Exhibit 10.12

 

GUARANTEE AGREEMENT

 

GUARANTEE AGREEMENT dated as of November 22, 2005, among each of the
subsidiaries listed on Schedule I hereto (each such subsidiary individually, a
“Guarantor” and collectively, the “Guarantors”) of POLYMER GROUP, INC., a
Delaware corporation (the “Borrower”), and CITICORP NORTH AMERICA, INC., as
Collateral Agent and Administrative Agent (the “Agent”) for the Secured Parties
(as defined in the Credit Agreement referred to below).

 

Reference is made to the Credit Agreement dated as of November 22, 2005 (the
“Credit Agreement”), among POLYMER GROUP, INC., a Delaware corporation (the
“Borrower”), the guarantors from time to time a party thereto, the financial
institutions listed on Schedule 2.01 thereto, as such Schedule may from time to
time be supplemented and amended (the “Lenders”), CITICORP NORTH AMERICA, INC.,
as administrative agent (in such capacity, the “Administrative Agent”) for the
Lenders, as documentation agent (in such capacity, the “Documentation Agent”),
as syndication agent (in such capacity, the “Syndication Agent”), as collateral
agent for the Secured Parties (in such capacity, the “Collateral Agent”), and
CITIGROUP GLOBAL MARKETS INC. (“CGMI”), as sole lead arranger and sole
bookrunner (in such capacity, the “Lead Arranger”). Terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.

 

The Lenders have agreed to make Loans to the Borrower, and the Issuing Bank has
agreed to issue Letters of Credit for the account of the Borrower, pursuant to,
and upon the terms and subject to the conditions specified in, the Credit
Agreement. Each of the Guarantors is a direct or indirect wholly owned
Subsidiary of the Borrower and acknowledges that it will derive substantial
benefit from the making of the Loans by the Lenders, and the issuance of the
Letters of Credit by the Issuing Bank. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit are conditioned on,
among other things, the execution and delivery by the Guarantors of a Guarantee
Agreement in the form hereof. As consideration therefor and in order to induce
the Lenders to make Loans and the Issuing Bank to issue Letters of Credit, the
Guarantors are willing to execute this Agreement.

 

Accordingly, the parties hereto agree as follows:

 

SECTION 1.           GUARANTEE. EACH GUARANTOR UNCONDITIONALLY GUARANTEES,
JOINTLY WITH THE OTHER GUARANTORS AND SEVERALLY, AS A PRIMARY OBLIGOR AND NOT
MERELY AS A SURETY, (A) THE DUE AND PUNCTUAL PAYMENT OF THE OBLIGATIONS AND (B)
THE DUE AND PUNCTUAL PERFORMANCE OF ALL COVENANTS, AGREEMENTS, OBLIGATIONS AND
LIABILITIES OF THE LOAN PARTIES UNDER OR PURSUANT TO THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS (ALL THE MONETARY AND OTHER OBLIGATIONS REFERRED TO IN
THE PRECEDING CLAUSES (A) AND (B) BEING COLLECTIVELY CALLED THE “GUARANTEED
OBLIGATIONS”). EACH GUARANTOR FURTHER AGREES THAT THE GUARANTEED OBLIGATIONS MAY
BE EXTENDED OR RENEWED, IN WHOLE OR IN PART, WITHOUT NOTICE TO OR FURTHER ASSENT
FROM IT, AND THAT IT WILL REMAIN BOUND UPON ITS GUARANTEE NOTWITHSTANDING ANY
EXTENSION OR RENEWAL OF ANY OBLIGATION. BY EXECUTION OF THIS AGREEMENT, EACH
GUARANTOR AGREES TO BE BOUND BY THE TERMS OF THE CREDIT AGREEMENT AS A
SUBSIDIARY LOAN PARTY AS IF IT WERE A PARTY TO THE CREDIT AGREEMENT.

 

SECTION 2.           GUARANTEED OBLIGATIONS NOT WAIVED. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH GUARANTOR WAIVES PRESENTMENT TO, DEMAND OF
PAYMENT FROM AND PROTEST TO THE LOAN PARTIES OF ANY OF THE GUARANTEED
OBLIGATIONS, AND ALSO WAIVES NOTICE OF ACCEPTANCE OF ITS GUARANTEE AND NOTICE OF
PROTEST FOR NONPAYMENT. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
OBLIGATIONS OF EACH GUARANTOR HEREUNDER SHALL NOT BE AFFECTED BY (A) THE FAILURE
OF THE AGENTS OR ANY OTHER SECURED PARTY TO ASSERT ANY CLAIM OR DEMAND OR TO
ENFORCE OR EXERCISE ANY RIGHT OR REMEDY AGAINST THE LOAN PARTIES UNDER THE
PROVISIONS OF THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR OTHERWISE, (B)
ANY RESCISSION, WAIVER, AMENDMENT OR MODIFICATION OF, OR ANY RELEASE FROM ANY OF
THE TERMS OR PROVISIONS OF, THIS

 

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AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY GUARANTEE OR ANY OTHER AGREEMENT,
INCLUDING WITH RESPECT TO ANY OTHER GUARANTOR UNDER THIS AGREEMENT, OR (C) THE
FAILURE TO PERFECT ANY SECURITY INTEREST IN OR LIEN ON, OR THE RELEASE OF, ANY
OF THE SECURITY HELD BY OR ON BEHALF OF THE AGENTS OR ANY OTHER SECURED PARTY.

 

SECTION 3.           GUARANTEE OF PAYMENT. EACH GUARANTOR FURTHER AGREES THAT
ITS GUARANTEE CONSTITUTES A GUARANTEE OF PAYMENT WHEN DUE AND NOT OF COLLECTION,
AND WAIVES ANY RIGHT TO REQUIRE THAT ANY RESORT BE HAD BY THE AGENTS OR ANY
OTHER SECURED PARTY TO ANY OF THE SECURITY HELD FOR PAYMENT OF THE GUARANTEED
OBLIGATIONS OR TO ANY BALANCE OF ANY DEPOSIT ACCOUNT OR CREDIT ON THE BOOKS OF
THE AGENTS OR ANY OTHER SECURED PARTY IN FAVOR OF THE BORROWER OR ANY OTHER
PERSON.

 

SECTION 4.           NO DISCHARGE OR DIMINISHMENT OF GUARANTEE. THE OBLIGATIONS
OF EACH GUARANTOR HEREUNDER SHALL NOT BE SUBJECT TO ANY REDUCTION, LIMITATION,
IMPAIRMENT OR TERMINATION FOR ANY REASON (OTHER THAN THE INDEFEASIBLE PAYMENT IN
FULL IN CASH OF THE GUARANTEED OBLIGATIONS), INCLUDING ANY CLAIM OF WAIVER,
RELEASE, SURRENDER, ALTERATION OR COMPROMISE OF ANY OF THE GUARANTEED
OBLIGATIONS, AND SHALL NOT BE SUBJECT TO ANY DEFENSE OR SETOFF, COUNTERCLAIM,
RECOUPMENT OR TERMINATION WHATSOEVER BY REASON OF THE INVALIDITY, ILLEGALITY OR
UNENFORCEABILITY OF THE GUARANTEED OBLIGATIONS OR OTHERWISE. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE OBLIGATIONS OF EACH GUARANTOR HEREUNDER
SHALL NOT BE DISCHARGED OR IMPAIRED OR OTHERWISE AFFECTED BY THE FAILURE OF THE
AGENTS OR ANY OTHER SECURED PARTY TO ASSERT ANY CLAIM OR DEMAND OR TO ENFORCE
ANY REMEDY UNDER THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER
AGREEMENT, BY ANY WAIVER OR MODIFICATION OF ANY PROVISION OF ANY THEREOF, BY ANY
DEFAULT, FAILURE OR DELAY, WILLFUL OR OTHERWISE, IN THE PERFORMANCE OF THE
GUARANTEED OBLIGATIONS, OR BY ANY OTHER ACT OR OMISSION THAT MAY OR MIGHT IN ANY
MANNER OR TO ANY EXTENT VARY THE RISK OF ANY GUARANTOR OR THAT WOULD OTHERWISE
OPERATE AS A DISCHARGE OF EACH GUARANTOR AS A MATTER OF LAW OR EQUITY (OTHER
THAN THE PAYMENT IN FULL IN CASH OR CASH EQUIVALENTS OF ALL THE GUARANTEED
OBLIGATIONS).

 

SECTION 5.           DEFENSES OF BORROWER WAIVED. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE GUARANTORS WAIVES ANY DEFENSE BASED ON
OR ARISING OUT OF ANY DEFENSE OF ANY LOAN PARTY OR THE UNENFORCEABILITY OF THE
GUARANTEED OBLIGATIONS OR ANY PART THEREOF FROM ANY CAUSE, OR THE CESSATION FROM
ANY CAUSE OF THE LIABILITY OF ANY LOAN PARTY, OTHER THAN THE FINAL PAYMENT IN
FULL IN CASH OR CASH EQUIVALENTS OF THE GUARANTEED OBLIGATIONS. THE AGENTS AND
THE OTHER SECURED PARTIES MAY, AT THEIR ELECTION, FORECLOSE ON ANY SECURITY HELD
BY ONE OR MORE OF THEM BY ONE OR MORE JUDICIAL OR NONJUDICIAL SALES, ACCEPT AN
ASSIGNMENT OF ANY SUCH SECURITY IN LIEU OF FORECLOSURE, COMPROMISE OR ADJUST ANY
PART OF THE GUARANTEED OBLIGATIONS, MAKE ANY OTHER ACCOMMODATION WITH ANY LOAN
PARTY OR ANY OTHER GUARANTOR OR EXERCISE ANY OTHER RIGHT OR REMEDY AVAILABLE TO
THEM AGAINST ANY LOAN PARTY OR ANY OTHER GUARANTOR, WITHOUT AFFECTING OR
IMPAIRING IN ANY WAY THE LIABILITY OF ANY GUARANTOR HEREUNDER EXCEPT TO THE
EXTENT THE GUARANTEED OBLIGATIONS HAVE BEEN FULLY AND FINALLY PAID IN CASH OR
CASH EQUIVALENTS. PURSUANT TO APPLICABLE LAW, EACH OF THE GUARANTORS WAIVES ANY
DEFENSE ARISING OUT OF ANY SUCH ELECTION EVEN THOUGH SUCH ELECTION OPERATES,
PURSUANT TO APPLICABLE LAW, TO IMPAIR OR TO EXTINGUISH ANY RIGHT OF
REIMBURSEMENT OR SUBROGATION OR OTHER RIGHT OR REMEDY OF SUCH GUARANTOR AGAINST
ANY LOAN PARTY OR ANY OTHER GUARANTOR OR GUARANTOR, AS THE CASE MAY BE, OR ANY
SECURITY.

 

SECTION 6.           AGREEMENT TO PAY; SUBORDINATION. IN FURTHERANCE OF THE
FOREGOING AND NOT IN LIMITATION OF ANY OTHER RIGHT THAT THE AGENTS OR ANY OTHER
SECURED PARTY HAS AT LAW OR IN EQUITY AGAINST ANY GUARANTOR BY VIRTUE HEREOF,
UPON THE FAILURE OF ANY LOAN PARTY TO PAY ANY OBLIGATION WHEN AND AS THE SAME
SHALL BECOME DUE, WHETHER AT MATURITY, BY ACCELERATION, AFTER NOTICE OF
PREPAYMENT OR OTHERWISE, PROMPTLY UPON NOTICE FROM THE AGENT EACH GUARANTOR
HEREBY PROMISES TO AND WILL FORTHWITH PAY, OR CAUSE TO BE PAID, TO THE AGENTS OR
SUCH OTHER SECURED PARTY AS DESIGNATED THEREBY IN CASH OR CASH EQUIVALENTS THE
AMOUNT OF SUCH UNPAID GUARANTEED OBLIGATIONS. UPON PAYMENT BY ANY GUARANTOR OF
ANY SUMS TO THE AGENTS OR ANY SECURED PARTY AS PROVIDED ABOVE, ALL RIGHTS OF
SUCH GUARANTOR AGAINST ANY LOAN PARTY

 

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ARISING AS A RESULT THEREOF BY WAY OF RIGHT OF SUBROGATION, CONTRIBUTION,
REIMBURSEMENT, INDEMNITY OR OTHERWISE SHALL IN ALL RESPECTS BE SUBORDINATE AND
JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL IN CASH OR CASH
EQUIVALENTS OF ALL THE GUARANTEED OBLIGATIONS. IN ADDITION, ANY INDEBTEDNESS OF
ANY LOAN PARTY NOW OR HEREAFTER HELD BY ANY GUARANTOR IS HEREBY SUBORDINATED IN
RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL IN CASH OR CASH EQUIVALENTS OF THE
GUARANTEED OBLIGATIONS. IF ANY AMOUNT SHALL ERRONEOUSLY BE PAID TO ANY GUARANTOR
ON ACCOUNT OF (I)  SUCH SUBROGATION, CONTRIBUTION, REIMBURSEMENT, INDEMNITY OR
SIMILAR RIGHT OR (II) ANY SUCH INDEBTEDNESS OF ANY LOAN PARTY, SUCH AMOUNT SHALL
BE HELD FOR THE BENEFIT OF THE SECURED PARTIES AND SHALL FORTHWITH BE PAID TO
THE AGENTS TO BE CREDITED AGAINST THE PAYMENT OF THE GUARANTEED OBLIGATIONS,
WHETHER MATURED OR UNMATURED, IN ACCORDANCE WITH THE TERMS OF THE LOAN
DOCUMENTS.

 

SECTION 7.           INFORMATION. EACH OF THE GUARANTORS ASSUMES ALL
RESPONSIBILITY FOR BEING AND KEEPING ITSELF INFORMED OF EACH OTHER LOAN PARTY’S
FINANCIAL CONDITION AND ASSETS, AND OF ALL OTHER CIRCUMSTANCES BEARING UPON THE
RISK OF NONPAYMENT OF THE GUARANTEED OBLIGATIONS AND THE NATURE, SCOPE AND
EXTENT OF THE RISKS THAT SUCH GUARANTORS AND INCURS HEREUNDER, AND AGREES THAT
NONE OF THE AGENTS OR THE OTHER SECURED PARTIES WILL HAVE ANY DUTY TO ADVISE ANY
OF THE GUARANTORS OF INFORMATION KNOWN TO IT OR ANY OF THEM REGARDING SUCH
CIRCUMSTANCES OR RISKS.

 

SECTION 8.           REPRESENTATIONS AND WARRANTIES. EACH OF THE GUARANTORS
REPRESENTS AND WARRANTS AS TO ITSELF THAT ALL REPRESENTATIONS AND WARRANTIES
RELATING TO IT CONTAINED IN THE CREDIT AGREEMENT ARE TRUE AND CORRECT.

 

SECTION 9.           TERMINATION. (A)  THE GUARANTEES MADE HEREUNDER (I) SHALL
TERMINATE WHEN ALL THE GUARANTEED OBLIGATIONS (OTHER THAN CONTINGENT
INDEMNIFICATION PROVISIONS NOT THEN CLAIMED OR DUE) HAVE BEEN PAID IN FULL IN
CASH OR CASH EQUIVALENTS AND THE LENDERS HAVE NO FURTHER COMMITMENT TO LEND
UNDER THE CREDIT AGREEMENT OR TO ISSUE OR PARTICIPATE IN LETTERS OF CREDIT AND
THE LC EXPOSURE HAS BEEN REDUCED TO ZERO AND (II) SHALL CONTINUE TO BE EFFECTIVE
OR BE REINSTATED, AS THE CASE MAY BE, IF AT ANY TIME ANY PAYMENT IN RESPECT
THEREOF, OF ANY OBLIGATION IS RESCINDED OR MUST OTHERWISE BE RESTORED BY ANY
SECURED PARTY OR ANY GUARANTOR UPON THE BANKRUPTCY OR REORGANIZATION OF THE
BORROWER, ANY GUARANTOR OR OTHERWISE. IN CONNECTION WITH THE FOREGOING, THE
AGENTS SHALL EXECUTE AND DELIVER TO SUCH GUARANTOR OR GUARANTOR’S DESIGNEE, AT
SUCH GUARANTOR’S EXPENSE, ANY DOCUMENTS OR INSTRUMENTS WHICH SUCH GUARANTOR
SHALL REASONABLY REQUEST FROM TIME TO TIME IN WRITING TO EVIDENCE SUCH
TERMINATION AND RELEASE.

 

(B)           IF THE EQUITY INTERESTS OF A GUARANTOR ARE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF TO A PERSON THAT IS NOT AN AFFILIATE PURSUANT TO A
TRANSACTION PERMITTED BY SECTION 6.05 OF THE CREDIT AGREEMENT THAT RESULTS IN
SUCH GUARANTOR CEASING TO BE A SUBSIDIARY, OR UPON THE EFFECTIVENESS OF ANY
WRITTEN CONSENT PURSUANT TO SECTION 9.08 OF THE CREDIT AGREEMENT TO THE RELEASE
OF THE GUARANTEE GRANTED BY SUCH GUARANTOR HEREBY, SUCH GUARANTOR SHALL BE
RELEASED FROM ITS OBLIGATIONS UNDER THIS AGREEMENT WITHOUT FURTHER ACTION. IN
CONNECTION WITH SUCH RELEASE, THE AGENTS SHALL EXECUTE AND DELIVER TO SUCH
GUARANTOR, AT SUCH GUARANTOR’S EXPENSE, ALL DOCUMENTS THAT SUCH GUARANTOR SHALL
REASONABLY REQUEST TO EVIDENCE SUCH TERMINATION OR RELEASE. ANY EXECUTION AND
DELIVERY OF DOCUMENTS PURSUANT TO THIS SECTION 9(B) SHALL BE WITHOUT RECOURSE TO
OR WARRANTY BY THE AGENTS.

 

SECTION 10.         BINDING EFFECT; SEVERAL AGREEMENT; SUCCESSORS AND ASSIGNS.
(A)  THIS AGREEMENT SHALL BECOME EFFECTIVE AS TO ANY GUARANTOR WHEN A
COUNTERPART HEREOF EXECUTED ON BEHALF OF SUCH GUARANTOR SHALL HAVE BEEN
DELIVERED TO THE AGENTS AND A COUNTERPART HEREOF (INCLUDING A FACSIMILE COPY)
SHALL HAVE BEEN EXECUTED ON BEHALF OF THE AGENTS, AND THEREAFTER SHALL BE
BINDING UPON SUCH GUARANTOR AND THE AGENTS AND THEIR RESPECTIVE PERMITTED

 

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SUCCESSORS AND ASSIGNS, AND SHALL INURE TO THE BENEFIT OF SUCH GUARANTOR, THE
AGENTS AND THE OTHER SECURED PARTIES AND THEIR RESPECTIVE PERMITTED SUCCESSORS
AND ASSIGNS, EXCEPT THAT NO GUARANTOR SHALL HAVE THE RIGHT TO ASSIGN OR TRANSFER
ITS RIGHTS OR OBLIGATIONS HEREUNDER OR ANY INTEREST HEREIN (AND ANY SUCH
ATTEMPTED ASSIGNMENT OR TRANSFER SHALL BE VOID) EXCEPT AS EXPRESSLY PERMITTED BY
EACH OF THE OTHER LOAN DOCUMENTS.

 

(B)           UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED TO
BE ENFORCEABLE.

 

(C)           THIS AGREEMENT SHALL BE CONSTRUED AS A SEPARATE AGREEMENT WITH
RESPECT TO EACH GUARANTOR AND MAY BE AMENDED, MODIFIED, SUPPLEMENTED, WAIVED OR
RELEASED WITH RESPECT TO ANY GUARANTOR WITHOUT THE APPROVAL OF ANY OTHER
GUARANTOR AND WITHOUT AFFECTING THE OBLIGATIONS OF ANY OTHER GUARANTOR
HEREUNDER.

 

(D)           WHENEVER IN THIS AGREEMENT ANY OF THE PARTIES HERETO IS REFERRED
TO, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE THE SUCCESSORS AND ASSIGNS OF SUCH
PARTY; AND ALL COVENANTS, PROMISES AND AGREEMENTS BY OR ON BEHALF OF ANY
GUARANTOR OR THE AGENTS THAT ARE CONTAINED IN THIS AGREEMENT SHALL BIND AND
INURE TO THE BENEFIT OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.

 

SECTION 11.         WAIVERS; AMENDMENT. (A)  NO FAILURE OR DELAY OF THE AGENTS
IN EXERCISING ANY POWER OR RIGHT HEREUNDER SHALL OPERATE AS A WAIVER THEREOF,
NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH RIGHT OR POWER, OR ANY
ABANDONMENT OR DISCONTINUANCE OF STEPS TO ENFORCE SUCH A RIGHT OR POWER,
PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER
RIGHT OR POWER. THE RIGHTS AND REMEDIES OF THE AGENTS HEREUNDER AND OF THE OTHER
SECURED PARTIES UNDER THE OTHER LOAN DOCUMENTS ARE CUMULATIVE AND ARE NOT
EXCLUSIVE OF ANY RIGHTS OR REMEDIES THAT THEY WOULD OTHERWISE HAVE. NO WAIVER OF
ANY PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR CONSENT TO ANY
DEPARTURE BY ANY GUARANTOR THEREFROM SHALL IN ANY EVENT BE EFFECTIVE UNLESS THE
SAME SHALL BE PERMITTED BY PARAGRAPH (B) BELOW, AND THEN SUCH WAIVER OR CONSENT
SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE PURPOSE FOR WHICH
GIVEN. NO NOTICE TO OR DEMAND ON ANY GUARANTOR IN ANY CASE SHALL ENTITLE SUCH
GUARANTOR OR ANY OTHER GUARANTOR TO ANY OTHER OR FURTHER NOTICE OR DEMAND IN
SIMILAR OR OTHER CIRCUMSTANCES.

 

(B)           NEITHER THIS AGREEMENT NOR ANY PROVISION HEREOF MAY BE WAIVED,
AMENDED OR MODIFIED EXCEPT PURSUANT TO AN AGREEMENT OR AGREEMENTS IN WRITING
ENTERED INTO AMONG THE BORROWER, THE AGENTS AND THE GUARANTORS WITH RESPECT TO
WHICH SUCH WAIVER, AMENDMENT OR MODIFICATION IS TO APPLY.

 

SECTION 12.       GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 13.         NOTICES. ALL COMMUNICATIONS AND NOTICES HEREUNDER SHALL
(EXCEPT AS OTHERWISE EXPRESSLY PERMITTED HEREIN) BE IN WRITING AND GIVEN AS
PROVIDED IN SECTION 9.01 OF THE CREDIT AGREEMENT. ALL COMMUNICATIONS AND NOTICES
HEREUNDER TO ANY GUARANTOR SHALL BE GIVEN TO IT AT ITS ADDRESS OR TELECOPY
NUMBER SET FORTH ON SCHEDULE I, WITH A COPY TO BORROWER.

 

SECTION 14.         SURVIVAL OF AGREEMENT; SEVERABILITY. (A)  ALL COVENANTS,
AGREEMENTS, REPRESENTATIONS AND WARRANTIES MADE BY ANY GUARANTOR HEREIN AND IN
THE CERTIFICATES OR OTHER INSTRUMENTS PREPARED OR DELIVERED IN CONNECTION WITH
OR PURSUANT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE CONSIDERED TO
HAVE BEEN RELIED UPON BY THE AGENTS AND THE OTHER SECURED PARTIES AND SHALL
SURVIVE THE MAKING BY THE LENDERS OF THE LOANS AND THE LENDERS’ ISSUANCE OF AND
PARTICIPATIONS IN LETTERS OF CREDIT, REGARDLESS OF ANY INVESTIGATION MADE BY THE
SECURED PARTIES OR ON THEIR BEHALF, AND SHALL CONTINUE IN FULL FORCE AND EFFECT
UNTIL THIS AGREEMENT SHALL TERMINATE.

 

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(B)           IN THE EVENT ANY ONE OR MORE OF THE PROVISIONS CONTAINED IN THIS
AGREEMENT SHOULD BE HELD INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT, THE
VALIDITY, LEGALITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS CONTAINED
HEREIN SHALL NOT IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY (IT BEING UNDERSTOOD
THAT THE INVALIDITY OF A PARTICULAR PROVISION IN A PARTICULAR JURISDICTION SHALL
NOT IN AND OF ITSELF AFFECT THE VALIDITY OF SUCH PROVISION IN ANY OTHER
JURISDICTION). THE PARTIES SHALL ENDEAVOR IN GOOD FAITH NEGOTIATIONS TO REPLACE
THE INVALID, ILLEGAL OR UNENFORCEABLE PROVISIONS WITH VALID PROVISIONS THE
ECONOMIC EFFECT OF WHICH COMES AS CLOSE AS POSSIBLE TO THAT OF THE INVALID,
ILLEGAL OR UNENFORCEABLE PROVISIONS.

 

SECTION 15.         COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, EACH OF WHICH SHALL CONSTITUTE AN ORIGINAL BUT ALL OF WHICH WHEN
TAKEN TOGETHER SHALL CONSTITUTE A SINGLE CONTRACT (SUBJECT TO SECTION 10) AND
SHALL BECOME EFFECTIVE AS PROVIDED IN SECTION 10. DELIVERY OF AN EXECUTED
SIGNATURE PAGE TO THIS AGREEMENT BY FACSIMILE TRANSMISSION SHALL BE EFFECTIVE AS
DELIVERY OF A MANUALLY EXECUTED COUNTERPART HEREOF. IT IS UNDERSTOOD AND AGREED
AMONG THE PARTIES THAT THIS AGREEMENT SHALL CREATE SEPARATE GUARANTEES IN FAVOR
OF EACH OF THE TERM LENDERS AND THE REVOLVING LENDERS, AND THAT ANY
DETERMINATION BY ANY COURT WITH JURISDICTION THAT THE GUARANTEE IN FAVOR OF
EITHER GROUP OF LENDERS IS INVALID FOR ANY REASON SHALL NOT IN AND OF ITSELF
INVALIDATE THE GUARANTEE WITH RESPECT TO ANY OTHER BENEFICIARY HEREUNDER.

 

SECTION 16.         RULES OF INTERPRETATION; HEADINGS. (A)  THE RULES OF
INTERPRETATION SPECIFIED IN SECTION 1.03 OF THE CREDIT AGREEMENT SHALL BE
APPLICABLE TO THIS AGREEMENT.

 

(B)           SECTION HEADINGS USED HEREIN ARE FOR THE PURPOSE OF REFERENCE
ONLY, ARE NOT PART OF THIS AGREEMENT AND ARE NOT TO AFFECT THE CONSTRUCTION OF,
OR TO BE TAKEN INTO CONSIDERATION IN INTERPRETING THIS AGREEMENT.

 

SECTION 17.         JURISDICTION; CONSENT TO SERVICE OF PROCESS. (A)  EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE AGENTS OR ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(B)           EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT REFERRED TO IN PARAGRAPH (C) OF
THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(C)           EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 13. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.

 

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SECTION 18.       WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.

 

SECTION 19.         RIGHT OF SETOFF. IF AN EVENT OF DEFAULT OR EVENT OF
TERMINATION SHALL HAVE OCCURRED AND BE CONTINUING, EACH SECURED PARTY IS HEREBY
AUTHORIZED AT ANY TIME AND FROM TIME TO TIME, TO THE FULLEST EXTENT PERMITTED BY
LAW, TO SET OFF AND APPLY ANY AND ALL DEPOSITS (GENERAL OR SPECIAL, TIME OR
DEMAND, PROVISIONAL OR FINAL) AT ANY TIME HELD AND OTHER INDEBTEDNESS AT ANY
TIME OWING BY SUCH SECURED PARTY TO OR FOR THE CREDIT OR THE ACCOUNT ANY
GUARANTOR AGAINST ANY OF AND ALL THE OBLIGATIONS OF SUCH GUARANTOR NOW OR
HEREAFTER EXISTING UNDER THIS AGREEMENT AND OTHER LOAN DOCUMENTS HELD BY SUCH
SECURED PARTY, IRRESPECTIVE OF WHETHER OR NOT SUCH SECURED PARTY SHALL HAVE MADE
ANY DEMAND UNDER THIS AGREEMENT OR SUCH OTHER LOAN DOCUMENT AND ALTHOUGH SUCH
OBLIGATIONS MAY BE UNMATURED. IN CONNECTION WITH EXERCISING ITS RIGHTS PURSUANT
TO THE PREVIOUS SENTENCE, A SECURED PARTY MAY AT ANY TIME USE ANY OF THE SUCH
GUARANTOR’S CREDIT BALANCES WITH THE SECURED PARTY TO PURCHASE AT THE SECURED
PARTY’S APPLICABLE SPOT RATE OF EXCHANGE ANY OTHER CURRENCY OR CURRENCIES WHICH
THE SECURED PARTY CONSIDERS NECESSARY TO REDUCE OR DISCHARGE ANY AMOUNT DUE BY
THE SUCH GUARANTOR TO THE SECURED PARTY, AND MAY APPLY THAT CURRENCY OR THOSE
CURRENCIES IN OR TOWARDS PAYMENT OF THOSE AMOUNTS. THE RIGHTS OF EACH SECURED
PARTY UNDER THIS SECTION ARE IN ADDITION TO OTHER RIGHTS AND REMEDIES (INCLUDING
OTHER RIGHTS OF SETOFF) WHICH SUCH SECURED PARTY MAY HAVE. EACH SECURED PARTY
AGREES PROMPTLY TO NOTIFY SUCH GUARANTOR AND THE AGENTS AFTER MAKING ANY SUCH
SETOFF.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

 

BONLAM (S.C.), INC.

 

CHICOPEE, INC.

 

DOMINION TEXTILE (USA) INC.

 

FABPRO ORIENTED POLYMERS, INC.

 

FABRENE CORP.

 

FABRENE GROUP L.L.C.

 

FIBERGOL CORPORATION

 

FIBERTECH GROUP, INC.

 

FNA ACQUISITION, INC.

 

FNA POLYMER CORP.

 

LORETEX CORPORATION

 

PGI EUROPE, INC.

 

PGI POLYMER, INC.

 

PNA CORP.

 

POLY-BOND INC.

 

POLYIONIX SEPARATION TECHNOLOGIES, INC.

 

PRISTINE BRANDS CORPORATION

 

TECHNETICS GROUP, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

S-1

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CITICORP NORTH AMERICA, INC., as

 

Administrative Agent

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

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Schedule I to the
Guarantee Agreement

 

Guarantors

 

Name

 

 

 

 

 

Bonlam (S.C.), Inc.

 

 

Chicopee, Inc.

 

 

Dominion Textile (USA) Inc.

 

 

FabPro Oriented Polymers, Inc.

 

 

Fabrene Corp.

 

 

Fabrene Group L.L.C.

 

 

FiberGol Corporation

 

 

FiberTech Group, Inc.

 

 

FNA Acquisition, Inc.

 

 

FNA Polymer Corp.

 

 

Loretex Corporation

 

 

PGI Europe, Inc.

 

 

PGI Polymer, Inc.

 

 

PNA Corp.

 

 

Poly-Bond Inc.

 

 

PolyIonix Separation Technologies, Inc.

 

 

Pristine Brands Corporation

 

 

Technetics Group, Inc.

 

 

 

Address/telecopy number for each Guarantor

 

 

 

 

 

c/o Polymer Group, Inc.

 

 

4055 Faber Place, Suite 201

 

 

North Charleston, South Carolina 29405

 

 

attention: Willis C. Moore III

 

 

(telecopy: 843-329-0415)

 

 

 

3

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