing in this Agreement and no action of the Agent, Lenders or any
other Secured Party pursuant to the Loan Documents or otherwise shall be deemed
to constitute the Agent and any Secured Party to be a partnership, association,
joint venture or similar arrangement, nor to constitute control of any Loan
Party.

14.11. No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated by any Loan Document, Loan Parties acknowledge
and agree that (a)(i) this credit facility and any related arranging or other
services by the Agent, any Lender, any of their Affiliates or any Joint Lead
Arranger or other agent are arm’s-length commercial transactions between Loan
Parties and such Person; (ii) Loan Parties have consulted their own legal,
accounting, regulatory and Tax

 

175

--------------------------------------------------------------------------------

advisors to the extent they have deemed appropriate; and (iii) Loan Parties are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
the Agent, Lenders, their Affiliates and any Joint Lead Arranger or other agent
is and has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting as
an advisor, agent or fiduciary for Loan Parties, any of their Affiliates or any
other Person, and has no obligation with respect to the transactions
contemplated by the Loan Documents except as expressly set forth therein; and
(c) the Agent, Lenders, their Affiliates and any Joint Lead Arranger or other
agent may be engaged in a broad range of transactions that involve interests
that differ from those of Loan Parties and their Affiliates, and have no
obligation to disclose any of such interests to Loan Parties or their
Affiliates. To the fullest extent permitted by Applicable Law, each Loan Party
hereby waives and releases any claims that it may have against the Agent,
Lenders, their Affiliates and any Joint Lead Arranger or other agent with
respect to any breach of agency or fiduciary duty in connection with any
transaction contemplated by a Loan Document.

14.12. Confidentiality. Each of the Agent, Lenders and each Fronting Bank shall
maintain the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, members, directors, officers, employees, agents, advisors and
representatives; provided such Persons are informed of the confidential nature
of the Information and instructed to keep it confidential; (b) to the extent
requested by any governmental, regulatory or self-regulatory authority
purporting to have jurisdiction over it or its Affiliates; (c) to the extent
required by Applicable Law or by any subpoena or other legal process; (d) to any
other party hereto; (e) in connection with any action or proceeding, or other
exercise of rights or remedies, relating to any Loan Documents or Secured
Obligations; (f) subject to an agreement containing provisions substantially the
same (or at least as restrictive) as this Section 14.12, to any Transferee or
any actual or prospective party (or its advisors) to any Bank Product; (g) with
the consent of a Loan Party Agent; (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section 14.12 or (ii) is available to the Agent, any Lender, Fronting Bank or
any of their Affiliates on a nonconfidential basis from a source other than Loan
Parties or (i) on a confidential basis to any rating agency in connection with
rating any Loan Party or its Subsidiaries. Notwithstanding the foregoing, the
Agent and Lenders may publish or disseminate general information concerning this
credit facility, including the names and addresses of Loan Parties and a general
description of Loan Parties’ businesses, and may use Loan Parties’ logos,
trademarks or product photographs in advertising materials. As used herein,
“Information” means all information received from a Loan Party or Subsidiary
relating to it or its business. Any Person required to maintain the
confidentiality of Information pursuant to this Section 14.12 shall be deemed to
have complied if it exercises a degree of care to that it accords its own
confidential information. Each of the Agent, Lenders and each Fronting Bank
acknowledges that (A) Information may include material non-public information
concerning a Loan Party or Subsidiary; (B) it has developed compliance
procedures regarding the use of material non-public information; (C) it will
handle such material non-public information in accordance with Applicable Law,
including federal, state, provincial and territorial securities laws.

14.13. [Reserved].

14.14. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW AND FEDERAL LAWS RELATING
TO NATIONAL BANKS).

 

176

--------------------------------------------------------------------------------

14.15. Consent to Forum.

14.15.1. Forum. EACH PARTY HERETO HEREBY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER
THE COUNTY OF NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY
LOAN DOCUMENTS, AND EACH LOAN PARTY AGREES THAT ANY SUCH PROCEEDING SHALL BE
BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH PARTY IRREVOCABLY WAIVES ALL
CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL
OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 14.3.1. Nothing herein shall limit the right of the Agent, any Security
Trustee or any Lender to bring proceedings against any Loan Party in any other
court, nor limit the right of any party to serve process in any other manner
permitted by Applicable Law. Nothing in this Agreement shall be deemed to
preclude enforcement by the Agent or any Security Trustee of any judgment or
order obtained in any forum or jurisdiction. Final judgment against a Loan Party
in any action, suit or proceeding shall be conclusive and may be enforced in any
other jurisdiction, including the country in which such Loan Party is domiciled,
by suit on the judgment.

14.15.2. Process Agent. Without prejudice to any other mode of service allowed
under any relevant law, each Foreign Borrower and each other Loan Party
organized outside the U.S. (a) irrevocably appoints the Corporation Trust
Company located at Corporation Trust Center, 1209 Orange Street, Wilmington, DE
19801, as its agent for service of process in relation to any action or
proceeding arising out of or relating to any Loan Documents, and (b) agrees that
failure by a process agent to notify such Borrower or such Loan Party of any
process will not invalidate the proceedings concerned. For purposes of clarity,
nothing in this Agreement or any other Loan Document will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law.

14.15.3. Waivers by Loan Parties. To the fullest extent permitted by Applicable
Law, each Loan Party waives (a) the right to trial by jury (which the Agent,
each Security Trustee and each Lender hereby also waives) in any proceeding or
dispute of any kind relating in any way to any Loan Documents, Obligations or
Collateral; (b) presentment, demand, protest, notice of presentment, default,
non-payment, maturity, release, compromise, settlement, extension or renewal of
any commercial paper, accounts, documents, instruments, chattel paper and
guaranties at any time held by the Agent on which a Loan Party may in any way be
liable, and hereby ratifies anything the Agent may do in this regard; (c) notice
prior to taking possession or control of any Collateral; (d) any bond or
security that might be required by a court prior to allowing the Agent or a
Security Trustee to exercise any rights or remedies; (e) the benefit of all
valuation, appraisement and exemption laws; (f) any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential,
exemplary or punitive damages (as opposed to direct or actual damages) in any
way relating to any Enforcement Action, Obligations, Loan Documents or
transactions relating thereto; and (g) notice of acceptance hereof. Each Loan
Party acknowledges that the foregoing waivers are a material inducement to the
Agent, each Security Trustee, each Fronting Bank and Lenders entering into this
Agreement and that the Agent, Security Trustees, each Fronting Bank and Lenders
are relying upon the foregoing in their dealings with Loan Parties. Each Loan
Party has reviewed the foregoing waivers with its legal counsel and has
knowingly and voluntarily waived its jury trial and other rights following
consultation with legal counsel. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.

14.16. Patriot Act Notice. The Agent and Lenders hereby notify Loan Parties that
pursuant to the requirements of the Patriot Act and other applicable anti-money
laundering, anti-terrorist financing, economic or trade sanctions and “know your
client” policies, regulations, laws or rules (the Proceeds of Crime Act and such
other applicable policies, regulations, laws or rules, collectively, including
any guidelines or orders thereunder, “AML Legislation”), the Agent and Lenders
are required to obtain, verify

 

177

--------------------------------------------------------------------------------

and record certain information that identifies each Loan Party, including its
legal name, address, Tax ID number and other similar information that will allow
the Agent and Lenders to identify it in accordance with the Patriot Act and the
AML Legislation. The Agent and Lenders may require information regarding Loan
Parties’ management and owners, such as legal name, address, social security
number and date of birth. Each Loan Party shall promptly provide all such
information, including supporting documentation and other evidence, as may be
reasonably requested by the Agent, any Lender or any prospective assignee or
participant of a Lender pursuant to the terms herein, in order to comply with
the Patriot Act and/or the AML Legislation.

14.17. [Reserved].

14.18. Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Loan
Party for liquidation or reorganization, should any Loan Party become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of such Loan Party’s
assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.

14.19. Nonliability of Lenders. Neither the Agent, any Fronting Bank nor any
Lender undertakes any responsibility to any Loan Party to review or inform any
Loan Party of any matter in connection with any phase of any Loan Party’s
business or operations. Each Loan Party agrees, on behalf of itself and each
other Loan Party, that neither the Agent, any Fronting Bank nor any Lender shall
have liability to any Loan Party (whether sounding in tort, contract or
otherwise) for losses suffered by any Loan Party in connection with, arising out
of, or in any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable judgment
by a court of competent jurisdiction that such losses resulted from the gross
negligence, willful misconduct or bad faith of the party from which recovery is
sought. NO LENDER SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS
OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS, SYNDTRAK OR
OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS
AGREEMENT.

14.20. Restrictions on Foreign Pledges. Notwithstanding anything to the contrary
in this Agreement or any other Loan Document, no Foreign Domiciled Loan Party
shall directly or indirectly guarantee or pledge its assets, and no shares in
excess of 65% of any Foreign Subsidiary shall be pledged (including an indirect
pledge through the pledge of the shares of a Subsidiary that is treated as a
disregarded entity for U.S. federal income tax purposes that has no material
assets other than shares in one or more Foreign Subsidiaries), in support of the
U.S. Facility, the Obligations of any U.S. Borrower or any guarantee in support
thereof. Additionally, no pledge or guarantee by any other entity shall be
required, and no proceeds resulting therefrom shall be used, to the extent such
action would result in a controlled foreign corporation (with respect to which a
U.S. Borrower is a “United States shareholder” within the meaning of subpart F
of the Code) holding “United States property” (pursuant to the rules of
Section 956(d) of the Code). For the avoidance of doubt, the parties hereto
agree that notwithstanding anything herein or in any other Loan Documents to the
contrary, with respect to all Loan Documents, a payment (whether money, property
or setoff) (x) by (or on behalf of) a Foreign Subsidiary, (y) resulting from
enforcement of a Lien granted by, or in respect of, a Foreign Subsidiary or
(z) by any Loan Party

 

178

--------------------------------------------------------------------------------

with respect to a Foreign Subsidiary’s Obligations, shall not be applied to
satisfy an obligation under the U.S. Facility or a guarantee thereof (whether
directly or indirectly, including by setoff) and shall not serve as Collateral
therefor.

14.21. NO ORAL AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

14.22. ABL Intercreditor Agreement. Notwithstanding anything to the contrary
contained in this Agreement and each other Loan Document, the Liens, security
interests and rights granted pursuant to this Agreement or any other Loan
Document shall be subject to the terms, provisions and conditions of (and the
exercise of any right or remedy by the Agent hereunder or thereunder shall be
subject to the terms and conditions of), the ABL Intercreditor Agreement. In the
event of any conflict between this Agreement and any other Loan Document or the
ABL Intercreditor Agreement, as the case may be, the ABL Intercreditor Agreement
shall control and no right, power, or remedy granted to the Agent hereunder or
under any other Loan Document shall be exercised by the Agent and no direction
shall be given by the Agent, in contravention of the ABL Intercreditor
Agreement. With respect to any requirement herein or in any other Loan Document
for any Loan Party to deliver originals of certificated Equity Interests,
Instruments, or similar documents constituting Collateral which is Term Debt
Priority Collateral, such requirements shall be deemed satisfied to the extent
the requirements to deliver the same to the Term Agent in accordance with the
ABL Intercreditor Agreement and the Term Debt Documents are in effect and are
satisfied by such Loan Party. To the extent that any covenants, representations
or warranties set forth in this Agreement or any other Loan Document are untrue
or incorrect solely as a result of the delivery to or grant of possession or
control to, the Term Agent in accordance with this Section 14.22, such
representation or warranty shall not be deemed to be untrue or incorrect for
purposes of this Agreement or such other Loan Document. Each of the Lenders
hereby acknowledges that it has received and reviewed the ABL Intercreditor
Agreement and agrees to be bound by the terms thereof as if such Lender was a
signatory thereto. Each Lender (and each Person that becomes a Lender hereunder
pursuant to Section 13.1) hereby acknowledges that Bank of America is acting
under the ABL Intercreditor Agreement as the “Initial ABL Collateral Agent” Each
Lender (and each Person that becomes a Lender hereunder pursuant to
Section 13.1) hereby authorizes and directs the Agent to enter into the ABL
Intercreditor Agreement on behalf of such Lender and agrees that the Agent, in
its various capacities thereunder, may take such actions on its behalf as is
contemplated by the terms of the ABL Intercreditor Agreement.

14.23. Amendment and Restatement. This Agreement amends and restates in its
entirety the Existing Credit Agreement. This Agreement and the other Loan
Documents govern the present relationship between the Loan Parties, Agent and
Lenders. This Agreement, however, is in no way intended, nor shall it be
construed to affect, replace, impair or extinguish the creation, attachment,
perfection or priority of the security interests in, and other Liens on, the
Collateral, which security interests and other Liens each of the Loan Parties by
this Agreement, acknowledges, reaffirms and confirms to Agent and Lenders. In
addition, except as otherwise provided herein, all monetary obligations and
liabilities and indebtedness created or existing under, pursuant to, or as a
result of, the Existing Credit Agreement, other than Excluded Swap Obligations
(the “Existing Credit Agreement Obligations”) shall continue in existence within
the definition of “Obligations” under this Agreement, which obligations,
liabilities and indebtedness the Loan Parties, by this Agreement, acknowledge
reaffirm and confirm. Nothing herein shall be construed to be a novation or
extinguishment of the Existing Credit Agreement Obligations. The Loan Parties
agree that any outstanding commitment or other obligation to make advances or
otherwise extend credit or credit support to any Loan Party pursuant to the
Existing

 

179

--------------------------------------------------------------------------------

Credit Agreement is superseded by, and renewed and consolidated under, this
Agreement. The Loan Parties represent and warrant that none of them have
assigned or otherwise transferred any rights arising under the Existing Credit
Agreement.

To the extent not amended and restated as of the Closing Date, the Loan
Documents executed in connection with the Existing Credit Agreement and in
effect prior to the Closing Date (the “Existing Credit Documents”) (i) shall
continue in full force and effect, (ii) are hereby ratified, reaffirmed and
confirmed in all respects, and (iii) shall, for the avoidance of doubt,
constitute “Loan Documents” under this Agreement. The terms of the Loan
Documents relating to the terms of the Existing Credit Documents that have been
amended and restated as of the Closing Date shall govern for any period
occurring on or after the Closing Date and the terms of such Existing Credit
Documents prior to their amendment and restatement shall govern for any period
beginning before the Closing Date and ending on the day immediately preceding
the Closing Date. In furtherance of the foregoing, (b) each reference in any
Loan Document to the “Loan Agreement” or any other Loan Document that is being
amended and restated as of the Closing Date, is hereby amended, mutatis
mutandis, as applicable in the context, to be a reference to, and shall
thereafter mean, this Agreement or such other amended and restated Loan
Document, as applicable in the context (as each may be amended, modified or
supplemented and in effect from time to time) and (c) the definition of any term
defined in any Loan Document by reference to the terms defined in the “Loan
Agreement” or any other Loan Document that is being amended and restated as of
the Closing Date, is hereby amended to be defined by reference to the defined
term in this Agreement or such other amended and restated Loan Document as
applicable (as each may be amended, modified or supplemented and in effect from
time to time). It is acknowledged and agreed that this Agreement is an “ABL
Credit Agreement” for all purposes under the ABL Intercreditor Agreement, and,
as of the date hereof, is the only “ABL Credit Agreement” in existence for
purpose of the ABL Intercreditor Agreement, and the Agent is the “ABL Collateral
Agent” for all purposes under the ABL Intercreditor Agreement.

In order to induce Lenders to enter into this Agreement on the Closing Date,
each Loan Party hereby represents, warrants and covenants to Lenders that it has
determined that each Loan Party will benefit specifically and materially from
the amendment and restatement of the Existing Credit Agreement pursuant to this
Agreement on the Closing Date and that each Loan Party requested and bargained
for the structure and terms of and security for the Loans contemplated by this
Agreement on the Closing Date.

[Remainder of page intentionally left blank; signatures begin on following page]

 

180

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

KRATON POLYMERS U.S. LLC

ARIZONA CHEMICAL COMPANY, LLC,

each as a U.S. Borrower and a Guarantor

By:  

/s/ Stephen E. Tremblay

Name:   Stephen E. Tremblay Title:   Executive Vice President and Chief
Financial Officer KRATON PERFORMANCE POLYMERS, INC. KRATON POLYMERS LLC KRATON
POLYMERS CAPITAL CORPORATION ELASTOMERS HOLDINGS LLC ARIZONA CHEMICAL HOLDINGS
CORPORATION AZ CHEM INTERMEDIATE INC. AZ CHEM US HOLDINGS INC.

AZ CHEM US INC.,

each as a Guarantor

By:  

/s/ Stephen E. Tremblay

Name:   Stephen E. Tremblay Title:   Executive Vice President and Chief
Financial Officer

[Signature Page to Amended and Restated Loan, Security and Guaranty Agreement]

--------------------------------------------------------------------------------

KRATON POLYMERS NEDERLAND B.V., as a Dutch Borrower and a Dutch Guarantor By:  

/s/ Stephen E. Tremblay

Name:   Stephen E. Tremblay Title:   Director and Attorney-in-Fact K.P. GLOBAL
HOLDINGS C.V. KRATON POLYMERS HOLDINGS B.V.

KP INTERNATIONAL C.V.,

each as a Dutch Guarantor

By:  

/s/ Stephen E. Tremblay

Name:   Stephen E. Tremblay Title:   Director and Attorney-in-Fact

[Signature Page to Amended and Restated Loan, Security and Guaranty Agreement]

--------------------------------------------------------------------------------

AGENT AND LENDERS:

BANK OF AMERICA, N.A., as Agent, as a Joint

Lead Arranger and a Joint Book Manager and a

U.S. Lender

By:  

/s/ H. Michael Wills

Name:   H. Michael Wills Title:   Senior Vice President   Bank of America, N.A.
  901 Main Street, 11th Floor TX 1-492-11-23   Dallas, TX 75202   Attn:  Michael
Wills   Telecopy: 214.209.4766   with a copy (which shall not constitute notice)
to:  

Holland & Knight LLP

200 Crescent Court Suite 1600

Dallas, Texas 75201

Attn: Angelique Waddell

Telecopy: 214.964.9501

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

BANK OF AMERICA, N.A., (acting through its

London, England Branch), as a Dutch Lender

By:  

/s/ H. Michael Wills

Name:   H. Michael Wills Title:   Senior Vice President   Bank of America, N.A.
  901 Main Street, 11th Floor TX 1-492-11-23   Dallas, TX 75202   Attn:  H.
Michael Wills   Telecopy: 214.209.4766

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

CREDIT SUISSE AG as a Joint Lead Arranger

and a Joint Book Manager and a U.S. Lender

By:  

/s/ Christopher Day

Name:   Christopher Day Title:   Authorized Signatory By:  

/s/ Karim Rahimtoola

Name:   Karim Rahimtoola Title:   Authorized Signatory  

Eleven Madison Avenue, 6th Floor

New York, NY 10010

  Attn:    Loan Operations—Agency Manager   Telecopy:
Agency.loanops@credit-suisse.com

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

CREDIT SUISSE AG, as a Dutch Lender By:  

/s/ Christopher Day

Name:   Christopher Day Title:   Authorized Signatory By:  

/s/ Karim Rahimtoola

Name:   Karim Rahimtoola Title:   Authorized Signatory  

Eleven Madison Avenue, 6th Floor

New York, NY 10010

  Attn:    Loan Operations—Agency Manager   Telecopy:
Agency.loanops@credit-suisse.com

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

NOMURA CORPORATE FUNDING AMERICAS, LLC, as a U.S. Lender By:  

/s/ Sue Lee

Name:   Sue Lee Title:   Managing Director   309 W 49th Street   New York, NY
10019-7316   Attn:     Cherati Patel   Telecopy: 646-587-1328

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

NOMURA CORPORATE FUNDING AMERICAS, LLC, as a Dutch Lender By:  

/s/ Sue Lee

Name:   Sue Lee Title:   Managing Director   309 W 49th Street   New York, NY
10019-7316   Attn:     Cherati Patel   Telecopy: 646-587-1328

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

DEUTSCHE BANK SECURITIES, INC.,

as a Joint Lead Arranger and Joint Book Manager

and as a U.S. Lender

By:  

/s/ Frank Fazio

Name:   Frank Fazio Title:   Managing Director By:  

/s/ Phillip Saliba

Name:   Phillip Saliba Title:   Director   5022 Gate Parkway, Suite 100  
Jacksonville, FL 32256   Attn:     Hareesha D. Kuberappa   Telecopy:
loan.admin-ny@by.com]

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

DEUTSCHE BANK SECURITIES, INC., as a

Dutch Lender

By:  

/s/ Marcus Tarkington

Name:   Marcus Tarkington Title:   Director By:  

/s/ Benjamin Souh

Name:   Benjamin Souh Title:   Vice President 5022 Gate Parkway, Suite 100
Jacksonville, FL 32256 Attn:   Hareesha D. Kuberappa Telecopy:
loan.admin-ny@by.com

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

WELLS FARGO BANK NATIONAL ASSOCIATION, as a U.S. Lender By:  

/s/ Krista Mize

Name:   Krista Mize Title:   Authorized Signatory   2450 Colorado Ave, Suite
3000 West   Santa Monica, CA 90404   Attn:    Krista Mize   Telecopy:
855-671-0838

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

WELLS FARGO BANK NATIONAL ASSOCIATION, as a Dutch Lender By:  

/s/ N. B. Hogg

Name:   N. B. Hogg Title:   Authorized Signatory

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

JPMORGAN CHASE BANK N.A., as a U.S. Lender By:  

/s/ Jeff A. Thompkins

Name:   Jeff A. Tompkins Title:   Authorized Officer   2200 Ross Ave. Floor 9  
Dallas, TX 75201   Attn:     Jeff Tompkins   Telecopy: 214-965-2594

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement

--------------------------------------------------------------------------------

JPMORGAN CHASE BANK N.A., as a Dutch Lender By:  

/s/ Timothy Jacob

Name:   Timothy Jacob Title:   Senior Vice President   25 bank Streeet, Canary
Wharf, Floor 25   London, E14 5JP, United Kingdom   Attn:     Timothy Jacob  
Telecopy: +44 203 4931365

Signature Page to Amended and Restated Loan, Security and Guaranty Agreement