Exhibit 10.1

     
 
     

CREDIT AGREEMENT
among
WELLMAN, INC., AND
THE OTHER BORROWERS NAMED HEREIN,
Debtors and Debtors in Possession
as Borrowers,
with
WELLMAN, INC.,
as Funds Administrator,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Administrative Agent and Collateral Agent
DEUTSCHE BANK SECURITIES INC.,
as Lead Arranger and Bookrunner
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Syndication Agent
GENERAL ELECTRIC CAPITAL CORPORATION,
LASALLE BUSINESS CREDIT, LLC,
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL)
as Co-Documentation Agents
Dated as of February 26, 2008

     
 
     

 

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TABLE OF CONTENTS

              Page
ARTICLE I DEFINITIONS
    2  
1.1 General Definitions
    2  
1.2 Accounting Terms and Determinations
    36  
1.3 Other Interpretive Provisions
    36  
 
       
ARTICLE II LOANS
    37  
2.1 Commitments; Delivery of Notes
    37  
2.2 Borrowing Mechanics; Interim Advances
    37  
2.3 Settlements Among the Agent and the Lenders
    39  
2.4 Mandatory Payment; Mandatory Reduction of Commitments
    41  
2.5 Payments and Computations; Cash Management
    43  
2.6 Maintenance of Account
    44  
2.7 Statement of Account
    44  
2.8 Withholding and Other Taxes
    45  
2.9 Affected Lenders
    48  
2.10 Sharing of Payments
    49  
2.11 Superpriority Nature of Obligations; Priming Lien
    49  
2.12 Waiver of any Priming Rights
    51  
2.13 Payment of Obligations
    51  
2.14 No Discharge; Survival of Claims
    51  
 
       
ARTICLE III LETTERS OF CREDIT
    51  
3.1 Issuance of Letters of Credit
    51  
3.2 Procedure for Issuance
    52  
3.3 Terms of Letters of Credit
    53  
3.4 Lenders’ Participation
    54  
3.5 Maturity of Drawings; Interest Thereon
    54  
3.6 Payment of Amounts Drawn Under Letters of Credit
    55  
3.7 Nature of Issuing Bank’s Duties
    55  
3.8 Obligations Absolute
    55  
 
       
ARTICLE IV INTEREST, FEES AND EXPENSES
    56  
4.1 Interest on LIBOR Rate Loans
    56  
4.2 Interest on Prime Rate Loans
    57  
4.3 Notice of Continuation and Notice of Conversion
    57  
4.4 Interest After Event of Default
    59  
4.5 Fees
    59  
4.6 Letter of Credit Fees
    59  
4.7 Reimbursement of Expenses
    60  
4.8 Authorization to Charge Borrowers’ Accounts
    60  
4.9 Indemnification in Certain Events
    61  
4.10 Calculations and Determinations
    61  

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              Page
ARTICLE V CONDITIONS PRECEDENT
    62  
5.1 Conditions to Initial Credit Event
    62  
5.2 Conditions to Each Credit Event
    63  
 
       
ARTICLE VI REPRESENTATIONS AND WARRANTIES
    65  
6.1 Organization and Qualification
    65  
6.2 Rights in Collateral; Priority of Liens
    66  
6.3 Company Power and Authority
    66  
6.4 No Violation
    66  
6.5 Consents
    67  
6.6 Financial Data
    67  
6.7 Locations of Offices, Records and Inventory
    67  
6.8 Fictitious Business Names
    68  
6.9 Subsidiaries
    68  
6.10 No Judgments or Litigation
    68  
6.11 Environmental Matters
    68  
6.12 Labor Matters
    69  
6.13 Compliance with Law
    69  
6.14 ERISA
    69  
6.15 Intellectual Property
    70  
6.16 Licenses and Permits
    70  
6.17 Title to Property
    71  
6.18 Governmental Regulations
    71  
6.19 Borrowers’ Taxes and Tax Returns
    71  
6.20 Status of Accounts
    72  
6.21 Material Contracts and Restrictions
    72  
6.22 Affiliate Transactions
    72  
6.23 Accuracy and Completeness of Information
    72  
6.24 Recording Taxes and Fees
    73  
6.25 No Adverse Change or Event
    73  
6.26 Perfection Certificates
    73  
6.27 Indebtedness
    73  
6.28 Insurance
    74  
6.29 Use of Proceeds; Margin Regulations
    74  
6.30 Anti-Terrorism Law
    75  
6.31 Accounts
    76  
6.32 Reorganization Matters
    76  
 
       
ARTICLE VII AFFIRMATIVE COVENANTS
    77  
7.1 Financial Information
    77  
7.2 Certain Collateral
    80  
7.3 Corporate Existence and Compliance with Laws
    80  
7.4 ERISA
    80  
7.5 Books and Records
    81  
7.6 Collateral Records
    81  
7.7 Payment of Obligations
    82  
7.8 Insurance; Casualty Loss
    82  

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              Page
7.9 Borrower’s Taxes
    83  
7.10 Environmental Matters
    83  
7.11 Use of Proceeds
    84  
7.12 Fiscal Year
    84  
7.13 Notification of Certain Events
    84  
7.14 Intellectual Property
    85  
7.15 Maintenance of Property
    85  
7.16 Additional Security; Further Assurances
    85  
7.17 Weekly Management Calls
    86  
7.18 Chief Restructuring Officer
    86  
 
       
ARTICLE VIII NEGATIVE COVENANTS
    86  
8.1 Cash Budget Compliance
    87  
8.2 Financial Covenants
    87  
8.3 No Additional Indebtedness
    87  
8.4 No Liens; Judgments
    88  
8.5 No Sale of Assets
    90  
8.6 No Corporate Changes
    90  
8.7 No Guaranties
    90  
8.8 No Restricted Payments or Payments of Pre-Petition Obligations
    90  
8.9 No Investments
    91  
8.10 No Affiliate Transactions
    91  
8.11 Limitation on Transactions Under ERISA
    92  
8.12 Amendments of Governing Documents
    92  
8.13 Additional Restrictive Covenants
    92  
8.14 New Collateral Locations
    92  
8.15 New Accounts
    93  
8.16 Limitation on Preferred Stock of Subsidiaries
    93  
8.17 Embargoed Person
    93  
8.18 No Accounting Changes
    93  
8.19 Insurance Subsidiary
    94  
8.20 Anti-Terrorism Law; Anti-Money Laundering
    94  
8.21 Returned Goods Under Section 546(h)
    94  
8.22 Chapter 11 Claims
    94  
8.23 Financial Advisor
    94  
8.24 Chief Restructuring Officer
    94  
 
       
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
    94  
9.1 Events of Default
    95  
9.2 Acceleration and Cash Collateralization
    99  
9.3 Remedies
    99  
9.4 Actions in Concert
    100  
9.5 Distributions
    101  
 
       
ARTICLE X THE AGENT
    101  
10.1 Appointment of Agent
    101  
10.2 Nature of Duties of Agent
    102  

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              Page
10.3 Lack of Reliance on the Agent
    102  
10.4 Certain Rights of the Agent
    102  
10.5 Reliance by the Agent
    103  
10.6 Indemnification of Agent
    103  
10.7 The Agent in its Individual Capacity
    103  
10.8 Holders of Notes
    104  
10.9 Successor Agent
    104  
10.10 Collateral Matters
    105  
10.11 Actions with Respect to Defaults
    106  
10.12 Delivery of Information
    106  
10.13 Other Agents
    107  
 
       
ARTICLE XI MISCELLANEOUS
    107  
11.1 SUBMISSION TO JURISDICTION; WAIVERS
    107  
11.2 JURY TRIAL
    108  
11.3 GOVERNING LAW
    108  
11.4 Delays; Partial Exercise of Remedies
    108  
11.5 Notices
    108  
11.6 Assignability
    109  
11.7 Confidentiality
    111  
11.8 Indemnification
    112  
11.9 Entire Agreement; Successors and Assigns
    114  
11.10 Amendments, Etc
    114  
11.11 Nonliability of Agent and Lenders
    115  
11.12 Counterparts
    115  
11.13 Effectiveness
    116  
11.14 Severability
    116  
11.15 Headings Descriptive
    116  
11.16 Maximum Rate
    116  
11.17 Right of Setoff
    117  
11.18 Defaulting Lender
    117  
11.19 Rights Cumulative
    118  
11.20 Third Party Beneficiaries
    118  
11.21 Joint and Several Liability of Borrowers
    118  
11.22 Appointment and Authorization of Funds Administrator
    120  
11.23 Parties Including Trustees; Bankruptcy Court Proceedings
    121  
11.24 Effect of Financing Orders
    121  
11.25 Reservation of Rights
    121  

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ANNEXES
ANNEX I            Lenders; Commitments; Lending Offices
ANNEX II            Closing Document List
EXHIBITS

     
EXHIBIT A
  Form of Assignment and Assumption Agreement
EXHIBIT B
  Form of Note
EXHIBIT C
  Form of Notice of Borrowing
EXHIBIT C-1
  Form of Notice of Continuation/Conversion
EXHIBIT C-2
  Form of Letter of Credit Request
EXHIBIT D
  Form of Compliance Certificate
EXHIBIT E
  Form of Borrowing Base Certificate
EXHIBIT F
  Account Debtor Concentrations
EXHIBIT G
  Form of Final Financing Order
EXHIBIT H
  [Reserved]
EXHIBIT I
  Form of Interim Financing Order
EXHIBIT J
  Form of Cash Report
EXHIBIT K
  Form of EBITDA Report

SCHEDULES

     
SCHEDULE B, PART 3.1
  Original Letters of Credit
SCHEDULE B, PART 6.1
  Jurisdictions Qualified to Do Business
SCHEDULE B, PART 6.7
  Principal Places of Business; Chief Executive Offices;
 
  Locations of Books and Records;
 
  Other Locations of Collateral
SCHEDULE B, PART 6.9
  Subsidiaries
SCHEDULE B, PART 6.14
  ERISA Matters
SCHEDULE B, PART 6.17
  Real Property
SCHEDULE B, PART 6.19
  Tax Matters
SCHEDULE B, PART 6.22
  Affiliate Transactions
SCHEDULE B, PART 6.27
  Existing Indebtedness
SCHEDULE B, PART 6.28
  Insurance
SCHEDULE B, PART 6.31
  Bank Accounts
SCHEDULE B, PART 8.4
  Existing Liens
SCHEDULE B, PART 8.9
  Investments

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CREDIT AGREEMENT
     This Credit Agreement is dated as of February 26, 2008 and entered into by
and among Wellman, Inc., a Delaware corporation (“Wellman”), Prince, Inc., a
Delaware corporation (“Prince”), Wellman of Mississippi, Inc., a Delaware
corporation (“Wellman Mississippi”), Carpet Recycling of Georgia, Inc., a
Georgia corporation (“Carpet”), ALG, Inc., a Delaware corporation (“ALG”), PTA
Resources, LLC, a Delaware limited liability company (“PTA Resources”) and Fiber
Industries, Inc., a Delaware corporation (“Fiber” and, together with Wellman,
Prince, Wellman Mississippi, Carpet, ALG, PTA and Resources, each individually
referred to herein as a “Borrower” and collectively as “Borrowers” with Wellman
acting in its capacity as Funds Administrator for Borrowers), as debtors and
debtors in possession, each of the Lenders from time to time party hereto and
Deutsche Bank Trust Company Americas, acting in its capacity as administrative
agent (the “Administrative Agent”) and collateral agent (“Collateral Agent”) for
the Lenders hereunder (in its capacities as Administrative Agent and Collateral
Agent, the “Agent”). Capitalized terms used in this Credit Agreement shall have
the meanings ascribed to them in Section 1.1.
RECITALS
          WHEREAS, on February 22, 2008 (the “Petition Date”), Borrowers and the
Subsidiary Guarantors (as defined below) filed voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code with the United States
Bankruptcy Court for the Southern District of New York (together with such other
court having jurisdiction over the Chapter 11 Cases (as hereinafter defined),
the “Bankruptcy Court”), which cases are jointly administered under Case
No. 08-10595 (each, a “Chapter 11 Case” and collectively, the “Chapter 11
Cases”);
          WHEREAS, Borrowers and the Subsidiary Guarantors continue to operate
their respective businesses as debtors and debtors in possession pursuant to
Sections 1107(a) and 1108 of the Bankruptcy Code;
          WHEREAS, Borrowers have requested that Lenders provide a senior
secured superpriority revolving credit facility to Borrowers in an aggregate
amount not to exceed $225,000,000 at any time outstanding and maturing on the
Facility Termination Date (as hereinafter defined);
          WHEREAS, the proceeds of the loans made hereunder, and the letters of
credit issued hereunder will be used by Borrowers and the Subsidiaries of
Borrowers to pay transaction costs and expenses related to the Chapter 11 Cases
of Borrowers and the Subsidiaries of Borrowers as provided herein or as may be
agreed to by Agent and Lenders, to pay all outstanding amounts under, and
replace letters of credit outstanding under, the Pre-Petition Credit Agreement,
to provide working capital, to fund permitted capital expenditures hereunder,
for other ordinary course purposes of Borrowers and the Subsidiaries of
Borrowers, and any other use permitted by Agent, in each case as and to the
extent permitted hereunder; and

 

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          WHEREAS, the Lenders are willing to extend their commitment to make
revolving credit available to Borrowers for the purposes specified above only on
the terms and subject to the conditions set forth herein;
          WHEREAS, Borrowers have agreed to secure all of their obligations
under the credit facilities provided herein by granting to Agent, for the
benefit of Agent and Lenders, a security interest in and lien upon all of their
existing and after-acquired real and personal property;
          WHEREAS, Warehouse Associates, Inc. USA, a South Carolina corporation
(“Warehouse”), MRF, Inc., a Delaware corporation (“MRF”), Josdav Inc., a
Delaware corporation (“Josdav”), and MED Resins, Inc., a Delaware corporation
(“MED Resins” and together with Warehouse, MRF, Josdav, and certain other
material Domestic Subsidiaries, the “Subsidiary Guarantors”), as debtors and
debtors in possession, are willing to (a) guarantee all of the Obligations of
Borrowers to Agent and Lenders and (b) secure their respective guarantees by
granting to Agent, for the benefit of Agent and Lenders, a security interest in
and lien upon all of their respective existing and after-acquired real and
personal property; and
          WHEREAS, based on the foregoing, Lenders are willing to make such
credit facilities available to Borrowers subject to the terms and condition set
forth herein;
          NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
     1.1 General Definitions. As used herein, the following terms shall have the
meanings herein specified:
     “Accounts” shall mean, with respect to any Person, all of such Person’s
accounts, whether existing now or in the future, including, without limitation,
(a) all accounts receivable of such Person or other accounts of such Person
created by, or arising from or related to the sales of goods or rendition of
services made by such Person whether under its own name, under any of its trade
names, or through any of its divisions, or in the name of any other Person, (b)
all unpaid seller’s rights of such Person (including rescission, replevin,
reclamation and stoppage in transit) relating to the foregoing or arising
therefrom, (c) all rights of such Person to any goods represented by any of the
foregoing, including returned or repossessed goods, (d) all reserves and credit
balances held by such Person with respect to any such accounts receivable or
account debtors and (e) all Guaranties or collateral for any of the foregoing.
     “Accumulated Funding Deficiency” shall have the meaning ascribed to such
term in Section 302 of ERISA.
     “Act of Bankruptcy” shall have the meaning ascribed to such term in the
definition of “Eligible Accounts Receivable”.

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     “Acquisition” shall mean, with respect to any Credit Party, any transaction
or series of related transactions resulting in (a) the acquisition by such
Credit Party of all or substantially all of the assets of any other Person, or
of any business or division of any other Person, (b) the acquisition by such
Credit Party of all of the issued and outstanding Capital Securities of any
other Person, including, without limitation, by means of a merger of such other
Person with and into such Credit Party (or a Wholly-Owned Subsidiary of such or
any Credit Party formed solely for the purpose of consummating such acquisition)
or otherwise causing any Person (other than any Person that is at such time a
Credit Party) to become a Wholly-Owned Subsidiary of such Credit Party, or (c) a
merger, consolidation or any other combination of such Credit Party with any
other Person (other than any Person that is at such time a Credit Party),
provided that such Credit Party is the surviving Person.
     “Additional Security Documents” shall have the meaning ascribed to such
term in Section 7.16(c).
     “Adjusted LIBOR Rate” shall mean, for any Interest Period, the rate
obtained by dividing (a) the LIBOR Rate for such Interest Period by (b) a
percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all
reserves, if any, required to be maintained against “Eurocurrency liabilities”
as specified in Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR Rate Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Lender to United States
residents).
     “Affiliate” shall mean, with respect to any Person, any Person which
directly or indirectly through one or more intermediaries Controls, is
Controlled by, or is under common Control with, such Person, or any Person who
is a director or officer of such Person or any Subsidiary of such Person;
provided, however, for purposes of determining Eligible Accounts Receivable and
Eligible Inventory, the Permitted Holder shall not be deemed an Affiliate of
Borrowers.
     “Agent” shall have the meaning ascribed to such term in the preamble to
this Credit Agreement and shall include any successor Agent appointed pursuant
to Section 10.9.
     “Applicable Lending Office” shall mean, with respect to each Lender, such
Lender’s LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender’s Domestic Lending Office in the case of a Prime Rate Loan.
     “Applicable Margin” shall mean, at any time with respect to any LIBOR Rate
Loan, 2.75% per annum, and at any time with respect to any Prime Rate Loan,
1.75% per annum.
     “Approved Secured Derivative Transaction Liabilities” shall mean
Liabilities of Borrowers to any Lender or its Affiliates in respect of
Derivative Transactions outstanding on the Petition Date and permitted pursuant
to the Pre-Petition Credit Agreement which are secured by the Collateral,
provided, that in no event shall the aggregate Liabilities of Borrowers in
respect of such Derivative Transactions which constitute “Secured Obligations”
(as such term is defined in the Security Agreement) be greater than $15,000,000.
Unless otherwise expressly provided to the contrary, the amount of the
obligations of any Credit Party in respect of a

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Derivative Transaction shall be calculated by reference to the mark to market
termination value of the relevant Derivative Transaction as of the last day of
the preceding month or as of the day most recently requested by the Agent.
     “Asset Sale” shall mean any direct or indirect sale, issuance, conveyance,
lease (other than operating leases and subleases and licenses and sublicenses
entered into in the ordinary course of business), assignment, transfer or other
disposition for value (including, without limitation, pursuant to any
amalgamation, merger or consolidation or pursuant to any Sale and Leaseback
Transaction) by any Borrower or by any Subsidiary to any Person other than any
Borrower or any Subsidiary (any such transaction, a “disposition”) of (i) any of
the stock of any of the Borrowers or any Subsidiary (other than the issuance by
Wellman of Capital Securities), (ii) substantially all of the assets of any
division or line of business of any Borrower or of any Subsidiary, or (iii) any
other assets of any Borrower or of any Subsidiary other than in the ordinary
course of business; provided, however, that (i) transfers of assets under Tax
Reduction Agreements and (ii) termination of any Derivative Transactions shall
not constitute an “Asset Sale”.
     “Assignment and Assumption Agreement” shall mean an assignment and
assumption agreement substantially in the form of Exhibit A entered into by an
assigning Lender and an assignee Lender, and which has been accepted by the
Agent, in accordance with Section 11.6.
     “Attributable Indebtedness” shall mean, as of the date of determination
thereof, without duplication (i) when used with respect to any Sale and
Leaseback Transaction, as at the time of determination, the present value
(discounted at a rate equivalent to the applicable Borrower’s then-current
weighted average cost of funds for borrowed money as at the time of
determination, compounded on a semi-annual basis) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in any such Sale and Leaseback Transaction and (ii) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product to which
such Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP.
     “Auditors” shall mean a nationally-recognized firm of independent certified
public accountants selected by Borrowers and satisfactory to the Agent in its
sole discretion. For purposes of this Credit Agreement, Borrowers’ current firm
of independent certified public accountants, Ernst & Young LLP, shall be deemed
to be satisfactory to the Agent.
     “Availability” shall mean the result of (a) the lesser of (i) the Borrowing
Base and (ii) the Line of Credit minus (b) Total Exposure.
     “Availability Reserves” shall mean at any time (i) such amounts as Agent,
in the exercise of its Permitted Discretion, may from time to time establish
against the Borrowing Base; (ii) a reserve for the Carve-Out Reserve in the
amount of $3,600,000; and (iii) rebate reserves to the extent pro-forma dilution
would exceed 5%.
     “Available Cash Surplus” shall mean at any time, an amount not less than $0
equal to Total Cash minus Restricted Cash at such time.

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     “Bankruptcy Code” shall mean Title 11 of the United States Code, as
hereafter amended.
     “Bankruptcy Court” shall have the meaning ascribed to such term in the
recitals to this Credit Agreement.
     “Bankruptcy Rules” shall mean, collectively, the Federal Rules of
Bankruptcy Procedure as promulgated pursuant to 28 U.S.C. § 2075, and the local
rules of the Bankruptcy Court, as the same are in effect as of the date hereof
and as may hereafter be amended.
     “Borrower” and “Borrowers” shall have the meanings ascribed to such terms
in the preamble to this Credit Agreement.
     “Borrower’s Account” and “Borrowers’ Accounts” shall have the meanings
ascribed to such terms in Section 2.6.
     “Borrower Taxes” shall have the meaning ascribed to such term in
Section 6.19(b).
     “Borrowing” shall mean a borrowing consisting of Loans of the same Type
advanced, continued or converted on the same day by the Lenders or the Agent.
     “Borrowing Base” shall mean:
     (a) Subject to clause (b) below, at any time, the amount equal at such time
to:
     (i) eighty five percent (85%) of the Value of Eligible Accounts Receivable
of each Borrower, plus
     (ii) the lesser of seventy percent (70%) of the Value of Eligible Inventory
of each Borrower and eighty five percent (85%) of the Net Orderly Liquidation
Value of Eligible Inventory of each Borrower;
     minus
     (iii) the net amount of all Approved Secured Derivative Transaction
Liabilities (if greater than zero);
     minus
     (iv) the amount of any Availability Reserves in effect at such time;
     minus
     (v) the Minimum Liquidity Availability in effect at such time.
     (b) The Agent at any time in the exercise of its Permitted Discretion shall
be entitled to (i) establish, eliminate, increase and decrease Availability
Reserves (provided that the reserve for the Carve-Out Reserve may not be reduced
below $3,600,000 without the approval of the Steering Committee) and (ii) impose
additional restrictions (or

5

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eliminate any such additional restrictions) to the standards of eligibility set
forth in the respective definitions of “Eligible Accounts Receivable” and
“Eligible Inventory”. Promptly after determining that any action under this
clause (b) is necessary or desirable, the Agent shall give the Funds
Administrator three (3) Business Days notice of its intent to take such action
and use its reasonable best efforts to consult with the Funds Administrator as
to the need to take such action, it being understood that Agent’s failure to
consult shall not in any way restrict the Agent from taking such action or
impose any liability on the Agent as a consequence of such failure.
     “Borrowing Base Certificate” shall have the meaning ascribed to such term
in Section 7.1(f).
     “Business Day” shall mean any day other than a Saturday, Sunday or legal
holiday on which commercial banks in New York, New York, are generally closed.
When used in connection with LIBOR Rate Loans, this definition will also exclude
any day on which commercial banks are not open for dealing in Dollar deposits in
the London (England, U.K.) interbank market. When used in connection with any
Letter of Credit, this definition will also exclude any day on which the
applicable Issuing Bank is not open for the general conduct of its business.
     “Capital Expenditures” shall mean, of any Person for any period, the sum of
(a) all expenditures to the extent required to be included in the property,
plant and equipment reflected in the consolidated balance sheet of such Person
in accordance with GAAP plus, without duplication, (b) the entire principal
amount of any debt (including obligations under capitalized leases) assumed or
incurred by such Person in connection with any such expenditures described in
the foregoing clause (a) other than any such debt owing by such Person to any
other Person that is a Subsidiary or Affiliate of such Person. Expenditures from
insurance proceeds and any other payments received or, without duplication,
expected to be received (as certified to the Agent in a certificate of a
Responsible Officer of such Person) on account of any Casualty Loss applied to
the repair or replacement of the property affected by such Casualty Loss shall
not constitute Capital Expenditures; provided, that to the extent the actual
amount received under any insurance claim differs from the amount certified (and
any appeal in respect of such amount received is exhausted if undertaken), the
amount deemed a Capital Expenditure shall be adjusted to reflect such
difference.
     “Capital Security” shall mean, with respect to any Person, (a) any share of
capital stock of or other unit of ownership interest in such Person and (b) any
security convertible into, or any option, warrant or other right to acquire, any
share of capital stock of or other unit of ownership interest in such Person.
     “Capitalized Lease Obligation” shall mean obligations under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations determined in accordance with GAAP.
     “Carve-Out Reserve” shall have the meaning ascribed to such term
Section 2.11(c).

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     “Cash Budget” shall mean on the date of determination, the thirteen
(13) week cash flow forecast, in form and substance reasonably satisfactory to
the Steering Committee, most recently delivered to the Agent pursuant to
Section 7.1(k)(ii) either on the Closing Date or on the first week of the then
current Cash Budget Period.
     “Cash Budget Period” shall mean any of the following periods of consecutive
calendar weeks elapsed after the Closing Date: (i) the first (1st) through the
fourth (4th) calendar weeks, (ii) the fifth (5th) through eighth (8th) calendar
weeks , (iii) the ninth (9th) through the thirteenth (13th) calendar weeks,
(iv) the fourteenth (14th) through the seventeenth (17th) calendar weeks,
(v) the eighteenth (18th) through the twenty-first (21st) calendar weeks,
(vi) the twenty-second (22nd) through the twenty-sixth (26th) calendar weeks,
(vii) the twenty-seventh (27th) through the thirtieth (30th) calendar weeks,
(viii) the thirty-first (31st) through the thirty-fourth (34th) calendar weeks,
(ix) the thirty-fifth (35th) through the thirty-ninth (39th) calendar weeks,
(x) the fortieth (40th) through the forty-third (43rd) calendar weeks, the
forty-fourth through the forty-seventh (47th) calendar weeks, and (xi) the
forty-eighth (48th) through the fifty-second (52nd) calendar weeks, provided
that if the Closing Date occurs on a day of the week other than Monday, the
initial Cash Budget Period under this Credit Agreement shall include the days
from the Effective Date to the commencement of the first calendar week after the
Effective Date.
     “Cash Equivalents” shall mean (i) marketable direct obligations issued or
unconditionally guaranteed or insured by the United States government or issued
by any agency or instrumentality thereof and backed by the full faith and credit
of the United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having an investment grade rating from
either S&P or Moody’s; (iii) commercial paper maturing no more than one year
from the date of creation thereof and, at the time of acquisition, rated at
least A-1 by S&P or at least P-1 by Moody’s; (iv) time deposits, certificates of
deposit or bankers’ acceptances maturing within one year from the date of
acquisition thereof issued by any commercial bank organized under the laws of
the United States or any state thereof or the District of Columbia that (a) is
“adequately capitalized” (as defined in the regulations of its primary Federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $100,000,000; (v) repurchase agreements with respect to, and
which are fully secured by a perfected security interest in, obligations of a
type described in clause (i) or clause (ii) above and are with any commercial
bank described in clause (iv) above; (vi) shares of any mutual fund that are
substantially invested in the types of investments referred to in clauses (i) to
(v) above; and (vii) demand deposit accounts maintained in the ordinary course
of business.
     “Cash Proceeds” shall mean, with respect to any Asset Sale, cash payments
(including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise (other than the portion of such
deferred payment constituting or deemed to constitute interest, which shall be
deemed not to constitute Cash Proceeds) but only as and when so received)
received from such Asset Sale.
     “Casualty Loss” shall have the meaning ascribed to such term in
Section 7.8.
     “Change of Control” shall mean the occurrence of one or more of the
following events:

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     (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of
Wellman to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a “Group”), together with any Affiliates thereof (other
than the Permitted Holder);
     (ii) the approval by the holders of Capital Securities of Wellman of any
plan or proposal for the liquidation or dissolution of Wellman;
     (iii) the replacement of a majority of the Board of Directors of Wellman
over a two-year period from the directors who constituted the Board of Directors
of Wellman at the beginning of such period, and such replacement shall not have
been approved by a vote of at least a majority of the Board of Directors of
Wellman then still in office who either were members of such Board of Directors
at the beginning of such period or whose election as a member of such Board of
Directors was previously so approved; or
     (iv) any Borrower ceases to be a Wholly-Owned Subsidiary of Wellman except
as otherwise permitted hereunder.
     “Chapter 11 Cases” shall have the meaning ascribed to such term in the
recitals to this Credit Agreement.
     “Chief Restructuring Officer” shall mean a chief restructuring officer
retained by Wellman, reasonably acceptable to the Agent upon terms and
conditions reasonably acceptable to the Agent and with duties and powers
customary for a chief restructuring officer in a Chapter 11 case of this type.
     “Closing Date” shall mean the date on which the initial Credit Event
occurs.
     “Closing Document List” shall mean the Closing Document List attached
hereto as Annex II.
     “Code” shall mean the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder.
     “Collateral” shall mean any and all assets and rights and interests in or
to property of each Borrower and each of the other Credit Parties and each
Credit Party’s bankruptcy estate, whether real or personal, tangible or
intangible, on which a Lien is granted or purported to be granted to Agent or
any Lender pursuant to the Credit Documents, including, without limitation, the
proceeds of the claims and causes of action arising under Sections 544, 545,
547, 548, 549 and 550 of the Bankruptcy Code, but not the claims and causes of
action.
     “Collateral Access Agreements” shall mean any landlord waivers, mortgagee
waivers, bailee letters and any similar usage, access or acknowledgment
agreements of any Person, such as a warehouseman, processor, lienholder or
lessor, in possession of any assets of any Borrower or any other Credit Party,
in each case in form and substance reasonably satisfactory to the Agent.

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     “Collateral Documents” shall mean the Security Agreement, the Pledge
Agreement, the Control Agreements, the Intercreditor Agreement, the Mortgages,
the Financing Orders, any Additional Security Documents and all other contracts,
instruments and other documents now or hereafter executed and delivered in
connection with this Credit Agreement, pursuant to which Liens are granted or
are purported to be granted to the Agent in the Collateral for the benefit of
some or all of the Agent, the Lenders and the Issuing Banks.
     “Commitment” of any Lender shall, subject to Section 11.18(c)(ii), mean the
amount set forth opposite such Lender’s name on Annex I, under the heading
“Commitment,” as such amount may be reduced from time to time or terminated
pursuant to the terms of this Credit Agreement.
     “Common Stock” of any Person shall mean any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person’s common stock, whether outstanding on the
Closing Date or issued after the Closing Date, and includes, without limitation,
all series and classes of such common stock.
     “Concentration Account” shall have the meaning ascribed to such term in
Section 2.5(b)(i).
     “Consolidated Entity” shall mean Borrowers and each of Borrower’s
respective Subsidiaries.
     “Consolidated Interest Expense” shall mean the aggregate consolidated
interest expense (net of consolidated interest income) of the Consolidated
Entity in respect of Indebtedness determined on a consolidated basis in
accordance with GAAP, including amortization of original issue discount on any
Indebtedness and of all fees payable in connection with the incurrence of such
Indebtedness, including, without limitation, aggregate fees payable in respect
of Letters of Credit pursuant to Section 4.6 (in each case, to the extent
included in interest expense), the interest portion of any deferred payment
obligation and the interest component of any Capital Lease Obligations.
     “Consolidated Net Income” shall mean, with respect to any Person, for any
period, the aggregate of the net income (or loss) of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (a) the net income of any other Person in which such
Person or any of its Subsidiaries has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income of
such Person and its Subsidiaries in accordance with GAAP) shall be included only
to the extent of the amount of dividends or distributions actually paid to such
Person or such Subsidiary by such other Person during such period; (b) the net
income of any Subsidiary of such Person that is subject to any Payment
Restriction shall be excluded to the extent such Payment Restriction would
prevent the payment of an amount that otherwise could have been paid to such
Person or to a Subsidiary of such Person not subject to any Payment Restriction;
and (c) there shall be excluded from Consolidated Net Income:

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     (i) all gains and losses realized on the purchase or other acquisition by
such Person or any of its Subsidiaries of any Securities of such Person or any
of its Subsidiaries,
     (ii) all extraordinary gains and losses,
     (iii) all deferred financing costs written off or premiums paid in
connection with the early extinguishment of any Indebtedness, in each case,
incurred by Wellman or any of its Subsidiaries in connection with the Financing
Transactions,
     (iv) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued),
     (v) in the case of a successor to the referent Person by consolidation or
merger or as transferee of the referent Person’s assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets, and
     (vi) the cumulative effect of a change in accounting principles.
     “Consolidated Non-cash Charges” shall mean, with respect to any Person, for
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Subsidiaries reducing Consolidated Net Income of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP (excluding any such charges constituting an
extraordinary item or loss or any such charge to the extent that it requires an
accrual of or a reserve for cash charges for any future period).
     “Consummation Date” shall mean the earlier of the effective date or
substantial consummation of any Reorganization Plan.
     “Continuation” shall have the meaning ascribed to such term in
Section 4.3(a).
     “Control” shall mean, with respect to any Person, the possession, directly
or indirectly, of the power to (a) vote ten percent (10%) or more of the
securities having ordinary voting power for the election of directors or
managers of such Person or (b) direct or cause the direction of management and
policies of a business, whether through the ownership of voting securities, by
contract or otherwise either alone or in conjunction with others or any group.
The words “Controlling” and “Controlled” have correlative meanings.
     “Control Agreement” shall mean an agreement in writing, in form and
substance reasonably satisfactory to Agent, by and among Agent, the applicable
Credit Party and any financial institution, securities intermediary, commodity
intermediary or other Person who has custody, control or possession of any
receipts on Accounts, deposits or investment property of such Credit Party,
pursuant to which such financial institution, securities intermediary, commodity
intermediary or such other Person acknowledges that such financial institution,
securities intermediary, commodity intermediary or other Person has custody,
control or possession of such receipts, deposits or investment property on
behalf of Agent, that it will comply with entitlement orders originated by Agent
with respect to such receipts, deposits or

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investment property, or other instructions of Agent, or (as the case may be)
apply any amounts distributed on account of such assets as directed by Agent, in
each case, without the further consent of such Credit Party and including such
other terms and conditions as Agent may reasonably require.
     “Convert,” “Conversion” and “Converted” each shall refer to a conversion of
Loans of one Type into Loans of another Type pursuant to Section 4.3.
     “Covered Taxes” shall have the meaning ascribed to such term in
Section 2.8(a).
     “Credit Agreement” shall mean this credit agreement, dated as of the
Closing Date, as the same may be modified, amended, extended, restated, amended
and restated or supplemented from time to time.
     “Credit Documents” shall mean, collectively, this Credit Agreement, the
Notes, Letters of Credit, each L/C Application, each of the Collateral
Documents, each Subsidiary Guaranty, the Fee Letter and all other documents,
agreements, instruments, opinions and certificates now or hereafter executed and
delivered in connection herewith or therewith, as the same may be modified,
amended, extended, restated, amended and restated or supplemented from time to
time.
     “Credit Event” shall mean (a) the making of a Loan and/or (b) the issuance
of any Letter of Credit.
     “Credit Party” or “Credit Parties” shall mean, individually or collectively
as the context requires, each Borrower and each other Subsidiary party to the
Credit Documents.
     “DBTCo.” shall mean Deutsche Bank Trust Company Americas, a New York
banking corporation, acting in its individual capacity, and its successors and
assigns.
     “Default” shall mean an event, condition or default which with the giving
of notice, the passage of time or both would (if not cured, waived or otherwise
remedied during such time) be an Event of Default.
     “Defaulting Lender” shall have the meaning ascribed to such term in
Section 11.18(b).
     “Depository Accounts” shall have the meaning ascribed to such term in
Section 2.5(b)(i).
     “Derivative Transaction” shall mean (a) an interest-rate transaction,
including an interest-rate swap, basis swap, forward rate agreement, interest
rate option (including a cap, collar, and floor), and any other instrument
linked to interest rates that gives rise to similar credit risks (including
when-issued securities and forward deposits accepted), (b) an exchange-rate
transaction (other than a spot-rate exchange), including a cross-currency
interest-rate swap, a forward foreign-exchange contract, a currency option, and
any other instrument linked to exchange rates that gives rise to similar credit
risks, (c) an equity derivative transaction that gives rise to a contingent cash
payment obligation (other than as a result of customary provisions in any
convertible note documents or an event which would constitute a Change of
Control),

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including an equity-linked swap, an equity-linked option, a forward
equity-linked contract, and any other instrument linked to equities that gives
rise to similar credit risk and (d) a commodity (including precious metal)
derivative transaction, including a commodity-linked swap, a commodity-linked
option, a forward commodity-linked contract, and any other instrument linked to
commodities that gives rise to similar credit risks.
     “Disqualified Capital Securities” shall mean any Capital Securities which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event (other than an
event which would constitute a Change of Control), (i) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof, in whole or in part, on a date on or
prior to one year after the Facility Termination Date in each case, other than a
maturity or redemption that entitles the holder of such Capital Security to
receive Wellman Common Stock as sole consideration upon maturity or redemption,
or (ii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (a) debt securities or (b) any Capital Securities
referred to in clause (i) above, in each case at any time on a date on or prior
to one year after the Facility Termination Date; provided that only the portion
of Capital Securities which so matures or is mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such date shall be deemed to be Disqualified Capital
Securities.
     “Dollars” and the sign “$” shall each mean the lawful money of the United
States of America.
     “Domestic Lending Office” shall mean, with respect to any Lender, the
office of such Lender specified as its “Domestic Lending Office” opposite its
name on Annex I, as such annex may be amended from time to time, or in the
relevant Assignment and Assumption Agreement.
     “Domestic Subsidiary” shall mean any Subsidiary of Borrowers that is not a
Foreign Subsidiary.
     “EBITDA” shall mean, with respect to any Person, for any period, the result
(without duplication) of:
     (1) Consolidated Net Income; plus
     (2) to the extent Consolidated Net Income has been reduced thereby:
          (a) all income taxes of such Person and its Subsidiaries paid or
accrued in accordance with GAAP for such period (other than income taxes
attributable to extraordinary gains or losses or non-recurring and
non-operational charges or gains other than restructuring charges);
          (b) Consolidated Interest Expense;
          (c) Consolidated Non-cash Charges; and

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          (d) non-recurring fees, cash charges and other cash expenses made or
incurred in connection with the Transaction;
in each case as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP.
     “Effective Date” shall mean, as applied to an L/C Notice of Drawing, the
Business Day on which the Agent receives such L/C Notice of Drawing if such
notice is received by it not later than 11:00 A.M. (New York City time) on such
day and, if received after such time, the next succeeding Business Day.
     “Eligible Accounts Receivable” shall mean Accounts of a Borrower payable in
Dollars. In determining the amount to be so included, the face amount of such
Accounts shall exclude any such Accounts that the Agent determines in its
Permitted Discretion to be ineligible pursuant to the definition of the term
“Borrowing Base” set forth herein. Unless otherwise approved in writing by the
Agent, no Account of any Borrower shall be deemed to be an Eligible Account
Receivable (but without duplication) if:
          (a) it arises out of a sale made by such Borrower to an Affiliate of
such or any other Borrower; or
          (b) the Account is unpaid more than (i) 60 days after the original
payment due date and/or (ii) 90 days after the original invoice date unless such
Account is subject to credit insurance issued by an insurer and on terms and in
an amount reasonably acceptable to Agent or is guaranteed or supported by a
guarantor or support provider reasonably acceptable to the Agent on terms and
conditions acceptable to the Agent; or
          (c) it is from the same account debtor (or any Affiliate thereof) and
fifty percent (50%) or more, in face amount, of all Accounts from such account
debtor (and any Affiliate thereof) are ineligible pursuant to clause (b) above;
or
          (d) the Account, when aggregated with all other Accounts of such
account debtor (and any Affiliate thereof), exceeds (i) in the case of any
Account, the account debtor of which is listed on Exhibit F hereto (as such
Exhibit may be modified from time to time at the request of Borrowers and with
the approval of the Agent), twenty percent (20%), and (ii) in all other cases,
fifteen percent (15%), in face value of all Accounts of Borrowers combined then
outstanding, to the extent of such excess, provided that Accounts insured in a
manner satisfactory to the Agent, guaranteed by a guarantor reasonably
acceptable to the Agent or supported or secured by an irrevocable letter of
credit in form and substance satisfactory to the Agent, issued by a financial
institution satisfactory to the Agent, in each case, duly transferred, assigned
or pledged to the Agent (together with sufficient documentation to permit direct
draws by or direct payments to the Agent), shall be excluded for the purposes of
such calculation to the extent of the face amount of such letter of credit or,
in the case of insurance or guarantees, as determined by the Agent in its sole
discretion; or
          (e) (i) the account debtor is also a creditor of such Borrower, (ii)
the account debtor has disputed its liability on, or the account debtor has made
any claim with respect to, such Account or any other Account due from such
account debtor to such Borrower, which has

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not been resolved or (iii) the Account otherwise is or may reasonably be
expected to become subject to any right of setoff by the account debtor;
provided that any Account deemed ineligible pursuant to this clause (e) shall
only be ineligible to the extent of the amount owed by such Borrower to the
account debtor, the amount of such dispute or claim, or the amount of such
setoff, as applicable; or
          (f) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or if a decree or order for relief has
been entered by a court having jurisdiction over the account debtor in an
involuntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or if any other petition or other application for relief
under the federal bankruptcy laws has been filed by or against the account
debtor, or if the account debtor has filed a certificate of dissolution under
applicable state law or shall be liquidated, dissolved or wound-up, or shall
authorize or commence any action or proceeding for dissolution, winding-up or
liquidation, or if the account debtor has failed, suspended business, declared
itself to be insolvent, is generally not paying its debts as they become due or
has consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs
(any such act or event an “Act of Bankruptcy”), unless the payment of Accounts
from such account debtor is secured by assets of, or guaranteed by, in either
case in a manner satisfactory to the Agent, a Person with respect to which an
Act of Bankruptcy has not occurred and that is 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 federal bankruptcy laws, as
now or hereafter in effect, the Agent shall have determined that the timely
payment and collection of such Account will not be impaired; or
          (g) the Agent does not have a valid and perfected first priority
security interest in such Account or the Account does not otherwise conform in
all material respects to the representations and warranties contained in the
Credit Agreement, any Security Agreement or any of the other Collateral
Documents unless the sale to which such Account relates is to an account debtor
outside of the United States, Canada or Puerto Rico, and (i) such account debtor
has supplied such Borrower with an irrevocable letter of credit in form and
substance reasonably satisfactory to the Agent, issued by a financial
institution satisfactory to the Agent and which has been duly transferred to the
Agent, (ii) such Account is subject to credit insurance issued by an insurer and
on terms and in an amount reasonably acceptable to Agent or is guaranteed or
supported by a guarantor or support provider reasonably acceptable to the Agent
on terms and conditions acceptable to the Agent or (iii) such Account, when
aggregated with all other such Accounts that are less than 120 days past their
original invoice date (except Accounts described in (i) and (ii) of this clause
(g)), does not exceed $10,000,000; or
          (h) the sale to the account debtor is on a bill-and-hold, guarantied
sale, sale-and-return, sale on approval or consignment basis or made pursuant to
any other written agreement providing for repurchase or return; or
          (i) the account debtor is the United States of America, any State or
any political subdivision, department, agency or instrumentality thereof, unless
such Borrower duly assigns its rights to payment of such Account to the Agent
pursuant to the Assignment of Claims

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Act of 1940 (31 U.S.C. § 3727 et seq.) or complies with any similar State or
local law as Agent shall require; or
          (j) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the account debtor (with FOB plant shipments deemed
to be accepted by the applicable account debtor until Wellman or any Subsidiary
has been notified of non-acceptance) or the services giving rise to such Account
have not been performed by such Borrower and accepted by the account debtor or
the Account otherwise does not represent a final sale; or
          (k) the Accounts are subject to any adverse security deposit, progress
payment or other similar advance made by or for the benefit of the applicable
account debtor to the extent of such security deposit, progress payment or other
similar advance; or
          (l) the Accounts are evidenced by or arise under any instrument or
chattel paper unless such instruments or chattel paper have been pledged to
Agent containing such endorsement as Agent shall reasonably require; or
          (m) the account debtor has a presence in a State requiring the filing
of Notice of Business Activities Report or similar report in order to permit
such Borrower to seek judicial enforcement in such State of payment of such
Account unless such Borrower has qualified to do business in such State or has
filed a Notice of Business Activities Report or equivalent report for the then
current year or such failure to file and inability to seek judicial enforcement
is capable of being remedied without any material delay or material cost; or
          (n) the Account consists of progress billings (such that the
obligation of the account debtor with respect to such Account is conditioned
upon such Borrower’s satisfactory completion of any further performance under
the agreement giving rise thereto); or
          (o) the goods giving rise to such Account are also Inventory of such
Borrower.
     “Eligible Inventory” shall mean Inventory of a Borrower that consists of
raw materials, work in process and finished goods. In determining the amount to
be so included, the amount of such Inventory shall exclude any Inventory that
the Agent determines in its Permitted Discretion to be ineligible pursuant to
the definition of the term “Borrowing Base” set forth herein. Unless otherwise
approved in writing by the Agent, no Inventory of any Borrower shall be deemed
Eligible Inventory if:
          (a) the Inventory has been returned or rejected by such Borrower’s
customers; or
          (b) the Inventory is not owned solely by such Borrower or such
Borrower does not have good, valid and marketable title thereto unless such
Inventory is Qualified Inventory; or
          (c) the Inventory is not stored on property that is either (i) owned
or leased by such or any other Borrower or (ii) owned or leased by a
warehouseman that has contracted with such Borrower to store Inventory on such
warehouseman’s property unless such Inventory is

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Qualified Inventory (provided that, with respect to Inventory of any Borrower
other than Qualified Inventory, (A) stored on property leased by a Borrower,
such Borrower shall have delivered to the Agent a Collateral Access Agreement
executed by the lessor of such property, (B) stored on property owned or leased
by a warehouseman, such Borrower shall have delivered to the Agent a Collateral
Access Agreement executed by such warehouseman and (C) stored on property owned
by such Borrower which is subject to a mortgage in favor of any Person other
than Agent or any Lender, such Borrower shall have delivered to the Agent a
Collateral Access Agreement executed by the mortgagee of such property or an
intercreditor agreement in form and substance reasonably satisfactory to the
Agent; provided that in the case of clauses (A) and (B), the Agent may reserve
an amount equal to ninety (90) days rent from the Borrowing Base to the extent
that a Collateral Access Agreement is not delivered with respect to such
property); or
          (d) the Inventory is not Qualified Inventory and is not subject to a
valid and perfected first priority security interest in favor of the Agent
except, with respect to Eligible Inventory stored at sites described in clause
(c)(ii) of this definition, for Liens for normal and customary charges; or
          (e) the Inventory is obsolete or slow moving (in each case as
reasonably determined by the Agent) or, other than Qualified Inventory, the
Inventory does not otherwise conform in all material respects to the
representations and warranties contained in the Credit Agreement, the Security
Agreement or any of the other Collateral Documents; or
          (f) the Inventory was not manufactured in accordance with or does not
meet all standards imposed by all Requirements of Law or by any government
agency, or department or division thereof, having regulatory authority over such
goods or their manufacture, use or sale; or
          (g) the Inventory consists of spare parts for equipment, packaging and
shipping materials or supplies used or consumed in a Borrower’s business; or
          (h) the Inventory is purchased or sold on consignment unless a
consignment agreement in form and substance satisfactory to the Agent is in
place and appropriate financing statements have been filed; or
          (i) the Inventory, other than Qualified Inventory, is located outside
the United States of America or Canada (provided that, with respect to Inventory
in Canada, Agent has determined that it has a valid and perfected first priority
security interest in such Inventory); or
          (j) the Inventory is subject to a license agreement or other
arrangement with a third party which, in Agent’s determination, restricts the
ability of Agent to exercise its rights under any of the Credit Documents with
respect to such Inventory unless such third party has entered into an agreement
in form and substance reasonably satisfactory to Agent permitting Agent to
exercise its rights with respect to such Inventory or Agent has otherwise agreed
to allow such Inventory to be eligible in Agent’s Permitted Discretion; or
          (k) the Inventory consists of work in process not classified as
amorphous resin or mixed xylenes; or

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          (l) the Inventory has given rise to an Account.
     “Environment” shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, natural resources, the workplace or as otherwise defined in
any Environmental Law.
     “Environmental Claim” shall mean any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction by any
Governmental Authority or any Person for any response or corrective action, any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, investigation,
remediation or other cost recovery, contribution, indemnity, consequential
damages, damage to the environment, nuisance, pollution, contamination or other
adverse effects on the Environment, or for fines or penalties, in each case
arising under any Environmental Law, including without limitation, relating to,
resulting from or in connection with Hazardous Materials and relating to any
Borrower, any Subsidiaries of any Borrower or any of their respective properties
or predecessors in interest.
     “Environmental Laws” means the common law and all United States statutes,
ordinances, orders, rules, regulations, judgments or decrees relating to
(i) pollution or protection of the Environment and public health and welfare,
including, without limitation, those relating to the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (42 U.S.C. § 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air
Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. §
2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
§ 136 et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.)
and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et
seq.), each as amended or supplemented, and regulations promulgated pursuant
thereto, each as in effect as of the date of determination. When used with
reference to Foreign Subsidiaries, “Environmental Laws” shall mean the statutes,
ordinances, orders, rules, regulations, judgments or decrees of the applicable
foreign jurisdictions relating to the categories described in clauses (i), (ii)
and (iii) above.
     “Environmental Lien” means a Lien in favor of a Governmental Authority or
other Person for any liability, damages, costs or any other obligation under an
Environmental Law.
     “Equipment” shall mean, with respect to any Person, all of such Person’s
equipment, including machinery, equipment, office equipment and supplies,
computers and related equipment, furniture, furnishings, tools, tooling, jigs,
dies, fixtures, manufacturing implements, fork lifts, trucks, trailers, motor
vehicles, and other equipment.
     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, and
all final or temporary regulations promulgated thereunder and published,
generally applicable rulings entitled to precedential effect.

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     “ERISA Affiliate” shall mean any Person required at any relevant time to be
aggregated with any Borrower or any Subsidiary of any Borrower under
Sections 414(b), (c), (m) or (o) of the Code.
     “Euros” and the sign “€” shall each mean the lawful money of the European
Union.
     “Event of Default” shall have the meaning ascribed to such term in
Article 9 of this Credit Agreement.
     “Excluded Actions” shall have the meaning ascribed to such term in
Section 2.11(c).
     “Expenses” shall mean all present and future reasonable expenses incurred
by or on behalf of the Agent, in its capacity as Agent, in connection with the
Credit Agreement, any other Credit Document or otherwise, whether incurred
heretofore or hereafter, which expenses shall include, without being limited to,
the cost of record searches, the reasonable fees and expenses of attorneys
(including the allocated cost of internal counsel) and paralegals, all
reasonable costs and expenses incurred by the Agent in opening bank accounts and
lockboxes, depositing checks, receiving and transferring funds, and any
reasonable charges imposed on the Agent due to insufficient funds of deposited
checks and the Agent’s standard fee relating thereto, collateral examination
fees and expenses, reasonable fees and expenses of accountants, appraisers,
field examiners or other consultants, experts or advisors employed or retained
by the Agent, reasonable fees and expenses incurred by the Agent in connection
with the initial assignments of the Loans, fees and taxes relative to the filing
of financing statements, costs of preparing and recording any other Collateral
Documents, all expenses and costs referred to in Article 4 of this Credit
Agreement, all other reasonable fees and expenses required to be paid pursuant
to the Fee Letter and all reasonable fees and expenses incurred in connection
with releasing Collateral and the amendment or termination of any of the Credit
Documents.
     “Exposure” shall have the meaning ascribed to such term in the definition
of “Majority Lenders”.
     “Facility Termination Date” shall mean the earliest of: (i) the date that
is three hundred sixty-five (365) days after the Closing Date; (ii) such date as
the Commitments shall have been terminated or otherwise reduced to $0 pursuant
to this Credit Agreement (whether pursuant to Section 9.1 or otherwise), all
Loans have been repaid, all Letters of Credit have been terminated or have been
cash collateralized at 105% and the Borrowers are entitled to a release of the
Collateral under Section 10.10; (iii) the date that is six (6) Business Days
after the Petition Date if the Interim Financing Order has not been approved by
the Bankruptcy Court by such date, or eight (8) Business Days after the Petition
Date if such Financing Order has not been entered by the Bankruptcy Court by
such date; (iv) the date that is forty-five (45) days after the Petition Date if
the Final Financing Order has not been approved by the Bankruptcy Court by such
date, or two (2) Business Days after such forty-five (45) day period if the
Final Financing Order has not been entered by the Bankruptcy Court by such date,
unless the Interim Financing Order has been extended with Agent’s written
consent to a date acceptable to Agent; (v) the date upon which the Interim
Financing Order expires, unless the Final Financing Order shall have been
entered and become effective on such date; (vi) the Consummation Date for any
Reorganization Plan in any Chapter 11 Case; and (vii) contemporaneously with the
funding of the Wellman Sale.

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     “Federal Funds Rate” shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.
     “Fee Letter” shall mean that certain letter agreement dated February 20,
2008 by and among Deutsche Bank Securities Inc., the Agent and Wellman and
providing for the payment of certain fees in connection with, among other
things, the Transactions.
     “Fees” shall mean the Upfront Fee, the Unused Line Fee, the Letter of
Credit Fees and the Issuing Bank Fees, and, without duplication, all fees
payable by Borrowers under the Fee Letter.
     “Final Financing Order” shall mean an order of the Bankruptcy Court entered
in the Chapter 11 Cases after a final hearing under Bankruptcy Rule 4001(c)(2)
substantially in the form of Exhibit G hereto (with such changes as are
acceptable to the Agent (with approval of the Steering Committee in its sole
discretion) and Borrowers), as the same may be amended, supplemented or
otherwise modified from time to time with the express written consent or joinder
of Agent (with the approval of the Steering Committee in its sole discretion)
and approved by the Bankruptcy Court.
     “Final Financing Order Date” shall mean the date of entry of the Final
Financing Order by the Bankruptcy Court.
     “Financial Advisory Fee” shall mean the fee payable by Wellman to Lazard in
connection with closing the Wellman Sale pursuant to the existing agreement of
Wellman with Lazard previously delivered to the Agent in connection with filing
the Chapter 11 Cases and as approved by the Bankruptcy Court.
     “Financing Orders” shall mean collectively, the Interim Financing Order and
the Final Financing Order.
     “Financial Statements” shall mean the consolidated balance sheets,
statements of income, cash flows and shareholder’s equity of the Consolidated
Entity for the period specified.
     “First Lien Credit Agreement” means the term loan agreement that evidences
the First Lien Credit Facility.
     “First Lien Credit Facility” shall mean the term loan credit agreement
providing for $185,000,000 in term loans entered into on February 10, 2004,
between Wellman, the lenders party thereto in their capacities as lenders
thereunder and DBTCA, as administrative agent, together with the related
documents thereto (including, without limitation, any guarantee, collateral and
security agreements and/or documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified prior to the Petition Date.

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     “First Lien Credit Facility Agent” shall mean the Administrative Agent (as
defined in the First Lien Credit Agreement).
     “Fiscal Quarter” shall mean any of the quarterly accounting periods of
Borrowers, ending on March 31, June 30, September 30 and December 31 of each
year.
     “Fiscal Year” shall mean any of the annual accounting periods of Borrowers
ending on December 31 of each year.
     “Foreign Lender” shall mean any Lender or Issuing Bank organized under the
laws of a jurisdiction outside of the United States.
     “Foreign Subsidiary” shall mean each Subsidiary of a Borrower that is
incorporated or organized under the laws of and conducts substantially all of
its business in any jurisdictions other than the United States, any State
thereof, the United States Virgin Islands or Puerto Rico.
     “Funding Bank” shall have the meaning ascribed to such term in Section 4.9.
     “Funds Administrator” shall mean Wellman in its capacity as borrowing agent
and funds administrator for Borrowers hereunder and under each of the other
Credit Documents.
     “GAAP” shall mean generally accepted accounting principles in the United
States as in effect from time to time.
     “Governing Documents” shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person.
     “Governmental Authority” shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
     “Guarantee Obligations” shall mean, as to any Person, without duplication,
any direct or indirect obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, dividend, Capitalized Lease Obligation or operating
lease, any other lease or other obligation (“primary obligations”) of any other
Person (the “primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent: (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor; (ii) to advance or supply
funds (a) for the purchase or payment of any such primary obligation, or (b) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor; (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation; or (iv) otherwise to assure or hold harmless
the owner of such primary obligation against loss in respect thereof, provided,
however, that the term Guarantee Obligations shall not include endorsements of
instruments for deposit or collection in the ordinary course of business or
guarantees in respect of trade payables of Wellman and its Subsidiaries. The
amount of any Guarantee Obligation at any time shall be deemed to be an amount
equal to the lesser at such time of (x) the stated or determinable amount of the
primary obligation in respect of which such

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Guarantee Obligation is made or (y) the maximum amount for which such Person may
be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation; or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof; provided, however, as to any
Derivative Transaction, such amount shall be calculated by reference to the mark
to market termination value of the relevant Derivative Transaction as of the
last day of the preceding month or as of the day most recently requested by the
Agent.
     “Guaranty” of any Person shall mean any liability, contingent or otherwise,
of such Person (other than an endorsement for collection or deposit and standard
contractual indemnities, in each case, in the ordinary course of business) (a)
to pay any liability of any other Person or to otherwise protect, or having the
practical effect of protecting, the holder of any such Liability against loss
(whether such obligation arises by virtue of such Person being a partner of a
partnership or participant in a joint venture or by agreement to pay, to keep
well, to maintain solvency, assets, level of income or other financial
condition, to purchase assets, goods, securities or services or to take or pay,
or otherwise) or (b) incurred in connection with the issuance by a third Person
of a Guaranty of any liability of any other Person (whether such obligation
arises by agreement to reimburse or indemnify such third Person or otherwise).
The word “Guaranty” when used as a verb has the correlative meaning.
     “GuardWell” shall mean GuardWell Insurance Company, a Vermont corporation.
     “Hazardous Materials” shall mean any pollutant, contaminant, waste,
chemical, material or substance or constituent, including without limitation,
any petroleum or petroleum products, radioactive materials, asbestos in any form
that is or could become friable and require abatement, transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
and radon gas, subject to regulation or which could give rise to liability under
Environmental Laws.
     “Highest Lawful Rate” shall mean, at any time when any Obligations shall be
outstanding hereunder, the maximum nonusurious interest rate, that then may be
contracted for, taken, reserved, charged or received on the Obligations owing
under this Credit Agreement or any of the other Credit Documents, under (a) the
laws of the State of New York (or the law of any other jurisdiction whose laws
may be mandatorily applicable notwithstanding other provisions of this Credit
Agreement and the other Credit Documents) or (b) if higher, applicable federal
laws, in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under this Credit
Agreement and any other Credit Documents executed in connection herewith, and
any available exemptions, exceptions and exclusions.
     “Immaterial Subsidiary” shall mean as of any date of determination, any
Subsidiary of a Borrower that, as of the most recently ended fiscal quarter, has
gross assets of less than $5,000,000.
     “Indebtedness” shall mean, with respect to any Person, without duplication
     (i) all indebtedness, obligations and liabilities of such Person for
borrowed money,

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     (ii) that portion of obligations with respect to Capitalized Lease
Obligations that is properly classified as a liability on a balance sheet of
such Person in conformity with GAAP,
     (iii) notes payable and drafts accepted representing extensions of credit,
whether or not representing obligations for borrowed money, of such Person,
     (iv) any indebtedness, obligation or liability of such Person owed for all
or any part of the deferred purchase price of property or services, conditional
sale obligations and obligations under title retention agreements (excluding any
such obligations incurred under ERISA), which purchase price is (a) due more
than six months (or a longer period of up to one year, if such terms are
available from suppliers in the ordinary course of business) from the date of
incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument,
     (v) all indebtedness, obligations and liabilities (other than those
constituting an operating lease) secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person,
     (vi) Guarantee Obligations of such Person,
     (vii) guarantees and other contingent obligations in respect of
indebtedness referred to in clauses (i) through (v) above,
     (viii) all Disqualified Capital Securities issued by such Person with the
amount of Indebtedness represented by such Disqualified Capital Securities being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends, if any,
     (ix) Attributable Indebtedness of such Person; and
     (x) the mark to market termination value, if any, of all Derivative
Transactions to the extent such transactions should be reflected on the balance
sheet of such Person.
     For purposes hereof, the “maximum fixed repurchase price” of any
Disqualified Capital Securities which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Securities as if such Disqualified Capital Securities were purchased on any date
on which Indebtedness shall be required to be determined pursuant to this Credit
Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Securities, such fair market value to be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Capital Securities. Notwithstanding the foregoing,
“Indebtedness” shall not include trade payables and accrued liabilities incurred
in the ordinary course of business for the purchase of goods or services which
are not secured by a Lien other than a Permitted Lien and which are not overdue
by more than

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180 days. Indebtedness shall not include deferred payments on intercompany sales
pursuant to appropriate transfer pricing terms and which are paid within ninety
(90) days.
     “Intellectual Property” shall mean, with respect to any Person, all of such
Person’s now owned and hereafter arising or acquired: patents, patent rights,
patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles,
trademark and service mark applications, and rights under licenses and other
rights to use any of the foregoing; all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing; all
rights to sue for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill
(including any goodwill associated with any trademark or the license of any
trademark); customer and other lists in whatever form maintained; and trade
secret rights, copyright rights, rights in works of authorship, domain names and
domain name registrations; software and contract rights relating to software, in
whatever form created or maintained.
     “Intercompany Indebtedness” shall mean any Indebtedness of a Borrower or
any Subsidiary Guarantor or Wholly-Owned Subsidiary of a Borrower that is not a
Subsidiary Guarantor that, in the case of a Borrower, is owing to any other
Borrower, any Subsidiary Guarantor or Wholly-Owned Subsidiary of a Borrower that
is not a Subsidiary Guarantor and that, in the case of any such Subsidiary, is
owing to a Borrower or any Subsidiary Guarantor or Wholly-Owned Subsidiary of a
Borrower that is not a Subsidiary Guarantor; provided that if as of any date any
Person other than a Borrower or a Subsidiary Guarantor or Wholly-Owned
Subsidiary of a Borrower that is not a Subsidiary Guarantor owns or holds such
Indebtedness, or holds any Lien in respect thereof, such Indebtedness shall no
longer be Intercompany Indebtedness permitted to be incurred pursuant to
Section 8.3(c).
     “Intercreditor Agreement” shall mean that certain Intercreditor Agreement,
dated as of February 10, 2004, by and among the Agent (as successor to the Agent
as defined in the Pre-Petition Credit Agreement), the First Lien Credit Facility
Agent and the Second Lien Credit Facility Agent, as such agreement may be
amended, restated or otherwise modified and in effect.
     “Interest Period” shall mean a period, commencing, in the case of the first
Interest Period applicable to a LIBOR Rate Loan, on the date of the making of,
or conversion into, such Loan, and, in the case of each subsequent, successive
Interest Period applicable thereto, on the last day of the immediately preceding
Interest Period. The duration of each such Interest Period shall be one month
(and other shorter periods if available to all Lenders), in each case as the
Funds Administrator may, in an appropriate Notice of Borrowing, Notice of
Continuation or Notice of Conversion, select; provided that the Funds
Administrator may not select any Interest Period that ends after the Facility
Termination Date. Whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided that if
such extension would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest Period shall occur
on the next preceding Business Day.
     “Interest Rate Agreement” shall mean any agreement evidencing an interest
rate transaction, including an interest rate swap, basis swap, forward rate
agreement, interest rate

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option (including a cap, collar or floor), and any other instrument linked to
interest rates that gives rise to similar credit risks.
     “Interim Advance” shall mean a Loan made by the Agent to Borrowers pursuant
to Section 2.2(b)(i).
     “Interim Advance Period” shall have the meaning ascribed to such term in
Section 2.2(b)(i).
     “Interim Financing Order” shall mean an order of the Bankruptcy Court
entered in the Chapter 11 Cases after an interim hearing substantially in the
form of Exhibit I hereto (with such changes as are acceptable to the Agent and
Borrowers), as the same may be amended, supplemented or otherwise modified from
time to time with the express written consent or joinder of the Agent in its
sole discretion and approved by the Bankruptcy Court.
     “Internal Revenue Service” or “IRS” shall mean the United States Internal
Revenue Service and any successor agency.
     “Inventory” shall mean, with respect to any Person, all of such Person’s
inventory, including: (a) all raw materials, work in process, parts, components,
assemblies, supplies and materials used or consumed in such Person’s business;
(b) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(c) all goods returned or repossessed by such Person.
     “Investment” shall mean, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a Guarantee
Obligation) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition by such Person of any Capital
Securities, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any other Person. “Investment” shall exclude extensions
of trade credit in the ordinary course and deposits to secure leases by Wellman
and its Subsidiaries in the ordinary course of business of Wellman or such
Subsidiary, in each case, as the case may be. In determining the aggregate
amount of Investments outstanding at any particular time, without duplication
(a) the amount of any Investment represented by a Guaranty shall be taken at not
less than the principal amount of the Liabilities to which such Guaranty is
applicable and still outstanding; (b) there shall be deducted in respect of each
such Investment (but not in excess of the amount of such Investment) any amount
received after the Closing Date, in cash in respect of such Investment; and (c)
there shall not be deducted from the original amount of any Investment, and such
Investment shall be deemed to continue to be “outstanding” in such original
amount notwithstanding, any (i) decrease in the market value thereof or (ii)
amount thereof that may have been forgiven, released, cancelled or otherwise
nullified or held to be invalid. Notwithstanding the foregoing, for purposes of
determining the aggregate amount of Investments in Foreign Subsidiaries,
“Investment” shall also include the transfer of assets, whether by dividend on
Capital Securities, redemption of such Capital Securities or otherwise, in each
case, net of any such transfers received after the Closing Date, by Borrowers
and Domestic Subsidiaries from Foreign Subsidiaries.

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     “Investment Account” shall have the meaning ascribed to such term in
Section 8.9(f).
     “Issuing Bank” shall mean DBTCo. or (a) any Lender or (b) any Affiliate of
a Lender that, in either case, is acceptable to the Agent and has agreed to
issue a Letter of Credit for the account of Borrowers under this Credit
Agreement.
     “Issuing Bank Fees” shall have the meaning ascribed to such term in
Section 4.6(b).
     “Lazard” shall mean Lazard LLC.
     “L/C Interest Rate” shall have the meaning ascribed to such term in
Section 3.5(b).
     “L/C Notice of Drawing” shall mean the date on which the Issuing Bank
provides Agent with notice that a drawing has been made under a Letter of
Credit.
     “L/C Participation” shall have the meaning ascribed to such term in
Section 3.4.
     “Lender” shall, subject to Section 11.18(c)(ii), mean (a) each Person
listed as a “Lender” on the signature pages hereof and (b) each Person that has
been assigned any or all of the rights and obligations of a Lender pursuant to
Section 11.6(c).
     “Letter of Credit” shall mean all letters of credit (whether commercial or
stand-by and whether for the purchase of inventory, equipment or otherwise)
issued for the account of any Borrower by an Issuing Bank pursuant to Article 3
of this Credit Agreement and all amendments, renewals, extensions or
replacements thereof.
     “Letter of Credit Fees” shall have the meaning ascribed to such term in
Section 4.6(a).
     “Letter of Credit Obligations” shall mean, at any time, the sum of (a) the
aggregate undrawn face amounts of all Letters of Credit outstanding at such
time, plus (b) the aggregate unreimbursed amount of all drawings under Letters
of Credit.
     “Letter of Credit Request” shall have the meaning ascribed to such term in
Section 3.2(a).
     “Liability” of any Person shall mean (in each case, whether with full or
limited recourse) any indebtedness, liability, obligation, covenant or duty of
or binding upon, or any term or condition to be observed by or binding upon,
such Person or any of its assets, of any kind, nature or description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, whether arising under contract, Requirement of Law,
or otherwise, whether now existing or hereafter arising, and whether for the
payment of money or the performance or non-performance of any act.
     “LIBOR Lending Office” shall mean, with respect to any Lender, the office
of such Lender specified as its “LIBOR Lending Office” opposite its name on
Annex I or in the relevant Assignment and Acceptance Agreement (or, if no such
office is specified, its Domestic Lending Office), or such other office or
Affiliate of such Lender as such Lender may from time to time specify to the
Funds Administrator and the Agent.

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     “LIBOR Margin” shall mean, at any time, the Applicable Margin for LIBOR
Rate Loans at such time.
     “LIBOR Rate” shall mean, with respect to any Interest Period, (a) the rate
per annum for Dollar deposits approximately equal to the principal amount of the
LIBOR Rate Loans for which the LIBOR Rate is being determined and with
maturities comparable to the Interest Period for which such LIBOR Rate would
apply, which appears on the Telerate Page 3750 at approximately 11:00 A.M.,
London time, on the day that is two (2) Business Days prior to the first day of
such Interest Period and (b) if no such rate so appears on the Telerate Page
3750, an interest rate per annum equal to the rate (rounded upward to the
nearest whole multiple of one-sixteenth (1/16) of one percent (1.00%) per annum,
if such rate is not such a multiple) of the offered quotation, if any, to first
class banks in the London (U.K.) interbank market by Deutsche Bank for Dollar
deposits of amounts in immediately available funds comparable to the principal
amount of the LIBOR Rate Loans for which the LIBOR Rate is being determined with
maturities comparable to the Interest Period for which such LIBOR Rate will
apply as of approximately 10:00 A.M. (New York City time) two (2) Business Days
prior to the commencement of such Interest Period. The term “Telerate Page 3750”
shall mean the display designated as Page 3750 on the Telerate Services (or such
other page as may replace such page on such service for the purpose of
displaying a comparable rate).
     “LIBOR Rate Loan” shall mean a Loan that bears, or is to bear, interest by
reference to the LIBOR Rate.
     “Lien(s)” shall mean (a) any lien, claim, charge, pledge, security
interest, deed of trust, mortgage, other encumbrance or other arrangement (other
than a deposit consisting solely of a Letter of Credit) having the practical
effect of the foregoing or other preferential arrangement of any other kind and
shall include the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement and (b) in addition,
in the case of any investment property, any contract or other arrangement,
express or implied, under which any Person has the right to control such
investment property.
     “Line of Credit” shall mean, at any time, an amount equal to the aggregate
amount, at such time, of the Commitments.
     “Loans” shall mean amounts advanced by Agent or a Lender pursuant to
Section 2.1, 2.2(b), 2.2(c), 3.6 or any other provision of this Credit
Agreement.
     “Lockboxes” shall have the meaning ascribed to such term in
Section 2.5(b)(i).
     “Majority Lenders” shall mean, at any time, those Lenders having more than
50% of the aggregate amount of the Commitments or, if the Commitments shall have
expired or been terminated, Lenders having more than 50% of the aggregate amount
of the outstanding Exposures; and for this purpose, a Lender’s “Exposure” shall
mean (assuming that any Interim Advances have been settled) the aggregate amount
of such Lender’s outstanding Loans plus such Lender’s Proportionate Share of
outstanding Letter of Credit Obligations.
     “Management Call” shall mean a conference call including the management of
Wellman (including the Chief Restructuring Officer), the Agent and the Lenders.
Such calls will cover

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topics including, but not limited to, the following: (i) updates from Lazard
regarding the Wellman Sale, (ii) the Cash Budget, (iii) the financial condition
and prospects of Wellman and its Subsidiaries, and (iv) developments affecting
the administration of the Chapter 11 Cases.
     “Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, results of operations, assets, liabilities, prospects or
condition (financial or otherwise) of the Credit Parties taken as a whole or a
substantial portion of the Collateral, (b) any Credit Party’s ability to perform
its material obligations under the Credit Documents to which it is a party or
(c) the rights and remedies of the Agent, the Lenders or any Issuing Bank under
any Credit Document. The events leading up to the filing and the filing of a
Chapter 11 Case do not, in and of themselves, or in the aggregate with all other
Chapter 11 Cases, constitute a Material Adverse Effect.
     “Material Contract” shall mean any contract, lease, license indenture,
agreement, commitment, raw material contract or other arrangement (other than
the Credit Documents), whether written or oral, to which any Borrower or any
Subsidiary of any Borrower is a party with respect to which breaches,
performances, nonperformances, cancellations or failures to renew or replace by
any party thereto singly or in the aggregate would reasonably be expected to
have a Material Adverse Effect.
     “Minimum Liquidity Availability” shall mean, on any date prior to
September 15, 2008, $20,000,000, provided that for the thirty days commencing
May 6, 2008, Minimum Liquidity Availability means $10,000,000. Commencing
September 15, 2008 and thereafter, Minimum Liquidity Availability shall mean
$30,000,000.
     “Mortgage” shall mean individually and collectively, any mortgages or
similar documents executed pursuant to Section 7.16, all as amended, restated,
supplemented or otherwise modified from time to time.
     “Mortgage Policies” shall mean any mortgage title insurance policies
delivered to the Agent hereunder.
     “Mortgage Property” shall mean any real property subject to the Mortgages.
     “Multiemployer Plan” shall mean a “multiemployer plan” as defined in
Sections 3(37) or 400l(a)(3) of ERISA and (a) which is, or within the
immediately preceding six (6) years was, contributed to by any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate or (b) with respect to which
any Borrower or any Subsidiary of any Borrower may incur any liability.
     “Net Orderly Liquidation Value”, at any time, shall mean (a) the “net
orderly liquidation value” determined by a valuation company acceptable to the
Agent at or prior to such time after performance of an Inventory valuation to be
done at the Agent’s request and Borrowers’ expense, less the amount estimated by
such valuation company for marshalling, reconditioning, carrying, and sales
expenses designed to maximize the resale value of such Inventory and assuming
that the time required to dispose of such Inventory is customary with respect to
such Inventory; or (b) if no such Inventory valuation has been requested by the
Agent, the value customarily attributed to Inventory in the appraisal industry
for Inventory of similar quality and quantity, and similarly dispersed (under
similar and relevant circumstances under

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standard asset-based lending procedures), at the time of the valuation, less the
amount customarily estimated in the appraisal industry at the time of any
determination for marshalling, recondition, carrying, and sales expenses
designed to maximize the resale value of such Inventory and assuming that the
time required to dispose of such Inventory is customary with respect to such
Inventory.
     “Net Sale Proceeds” shall mean, at any time, with respect to any Asset
Sale, Cash Proceeds of such Asset Sale net of bona fide direct costs of sale
including, but not limited to, (i) the cash expenses of such Asset Sale
(including, without limitation, the payment of principal, premium, if any, and
interest on Indebtedness required to be paid as a result of such Asset Sale and
legal, accounting and investment banking fees and sales commission(s)),
(ii) taxes paid or payable as a result thereof, and (iii) any portion of cash
proceeds which Wellman determines in good faith should be reserved for
post-closing adjustments, it being understood and agreed that on the day that
all such post-closing adjustments have been determined, the amount (if any) by
which the reserved amount in respect of such Asset Sale exceeds the actual
post-closing adjustments payable by the Borrowers or any of their Subsidiaries
shall constitute Net Sale Proceeds on such date.
     “Note” shall mean a promissory note of Borrowers payable to the order of
any Lender, in the form of Exhibit B, evidencing the aggregate Indebtedness of
Borrowers to such Lender resulting from the Loans made by such Lender or
acquired by such Lender pursuant to Section 11.6.
     “Notice of Borrowing” shall have the meaning ascribed to such term in
Section 2.2(a)(i).
     “Notice of Continuation” shall have the meaning ascribed to such term in
Section 4.3(a).
     “Notice of Conversion” shall have the meaning ascribed to such term in
Section 4.3(b).
     “Obligations” shall mean (a) the unpaid principal of and interest on the
Loans and the Notes, (b) the obligation of Borrowers to pay to an Issuing Bank
the amounts of all drawings together with interest accrued thereon at the L/C
Interest Rate, made under Letters of Credit of such Issuing Bank, (c) the Fees,
(d) the Expenses, (e) all other Liabilities of the respective Credit Parties to
the Agent, the Collateral Agent and any Lender (in its capacity as such and not
in its capacity as an Issuing Bank), which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, any other Credit Document, and
(f) all other Liabilities of the respective Borrowers to an Issuing Bank under
all its L/C Applications and Letters of Credit. As used in clauses (a), (b) and
(c) and wherever else the determination of the amount of “interest” is relevant,
“interest” shall include interest accruing on or after the filing of, or what
would have accrued but for the filing of, any petition in bankruptcy, or the
commencement of any insolvency, reorganization, or like proceeding, relating to
any Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding.
     “Other Taxes” shall have the meaning ascribed to such term in
Section 2.8(b).
     “Payment” shall have the meaning ascribed to such term in Section 2.10.

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     “Payment Restriction” shall mean any encumbrance or restriction on the
ability of any Subsidiary of any Borrower to (a) pay dividends or make any other
distributions on its Capital Securities or any other interest or participation
in, or measured by, its profits; (b) make loans or advances or pay any
Indebtedness or other obligation owed to any Borrower or to any Subsidiary of
any Borrower; or (c) transfer any of its property or assets to any Borrower or
to any Subsidiary of any Borrower.
     “PBGC” shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
     “Permitted Discretion” shall mean the Agent’s judgment exercised in good
faith based upon its consideration of any factor which the Agent believes in
good faith: (a) will or could adversely affect the value of any Collateral, the
enforceability or priority of the Agent’s Liens thereon or the amount which the
Agent, the Lenders or any Issuing Bank would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral, (b) suggests that any collateral report delivered to the
Agent by any Person on behalf of any Borrower is incomplete, inaccurate or
misleading in any material respect, (c) creates or could be expected to create a
Default or Event of Default, or (d) has or could otherwise materially adversely
affect the interests of the Secured Parties. In exercising such judgment, the
Agent may consider such factors already included in or tested by the definition
of Eligible Accounts Receivable or Eligible Inventory, as well as, without
limitation, any of the following: (i) the changes in collection history and
dilution with respect to the Accounts; (ii) changes in demand for, pricing of,
or product mix of Inventory; (iii) changes in any concentration of risk with
respect to the respective Borrowers’ Accounts or Inventory; and (iv) any other
factors relating to Borrowers’ Accounts or Inventory that change the credit risk
of lending to any Borrower on the security of any Borrowers’ Accounts or
Inventory. The burden of establishing lack of good faith hereunder shall be on
Borrowers.
     “Permitted Holder” shall mean Warburg Pincus Private Equity VIII, L.P. and
its Affiliates.
     “Permitted Lien” shall have the meaning ascribed to such term in
Section 8.4.
     “Permitted Senior Liens” shall mean (i) deposits provided to utility
service providers pursuant to Section 366 of the Bankruptcy Code, and (ii) Liens
on the Term Loan Collateral (as defined in the Intercreditor Agreement) securing
the First Lien Credit Facility in existence on the Petition Date and senior to
the extent set forth in the Intercreditor Agreement; provided that Permitted
Senior Liens shall not be deemed to include or permit as a result thereof any
administrative expense claim under the Bankruptcy Code senior to or pari passu
with the superpriority administrative expense claims of Agent and Lenders set
forth herein and in the Financing Orders.
     “Person” shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government (including any
division, agency or department thereof), and, as applicable, the successors,
heirs and assigns of each.

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     “Petition Date” shall have the meaning ascribed to such term in the
recitals to this Credit Agreement.
     “Plan” shall mean any employee benefit plan (within the meaning of
Section 3(3) of ERISA), whether oral or written, maintained or contributed to by
any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate, or with
respect to which any Borrower, any Subsidiary of any Borrower or any ERISA
Affiliate, may incur liability.
     “Pledge Agreement” shall mean the Pledge Agreement, dated as of the Closing
Date, by and among the Collateral Agent, Borrowers and the Subsidiary
Guarantors, as such agreement may be amended, restated or otherwise modified and
in effect.
     “Post-Petition” shall mean the time period beginning immediately upon the
filing of the Chapter 11 Cases.
     “Post-Petition Indebtedness” shall mean any or all Indebtedness of the
Credit Parties incurred after the filing of the Chapter 11 Case.
     “Pre-Petition” shall mean the time period ending immediately prior to the
filing of the Chapter 11 Cases.
     “Pre-Petition Credit Agreement” shall mean that certain Amended and
Restated Credit Agreement dated May 4, 2006, as amended, among Borrowers,
Deutsche Bank Trust Company Americas, as Agent, the lenders party thereto, and
the other agents identified therein. The term Pre-Petition Credit Agreement
includes all amendments and supplements to the Pre-Petition Credit Agreement,
all restatements of the Pre-Petition Credit Agreement and all guaranties,
security documents and other documents, instruments and agreements executed and
delivered in connection with the Pre-Petition Credit Agreement.
     “Pre-Petition Indebtedness” shall mean any or all Indebtedness of any of
the Credit Parties outstanding on the Petition Date immediately prior to the
filing of the Chapter 11 Cases.
     “Pre-Petition Secured Debt” shall mean any or all Indebtedness of the
Credit Parties secured under or pursuant to the Pre-Petition Term Loan
Agreements.
     “Pre-Petition Term Loan Agreements” shall mean the First Lien Credit
Agreement and the Second Lien Credit Agreement.
     “Preferred Stock” of any Person shall mean any Capital Securities of such
Person that has preferential rights (as compared to any other Capital Securities
of such Person) with respect to dividends or redemptions or upon liquidation.
     “Prime Lending Rate” shall mean the rate that Deutsche Bank announces from
time to time in New York, New York as its prime lending rate in the United
States, as in effect from time to time. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. Deutsche Bank, DBTCo. and each of the other Lenders may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.

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     “Prime Rate Loan” shall mean a Loan that bears, or is to bear, interest by
reference to the Prime Lending Rate.
     “Pro Forma Borrowing Base Certificate” shall have the meaning ascribed to
such term in Section 2.4(d).
     “Professional Carve-Out Reserve” shall have the meaning ascribed to such
term in Section 2.11(c).
     “Prohibited Transaction” shall mean any transaction that is prohibited
under Code Section 4975 or ERISA Section 406 and not exempt under Code
Section 4975 or ERISA Section 408.
     “Proportionate Share” shall, subject to Section 11.18(c)(ii), mean, with
respect to any Lender, a fraction (expressed as a percentage), the numerator of
which shall be the amount of such Lender’s Commitment and the denominator of
which shall be the Total Commitments or, if the Commitments have been
terminated, a fraction the numerator of which shall be the principal amount of
such Lender’s Exposure and the denominator of which shall be the aggregate
amount of all Exposures of all Lenders then outstanding.
     “Purchase Money Liens” shall mean Liens on any item of Equipment or Real
Property of any Credit Party acquired after the date of this Credit Agreement to
secure the purchase price thereof, provided that: (a) each such Lien shall
attach only to the property to be acquired and proceeds thereof; and (b) the
debt incurred in connection with such acquisitions shall not exceed the amount
of the purchase price of such items of Equipment or Real Property then being
financed.
     “Qualified Inventory” shall mean (a) any Inventory of Borrowers consisting
of mixed xylenes which are purchased by Borrowers from a supplier for processing
by a third party processor and which is either in transit to a Borrower or such
third party processor or is stored at such processor’s facility and the value of
such Inventory does not exceed $3,000,000; (b) any Inventory of Borrowers which
is in transit in Borrowers’ owned or leased railcars or trucks and under the
control of any Borrower and (c) any raw materials for which a Borrower has an
obligation to pay and which are in transit to a Borrower on a common carrier or
via another transportation mode which is under a Borrower’s control.
     “Real Property” shall mean, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real property owned, leased or operated by any Person, whether by lease,
license or other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures and equipment, all general intangibles and contract rights
and other property and rights incidental to the ownership, lease or operation
thereof.
     “Real Property Assets” shall mean interests in Real Property, including
improvements and fixtures attached thereto or used in the operation thereof, in
each case owned or leased (as lessee) by any Borrower or any of its
Subsidiaries.

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     “Reduced Rate” shall have the meaning ascribed to such term in
Section 2.8(e), relating to backup withholding tax.
     “refinance” shall mean, in respect of any security or Indebtedness, to
refinance, extend, renew, refund or defease, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part; “refinanced” and “refinancing” shall have correlative
meanings.
     “Regulation D” shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto.
     “Release” shall mean any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including, without limitation, the movement of any Hazardous
Material through the air, soil, surface water, groundwater or property.
     “Reorganization Plan” shall mean a plan of reorganization or liquidation in
any of the Chapter 11 Cases.
     “Reportable Event” shall mean any of the events described in Section 4043
of ERISA and the regulations thereunder, for which notice to the PBGC has not
been waived.
     “Required Notice” shall mean, as long as any Chapter 11 Case remains
pending, five (5) Business Days’ written notice to Borrowers, to counsel for any
unsecured creditors committee appointed in the Chapter 11 Cases, and to the
Office of the United States Trustee.
     “Requirement of Law” shall mean, as to any Person, the Governing Documents
of such Person, and any law, treaty, rule, regulation, direction, ordinance,
criterion or guideline or determination of a court or other Governmental
Authority or determination of an arbitrator, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
     “Responsible Officer” shall mean the controller, chief financial officer,
treasurer, assistant treasurer, chief accounting officer or any other similar
financial officer or position.
     “Restricted Cash” shall mean at any time, an amount equal to the amount of
outstanding checks written by Borrowers and any Subsidiary of any of the
Borrowers, plus, to the extent included in Total Cash, (i) any deposit escrows
established for any Asset Disposition to which Borrowers or any other Credit
Party does not have access pending the closing of, or default under, the
applicable asset purchase agreement, and (ii) cash held by Foreign Subsidiaries.
     “Restricted Payment” shall mean, with respect to any Person, (a) any
payment with respect to or on account of any of the Capital Securities of such
Person, including any dividend or other distribution on, any payment of interest
on or principal of, and any payment on account of any purchase, redemption,
retirement, exchange, defeasance or conversion of, or on account of any claim
relating to or arising out of Wellman’s offer, sale or purchase of, any such
Capital

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Securities and (b) any optional payment or prepayment on or redemption,
retirement, (including by making payments to a sinking or analogous fund),
repurchase, defeasance or other acquisition of, any Subordinated Indebtedness.
For the purposes of this definition, a “payment” (which for the avoidance of
doubt shall include any prepayment) shall include the transfer of any asset or
the incurrence of any Indebtedness or other Liability (the amount of any such
payment to be the fair market value of such asset or the amount of such
obligation, respectively).
     “Retiree Welfare Plan” shall mean, at any time, a welfare plan (as defined
in Section 3(1) of ERISA) that provides for continuing coverage or benefits for
any participant or any beneficiary of a participant after such participant’s
termination of employment, other than continuation coverage provided pursuant to
Section 4980B of the Code and at the sole expense of the participant or the
beneficiary of the participant.
     “Sale and Leaseback Transaction” shall mean with respect to any Person an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party providing for the leasing by such
Person of any property or asset of such Person which has been or is being sold
or transferred by such Person to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset
     “Second Lien Credit Facility” shall mean the term loan credit agreement
providing for $265,000,000 in term loans (the “Second Lien Credit Agreement”)
entered into on February 10, 2004, between Wellman, the lenders party thereto in
their capacities as lenders thereunder and DBTCA, as administrative agent,
together with the related documents thereto (including, without limitation, any
guarantee, collateral and security agreements and/or documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified prior to the Petition Date.
     “Second Lien Credit Facility Agent” shall mean the Administrative Agent (as
defined in the Second Lien Credit Agreement).
     “Secured Parties” has the meaning provided in the respective Collateral
Documents to the extent defined therein and shall include any Person who is
granted a security interest in any Credit Document.
     “Security Agreement” shall mean the Security Agreement, dated as of the
Closing Date, among the Agent, Borrowers and the Subsidiary Guarantors, as such
agreement may be amended, restated or otherwise modified and in effect.
     “Serving Affiliate” shall mean an Affiliate of a Lender that is an Issuing
Bank.
     “Settlement Date” shall have the meaning ascribed to such term in
Section 2.3(b)(i).
     “Steering Committee” shall mean an informal committee of Lenders consisting
of DBTCo., JPMorgan Chase Bank, N.A., General Electric Capital Corporation and
LaSalle Business Credit, LLC, as long as they are holders of the Loans, and any
replacement or additional member approved by the Agent. Whenever under this
Credit Agreement, approval of the Steering Committee is required or any action
taken must be to the Steering Committee’s

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reasonable satisfaction, such approval or satisfaction shall be deemed to have
been obtained by the approval of a majority of the members of the Steering
Committee, provided that in the event of a tied vote, DBTCo. acting in its
capacity as Agent for the Lenders shall cast the tie-breaking vote.
     “Subordinated Indebtedness” shall mean Indebtedness of Wellman or any of
its Subsidiaries which is expressly subordinated in right of payment to the
Loans or the Guaranty of such Subsidiary Guarantor, as the case may be.
     “Subsidiary” shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock or other equity interest entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereto is at the time owned, directly or indirectly, by
that Person.
     “Subsidiary Guarantor” shall mean any Domestic Subsidiary that is not a
Borrower other than GuardWell.
     “Subsidiary Guaranty” shall mean the Subsidiary Guaranty, dated as of the
Closing Date, among the Agent and the Subsidiary Guarantors.
     “Tax Transferee” shall have the meaning ascribed to such term in
Section 2.8(a).
     “Taxes” shall have the meaning ascribed to such term in Section 2.8(a).
     “Tax Reduction Agreement” means an agreement entered into between Wellman
or any of its Subsidiaries with a local Governmental Authority relating to the
transfer or acquisition of an asset for the purpose of obtaining tax relief;
provided that Wellman or such Subsidiary may at any time repossess such asset
for nominal net consideration; and provided, further, that such agreements may
also be similar to those currently in effect between Wellman or certain
Subsidiary Guarantors and Darlington and Florence Counties in South Carolina.
     “Termination Event” shall mean (a) a Reportable Event with respect to any
Title IV Plan or Multiemployer Plan; (b) the withdrawal of any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate from a Title IV Plan during a
plan year in which such entity was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA; (c) the providing of notice of intent to terminate
a Title IV Plan in a distress termination described in Section 4041(c) of ERISA
or the treatment of any amendment as a termination under Section 4041(e) of
ERISA; (d) the institution by the PBGC of proceedings to terminate a Title IV
Plan or Multiemployer Plan; (e) any event or condition (i) that might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan, or (ii)
that may result in termination of a Multiemployer Plan pursuant to Section 4041A
of ERISA; or (f) the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of any Borrower, any Subsidiary of any Borrower
or any ERISA Affiliate from a Multiemployer Plan.
     “Title IV Plan” shall mean an employee pension benefit plan as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) for which the funding
requirements under Section

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412 of the Code or Section 302 of ERISA is, or within the immediately preceding
six (6) years was, in whole or in part, the responsibility of any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate.
     “Total Cash” shall mean at any time, the actual amount of Cash, excluding
cash in the Collateral Account, held by and available to Borrowers and the
Subsidiaries of each of the Borrowers.
     “Total Commitments” shall mean the aggregate of the Commitments of all the
Lenders, which in the aggregate shall not exceed $225,000,000.
     “Total Exposure” shall mean, at any time, an amount equal to the sum of (a)
the Letter of Credit Obligations and (b) the principal amount of outstanding
Loans.
     “Transactions” shall mean, collectively, (i) the closing of and incurrence
of the initial Loans hereunder and (ii) the payment of fees, expenses,
commissions and transaction costs in connection with the foregoing.
     “Type” shall mean, with respect to any Loan, whether such Loan is a LIBOR
Rate Loan or a Prime Rate Loan.
     “UCC” shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York; provided that if, with respect to any financing
statement or by reason of any provisions of law, the perfection or the effect of
perfection or non-perfection of the Liens granted to the Agent pursuant to the
applicable Credit Document is governed by the Uniform Commercial Code as in
effect in a jurisdiction of the United States other than the State of New York,
UCC shall mean the Uniform Commercial Code as in effect from time to time in
such other jurisdiction for purposes of the provisions of this Credit Agreement,
each Credit Document and any financing statement relating to such perfection or
effect of perfection or non-perfection.
     “Unfunded Pension Liability” shall mean, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of 5 years following a transaction
which might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate as a result of such
transaction.
     “Unpaid Drawing” shall mean any unreimbursed drawing under any Letter of
Credit.
     “Unused Line Fee” shall have the meaning ascribed to such term in
Section 4.5.
     “Upfront Fee” shall have the meaning ascribed to such term in
Section 5.1(l).
     “Value” shall mean, as determined by Agent in good faith at any time, (a)
with respect to Eligible Accounts Receivable, the gross face amount of Eligible
Accounts Receivable less the

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sum of (i) sales, excise or similar taxes included in the amount thereof and
(ii) returns, discounts, claims, credits, charges and allowances (exclusive of
those paid in cash to the extent included in dilution) of any nature at any time
issued, owing, granted, outstanding, available or claimed with respect thereto
and (b) with respect to Eligible Inventory, the lower of (i) cost computed on a
first-in first-out basis in accordance with GAAP or (ii) market value.
     “Welfare Plan” shall mean a Plan described in Section 3(1) of ERISA.
     “Wellman Sale” shall mean the sale of all or substantially all of the
assets of the Borrowers and their Subsidiaries pursuant to which the Obligations
shall be paid in full in cash at closing pursuant to section 363 of the
Bankruptcy Code or in connection with the consummation of a Reorganization Plan.
     “Wholly-Owned Subsidiary” shall mean, with respect to any Person, any
Subsidiary of such Person all of the Capital Securities of which (except
directors’ qualifying shares and, in the case of Foreign Subsidiaries, other
nominal amounts of shares held by a Person other than such Person) are, directly
or indirectly, owned or Controlled by such Person or one or more Wholly-Owned
Subsidiaries of such Person or by such Person and one or more of such
Subsidiaries.
     1.2 Accounting Terms and Determinations. All accounting terms used herein
but not expressly defined in this Credit Agreement shall have the respective
meanings given to them in accordance with GAAP as applied and in effect on the
date hereof in the USA. Except as otherwise expressly provided herein (including
without limitation, any modification to the terms hereof pursuant to
Section 8.18), all computations and determinations for purposes of determining
compliance with the financial requirements of this Credit Agreement shall be
made in accordance with GAAP in effect in the USA on the date hereof and on a
basis consistent with the presentation of the most recent Financial Statements
delivered pursuant to, or otherwise referred to in, the first sentence of
Section 6.6. Notwithstanding the foregoing sentence, the Financial Statements
required to be delivered pursuant to Section 7.1 shall be prepared in accordance
with GAAP in the USA as in effect on the respective dates of their preparation.
If any Borrower shall change its method of inventory accounting to the last in
first out method, all calculations necessary to determine compliance with the
covenants contained herein shall be made as if such method of inventory
accounting had not been so changed. All computations and determinations of
amounts as of any given day or Business Day shall be based on the applicable
numbers at and as of the end of such day or Business Day.
     1.3 Other Interpretive Provisions. Terms not otherwise defined herein which
are defined in the UCC shall have the meanings given them in the UCC. The words
“hereof” “herein” and “hereunder” and words of similar import when used in this
Credit Agreement shall refer to this Credit Agreement as a whole and not to any
particular provision of this Credit Agreement, and references to Article,
Section, Annex, Schedule, Exhibit and like references are references to this
Credit Agreement unless otherwise specified. Any item or list of items set forth
following the word “including,” “include” or “includes” is set forth only for
the purpose of indicating that, regardless of whatever other items are in the
category in which such item or items are “included,” such item or items are in
such category, and shall not be construed as indicating that the items in the
category are limited to such items or to items similar to such items. Except as
otherwise specified herein, all references herein (a) to any Person shall be

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deemed to include such Person’s successors and assigns, (b) to any Requirement
of Law defined or referred to herein shall be deemed references to such
Requirement of Law or any successor Requirement of Law as the same may have been
or may be amended or supplemented from time to time, (c) to any Credit Document
or Collateral Document defined or referred to herein shall be deemed references
to such Credit Document or Collateral Document (and, in the case of any Note or
any other instrument, any instrument issued in substitution therefor) as the
terms thereof may have been or may be amended, supplemented, waived or otherwise
modified from time to time, provided that, in the case of any Letter of Credit
application or Letter of Credit, any such amendment, supplement, waiver or other
modification shall have been approved in writing by the Agent and (d) to any
other document, agreement, instrument or contract shall include references to
all amendments, supplements, waivers or other modifications thereto to the
extent not otherwise prohibited under the terms of this Credit Agreement.
Whenever the context so requires, the neuter gender includes the masculine or
feminine, the masculine gender includes the feminine, and the singular number
includes the plural, and vice versa. Except as otherwise specified herein, all
references to the time of day shall be deemed to be to New York City time as
then in effect.
ARTICLE II
LOANS
     2.1 Commitments; Delivery of Notes. (a) Subject to the terms and conditions
set forth in this Credit Agreement, on and after the Closing Date and to and
excluding the Facility Termination Date, each of the Lenders severally agrees to
make from time to time revolving loans to Borrowers in the maximum aggregate
principal amount not to exceed its Proportionate Share of the Total Commitments;
provided, however, that, after giving effect to any Borrowing of Loans, the
aggregate amount of all outstanding Loans and Letter of Credit Obligations then
outstanding, shall not at any time exceed the lesser of (i) the Borrowing Base,
(ii) the Total Commitment, or (iii) prior to the Final Financing Order Date, the
maximum amount of Loans and Letter of Credit Obligations permitted by the
Interim Financing Order.
          (b) At the request of any Lender through the Agent, Borrowers hereby
agree to execute and deliver to each Lender a Note to evidence the Loans to
Borrowers by such Lender.
     2.2 Borrowing Mechanics; Interim Advances.
          (a) Except as provided in Sections 2.2(b) and 2.3(b), Borrowings shall
be made on notice from the Funds Administrator to the Agent, given not later
than 12:00 Noon (New York City time) on the Business Day on which a proposed
Borrowing consisting of Prime Rate Loans is requested to be made and on the
third Business Day prior to the date of any proposed Borrowing consisting of
LIBOR Rate Loans is requested to be made.
     (i) Each Notice of Borrowing shall be given by, alternatively, telephone,
facsimile or electronic E mail transmission, and, if by telephone or electronic
E mail transmission, confirmed in writing on the same Business Day to the extent
requested by Agent, substantially in the form of Exhibit C (the “Notice of
Borrowing”). Each Notice

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of Borrowing shall be irrevocable (subject to Section 4.3(c)) by and binding on
the Funds Administrator and Borrowers.
     (ii) The Funds Administrator shall notify the Agent in writing of the names
of the officers of the Funds Administrator authorized to request Loans on behalf
of Borrowers and specifying which of those officers are also, or, if none are,
the other officers that are, authorized to direct the disbursement of Loans in a
manner contrary to standing disbursement instructions, and shall provide the
Agent with a specimen signature of each such officer. In the absence of a
specification of those officers who are authorized to vary standing disbursement
instructions, the Agent may assume that each officer authorized to request Loans
also has such authority. The Agent shall be entitled to rely conclusively on the
authority of such officers of the Funds Administrator to request Loans on behalf
of Borrowers, or to vary standing disbursement instructions, until the Agent
receives written notice to the contrary. The Agent shall have no duty to verify
the authenticity of the signature appearing on any Notice of Borrowing or other
writing delivered pursuant to this Section 2.2(a) and, with respect to an oral
or electronic E mail request for Loans, the Agent shall have no duty to verify
the identity of any individual representing himself as one of the officers of
the Funds Administrator authorized to make such request on behalf of Borrowers.
Neither the Agent nor any of the Lenders shall incur any liability to the Funds
Administrator or any of the Borrowers as a result of (A) acting upon any
telephonic or electronic E mail notice referred to in this Section 2.2(a) if the
Agent believes in good faith such notice to have been given by a duly authorized
officer of the Funds Administrator or other individual authorized to request
Loans on behalf of Borrowers or to direct the disbursement thereof in a manner
contrary to standing disbursement instructions, or (B) otherwise acting in good
faith under this Section 2.2(a) and an advance made and disbursed pursuant to
any such telephonic or electronic E-mail notice shall be deemed to be a Loan for
all purposes of this Credit Agreement.
     (iii) In its Notice of Borrowing, the Funds Administrator may request one
or more Borrowings on a single day. Each such Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Loans of the same Type and
shall, in the case of a Borrowing of LIBOR Rate Loans, be in an aggregate amount
for all Lenders of not less than $2,000,000 or an integral multiple of $500,000
in excess thereof. The right of the Funds Administrator to choose LIBOR Rate
Loans is subject to the provisions of Section 4.3(c).
          (b) (i) In the event Borrowers are unable to comply with (A) the
Borrowing Base limitation set forth in the proviso to Section 2.1(a) or (B) the
conditions precedent set forth in Section 5.2 to a Credit Event, the Lenders
authorize the Agent, in its sole discretion, to make Loans (“Interim Advances”)
to Borrowers during the period commencing on the date the Agent first receives a
Notice of Borrowing requesting an Interim Advance until the earliest of (1) the
twentieth (20th) Business Day after such date, (2) the date Borrowers are again
able to comply with such Borrowing Base limitation and conditions precedent, or
obtains an amendment or waiver with respect thereto and (3) the date the
Majority Lenders instruct the Agent, or the Agent determines, to cease making
Interim Advances (in each case, the “Interim Advance Period”).

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     (ii) The Agent shall not, in any event, (A) make any Interim Advance during
any Interim Advance Period if, after giving effect to such Interim Advance,
Total Exposure would exceed one hundred ten percent (110%) of Total Exposure on
the first day of such Interim Advance Period (calculated without giving effect
to Interim Advances made on such day) and (B) make any Interim Advance if, after
giving effect to such Interim Advance, Total Exposure would exceed the Line of
Credit.
     (iii) All amounts received by the Agent during an Interim Advance Period on
account of the Obligations, whether in the form of payments from any Borrower,
collections on the Collateral or otherwise, shall, so long as any Interim
Advances made during such Interim Advance Period are outstanding, be applied by
the Agent, first, to the repayment of such Interim Advances and, second, in
accordance with Section 2.5(c).
          (c) The failure of any Lender to make the Loan to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Loan on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on the date of any Borrowing.
          (d) In addition to being evidenced, as provided in Section 2.6, by
Borrowers’ Accounts, each Lender’s Loans and Borrowers’ joint and several
obligations to repay such Loans with interest in accordance with the terms of
this Credit Agreement shall be evidenced by this Credit Agreement, the records
of such Lender and such Lender’s Note. The records of each Lender shall be prima
facie evidence of such Lender’s Loans and accrued interest thereon and of all
payments made in respect thereof.
          (e) Each Lender shall be entitled to earn interest at the then
applicable rate of interest, calculated in accordance with Article 4, on
outstanding Loans which it has funded to the Agent; provided that if any amount
received by the Agent in respect of such interest and distributed by it is
thereafter recovered from the Agent, such Lender shall, upon request, repay to
the Agent its Proportionate Share of the amount so recovered to the extent
received by it, but without interest (unless the Agent is required to pay
interest on the amount recovered, in which case such Lender shall be required to
pay interest at a like rate).
          (f) Notwithstanding the obligation of the Funds Administrator to send
written confirmation of a Notice of Borrowing made by telephone or electronic E
mail transmission if and when requested by the Agent, in the event that the
Agent agrees to accept a Notice of Borrowing made by telephone or electronic E
mail transmission, such Notice of Borrowing shall be binding on the Funds
Administrator and each Borrower whether or not written confirmation is sent by
the Funds Administrator or requested by the Agent. The Agent may act prior to
the receipt of any requested written confirmation, without any liability
whatsoever, based upon telephonic or electronic E mail notice believed by the
Agent in good faith to be from the Funds Administrator or its agents. The
Agent’s records of the terms of any telephonic or electronic E mail transmission
Notices of Borrowing shall be conclusive on the Funds Administrator, each
Borrower and the Lenders in the absence of gross negligence, bad faith or
willful misconduct on the part of the Agent in connection therewith.
     2.3 Settlements Among the Agent and the Lenders.

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          (a) Except as provided in Section 2.3(b), the Agent shall give to each
Lender prompt notice of each Notice of Borrowing by telecopy or facsimile
transmission. No later than 3:00 P.M. (New York City time) (i) with respect to
Prime Rate Loans, on the date of receipt of each Notice of Borrowing requesting
a Prime Rate Loan (unless such Notice of Borrowing specifies the Closing Date as
the date of Borrowing, in which case no later than 12:00 Noon (New York City
time) on the Closing Date) and (ii) with respect to LIBOR Rate Loans, on the
date for which a LIBOR Rate Loan has been requested, each Lender will make
available for the account of its Applicable Lending Office, to the Agent at the
address of the Agent set forth on Annex I, in immediately available funds, its
Proportionate Share of such Borrowing requested to be made. Unless the Agent
shall have been notified by any Lender prior to the date of Borrowing that such
Lender does not intend to make available to the Agent its portion of the
Borrowing to be made on such date, the Agent may assume that such Lender will
make such amount available to the Agent on the Settlement Date and the Agent, in
reliance upon such assumption, may but shall not be obligated to make available
the amount of the Borrowing to be provided by such Lender. If and to the extent
such Lender shall not have so made available to the Agent its Proportionate
Share on such date and the Agent shall have so made available to Borrowers a
corresponding amount on behalf of such Lender, the Agent may recover such amount
on demand from such Lender in accordance with Section 11.18. If such Lender does
not pay such corresponding amount promptly upon the Agent’s demand therefor, the
Agent may promptly notify the Funds Administrator and Borrowers shall
immediately repay such corresponding amount to the Agent together with accrued
interest thereon at the applicable rate or rates provided in Sections 4.1, 4.2,
and 4.4.
          (b) Unless the Majority Lenders have instructed the Agent to the
contrary, the Agent on behalf of the Lenders may but shall not be obligated to
make Prime Rate Loans under Section 2.2 without prior notice of the proposed
Borrowing to the Lenders, subject to the following settlement arrangements:
     (i) The amount of each Lender’s Proportionate Share of Loans shall be
computed weekly (or more frequently in the Agent’s discretion) and shall be
adjusted upward or downward on the basis of the amount of outstanding Loans as
of 5:00 P.M. (New York City time) on the last Business Day of the period
specified by the Agent (such date, the “Settlement Date”). The Agent shall
deliver to each of the Lenders promptly after the Settlement Date a summary
statement of the amount of outstanding Loans for such period. The Lenders shall
transfer to the Agent, or, subject to Section 11.18(c)(i), the Agent shall
transfer to the Lenders, such amounts as are necessary so that (after giving
effect to all such transfers) the amount of Loans made by each Lender shall be
equal to such Lender’s Proportionate Share of the aggregate amount of Loans
outstanding as of such Settlement Date. If the summary statement is received by
the Lenders prior to 12:00 Noon (New York City time) on any Business Day, each
Lender shall make the transfers described above in immediately available funds
no later than 3:00 P.M. (New York City time) on the day such summary statement
was received; and if such summary statement is received by the Lenders after
12:00 Noon (New York City time) on such day, each Lender shall make such
transfers no later than 3:00 P.M. (New York City time) on the next succeeding
Business Day. The obligation of each of the Lenders to transfer such funds shall
be irrevocable and unconditional and without recourse to or warranty by the
Agent. Each of the Agent and the Lenders agrees to mark its books and records on

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the Settlement Date to show at all times the dollar amount of its Proportionate
Share of the outstanding Loans.
     (ii) To the extent that the settlement described above shall not yet have
occurred, upon repayment of Loans by Borrowers, the Agent may first apply such
amounts repaid directly to the amounts made available by the Agent pursuant to
this Section 2.3(b).
     (iii) Because the Agent on behalf of the Lenders may be advancing and/or
may be repaid Loans prior to the time when the Lenders will actually advance
and/or be repaid Loans, interest with respect to Loans shall be allocated by the
Agent to each Lender and the Agent in accordance with the amount of Loans
actually advanced by and repaid to each Lender and the Agent and shall accrue
from and including the date such Loans are so advanced to but excluding the date
such Loans are either repaid by Borrowers in accordance with Section 2.4 or
actually settled by the applicable Lender as described in this Section 2.3(b).
     2.4 Mandatory Payment; Mandatory Reduction of Commitments.
          (a) Borrowers shall prepay first, the outstanding principal amount of
the Loans, and then cash collateralize the Letter of Credit Obligations on any
date on which the aggregate outstanding principal amount of such Loans together
with the aggregate Letter of Credit Obligations (after giving effect to any
other repayments or prepayments on such day) exceeds the lesser of (x) the Total
Commitment then in effect, (y) the Borrowing Base then in effect and (z) prior
to the Final Financing Order Date, the maximum amount of Loans and Letter of
Credit Obligations permitted by the Interim Financing Order in the amount of
such excess. If, after giving effect to the prepayment of all outstanding Loans,
the aggregate Letter of Credit Obligations exceeds the lesser of (x) the Total
Commitment then in effect, (y) the Borrowing Base then in effect and (z) prior
to the Final Financing Order Date, the maximum amount of Loans and Letter of
Credit Obligations permitted by the Interim Financing Order, Borrowers shall
deposit cash with the Agent in an amount equal to the difference between such
Letter of Credit Obligations and the lesser of (x) the Total Commitment then in
effect, (y) the Borrowing Base and (z) prior to the Final Financing Order Date,
the maximum amount of Loans and Letter of Credit Obligations permitted by the
Interim Financing Order. Agent shall establish in its name for the benefit of
Agent and the Lenders a cash collateral account (the “Collateral Account”) into
which it shall deposit such cash to hold as collateral security for the
Obligations.
          (b) (i) On the Facility Termination Date, the Commitment of each
Lender shall automatically reduce to zero and may not be reinstated.
     (ii) Borrowers may reduce or terminate the Line of Credit at any time and
from time to time in whole or in part by reducing or terminating the
Commitments, any such reduction or termination to be pro rata on the amounts at
the time of the Commitments; provided that each such reduction must be in an
amount not less than $5,000,000 (and in increments of $1,000,000); and provided
further that (A) if Borrowers seek to reduce the Line of Credit to an amount
less than $50,000,000, then the Line of Credit shall at the option of the Agent
be reduced to zero and the Credit

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Agreement shall be terminated and (B) once reduced the amount of any such
reductions in the Line of Credit may not be reinstated.
     (iii) The amount by which Total Exposure exceeds the aggregate amount of
the Commitments at any time shall be immediately due and payable without the
necessity of any notice or demand. Repayments of such excess amounts shall be
applied, first, to the repayment of Loans, second, to the payment of outstanding
reimbursement obligations with respect Letters of Credit, and, third, to the
securing, with cash or Cash Equivalents as provided in the second paragraph of
Section 9.2 (but without the requirement of any demand provided for in such
paragraph), of the Letter of Credit Obligations (in each case to the extent the
same are such by virtue of clause (a) of the definition thereof).
          (c) Simultaneously with any Change of Control, the Commitments shall
be reduced to zero and Borrowers shall prepay, in full, the outstanding
principal amount of any outstanding Loans (and cash collateralize any
outstanding Letter of Credit Obligations in an amount equal to 105% of the
Letter of Credit Obligations), together with all accrued interest, fees, and
other expenses incurred by Agent, the Issuing Bank or the Lenders as a result of
such prepayment.
          (d) On the Business Day on which any Asset Sale occurs which decreases
the Eligible Inventory and/or Eligible Accounts Receivable amounts that are
included in computation of the Borrowing Base, the Funds Administrator shall
deliver to Agent a Borrowing Base Certificate prepared on a pro forma basis (a
“Pro Forma Borrowing Base Certificate”) giving effect to such Asset Sale and
setting forth the value of the Eligible Inventory and Eligible Accounts
Receivables previously included in the Borrowing Base and disposed of in such
Asset Sale. On such Business Day, Borrowers shall prepay the Loans in an amount
equal to (i) if all of the conditions specified in Section 5.2 are met at such
time, the amount by which the Total Exposure exceeds the Borrowing Base as
reflected in such Pro Forma Borrowing Base Certificate or (ii) if any condition
specified in Section 5.2 is not met at such time, the amount by which the
Borrowing Base is reduced as a result of such Asset Sale as reflected in such
Pro Forma Borrowing Base Certificate.
          (e) If at any time the Available Cash Surplus exceeds $2,000,000 for
any period of two (2) consecutive Business Days, Borrowers shall prepay the
outstanding principal amount of the Loans at the close of such second Business
Day in the amount of such excess.
          (f) On the date of receipt thereof, the Net Sale Proceeds of the
Wellman Sale shall be applied for the payment of, or if not then due deposited
in a reserve for payment of, first, any unpaid portion of the Financial Advisory
Fee, second the maximum unused amount of the Professional Carve-Out Reserve, and
third, the then outstanding balance of the Loans and Unpaid Drawings, and after
all Loans and Unpaid Drawings have been paid in full, for deposit in the
Collateral Account until the aggregate amount in the Collateral Account equals
105% of the stated amount of all Letters of Credit then outstanding. The
aggregate amount of the Financial Advisory Fee shall be reduced by the amounts
paid in this Section 2.4(f) in connection therewith, and any unused portion of
any reserves for such fee established pursuant to this Section 2.4(f) shall be
paid to the Agent for application pursuant to this Section 2.4(f). All amounts
deposited in a reserve in accordance with this Section 2.4(f) shall be effected
in a

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manner and pursuant to documentation in form and substance reasonably
satisfactory to the Agent such that the Agent shall have a continuing first
perfected security interest and lien in the excess (after taking into account
the reserves) of such Net Sale Proceeds (subject to Senior Permitted Liens and
the Carve-Out Reserve) until the same have been applied and reapplied as
required by this Section 2.4(f).
     2.5 Payments and Computations; Cash Management
          (a) (i) Borrowers shall, subject, in the case of payments in respect
of Letters of Credit, to Section 2.5(a)(ii), make each payment under the Credit
Documents and under the Notes not later than 2:00 P.M. (New York City time) on
the day when due in Dollars to the Agent at its address designated in or
pursuant to Section 11.5 in immediately available funds. The obligations of
Borrowers to the Lenders with respect to such payments shall be discharged by
making such payments to the Agent pursuant to this Section 2.5 or by the Agent,
in its discretion, adding such payments to the principal amount of the Loans
outstanding by charging such payments to the applicable Borrower’s Account
pursuant to Section 2.6.
     (ii) Amounts payable by Borrowers in respect of any Letter of Credit should
be made by Borrowers to the Agent until the Funds Administrator shall have
received notice from the Agent that the Agent has received payments equal to the
aggregate amount of all drawings thereunder, plus interest thereon from the date
such drawings were disbursed at the L/C Interest Rate.
          (b) (i) Borrowers shall have established and shall maintain, at one or
more financial institutions, one or more lockboxes (with respect to each
Borrower, such Borrower’s “Lockboxes”) and depository accounts (“Depository
Accounts”) and shall instruct all account debtors on the Accounts of such
Borrower to remit all payments to such Borrower’s Lockboxes or Depository
Accounts; provided, however, it shall be permissible for Borrowers to maintain a
consolidated Lockbox or Depository Account. Each Borrower, the Agent and DBTCo.
shall have entered into a Control Agreement providing, among other things, that
all receipts in the Lockboxes or Depository Accounts, as applicable, shall be
transferred by the end of each day to one of the Credit Parties’ concentration
accounts at DBTCo. (each, a “Concentration Account”). All amounts received by
any Borrower from any account debtor, shall following receipt, be deposited into
a Concentration Account.
     (ii) The closing of any Lockbox, Depository Account or Concentration
Account and the termination of any related account agreement shall require in
each case the prior written consent of the Agent which will not be unreasonably
withheld.
          (c) (i) Except as set forth in Section 9.5, all amounts received by
the Agent for distribution hereunder shall, subject to Section 2.2(b)(iii), be
distributed in the following order and, if to Lenders, according to each
Lender’s Proportionate Share with respect to each category set forth below:
first, to the payment of any Fees, Expenses or other Obligations due and payable
to the Agent under any of the Credit Documents, including

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amounts advanced by the Agent on behalf of the Lenders pursuant to Section
2.3(b);
second, to the ratable payment of any Fees and other Obligations due and payable
to the Lenders under any of the Credit Documents, other than to a Lender in its
capacity as an Issuing Bank and other than those Obligations specifically
referred to in this Section 2.5(c)(i).
third, to the ratable payment of interest due on the Loans;
fourth, to the ratable payment of principal due on the Loans;
fifth, to the ratable payment of other Liabilities not specifically referred to
in this Section 2.5(c) due and payable to the Lenders (in their capacities as
such, and not in their capacity as an Issuing Bank) under the Credit Documents;
and
sixth, to the ratable payment of other Liabilities not specifically referred to
in this Section 2.5(c) due and payable to the Issuing Banks under L/C
Applications and Letters of Credit.
     (ii) Each Person receiving a payment from the Agent pursuant to
Section 2.5(c)(i) shall, for all purposes of this Credit Agreement and other
Credit Documents, be deemed to have applied that payment in the order specified
in Section 2.5(c)(i).
     2.6 Maintenance of Account. The Agent shall maintain a separate account on
its books and records in the name of the Funds Administrator (the “Borrowers’
Accounts”) in which each Borrower will be charged or credited with (a) the
proceeds, if any, of each Loan received by or for the account of such Borrower,
(b) payments made to the Agent on account of the Obligations of such Borrower,
whether from collection of proceeds of Collateral or otherwise, (c) the
aggregate face amount of all outstanding Letters of Credit (or an appropriate
allocation thereof, if the Letters of Credit are issued for the direct benefit
of more than one Borrower) issued for the benefit of such Borrower, and (d) all
other Fees, Expenses and other Obligations attributable to such Borrower as
determined by Agent. The Agent will use its best efforts to give the Funds
Administrator three (3) days advance notice of such Fees, Expenses and other
Obligations in reasonable detail, provided that the failure to provide such
notice shall not result in any liability of the Agent or affect any of the
Agent’s rights hereunder. In no event shall prior recourse to any Accounts or
other Collateral be a prerequisite to the Agent’s right to demand payment of any
Obligation upon its maturity.
     2.7 Statement of Account. After the end of each month, the Agent shall send
the Funds Administrator a statement accounting for the charges, loans, advances
and other transactions occurring among and between the Agent, the Lenders, the
Funds Administrator and Borrowers during that month. The monthly statements
shall, absent manifest error, be an account stated, which is final, conclusive
and binding on Borrowers; provided that any failure to so record any transaction
or any error in so recording shall not limit or otherwise affect any Borrower’s
duty to pay the Obligations.

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     2.8 Withholding and Other Taxes.
          (a) Any and all payments by Borrowers hereunder, under the Notes or in
respect of Letters of Credit which are made to or for the benefit of any Lender
(whether in its capacity as a Lender or an Issuing Bank, and as used in this
Section 2.8, the term “Lender” shall mean a Lender in each such capacity, and
shall also include each Serving Affiliate of such Lender) or the Agent shall be
made, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings and penalties,
interests and all other liabilities with respect thereto (collectively,
“Taxes”), excluding, (i) in the case of each such Lender or the Agent, Taxes
imposed on its net income (including any Taxes imposed on branch profits) and
franchise taxes imposed on it by the jurisdiction under the laws of which such
Lender, or the Agent (as the case may be) is organized or any political
subdivision thereof, (ii) in the case of each such Lender, Taxes imposed on its
net income (including any Taxes imposed on branch profits) and franchise Taxes
imposed on it by the jurisdiction of such Lender’s Applicable Lending Office or
any political subdivision thereof, (iii) in the case of any Foreign Lender, any
Taxes that are in effect and that would apply to a payment hereunder, under the
Notes or in respect of Letters of Credit made to such Foreign Lender as of the
Closing Date, and (iv) if any Person acquires any interest in this Credit
Agreement, any Note or any L/C Participation pursuant to the provisions hereof,
or a Lender or the Agent changes the office in which any Loan or any L/C
Participation is made, accounted for or booked, to an office outside the United
States, or a Lender if an Issuing Bank, changes the office at which any Letter
of Credit is maintained to an office outside the United States (any such Person,
or such Lender or the Agent in that event, being referred to as a "Tax
Transferee”), any Taxes to the extent that they are in effect and would apply to
a payment to such Tax Transferee as of the date of the acquisition of such
interest or change in office, as the case may be, except to the extent Covered
Taxes (as defined below) would have resulted from such payments made hereunder,
under the Notes or in respect of Letters of Credit made to a Lender or the Agent
immediately prior to such acquisition of such interest or such change in office
(all such nonexcluded Taxes being hereinafter referred to as “Covered Taxes”).
If any Borrower shall be required by law to deduct or withhold any Covered Taxes
from or in respect of any sum payable hereunder, under any Note or in respect of
any Letter of Credit to or for the benefit of any Lender, the Agent or any Tax
Transferee, (A) the sum payable shall be increased as may be necessary so that
after making all required deductions or withholdings of Covered Taxes (including
deductions or withholdings of Covered Taxes applicable to additional sums
payable under this Section 2.8) such Lender, the Agent or such Tax Transferee,
as the case may be, receives an amount equal to the sum it would have received
had no such deductions or withholdings been made, (B) such Borrower shall make
such deductions or withholdings and (C) such Borrower shall pay the full amount
so deducted or withheld to the relevant taxation authority or other authority in
accordance with applicable law.
          (b) In addition, each Borrower agrees to pay any present or future
stamp, recording, documentary, excise, privilege, property, intangible or
similar levies that arise at any time or from time to time (i) from any payment
made under any and all Credit Documents, (ii) from the transfer of the rights of
any Lender under any Credit Documents to any transferee or (iii) from the
execution or delivery by the Funds Administrator or any Borrower of, or from the
filing or recording or maintenance of, or otherwise with respect to the exercise
by the Agent or the Lenders of their rights under, any and all Credit Documents
(hereinafter referred to as “Other Taxes”).

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          (c) Borrowers will jointly and severally indemnify each Lender, the
Agent, and any Tax Transferee for the full amount of (i) Covered Taxes imposed
on or with respect to amounts payable hereunder, under any Note or in respect of
any Letter of Credit, (ii) Other Taxes and (iii) any Taxes imposed by any
jurisdiction on amounts payable under this Section 2.8, paid by such Lender, the
Agent or such Tax Transferee, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto
whether or not such Taxes were correctly or legally asserted by the relevant
taxing or other Governmental Authority. Payment under this indemnification shall
be made within thirty (30) days from the date such Lender, the Agent or such Tax
Transferee certifies and sets forth in reasonable detail the calculation thereof
as to the amount and type of such Taxes. Any such certificate submitted by such
Lender, the Agent or such Tax Transferee in good faith to the Funds
Administrator shall, absent manifest error, be final, conclusive and binding on
all parties.
          (d) Within 60 days after the date of payment of any Covered Taxes or
Other Taxes, the Funds Administrator will furnish to the Agent, at its address
referred to in Section 11.5, the original or a certified copy of a receipt
evidencing payment thereof.
          (e) On or before the Closing Date, each Foreign Lender shall deliver
to the Agent and the Funds Administrator (i) two valid, duly completed copies of
IRS Form W 8BEN or W 8ECI or successor applicable form, as the case may be, and
any other required form, certifying in each case that such Foreign Lender is
entitled to receive payments under this Credit Agreement, the Notes or any
Letter of Credit payable to it without deduction or withholding of any United
States federal income taxes or with such withholding imposed at a reduced rate
(the “Reduced Rate”) and (ii) a valid, duly completed IRS Form W 8BEN or W 9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each such Foreign Lender shall also
deliver to the Agent and the Funds Administrator two further copies of said
Forms or other manner of required certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or otherwise is
required to be resubmitted as a condition to obtaining an exemption from a
required withholding of United States federal income tax or entitlement to
having such withholding imposed at the Reduced Rate or after the occurrence of
any event requiring a change in the most recent form previously delivered by it
to the Funds Administrator and the Agent, and such extensions or renewals
thereof as may reasonably be requested by the Funds Administrator and the Agent,
certifying (A) in the case of a Form W 8BEN or W 8ECI, that such Foreign Lender
is entitled to receive payments under this Credit Agreement, the Notes or any
Letter of Credit payable to it without deduction or withholding of any United
States federal income taxes or with such withholding imposed at a Reduced Rate,
unless in any such case any change in a tax treaty to which the United States is
a party, or any change in law or regulation of the United States or official
interpretation thereof has occurred after the Closing Date and prior to the date
on which any such delivery would otherwise be required that renders all such
forms inapplicable or that would prevent such Foreign Lender from duly
completing and delivering any such form with respect to it, and such Foreign
Lender advises the Funds Administrator and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax or with such withholding at the Reduced Rate, as the case may be, or
(B) in the case of a Form W 8BEN or W 9, or otherwise establishing an exemption
from United States backup withholding tax.

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          (f) If a Tax Transferee that is organized under the laws of a
jurisdiction outside of the United States acquires an interest in this Credit
Agreement or any Note or L/C Participation or a Lender changes the office
through which Loans or any L/C Participation are made, accounted for or booked,
to an office outside the United States or a Foreign Lender if an Issuing Bank,
changes the office at which any Letter of Credit is maintained to an office
outside the United States, the transferor, or the applicable Lender, in the case
of a change of office, shall cause such Tax Transferee to agree that, on or
prior to the effective date of such acquisition or change, as the case may be,
it will deliver to the Funds Administrator and the Agent (i) two valid, duly
completed copies of IRS Form W 8BEN or W 8ECI or successor applicable form, as
the case may be, and any other required form, certifying in each case that such
Tax Transferee is entitled to receive payments under this Credit Agreement, the
Notes and any Letter of Credit payable to it without deduction or withholding of
United States federal income tax or with such withholding imposed at a Reduced
Rate and (ii) a valid, duly completed IRS Form W 8BEN or W 9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding tax. Each Tax Transferee further undertakes to deliver
two further copies of the said Forms or other manner of required certification,
as the case may be, on or before the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to obtaining
an exemption from a required withholding of United States federal income tax or
entitlement to having such withholding imposed at the Reduced Rate or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Funds Administrator and the Agent, and such extensions or
renewals thereof as may reasonably be requested by the Funds Administrator and
the Agent, certifying (A) in the case of a Form W 8BEN or W 8ECI that such Tax
Transferee is entitled to receive payments under this Credit Agreement, the
Notes and any Letter of Credit without deduction or withholding of any United
States federal income taxes or with such withholding imposed at the Reduced
Rate, unless any change in treaty, law or regulation or official interpretation
thereof has occurred after the effective date of such acquisition or change and
prior to the date on which any such delivery would otherwise be required that
renders all such forms inapplicable or that would prevent such Tax Transferee
from duly completing and delivering any such form with respect to it, and such
Tax Transferee advises the Funds Administrator and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax or with such withholding at the Reduced Rate, as the
case may be, or (B) in the case of a Form W 8BEN or W 9, or otherwise
establishing an exemption from United States backup withholding tax.
          (g) If any Taxes for which any Borrower would be required to make
payment under this Section 2.8 are imposed, the applicable Lender or the Agent,
as the case may be, shall use its best efforts to avoid or reduce such Taxes by
taking any appropriate action (including assigning its rights hereunder to a
related entity or a different office) which would not in the sole opinion of
such Lender or the Agent be otherwise disadvantageous to such Lender or the
Agent, as the case may be.
          (h) Without prejudice to the survival of any other agreement of
Borrowers hereunder, the agreements and obligations of Borrowers contained in
this Section 2.8 shall survive the payment in full of the Obligations.

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          (i) Each Lender shall cause each of its Serving Affiliates that is a
Foreign Lender to take the actions required to be taken by such Serving
Affiliate as a Foreign Lender under Sections 2.8(e), (f) and (g).
     2.9 Affected Lenders. If any Borrower is obligated to pay to any Lender
(whether in its capacity as a Lender or an Issuing Bank) or any Serving
Affiliate of such Lender any amount under Sections 2.8 or 4.9, or if any Lender
is a Defaulting Lender, Borrowers may, if no Default or Event of Default then
exists, replace such Lender or Serving Affiliate with another lender reasonably
acceptable to the Agent, and such Lender hereby agrees to be so replaced or to
cause such Serving Affiliate to be replaced, subject to the following:
          (a) (i) The obligations of Borrowers hereunder to the Lender to be
replaced (in its capacity as a Lender, and including such increased or
additional costs incurred from the date of notice to the Funds Administrator of
such increase or additional costs through the date such Lender is replaced
hereunder) shall be paid in full to such Lender concurrently with such
replacement; and
     (ii) the obligations of Borrowers hereunder to the Lender to be replaced in
its capacity as an Issuing Bank, or to its Serving Affiliate in such capacity,
shall continue until (A) each Letter of Credit issued by that Person has expired
or been drawn in full, (B) all outstanding reimbursement obligations with
respect to Letters of Credit, together with interest thereon at the L/C Interest
Rate, shall have been paid in full, and (C) all Liabilities under each L/C
Application, to the extent due, have been paid in full and, to the extent not
due, been secured to the satisfaction of such Person, to the extent due, have
been paid in full and, to the extent not due, been secured to the satisfaction
of such Person.
          (b) If such replacement is a result of increased costs under
Sections 2.8 or 4.9, the replacement Lender shall be a bank or other financial
institution that is not subject to such increased costs which caused Borrowers’
election to replace any Lender hereunder, and each such replacement Lender shall
execute and deliver to the Agent such documentation satisfactory to the Agent
pursuant to which such replacement Lender is to become a party hereto,
conforming to the provisions of Section 11.6, with a Commitment equal to that of
the Lender being replaced and shall make Loans in the aggregate principal amount
equal to the aggregate outstanding principal amount of the Loans of the Lender
being replaced;
          (c) Upon such execution of such documents referred to in clause (b)
and repayment of the amounts referred to in clause (a), the replacement lender
shall be a “Lender” with a Commitment as specified herein above and the Lender
being replaced shall cease to be a “Lender” hereunder, except with respect to
indemnification provisions under this Credit Agreement, which shall survive as
to such replaced Lender and except to the extent such Lender continues to be an
Issuing Bank pursuant to Section 2.9(a)(ii);
          (d) The Agent shall reasonably cooperate in effectuating the
replacement of any Lender under this Section 2.9, but at no time shall the Agent
be obligated to initiate any such replacement;

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          (e) Any Lender replaced under this Section 2.9 shall be replaced at
Borrowers’ sole cost and expense and at no cost or expense to the Agent or any
of the Lenders; and
          (f) If Borrowers propose to replace any Lender pursuant to this
Section 2.9 because the Lender seeks reimbursement under either Section 2.8 or
4.9, then it must also replace any other Lender who seeks similar levels of
reimbursement (as a percentage of such Lender’s Commitment) under such Sections.
     2.10 Sharing of Payments. (a) (i) If any Lender (including a Lender in its
capacity as an Issuing Bank) shall obtain any payment (whether voluntary,
involuntary, and whether through the exercise of any right of set-off by virtue
of its claim in any applicable bankruptcy, insolvency or other similar
proceeding being deemed secured by a Liability owed by it to any Credit Party,
including a claim deemed secured under Section 506 of the Bankruptcy Code, or
otherwise) (each a “Payment”), on account of (A) the Loans made by it, (B) its
L/C Participations or (C) any of the other Obligations due and payable to it in
excess of its Proportionate Share of payments on account of the Loans or L/C
Participations or such other Obligations obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the Loans made by them, in their participation in Letters of Credit or their
other such Obligations as shall be then due and payable as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; however, provided that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender’s ratable share (according to the proportion of (1) the amount of
such Lender’s required repayment to (2) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect to the total amount so recovered. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.10 may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of such Borrower in the amount of such participation.
     (ii) For purposes of this Section 2.10, the unreimbursed drawings under
Letters of Credit issued by an Issuing Bank shall be deemed to constitute
“Loans” made by such Issuing Bank, and such Issuing Bank agrees that it shall
apply all Payments received by it in its capacity as an Issuing Bank to the
payment or the collateralization of the Liabilities of Borrowers to it that
constitute unreimbursed drawings under Letters of Credit issued by it before
applying them to any other Liabilities due it.
          (b) If an Issuing Bank is an Affiliate of a Lender, such Lender shall
cause such Affiliate to comply with the provisions of Section 2.10(a) as fully
as though such Affiliate were a Lender subject to such section.
     2.11 Superpriority Nature of Obligations; Priming Lien.

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          (a) The Obligations shall be secured by Liens in the Collateral under
Sections 364(c)(2) and (d)(1) of the Bankruptcy Code, senior to all other Liens
other than (i) Permitted Senior Liens, (ii) the Carve-Out Reserve, and
(iii) pari passu Liens in the Collateral securing the Approved Secured
Derivative Transaction Liabilities. The Obligations shall also be secured by
Liens pursuant to Section 364(c)(3) of the Bankruptcy Code in the Collateral
junior to Permitted Senior Liens.
          (b) The Obligations shall have the status in the Chapter 11 Cases of
superpriority administrative expenses under Section 364(c)(1) of the Bankruptcy
Code. Subject to the Carve-Out Reserve (as defined in Section 2.11(c) below),
such administrative claim shall have priority over all other claims, costs and
expenses of the kinds specified in, or ordered pursuant to, Sections 105, 326,
328, 330, 331, 503(b), 506(c) (subject to entry of the Final Financing Order),
507(a), 507(b), 726, 1113, 1114 or any other provision of the Bankruptcy Code
and shall at all times be senior to the rights of any Credit Party, any Credit
Party’s estate, and any successor trustee or estate representative in the
Chapter 11 Cases or any subsequent proceeding or case under the Bankruptcy Code.
          (c) Agent’s Liens on the Collateral under Sections 364(c)(2), (c)(3)
and (d)(1) of the Bankruptcy Code, for the benefit of Agent and Lenders, and the
superpriority administrative claim under Section 364(c)(1) of the Bankruptcy
Code afforded the Obligations shall be subject only to the following (the
“Carve-Out Reserve”): (a) all fees required to be paid to the Clerk of the
Bankruptcy Court and to the Office of the United States Trustee under section
1930(a) of title 28 of the United States Code plus interest at the statutory
rate, and (b) following notice to the Funds Administrator, its counsel (in
accordance with the notice procedures in Section 11.5) and to counsel for any
official committee by the Agent after the occurrence and during the continuance
of an Event of Default, the payment of accrued and unpaid professional fees and
expenses incurred by the Credit Parties and any official committee appointed in
the Chapter 11 Cases and allowed by the Bankruptcy Court, in an aggregate amount
not exceeding $2,500,000 (plus all unpaid professional fees and expenses allowed
by the Bankruptcy Court incurred prior to delivery of the notice referred to in
this clause (b) at any time) (the “Professional Carve-out Reserve”), provided
that (i) the Carve-Out Reserve shall not be available to pay any such
professional fees and expenses incurred in connection with the initiation or
prosecution of any claims, causes of action, adversary proceedings or other
litigation against any agent or lender under the Pre-Petition Credit Agreement,
or any of the Lenders or Agent under this Agreement (collectively, “Excluded
Actions”), (ii) so long as an Event of Default shall not have occurred and be
continuing, the Carve-Out Reserve shall not be reduced by the payment of fees
and expenses allowed by the Bankruptcy Court and payable under Sections 328, 330
and 331 of the Bankruptcy Code, and (iii) nothing herein shall impair the right
of any party to object to the reasonableness of any such fees or expenses to be
paid by the estates of the Credit Parties.
     Subject to the provisions of the Financing Orders and this Section 2.11,
the Credit Parties shall be permitted to pay as the same may become due and
payable (i) administrative expenses of the kind specified in Section 503(b) of
the Bankruptcy Code incurred in the ordinary course of their businesses,
(ii) compensation and reimbursement of expenses to professionals allowed or
otherwise permitted to be paid by the Bankruptcy Court and payable under
Sections 330 and 331 of the Bankruptcy Code, and (iii) any other Pre-Petition or
Post-Petition expenses of the Credit

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Parties, including adequate protection payments, to the extent approved by the
Bankruptcy Court and not otherwise prohibited by the terms of this Credit
Agreement or the other Credit Documents. Except for the Carve-Out Reserve, no
costs or expenses of administration shall be imposed against Agent, Lenders or
any of the Collateral under Sections 105, 506(c) or 552 of the Bankruptcy Code,
or otherwise, and, subject to entry of the Final Financing Order, Borrowers and
each of the other Credit Parties hereby waives, for itself and on behalf of its
estate in bankruptcy, any and all rights under Sections 105, 506(c) or 552, or
otherwise, to assert or impose or seek to assert or impose, any such costs or
expenses of administration against Agent or the Lenders.
     2.12 Waiver of any Priming Rights. Upon the Effective Date, and on behalf
of themselves and their estates, and for so long as any Obligation shall be
outstanding, each Credit Party hereby irrevocably waives any right, pursuant to
Sections 364(c) and 364(d) of the Bankruptcy Code or otherwise, to grant any
Lien of equal or greater priority than the Liens securing the Obligations or to
approve a claim of equal or greater priority than the Obligations.
     2.13 Payment of Obligations. Upon the maturity (whether by acceleration or
otherwise) of any of the Obligations under this Credit Agreement or any of the
other Credit Documents, Lenders shall be entitled to immediate payment of such
Obligations without further application to or order of the Bankruptcy Court,
subject to Required Notice under Section 9.3.
     2.14 No Discharge; Survival of Claims. Each of the Credit Parties agrees
that (a) the Obligations hereunder shall not be discharged by the entry of an
order confirming a Reorganization Plan in any Chapter 11 Case (and each of the
Credit Parties, pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby
waives any such discharge) and (b) the superpriority administrative claims
granted to Agent and Lenders pursuant to the Interim Financing Order and Final
Financing Order and described in Section 2.8, and the Liens granted to Agent
pursuant to the Financing Orders and the other Security Documents and described
in Section 2.8, shall not be affected in any manner by the entry of an order
confirming a Reorganization Plan in any Chapter 11 Case.
ARTICLE III
LETTERS OF CREDIT
     3.1 Issuance of Letters of Credit. (a) Prior to the Closing Date, Letters
of Credit (as such term is defined in the Pre-Petition Credit Agreement; such
letters of credit are listed on Schedule B, Part 3.1 and are hereinafter
referred to as the “Original Letters of Credit”) were issued by DBTCo on behalf
of Borrowers from time to time. Upon the terms and subject to the conditions of
this Credit Agreement, such outstanding Original Letters of Credit shall
constitute Letters of Credit under this Credit Agreement from and after the
Closing Date as fully as if such outstanding Original Letters of Credit had been
issued under this Credit Agreement and shall henceforth be governed by the terms
and conditions of this Credit Agreement in all respects. The Funds Administrator
may from time to time request the Agent to direct an Issuing Bank to issue a
Letter of Credit for the account of a Borrower. All such Letters of Credit shall
be denominated in Dollars. No such request shall be granted if, after such
issuance:

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     (i) (A) Total Exposure would exceed the lesser of (1) the Line of Credit
and (2) the Borrowing Base or (B) Letter of Credit Obligations would exceed
$40,000,000 or (C) any Lender’s Exposure would exceed its Commitment;
     (ii) (A) (1) any order, judgment or decree of any Governmental Authority or
arbitrator shall enjoin or restrain such Borrower from procuring, such Issuing
Bank from issuing, or a Lender from acquiring an L/C Participation in, such
Letter of Credit, or (2) any Requirement of Law applicable to such Borrower,
such Issuing Bank or a Lender or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over such
Borrower, such Issuing Bank or a Lender shall prohibit, or request that, any
such Person refrain from procuring, issuing or acquiring an L/C Participation
in, such Letter of Credit, as applicable, or, from performing its obligations
under such Letter of Credit or its L/C Participation thereunder, as applicable;
     (B) any Requirement of Law applicable to such Issuing Bank or a Lender or
any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuing Bank or a Lender
shall impose upon such Issuing Bank or such Lender (1) any restriction or
reserve or capital requirement or (2) any cost or expense with respect to, in
the case of such Issuing Bank, such Letter of Credit and, in the case of such
Lender, such L/C Participation (for which such Issuing Bank or such Lender shall
not otherwise be compensated) not in effect as of the Closing Date, and which
such Issuing Bank or such Lender deems in good faith to be material to it;
     (iii) any Lender is a Defaulting Lender, unless the Agent and Issuing Bank
have entered into satisfactory arrangements with Borrowers to eliminate the
Agent’s and such Issuing Bank’s risk with respect to such Lender, including cash
collateralization of such Lender’s Proportionate Share of Letter of Credit
Obligations; or
     (iv) Agent has determined that any of the conditions set forth in
Section 5.2 shall not be satisfied.
          (b) The Agent may assume, as to any Borrower, any Issuing Bank and any
Lender, that none of the conditions specified in Section 3.1(a) are applicable
as to such Person, unless the Agent shall have received a notice from such
Person specifically entitled “Notice under Section 3.1(a),” specifying the
condition or conditions that are applicable to such Person. Any such notice
shall continue in effect until the Agent shall have received from the Person
originally sending such notice a subsequent notice, entitled “Revocation of
Notice under Section 3.1(a),” stating that the condition or conditions specified
in such Person’s earlier notice are no longer applicable.
     3.2 Procedure for Issuance. (a) The Funds Administrator may from time to
time request the Agent to direct the issuance of a Letter of Credit by
delivering to the Agent, with a copy to the applicable Issuing Bank, a Letter of
Credit Request in the form of Exhibit C-2 to this Credit Agreement (a “Letter of
Credit Request”), not later than 1:00 P.M. (New York City time) at least five
(5) Business Days (or such shorter period as may be agreed to by the Agent and
the applicable Issuing Bank) in advance of the proposed date of issuance. Prior
to date of

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issuance or in conjunction with the submission of a Letter of Credit Request,
the Funds Administrator shall provide to the Agent and the applicable Issuing
Bank a precise description of the format of the Letter of Credit or information
and documents adequate to allow for the Issuing Bank to prepare the requested
Letter of Credit and shall specify that the only drawings permitted under the
Letter of Credit shall be sight drawings. The Issuing Bank shall not issue any
Letter of Credit until it has received authorization to do so from the Agent.
Promptly after the issuance or amendment of any standby Letter of Credit, the
Issuing Bank shall notify the Agent and the Funds Administrator, in writing, of
such issuance or amendment and such notice shall be accompanied by a copy of
such issuance and amendment. Upon receipt of such notice, the Agent shall
promptly notify the Lenders, in writing, of such issuance or amendment, and if
so requested by a Lender the Agent shall provide such Lender with copies of such
issuance or amendment. With regards to commercial Letters of Credit, the Issuing
Bank shall on the first Business Day of each week, provide to the Agent by
facsimile a report detailing the daily aggregate outstanding commercial Letters
of Credit for the previous week.
          (b) The transmittal by the Funds Administrator of each Letter of
Credit Request shall be deemed to be a representation and warranty made by each
of the Borrowers, both at the time of such transmittal and at the time of the
issuance of the requested Letter of Credit, that the Letter of Credit may be
issued in accordance with and will not violate any of the requirements of
Section 3.1.
     3.3 Terms of Letters of Credit. The Agent shall not direct the issuance of
any Letter of Credit unless:
          (a) if it is a standby Letter of Credit, its term does not exceed one
year from the date of issuance (except that any such Letter of Credit may
provide for annual renewals on terms reasonably acceptable to the Agent and the
Issuing Bank);
          (b) if it is a commercial Letter of Credit, its term does not exceed
120 days;
          (c) in the case of any Letter of Credit, it expires no later than
thirty (30) Business Days prior to the Facility Termination Date.
          (d) Each Letter of Credit issued or to be issued hereunder shall have
an expiration date of not later than 365 days after the Closing Date.
          (e) If the Facility Termination Date occurs prior to the expiration
date of any outstanding Letter of Credit, Borrowers shall either (i) make
arrangements satisfactory to Issuing Bank with respect to a back-up letter of
credit or the assumption of the outstanding Letters of Credit by the lenders
under any exit facility or (ii) deliver cash in an amount equal to 105% of the
stated amount of all outstanding Letters of Credit to Issuing Bank to be held by
and deposited in an account in the name of Issuing Bank as cash collateral for
the payment and performance of all Letter of Credit Obligations. Issuing Bank
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Monies in such account shall automatically be
applied by Issuing Bank to reimburse Issuing Bank for Unpaid Drawings for which
Issuing Bank has not been reimbursed, and any remaining amounts will either
(A) be held for the satisfaction of the Letter of Credit Obligations of
Borrowers at such time or (B) if the

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maturity of the Loans has been accelerated, be applied to satisfy all Letter of
Credit Obligations as such Letter of Credit Obligations become due and payable.
     3.4 Lenders’ Participation. (a) Immediately upon issuance by any Issuing
Bank of a Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally acquired from such Issuing Bank, without recourse or warranty,
an undivided interest and participation (an “L/C Participation”), to the extent
of such Lender’s Proportionate Share, in such Issuing Bank’s rights to be paid
the principal amount of, together with interest accrued on, drawings under such
Letter of Credit and in any security therefor or Guaranty pertaining thereto.
          (b) (i) Each Issuing Bank shall remit to the Agent, for the account of
each Lender such Lender’s Proportionate Share of each payment of principal and
interest (to the extent such interest does not exceed the L/C Interest Rate)
received by such Issuing Bank on account of any drawing under such Letter of
Credit (A) with respect to which such Issuing Bank has delivered an L/C Notice
of Drawing to the Agent during a Bankruptcy Default and (B) that is received by
such Issuing Bank on or after the date of such L/C Notice of Drawing; provided,
that in the event that any such payment received by any Issuing Bank shall be
required to be returned by such Issuing Bank, such Lender shall return to such
Issuing Bank the portion thereof previously distributed by it to the Agent, but
without interest thereon (unless such Issuing Bank is required to pay interest
on the amount returned, in which case such Lender shall be required to pay
interest at the same rate).
     (ii) (A) Payments required to be made by any Issuing Bank to the Agent for
the account of a Lender, together with interest thereon at the rate specified in
Section 3.4(b)(ii)(B), shall be made to the Agent, if the amount in respect of
which the payment is to be made to the Agent is received by such Issuing Bank on
or before 1:00 P.M. (New York City time) of such Issuing Bank’s time on a
Business Day, on the day received and, if received after such time, on or before
11:00 A.M. (New York City time) of such Issuing Bank’s time, on the next
succeeding Business Day.
     (B) Interest shall be payable by each Issuing Bank on amounts required to
be paid by it to the Agent pursuant to Section 3.4(b)(ii)(A) from the date such
payments are due until such amounts are paid in full at, for the first three
Business Days, the Federal Funds Rate, and, thereafter, the Prime Lending Rate.
     3.5 Maturity of Drawings; Interest Thereon. (a) Drawings under any Letter
of Credit shall, notwithstanding anything to the contrary contained therein,
mature and become due and payable, and shall be repaid to the Agent for the
account of the applicable Issuing Bank by Borrowers in full, together with
interest accrued thereon, from the date and at the rate specified in
Section 3.5(b), on the Effective Date of the L/C Notice of Drawing in respect of
such drawing.
          (b) Borrowers shall, notwithstanding anything to the contrary
contained in any Letter of Credit, pay interest on the outstanding principal
amount of each drawing under such Letter of Credit at a rate per annum equal to
the rate set forth in Section 4.2 (the “L/C Interest Rate”) from the date such
drawing is disbursed by the applicable Issuing Bank to the date such drawing is
reimbursed by Borrowers. Interest on each such drawing shall be payable when
such

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drawing shall be due (whether at maturity, by reason of acceleration or
otherwise) and, prior to such time, on demand.
     3.6 Payment of Amounts Drawn Under Letters of Credit. In the event of any
drawing under any Letter of Credit, the applicable Issuing Bank may deliver an
L/C Notice of Drawing to the Agent and the Agent shall treat each L/C Notice of
Drawing on its Effective Date as a Notice of Borrowing requesting Prime Rate
Loans in a principal amount equal to the amount of such drawing plus interest on
the amount of such drawing at the L/C Interest Rate from the day such drawing
was disbursed until the date of such L/C Notice of Drawing (unless such drawing
was disbursed and repaid on the same day, in which case interest shall be
payable for such day); and each such L/C Notice of Drawing shall have the same
force and effect as a Notice of Borrowing given by the Funds Administrator for
and on behalf of Borrowers, except that the conditions to borrowing specified in
Section 2.2 and Section 5.2 shall not apply.
     3.7 Nature of Issuing Bank’s Duties. In determining whether to pay under
any Letter of Credit, the Issuing Bank issuing such Letter of Credit shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit. As between
Borrowers, any Issuing Bank and each Lender, Borrowers assume all risks of the
acts and omissions of any Issuing Bank, or misuse of any Letter of Credit by the
respective beneficiaries of such Letter of Credit. In furtherance and not in
limitation of the foregoing, neither any Issuing Bank, the Agent nor any of the
Lenders shall be responsible (a) for the form, validity, sufficiency, accuracy,
genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
any Letter of Credit even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged, (b) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit, or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason, (c) for failure of the beneficiary of any
Letter of Credit to strictly comply with conditions required in order to draw
upon such Letter of Credit, (d) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex,
telecopy, facsimile or otherwise, whether or not they be in cipher, (e) for
errors in interpretation of technical terms, (f) for any loss or delay in the
transmission or otherwise of an document required in order to make a drawing
under any Letter of Credit, or of the proceeds thereof and (g) for the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing honored under such Letter of Credit. Any action taken or omitted to be
taken by any Issuing Bank under or in connection with any Letter of Credit shall
not create any liability on the part of the Agent or any Lender to any Borrower.
     3.8 Obligations Absolute. The joint and several obligations of Borrowers to
reimburse each Issuing Bank for drawings honored under a Letter of Credit issued
by such Issuing Bank, together with interest as herein provided, and the
obligations of the Lenders under Section 3.6 shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Credit Agreement, without any reduction or deduction whatsoever, including any
reduction or deduction for any set-off, recoupment or counterclaim, under all
circumstances including the following circumstances:

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          (a) any lack of validity or enforceability of any Letter of Credit;
          (b) the existence of any claim, set-off, defense or other right which
any Borrower or any Affiliate of any Borrower may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such beneficiary or transferee may be acting), the applicable Issuing Bank,
any Lender or any other Person, whether in connection with this Credit
Agreement, the transactions contemplated herein or any unrelated transaction;
          (c) any draft, demand, certificate or any other documents presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
          (d) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents;
          (e) payment by the applicable Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit (provided that the
foregoing shall not be construed to excuse the Issuing Bank from liability to
any Borrower to the extent of any direct damages (as opposed to consequential
damages) suffered by any Borrower that are caused by the Issuing Bank’s failure
to exercise care when determining whether drafts and other documents under a
Letter of Credit comply with the terms thereof);
          (f) failure of any drawing under a Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of any
drawing; or
          (g) the fact that a Default or an Event of Default shall have occurred
and be continuing;
provided that no payment by a Borrower or a Lender to any Issuing Bank shall
constitute a waiver or release by such Borrower or such Lender of any right it
may have against such Issuing Bank, including, in the case of a Borrower, a
claim that such Issuing Bank acted with willful misconduct or gross negligence
as determined by a court of competent jurisdiction in determining whether
documents presented under a Letter of Credit complied with the terms of such
Letter of Credit.
ARTICLE IV
INTEREST, FEES AND EXPENSES
     4.1 Interest on LIBOR Rate Loans. Subject to the provisions of Section 4.4,
each LIBOR Rate Loan shall bear interest on its unpaid principal amount at a
rate per annum equal to the applicable Adjusted LIBOR Rate plus the Applicable
Margin. Such interest shall be payable on the last day of each Interest Period
with respect to such LIBOR Rate Loan, at the date of Conversion of such LIBOR
Rate Loan (or a portion thereof) to a Prime Rate Loan and at maturity of such
LIBOR Rate Loan, and after maturity of such LIBOR Rate Loan (whether by
acceleration or otherwise), upon demand. The Agent upon determining the Adjusted
LIBOR

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Rate for any Interest Period shall promptly notify the Funds Administrator and
the Lenders by telephone (confirmed promptly in writing) or in writing thereof.
Each determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
     4.2 Interest on Prime Rate Loans. Subject to the provisions of Section 4.4,
each Prime Rate Loan shall bear interest on its unpaid principal amount at a
rate per annum equal to the Prime Lending Rate plus the Applicable Margin. Such
interest shall be payable monthly, in arrears, as of the last day of each
calendar month, at the date of conversion of such Prime Rate Loan (or a portion
thereof) to a LIBOR Rate Loan and at maturity of such Prime Rate Loan, and after
maturity of such Prime Rate Loan (whether by acceleration or otherwise), upon
demand. In the event of any change in said Prime Lending Rate, the rate
hereunder shall change, effective as of the day the Prime Lending Rate changes.
Each determination by the Agent of any interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
     4.3 Notice of Continuation and Notice of Conversion.
          (a) With respect to any Borrowing consisting of LIBOR Rate Loans,
Borrowers may (so long as no Default or Event of Default has occurred and is
continuing, subject to the provisions of Section 4.3(c)), elect to maintain such
Borrowing or any portion thereof as consisting of LIBOR Rate Loans by selecting
a new Interest Period for such Borrowing, which new Interest Period shall
commence on the last day of the immediately preceding Interest Period. Each
selection of a new Interest Period (a “Continuation”) shall be made by notice
given not later than 12:00 Noon (New York City time) on the third Business Day
prior to the date of any such Continuation relating to LIBOR Rate Loans, by the
Funds Administrator to the Agent. Such notice by the Funds Administrator of a
Continuation (a "Notice of Continuation”) shall be in substantially the form of
Exhibit C-1, specifying (i) the date of such Continuation, (ii) the aggregate
amount of Loans subject to such Continuation and (iii) the duration of the
selected Interest Period, all of which shall be specified in such manner as is
necessary to comply with all limitations on Loans outstanding hereunder.
Borrowers may elect to continue more than one Borrowing consisting of LIBOR Rate
Loans by combining such Borrowings into one Borrowing and selecting a new
Interest Period pursuant to this Section 4.3(a); provided that each of the
Borrowings so combined shall consist of Loans having Interest Periods ending on
the same date. If Borrowers shall fail to select a new Interest Period for any
Borrowing consisting of LIBOR Rate Loans in accordance with this Section 4.3(a),
such Loans will automatically, on the last day of the then existing Interest
Period therefor, Convert into Prime Rate Loans.
          (b) Borrowers may on any Business Day (so long as no Default or Event
of Default has occurred and is continuing), upon notice (each such notice, a
“Notice of Conversion”) given by the Funds Administrator to the Agent, and
subject to the provisions of Section 4.3(c), Convert the entire amount of or a
portion of all Loans of one Type comprising the same Borrowing into Loans of
another Type; provided, however, that any Conversion of any LIBOR Rate Loans
into Loans of another Type shall be made on, and only on, the last day of an
Interest Period for such LIBOR Rate Loans and, upon Conversion of any Loans into
Loans of another Type, Borrowers shall pay accrued interest to the date of
Conversion on the principal amount Converted. Each such Notice of Conversion
shall be given not later than 12:00 Noon

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(New York City time) on the Business Day prior to the date of any proposed
Conversion into Prime Rate Loans and on the third Business Day prior to the date
of any proposed Conversion into LIBOR Rate Loans. Subject to the restrictions
specified above, each Notice of Conversion shall be in substantially the form of
Exhibit C-1 hereto specifying (i) the requested date of such Conversion, (ii)
the Type of Loans to be Converted, (iii) the portion of such Type of Loan to be
Converted, (iv) the Type of Loan such Loans are to be Converted into and (v) if
such Conversion is into LIBOR Rate Loans, the duration of the Interest Period of
such Loan. Each Conversion shall be in an aggregate amount for the Loans of all
Lenders of not less than $2,000,000 or any integral multiple of $1,000,000 in
excess thereof. Borrowers may elect to Convert the entire amount of or a portion
of all Loans of one Type comprising more than one Borrowing into Loans of
another Type by combining such Borrowings into one Borrowing consisting of Loans
of another Type; provided that if the Borrowings so combined consist of LIBOR
Rate Loans, such Loans shall have Interest Periods ending on the same date.
          (c) Notwithstanding anything contained in subsections (a) and (b)
above or elsewhere in this Credit Agreement to the contrary,
     (i) (A) if the Agent is unable to determine the LIBOR Rate for LIBOR Rate
Loans comprising any requested Borrowing, Continuation or Conversion, the right
of Borrowers to select or maintain LIBOR Rate Loans for such Borrowing or any
subsequent Borrowing shall be suspended until the Agent shall notify the Funds
Administrator and the Lenders that the circumstances causing such suspension no
longer exist, and each Loan comprising such Borrowing shall be a Loan of a Type
that is unaffected by such circumstances, as selected by Borrowers pursuant to
this Credit Agreement;
     (B) if a Lender shall, at any time, notify the Agent that, because of a
change in applicable law after the date such Lender became a Lender, it has
become unlawful for such Lender to participate in any requested Borrowing,
Continuation or Conversion of LIBOR Rate Loans, to continue its LIBOR Rate
Loans, or to comply with its obligations hereunder in respect thereof, that
Lender’s obligation to participate in any such requested Borrowing, Continuation
or Conversion shall be discharged by such Lender’s making its participation
therein in the form of a Prime Rate Loan, and any of such Lender’s LIBOR Rate
Loans not otherwise being Converted shall be Converted into Prime Rate Loans on
the earlier of (1) the last day of the applicable Interest Period and (2) the
last day such Lender may lawfully continue to maintain LIBOR Rate Loans,
provided that any Prime Rate Loan that, but for this clause (B), would have been
a LIBOR Rate Loan shall constitute part of the Borrowing of which any such LIBOR
Rate Loan was or would have been a part;
          (ii) if the Majority Lenders shall, at least one Business Day before
the date of any requested Borrowing, Continuation or Conversion, notify the
Agent that the LIBOR Rate for Loans comprising such Borrowing will not
adequately reflect the cost to such Lenders of making or funding their
respective Loans for such Borrowing, the right of Borrowers to select LIBOR Rate
Loans for such Borrowing shall be suspended until the Agent shall notify the
Funds Administrator and the Lenders that the circumstances

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causing such suspension no longer exist, and each Loan comprising such Borrowing
shall be a Loan of a Type that is unaffected by such circumstances, as selected
by Borrowers pursuant to this Credit Agreement; and
     (iii) Borrowers shall borrow, prepay, convert and continue Loans in a
manner such that (A) the aggregate principal amount of LIBOR Rate Loans having
the same Interest Period shall at all times be not less than $2,000,000, (B)
there shall not be, at any one time, more than eight Interest Periods in effect
with respect to LIBOR Rate Loans and (C) no payment of LIBOR Rate Loans will
have to be made prior to the last day of an applicable Interest Period in order
to repay the Loans in the amounts and on the date specified in Section 2.4(b).
          (d) Each Notice of Continuation and Notice of Conversion shall be
irrevocable (subject to Section 4.3(c)) by and binding on Borrowers.
     4.4 Interest After Event of Default. At the election of Agent or the
Majority Lenders, Interest on any amount of overdue interest on or overdue
principal of the Loans, and interest on the amount of principal under the Loans
outstanding as of the date an Event of Default occurs, and at all times
thereafter until the earlier of the date upon which (a) all Obligations have
been paid and satisfied in full or (b) such Event of Default shall not be
continuing, shall be payable on demand at a rate per annum equal to the rate at
which the Loans are bearing interest pursuant to Section 4.2 above, plus two
percent (2.0%). In the event of any change in said applicable interest rate, the
rate hereunder shall change, effective as of the day the applicable interest
rate changes, so as to remain two percent (2.0%) per annum above the then
applicable interest rate.
     4.5 Fees. (a) Borrowers shall pay to the Agent, for the ratable benefit of
the Lenders, a non-refundable fee (the “Unused Line Fee”) equal to three eighths
of one percent (0.375%) per annum of the unused portion of the Line of Credit
(with any outstanding Letter of Credit Obligations constituting usage of the
Line of Credit). The Unused Line Fee shall accrue daily from the Closing Date
until the Facility Termination Date, and shall be due and payable monthly in
arrears, on the first Business Day of each Fiscal Quarter and on the Facility
Termination Date.
          (b) On the Closing Date, Borrowers shall pay to the Agent (i) the fees
set forth in the Fee Letter to the extent due on such date and (ii) the Upfront
Fees for distribution to the Lenders.
     4.6 Letter of Credit Fees. (a) The Agent shall be entitled to charge to the
account of the Funds Administrator on the first Business Day of each calendar
month, a fee for the ratable benefit of the Lenders for distribution to each
Lender, in an amount equal to the LIBOR Margin for Loans with respect to all
Letters of Credit on the daily undrawn amounts outstanding during the
immediately preceding calendar month; provided that from the date an Event of
Default occurs, and at all times thereafter until the earlier of the date upon
which (A) all Obligations have been paid and satisfied in full and (B) such
Event of Default shall not be continuing, such fee shall be equal to two (2%)
percent per annum above the LIBOR Margin, otherwise applicable hereunder and
shall be payable on demand (such fees, the “Letter of Credit Fees”); and

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          (b) The Agent shall be entitled to charge to the account of the Funds
Administrator on the first Business Day of the month immediately succeeding each
Fiscal Quarter, a fee for the benefit of the Issuing Bank equal to the greater
of (X) $500 per annum and (Y) 0.25% per annum with respect to all Letters of
Credit on the daily undrawn amounts outstanding during the immediately preceding
Fiscal Quarter (the “Fronting Fee”). In addition to the Fronting Fee, the Agent
shall be entitled to charge the account of the Funds Administrator, as and when
incurred, the customary charges, fees, costs and expenses of the Issuing Bank
for the issuance, transfer, amendment or payment of any Letter of Credit (the
“Issuing Bank Fees”). Each determination of the Fronting Fee and Issuing Bank
Fees shall be made by the Issuing Bank and provided in writing to the Agent and
shall be conclusive and binding for purposes of Agent’s right to collect and
distribute such fees, absent manifest error.
     4.7 Reimbursement of Expenses.
          (a) From and after the Closing Date, Borrowers shall promptly
reimburse the Agent for all Expenses of the Agent as the same are incurred by
the Agent and upon receipt of invoices therefor and, if requested by the Funds
Administrator, such reasonable backup materials and information as any Borrower
shall reasonably request.
          (b) Borrowers shall pay to each Lender, upon request, such amount or
amounts as such Lender determines in good faith are necessary to compensate it
for any breakage loss, cost or expense incurred by it as a result of (i) any
payment, prepayment or conversion of a LIBOR Rate Loan on a date other than the
last day of an Interest Period for such LIBOR Rate Loan or (ii) a LIBOR Rate
Loan for any reason not being made or Converted, or any payment of principal
thereof or interest thereon not being made, on the date therefor determined in
accordance with the applicable provisions of this Credit Agreement. At the
election of such Lender, and without limiting the generality of the foregoing,
but without duplication, such compensation on account of breakage losses may
include an amount equal to the excess of (A) the interest that would have been
received from Borrowers under and in accordance with the terms of this Credit
Agreement on any amounts to be reemployed during an Interest Period or its
remaining portion over (B) the interest component of the return that such Lender
determines it could have obtained had it placed such amount on deposit in the
interbank Dollar market selected by it for a period equal to such Interest
Period or its remaining portion.
     4.8 Authorization to Charge Borrowers’ Accounts. Each Borrower hereby
authorizes the Agent to charge the account of any Borrower maintained with the
Agent with the amount of all Fees, Expenses and other payments to be paid
hereunder, under the Fee Letters and under the other Credit Documents as and
when such payments become due and agrees that it shall pay interest thereon from
the date such amount is to be charged to such Borrower’s Account to the date the
same is paid (whether by the making of a Loan or otherwise) at the then
applicable rate for Prime Rate Loans. Each Borrower confirms that any charges
which the Agent may so make to such Borrower’s Account as herein provided will
be made as an accommodation to Borrowers and solely at the Agent’s discretion.
The Agent will use its best efforts to give the Funds Administrator three
(3) days advance notice of such Fees, Expenses and other payments in reasonable
detail, provided that the failure to provide such notice shall not result in any
liability of the Agent.

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     4.9 Indemnification in Certain Events. If after the Closing Date, either
(a) any change in or in the interpretation of any law or regulation is
introduced, including with respect to reserve requirements, applicable to
DBTCo., Deutsche Bank or any other banking or financial institution from whom
any of the Lenders borrows funds or obtains credit (a “Funding Bank”), the Agent
or any of the Lenders, or (b) the Agent, a Funding Bank or any of the Lenders
complies with any future guideline or request from any central bank or other
Governmental Authority or (c) the Agent, a Funding Bank or any of the Lenders
determines that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof has or would
have the effect described below, or the Agent, a Funding Bank or any of the
Lenders complies with any request or directive regarding capital adequacy
(whether of not having the force of law) of any such authority, central bank or
comparable agency, and in the case of any event set forth in this clause (c),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any of the Lenders’ capital as a
consequence of its obligations hereunder or under any L/C Participation to a
level below that which such Lender could have achieved but for such adoption,
change or compliance (taking into consideration the Agent’s or such Funding
Bank’s or Lender’s policies as the case may be with respect to capital adequacy)
by an amount deemed by such Lender to be material, or any of the foregoing
events described in clauses (a), (b) or (c) increases the cost to the Agent, or
any of the Lenders of (i) funding or maintaining the Line of Credit, or (ii)
acquiring or maintaining any L/C Participation in any Letter of Credit, or
reduces the amount receivable in respect thereof, or in respect of such Letter
of Credit, by the Agent, the Issuing Bank of such Letter of Credit or any
Lender, then Borrowers shall upon demand by the Agent, pay to the Agent, for the
account of each applicable Lender or, as applicable, an Issuing Bank or a
Funding Bank, additional amounts sufficient to indemnify such Person against
such increase in cost or reduction in amount receivable. A certificate as to the
amount of such increased cost and setting forth in reasonable detail the
calculation thereof shall, if requested by the Funds Administrator, be submitted
to the Funds Administrator by the Person making such claim, and shall be
conclusive absent manifest error; provided, however, in no event shall any party
seek indemnification for any amounts described in this Section 4.9 if such
amounts arose more than 180 days prior to the date on which reimbursement is
being sought.
     4.10 Calculations and Determinations. (a) All calculations of (i) interest
hereunder and (ii) Fees, shall be made by the Agent, on the basis of a year of
360 days, or, if such computation would cause the interest and fees chargeable
hereunder to exceed the Highest Lawful Rate, 365/366 days, in each case to the
extent applicable for the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which such interest or
fees are payable.
          (b) In making the determinations contemplated by Article 4, the Agent
and each Lender may make such estimates, assumptions, allocations and the like
that such Person in good faith determines to be appropriate.
          (c) Each determination by the Agent of an interest rate or payment
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

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ARTICLE V
CONDITIONS PRECEDENT
     5.1 Conditions to Initial Credit Event. The initial Credit Event is subject
to the satisfaction or waiver, immediately prior thereto or concurrently
therewith, of the following conditions precedent:
          (a) Closing Document List. The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals, consents,
certificates and other documents set forth on the Closing Document List attached
hereto as Annex II, all in form and substance reasonably satisfactory to Agent
and the Lenders and, where applicable, each duly executed by the Person(s)
specified thereon.
          (b) Payment of Obligations Under Existing Credit Agreement.
Simultaneously with the initial funding hereunder, the total commitments under
the Pre-Petition Credit Agreement shall have been terminated, all loans
thereunder shall have been repaid in full, together with interest thereon, all
letters of credit, if any, issued thereunder shall have been terminated or shall
have become Letters of Credit under this Credit Agreement pursuant to
Section 3.1 and all other amounts owing pursuant to the such agreements
(including, without limitation, all accrued and unpaid fees and expenses of
Agent and the Lenders) shall have been repaid in full.
          (c) Unused Availability. After giving pro forma effect to the funding
of the initial Loans, the issuance of Letters of Credit, if any, and the payment
of all costs, fees and expenses incurred by or for the account of Borrowers in
connection with the execution and delivery of this Credit Agreement and the
other Credit Documents, there shall be Availability consistent with the Cash
Budget.
          (d) Approvals. All necessary governmental (domestic and foreign) and
third party approvals in connection with this Credit Agreement, the Transactions
and the Chapter 11 Cases and related matters have been obtained and remain in
effect, and all applicable waiting periods shall have expired without any action
being taken by any competent authority which restrains, prevents or imposes
materially adverse conditions upon the consummation of all or any part of this
Credit Agreement and the Transactions. Additionally, there shall not exist any
judgment, order, injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or notified prohibiting or
imposing materially adverse conditions upon all or any part of this Credit
Agreement or the Transactions.
          (e) Litigation. No litigation by any entity (private or governmental)
shall be pending or, to the best knowledge of any Borrower, threatened with
respect to this Credit Agreement, any other Credit Document or any documentation
executed in connection herewith or the Transactions or the obligations being
refinanced in connection with the consummation thereof, or which Agent or the
Majority Lenders shall determine would reasonably be expected to have a Material
Adverse Effect.

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          (f) Insurance. Agent shall be satisfied with the insurance coverage in
effect on the Closing Date pertaining to the assets of Borrowers and the
Subsidiaries of each of the Borrowers, and shall have received evidence
satisfactory to it that Agent shall have been named as a loss payee and
additional insured on all such policies of insurance covering Collateral.
          (g) Corporate Proceedings. All corporate and legal proceedings and all
instruments and agreements in connection with this Credit Agreement and the
Transactions shall be satisfactory in form and substance to Agent and, except as
otherwise agreed by Agent, shall have been consummated without any waiver of any
conditions or other provisions set forth therein and Agent shall have received
all information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams or certificates, if any, which Agent or the Majority
Lenders reasonably may have requested in connection therewith, such documents
and papers where appropriate to be certified by a Responsible Officer or by
proper corporate or Governmental Authorities.
          (h) Adverse Change. On or prior to the Effective Date, nothing shall
have occurred (and none of the Agent nor any Lender shall have become aware of
any facts or conditions not previously known) which Agent or the Majority
Lenders shall determine has had or reasonably could be expected to have a
Material Adverse Effect.
          (i) First Day Matters. All motions filed and orders entered in
connection with the first day hearing to be held in each of the Chapter 11 Cases
will be reasonably satisfactory in form and substance to Agent and its counsel.
          (j) Cash Budget. Agent shall have received the Cash Budget,
satisfactory to the Steering Committee, and the Weekly Cash Management Report
required pursuant to Section 7.1(k)(ii).
          (k) Alvarez & Marsal Report. Agent shall have received a report
satisfactory to it from Alvarez & Marsal regarding the Collateral and otherwise
shall have completed its due diligence in a manner satisfactory to it with
respect to Borrowers, the Subsidiary Guarantors and the Chapter 11 Cases.
          (l) Fees. Agent shall have received, for its own accounts and/or the
accounts of Lenders, (i) the fees owing under the Fee Letter and (ii) the fees
payable under the joinder letter dated February 20, 2008 (the “Upfront Fee”).
          (m) Financial Statements. Agent shall have received the financial
statements described in Section 6.6.
     5.2 Conditions to Each Credit Event. On the date of each Credit Event
(including the initial Credit Event), both immediately before and immediately
after giving effect thereto and to the application of the proceeds therefrom,
the following statements shall be true (and each request for a Credit Event,
shall constitute a representation and warranty by each Borrower that on the date
of such Credit Event, immediately before and immediately after giving effect
thereto and to the application of the proceeds therefrom, such statements are
true):

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          (a) The representations and warranties contained in this Credit
Agreement and in each other Credit Document are true and correct in all material
respects on and as of the date of such Credit Event as though made on and as of
such date, except (i) to the extent that such representations and warranties are
expressly made as of a specific date (in which event such representations and
warranties shall have been true and correct in all material respects on and as
of such specified date) and (ii) the representation and warranty made under
Section 6.2 shall be deemed satisfied upon the entry of the Interim Financing
Order in a form satisfactory to the Agent;
          (b) No event has occurred and is continuing, or would result from such
Credit Event or the application of the proceeds thereof, which would constitute
a Default or an Event of Default;
          (c) In the case of the issuance of any Letter of Credit, none of the
events set forth in Section 3.1 has occurred and is continuing or would result
from the issuance of such Letter of Credit;
          (d) After giving effect to the Loans and Letters of Credit requested
to be made, no Lender will have an Available Commitment which is less than zero;
          (e) Agent shall have received such other documents as required by this
Credit Agreement in connection with such Loan, all in form and substance as
required by this Credit Agreement including with respect to Loans, a Notice of
Borrowing in accordance with the provisions of Section 2.2 hereof; and with
respect to the issuance of a Letter of Credit, Agent and the respective Issuing
Bank shall have received a Letter of Credit Request meeting the requirements of
Section 3.2(a);
          (f) Bankruptcy Matters.
     (i) As to the funding of any Borrowing or the incurrence of any Letter of
Credit Obligations occurring prior to the Final Financing Order Date, (x) the
Interim Financing Order shall have been entered by the Bankruptcy Court upon a
motion of Borrower satisfactory in form and substance to Agent and its counsel,
and on such prior notice as is reflected in the Interim Financing Order as being
good, sufficient and adequate, (y) the Interim Financing Order shall be in full
force and effect and (z) the Interim Financing Order shall not have been
reversed, stayed, vacated, modified or amended.
     (ii) As to the funding of any Borrowing or the incurrence of any Letter of
Credit Obligations after the date which is more than 45 days following the
Petition Date, (i) the Final Financing Order shall have been entered by the
Bankruptcy Court upon a motion of Borrowers satisfactory in form and substance
to Agent and on such prior notice as is reflected in the Final Financing Order
as being good, sufficient and adequate, (ii) the Final Financing Order shall be
in full force and effect, and (iii) the Final Financing Order shall not have
been vacated, reversed, stayed, vacated, modified or amended without the prior
written consent of Agent and Majority Lenders.

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     (iii) all other orders entered by the Bankruptcy Court on or prior to the
entry of the Final Financing Order shall be satisfactory in form and substance
to Agent and its counsel, including, without limitation, the provision by and
through such orders of adequate protection for the holders of the Pre-Petition
Secured Debt.
          (g) Cash Management Matters.
     (i) Agent shall have received a Weekly Cash Management Report meeting the
requirements of Section 7.1(k)(ii).
     (ii) After giving effect to the Credit Event requested, Availability shall
not be less than $0.
     (iii) The Credit Event, if a Borrowing, will not cause Available Cash
Surplus to exceed $2,000,000 for each of the next two (2) consecutive Business
Days.
          (h) Other Information. Agent shall have received such other
instruments, documents and opinions as it may reasonably request in connection
with such Credit Event to evidence compliance with the terms and provisions of
the Loan Documents, including, without limitation, if requested pursuant to
Section 7.1(f) an updated Borrowing Base Certificate in form and substance
satisfactory to Agent.
Each request for a Borrowing and the acceptance by Borrower of the proceeds
thereof shall constitute a representation and warranty by Borrower, as of the
date of the Loans comprising such Borrowing, that the conditions specified in
Section 5.2(a) through (h) have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
     To induce the Agent and the Lenders to enter into this Credit Agreement and
each Issuing Bank to issue Letters of Credit, each Borrower, with respect to
itself, each of the other Borrowers and each of their respective Subsidiaries,
hereby represents and warrants to the Agent, the Lenders and each Issuing Bank:
     6.1 Organization and Qualification. Each Borrower and each Subsidiary of
each Borrower (a) is duly organized, validly existing and in good standing under
the laws of the state of its organization, (b) subject to the provisions of the
Bankruptcy Code and entry of the Interim Financing Order (or the Final Financing
Order, when applicable) by the Bankruptcy Court, has the power and authority to
own its properties and assets and to transact the businesses in which it
presently is, or proposes to be, engaged and (c) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction where it
presently is, or proposes to be, engaged in business except to the extent where
failure to be so qualified or authorized or in good standing would not
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, with respect to each Borrower and each Subsidiary of each Borrower,
Schedule B, Part 6.1 lists the exact legal name of each such Person, the State
of incorporation of each such Person, all jurisdictions in which each such
Person is qualified to do business as foreign corporations, and in

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the case of each Domestic Subsidiary, the organizational identification number
and the federal employer identification number of each such Person.
     6.2 Rights in Collateral; Priority of Liens. Each Borrower and each
Subsidiary of each Borrower owns the property provided in the scope of the Lien
granted by it as Collateral under the Credit Documents, free and clear of any
and all Liens in favor of third parties, except for Permitted Liens. Upon entry
of each Financing Order, the provisions of each Security Agreement are effective
to create in favor of Collateral Agent for the benefit of the Secured Parties a
legal, valid and enforceable security interest in all right, title and interest
of the relevant Credit Party in the Collateral, subject to no other prior Liens
other than Permitted Senior Liens and the Carve-Out Reserve. Upon the entry by
the Bankruptcy Court of the Interim Financing Order (or the Final Financing
Order, when applicable) no additional filings or recordings shall be necessary
to perfect the security interests created in the Collateral under the Security
Documents; provided, however, that additional filings may be required in the
United States Copyright Office and/or United States Patent and Trademark Office
to perfect the Collateral Agent’s Lien on any Intellectual Property acquired
after the date hereof.
     6.3 Company Power and Authority. Upon the entry by the Bankruptcy Courts of
the Interim Financing Order (or the Final Financing Order, when applicable) each
of the Credit Parties has the power and authority to execute, deliver and
perform the terms and provisions of each of the Credit Documents to which it is
a party and has taken all necessary action to authorize the execution, delivery
and performance by it of such Credit Documents. Upon the entry by the Bankruptcy
Courts of the Interim Financing Order (or the Final Financing Order, when
applicable) each of the Credit Parties has duly executed and delivered each of
the Credit Documents to which it is a party, and each such Credit Document
constitutes the legal, valid and binding obligation of such party enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws generally affecting creditors’
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
     6.4 No Violation. Neither the execution, delivery or performance by any
Borrower or any Subsidiary of any Borrowers of any of the Credit Documents to
which it is a party, nor compliance by it with the terms and provisions thereof,
nor consummation of the transactions contemplated therein (i) will contravene in
any material respect any Requirement of Law, (ii) will conflict or be
inconsistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the properties or assets of any Borrower or any such Subsidiary pursuant
to the terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other agreement, contract or instrument, to which a Borrower
or such Subsidiary is a party or by which it or any of its property or assets is
bound or to which it may be subject, except to the extent a conflict, breach or
default results from the rejection of such agreement, contract or instrument
approved pursuant to an applicable order of the Bankruptcy Court, or entered
into or confirmed Post-Petition or (iii) will violate or conflict with the
Governing Documents of any Credit Party.

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     6.5 Consents. No order, consent, approval, license, or authorization or
validation of, or filing with or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with any Credit Event
hereunder, the grant of the Liens pursuant to the Credit Documents, or the
execution, delivery, performance, validity or enforceability of this Credit
Agreement, the Notes or the other Credit Documents and the transactions
contemplated herein and therein, except for consents or authorizations which
have been obtained or filings which have been made and which, in each case, are
in full force and effect. No order, consent, approval, license, or authorization
or validation of, or filing with or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
continuing operations of any Borrower or any Subsidiary of any Borrower, except
for any order, consent, approval, license, or authorization or validation of, or
filing with or other act by or in respect of, any Governmental Authority or any
other Person which have been made or which the failure to obtain or make would
not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
     6.6 Financial Data. Borrowers have furnished or caused to be furnished to
the Lenders the following Financial Statements, which have been prepared in
accordance with GAAP consistently applied (except as otherwise disclosed
therein) throughout the periods involved (except as to the unaudited statements,
the absence of footnotes and subject to year-end audit adjustments): (a) balance
sheets as of, and statements of income, cash flows and shareholders equity for
the Fiscal Year ended December 31, 2006 audited by independent certified public
accountants and accompanied by an unqualified opinion thereof; and (b) an
unaudited balance sheet as of, and unaudited statements of income, cash flows
and shareholders equity for the period ending December 31, 2007. The projections
delivered to the Lenders on or prior to the date hereof and any projections
delivered to the Lenders after the date hereof in accordance with Section 7.1(k)
hereof represent Borrowers’ good faith estimate of the future financial
performance of the Consolidated Entity for the periods set forth therein, it
being understood by the Agent and the Lenders that projections as to future
events are not to be viewed as facts and that the actual results during the
periods covered by the Projections may differ from the projected results set
forth therein.
     6.7 Locations of Offices, Records and Inventory. As of the Closing Date,
the address of the principal place of business and chief executive office of
each Credit Party is set forth on Schedule B, Part 6.7. As of the Closing Date,
the books and records of each Borrower and each Credit Party, and all of their
respective chattel paper and records of Accounts, are maintained exclusively at
such locations. As of the Closing Date, there is no location at which any Credit
Party has any Collateral (except for vehicles and Inventory in transit in the
ordinary course of business) other than those locations identified on
Schedule B, Part 6.7. As of the Closing Date, to the extent any such locations
are not owned, Schedule B, Part 6.7 also sets forth the purpose of such location
(e.g., warehouse, processing plant, sales office, etc.), the legal names of the
owners and/or operators thereof; and the address and phone numbers of such
owners and/or operators. As of the Closing Date, none of the receipts received
by any Borrower from any warehouseman or processor states that the goods covered
thereby are to be delivered to bearer or to the order of a named person or to a
named person and such named person’s assigns.

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     6.8 Fictitious Business Names. No Borrower and no Subsidiary of any
Borrower has used any corporate or fictitious name during the five (5) years
preceding the date hereof, other than the corporate name under which it has
executed this Credit Agreement.
     6.9 Subsidiaries. As of the Closing Date, the only Subsidiaries of each
Borrower are those listed on Schedule B, Part 6.9. As of the Closing Date, a
Borrower or a wholly-owned Subsidiary of a Borrower is the record and beneficial
owner of all of the issued and outstanding Capital Securities of each of the
Subsidiaries listed on Schedule B, Part 6.9. As of the Closing Date, there are
no proxies, irrevocable or otherwise, with respect to such Capital Securities of
any Subsidiary, and no Capital Securities of any Subsidiary of any Borrower are
or may become required to be issued by reason of any options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
Capital Securities of any Subsidiary of any Borrower, and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
of any Borrower is or may become bound to issue additional Capital Securities
convertible into or exchangeable for such Capital Securities. As of the Closing
Date, all of such shares listed on Schedule B, Part 6.9 are owned by a Borrower
or a Subsidiary of a Borrower free and clear of any Liens. The Foreign
Subsidiaries conduct no operations and in the aggregate have consolidated
assets, after eliminating intercompany accounts among the Foreign Subsidiaries,
with a value less than €400,000.
     6.10 No Judgments or Litigation. No judgments, orders, writs or decrees are
outstanding against any Credit Party or any Subsidiary of any Credit Party,
which constitute a Lien on any property owned by a Credit Party or a Domestic
Subsidiary. There is not pending or, to the knowledge of any Borrower or any
Credit Party, threatened any litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against any Credit Party or any
Subsidiary of any Credit Party (i) with respect to any Credit Document seeking
to enjoin any such Credit Party’s performance thereof or (ii) which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
     6.11 Environmental Matters. Except for such failures and noncompliances of
the types described herein which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect:
          (a) Each Borrower and each of its Subsidiaries is in compliance with
all applicable Environmental Laws and no Borrower nor any of its Subsidiaries is
liable for any damages, costs, penalties, fines, or forfeitures under such
Environmental Laws; there are no pending or, to the knowledge of any Borrower,
threatened Environmental Claims against any Borrower or any of its Subsidiaries
or any Real Property Assets owned or operated by any Borrower or any of its
Subsidiaries; and there are no facts, circumstances, conditions or occurrences
on any Real Property Assets at any time owned or operated by any Borrower or any
of its Subsidiaries or, to the knowledge of any Borrower, on any property
adjoining or in the vicinity of any such Real Property Assets that would
reasonably be expected (i) to form the basis of an Environmental Claim against
any Borrower or any of its Subsidiaries or any Real Property Assets currently
owned or operated by any Borrower or any of its Subsidiaries, or (ii) to cause
any such currently owned Real Property Assets to be subject to any restrictions
on the

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ownership, occupancy, use or transferability of such Real Property Assets by any
Borrower or any of its Subsidiaries under any applicable Environmental Law;
          (b) Each Borrower and each of its Subsidiaries have not at any time
generated, used, treated, stored disposed of Hazardous Materials on, or
transported Hazardous Materials to or from, or released Hazardous Materials on,
under or from any Real Property Assets owned or operated by any Borrower or any
of its Subsidiaries except in compliance with all applicable Environmental Laws
and in connection with the operation, use or maintenance of any such Real
Property Assets by such Borrower’s or such Subsidiary’s business;
          (c) No Borrower nor any of its Subsidiaries is currently conducting
any investigation, response or other corrective action at any location pursuant
to any Environmental Law, nor are any of them under any obligation to do so;
none of the Real Property Assets is (i) listed or proposed for listing on the
National Priorities List under CERCLA or (ii) listed on the Comprehensive
Environmental Response, Compensation and Liability Information System
promulgated pursuant to CERCLA, or (iii) included on any similar list maintained
under any Environmental Law; and
          (d) No Borrower nor any of its Subsidiaries has retained or assumed
any liability, contractually, by operation of law or otherwise, under any
Environmental Law.
     6.12 Labor Matters.
          (a) There are no material labor controversies pending or, to the best
knowledge of any Borrower after diligent inquiry, threatened between any
Borrower or any Subsidiary of any Borrower and any of their respective employees
which would be reasonably likely to result in a Material Adverse Effect.
          (b) No Borrower and no Subsidiary of any Borrower is engaged in any
unfair labor practice. There is (i) no unfair labor practice complaint pending
against any Borrower or any Subsidiary of any Borrower or, to the best knowledge
of any Borrower, threatened against any of them, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under collective bargaining agreements is so
pending against any Borrower or any Subsidiary of any Borrower or, to the best
knowledge of any Borrower, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against any Borrower or any Subsidiary of
any Borrower or, to the best knowledge of any Borrower, threatened against any
of them and (iii) to the knowledge of Borrowers, no union organizing activities
exist with respect to the employees of Wellman or any of its Subsidiaries not
currently subject to a collective bargaining agreement.
     6.13 Compliance with Law. Except as disclosed in connection with any
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, no Borrower and no Subsidiary of any Borrower has violated
or failed to comply, in any material respect, with any Requirement of Law or any
requirement of any self-regulatory organization, except any such violation or
non-compliance which would not reasonably be expected to have a Material Adverse
Effect.
     6.14 ERISA.

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          (a) As of the Closing Date, Schedule B, Part 6.14 lists (i) all ERISA
Affiliates and (ii) all Plans and separately identifies all Title IV Plans,
Multiemployer Plans, and Retiree Welfare Plans. Except with respect to
Multiemployer Plans, each Plan which is intended to be qualified under
Section 401 of the Code has been determined by the IRS to so qualify, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and nothing has occurred that would cause
the loss of such qualification or tax exempt status. As of the Closing Date,
each Plan is in material compliance with the applicable provisions of ERISA and
the Code, including the timely filing of all reports required under the Code or
ERISA. As of the Closing Date, no Borrower, any Subsidiary of any Borrower nor
any ERISA Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the Code or Section 302 of ERISA or the terms
of any such Title IV Plan except where such failure, individually or in the
aggregate, would be reasonably likely to result in a financial liability of
Borrowers and the Subsidiaries of each of the Borrowers in an amount not in
excess of $250,000. No Prohibited Transaction, in connection with any Plan has
occurred that would subject any Borrower, or Subsidiary of any Borrower to a
material tax under Section 502(l) of ERISA or Section 4975 of the Code, and no
event has occurred with respect to a Plan which would subject any Borrower or
Subsidiary of any Borrower to any material liability under Section 502(l) of
ERISA.
          (b) As of the Closing Date, except as set forth in Schedule B,
Part 6.14: (i) no Title IV Plan has any Unfunded Pension Liability; (ii) no
Termination Event or event described in Section 4062(e) of ERISA with respect to
any Title IV Plan has occurred or is reasonably expected to occur; (iii) there
are no pending, or to the knowledge of any Borrower or any Subsidiary of any
Borrower, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any Plan
or any Person as fiduciary or sponsor of any Plan; (iv) within the last five
years no Title IV Plan has been terminated, whether or not in a “standard
termination” as such term is used in Section 4041(b)(1) of ERISA, nor has any
Title IV Plan (determined at any time within the past five years) with Unfunded
Pension Liabilities been transferred outside of the “controlled group” (within
the meaning of Section 4001(a)(14) of ERISA) of any Borrower, Subsidiary of any
Borrower or ERISA Affiliate (determined at such time).
     6.15 Intellectual Property. Each Credit Party and each Subsidiary of each
Credit Party possesses such patents, patent applications, copyrights, service
marks, trademarks and trade names (or licenses thereof) as are required to
continue to conduct its present business activities, except for any failures to
so possess which singly or in the aggregate would not reasonably be expected to
have a Material Adverse Effect.
     6.16 Licenses and Permits. Except as would not reasonably be expected to
have a Material Adverse Effect, each Credit Party has obtained and holds in full
force and effect, all franchises, licenses, leases, permits, certificates,
authorizations, qualifications, easements, rights of way and other rights and
approvals which are necessary or advisable for the operation of its businesses
as presently conducted and as proposed to be conducted. Except as would not
reasonably be expected to have a Material Adverse Effect, each Credit Party is
not in violation of the terms of any such franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of way, right or
approval.

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     6.17 Title to Property. As of the Closing Date, all Real Property is
identified on Schedule B, Part 6.17. Each Credit Party has good and marketable
title in fee simple to, or a valid leasehold interest in, all its material Real
Property, and good title to all its other property, and none of such property is
subject to any Lien, except Permitted Liens.
     6.18 Governmental Regulations. No Credit Party is (a) an investment company
or a company controlled by an investment company within the meaning of the
Investment Company Act of 1940, as amended, or (b) subject to any other law
which purports to regulate or restrict its ability to borrow money or to
consummate the transactions contemplated by this Credit Agreement or the other
Credit Documents or to perform its obligations hereunder or thereunder.
     6.19 Borrowers’ Taxes and Tax Returns.
          (a) Except as set forth on Schedule B, Part 6.19, as of the Closing
Date, each Borrower and each Subsidiary of each Borrower (and any affiliated,
consolidated or combined group of which any Borrower or any Subsidiary of any
Borrower are now or have been members) have timely filed (inclusive of any
permitted extensions) with the appropriate taxing authorities all returns
(including information returns) in respect of Borrower Taxes required to be
filed through the date hereof except where the failure to file any such returns
would not reasonably be expected to have a Material Adverse Effect and will
timely file (inclusive of any permitted extensions) any such returns required to
be filed on and after the date hereof except such returns the non-filing of
which would not reasonably be expected to have a Material Adverse Effect. All
such returns filed are complete and accurate in all material respects. Except as
specified in Schedule B, Part 6.19, as of the Closing Date, no Borrower and no
Subsidiary of any Borrower, nor any affiliated, consolidated or combined group
of which any Borrower or any Subsidiary of any Borrower are now or were members,
have requested any extension of time within which to file returns (including
information returns) in respect of any Borrower Taxes.
          (b) As of the Closing Date, all taxes, assessments, fees and other
governmental charges (including any penalties or interest thereon) payable by
any Borrower and any Subsidiary of any Borrower (and any affiliated group of
which any Borrower or any Subsidiary of any Borrower is now or has been a
member) in respect of their incomes, franchises, businesses, properties or
otherwise (collectively, “Borrower Taxes”) in respect of periods beginning prior
to the date hereof, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in Schedule B,
Part 6.19 or in the Financial Statements, and no Borrower or Subsidiary of any
Borrower has any liability for Borrower Taxes in excess of the amounts so paid
or reserves so established.
          (c) As of the Closing Date, except as set forth in Schedule B,
Part 6.19, no deficiencies for Borrower Taxes have been claimed, proposed or
assessed by any taxing or other Governmental Authority against any Borrower or
any Subsidiary of any Borrower and no Liens for Borrower Taxes have been filed.
Except as set forth in Schedule B, Part 6.19, as of the Closing Date, there are
no pending or, to the best of the knowledge of any Borrower, threatened audits,
investigations or claims for or relating to any liability in respect of Borrower
Taxes, and there are no matters under discussion with any taxing or other
Governmental Authority with respect to Borrower Taxes which are likely to result
in a material additional liability for Borrower Taxes. Either the federal income
tax returns of each Borrower have been audited by

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the Internal Revenue Service and such audits have been closed, or the period
during which any assessments may be made by the Internal Revenue Service has
expired without waiver or extension, for all years up to and including the
Fiscal Year ended December 31, 2002. Except as set forth in Schedule B,
Part 6.19, as of the Closing Date, no extension of a statute of limitations
relating to Borrower Taxes is in effect with respect to any Borrower or any
Subsidiary of any Borrower.
          (d) Except as set forth on Schedule B, Part 6.19, as of the Closing
Date, no Borrower and no Domestic Subsidiary of any Borrower has any obligation
under any tax sharing agreement or agreement with any Subsidiary that is not a
Credit Party regarding payments in lieu of Borrower Taxes.
     6.20 Status of Accounts. Each Account of each Borrower included as an
Eligible Account Receivable in the most recently delivered Borrowing Base
Certificate is based on an actual and bona fide sale and delivery of goods or
rendition of services to customers, made by such Borrower in the ordinary course
of its businesses; the goods and inventory being sold by any Borrower and the
Accounts created thereby are the exclusive property of such Borrower and are not
and shall not be subject to any Lien whatsoever other than those arising under
the Security Agreements and Permitted Liens and such Borrower’s customers have
accepted the goods or services (with FOB plant shipments deemed to be accepted
by the applicable customer), owe and are obligated to pay the full amounts
stated in the invoices according to their terms, without any dispute, offset,
defense, counterclaim or contra except as arising in the ordinary course of
business consistent with past practices.
     6.21 Material Contracts and Restrictions. No Material Contract contains any
restrictions set forth in Section 8.13 and all Material Contracts are in full
force and effect, and other than the filing of the Chapter 11 Cases, no defaults
currently exist thereunder. No Material Contract has been modified, waived or
amended in any way which would reasonably be expected to have a Material Adverse
Effect.
     6.22 Affiliate Transactions. Except as set forth on Schedule B, Part 6.22,
no Borrower and no Subsidiary of any Borrower is a party to or bound by any
agreement or arrangement (whether oral or written) to which any Affiliate of any
Borrower or Subsidiary of any Borrower is a party except transactions entered
into in the ordinary course of and pursuant to the reasonable requirements of
such Borrower’s or such Subsidiary’s business, as the case may be, and upon fair
and reasonable terms no less favorable to such Borrower or such Subsidiary than
could be obtained in a comparable arm’s-length transaction with an unaffiliated
Person.
     6.23 Accuracy and Completeness of Information. All factual information
furnished by or on behalf of any Borrower or any Subsidiary of any Borrower in
writing to the Agent, any Lender, or the Auditors for purposes of or in
connection with this Credit Agreement or any of the other Credit Documents, or
any transaction contemplated hereby or thereby is or will be true and accurate
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time; provided that with respect to
projected financial information, the only representations and warranties made
hereby are that such information was prepared based on good faith estimates and
assumptions made by management of Wellman believed to be

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reasonable at the time made and that there are no statements or conclusions in
any such information which are based upon or include information known to the
executive officers of Wellman to be misleading or which fail to take into
account material information regarding the matters reported therein; provided,
further, that projections are not to be viewed as facts and that actual results
during the covered period may differ from projected results; and provided,
further, that no Borrower or its Subsidiaries shall be required to disclose
information that is subject to attorney-client privilege.
     6.24 Recording Taxes and Fees. All recording fees and other charges payable
in connection with the filing and recording of the Credit Documents have either
been paid in full by Borrowers or arrangements for the payment of such amounts
satisfactory to the Agent shall have been made.
     6.25 No Adverse Change or Event.
          (a) Since December 31, 2006, no change in the business, assets,
Liabilities, financial condition, results of operations or business prospects of
any Borrower or any Subsidiary of any Borrower has occurred, and no event has
occurred or failed to occur, that has had or would reasonably be expected to
have, either alone or in conjunction with all other such changes, events and
failures, a Material Adverse Effect.
          (b) Except as fully reflected in the Financial Statements described in
Section 6.6 and the Indebtedness incurred under this Credit Agreement and
Pre-Petition Secured Debt, as of the Closing Date, (i) there were no liabilities
or obligations (excluding current obligations incurred in the ordinary course of
business) with respect to any Borrower or any Subsidiary of any Borrower of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, would
reasonably be expected to have Material Adverse Effect and (ii) neither any
Borrower nor any Subsidiary of any Borrower knows of any basis for the assertion
against it or any of its Subsidiaries of any such liability or obligation of any
nature whatsoever that both (A) is not fully disclosed in the Financial
Statements delivered pursuant to Section 6.6 and (B) either individually or in
the aggregate, is or would be reasonably be expected to have a Material Adverse
Effect.
     6.26 Perfection Certificates. All material information set forth on the
perfection certificates provided to the Agent by Borrowers on the date hereof is
true and correct and does not omit or fail to state any material fact.
     6.27 Indebtedness. Schedule B, Part 6.27 sets forth a true and complete
list of all Pre-Petition Indebtedness (exclusive of Indebtedness pursuant to
this Credit Agreement and Intercompany Indebtedness among Credit Parties) of
each Borrower and each Subsidiary of each Borrower as of the Closing Date and
which is to remain outstanding after giving effect to this Credit Agreement and
the incurrence of Loans hereunder on such date, in each case showing the
aggregate principal amount thereof (and the aggregate amount of any undrawn
commitments with respect thereto) and the name of the respective borrower and
any other entity which directly or indirectly guaranteed such debt.

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     6.28 Insurance. Schedule B, Part 6.28 sets forth a true, complete and
correct description of all insurance maintained by each Borrower and each
Subsidiary of each Borrower as of the Closing Date. All insurance maintained
pursuant to the requirements of Section 7.8 by each Borrower and each Subsidiary
of each Borrower is in full force and effect, all premiums which are due and
payable have been duly paid, neither any Borrower nor any of its Subsidiaries
has received notice of violation or cancellation thereof (other than a
cancellation which has been replaced by similar insurance), the Real Property of
Borrowers and the Subsidiaries of each of the Borrowers, and the use, occupancy
and operation thereof, comply in all material respects with all requirements of
such policies, and there exists no default under any such policy. Each Borrower
and each Subsidiary of each Borrower has insurance in such amounts and covering
such risks and liabilities as are reasonably prudent.
     6.29 Use of Proceeds; Margin Regulations.
          (a) Loan Proceeds. Upon entry of the Interim Financial Order, all
proceeds of Loans and Letters of Credit shall be used by Borrowers for payment
of such transaction costs and expenses related to the Chapter 11 Cases as
permitted hereunder, for capital expenditures permitted hereunder, for the
ongoing working capital needs and for general corporate purposes of Borrowers
and the Credit Parties as and to the extent permitted hereunder, including,
without limitation, repayment in full of all amounts outstanding under the
Pre-Petition Credit Agreement, the Approved Secured Derivative Transaction
Liabilities and replacement of letters of credit outstanding under the
Pre-Petition Credit Agreement, payment of professional fees and costs pursuant
to Section 331 of the Bankruptcy Code plus amounts payable pursuant to 28 U.S.C.
§ 1930(a)(6) in accordance with the Cash Budget, and for other expenditures set
forth in the Cash Budget.
          (b) Restrictions on Use of Proceeds. Notwithstanding anything herein
to the contrary, no part of the proceeds of any Loan or Letter of Credit will be
used, directly or indirectly:
     (i) (A) to pay any fees or similar amounts to any Person who has proposed
or may propose to purchase assets of or interests in Borrowers or any other
Credit Party or who otherwise has proposed or may propose to invest in Borrowers
or any other Credit Party (including so-called “topping fees,” “exit fees,” and
similar amounts), it being understood that payment of any such amounts from the
proceeds of any such asset purchase or investment shall not be deemed a breach
of this Clause (A); (B) to make any distribution under a Reorganization Plan in
any Chapter 11 Case; (C) to finance in any way any adversary action, suit,
arbitration, proceeds, application, motion or other litigation of any type
relating to or in connection with the Pre-Petition Credit Agreement or any of
the loan documents or instruments entered into in connection therewith,
including, without limitation, any challenges to the obligations under the
Pre-Petition Credit Agreement or the validity, perfection, priority or
enforceability of any Lien securing such claims or any payment thereunder;
(D) to finance in any way any action, suit, arbitration, proceeding,
application, motion or other litigation of any type adverse to the interests of
Agent and the Lenders or their rights and remedies under this Credit Agreement,
the Credit Documents, the Interim Financing Order or the Final Financing Order;
(E) to make any payment of any claim, action or proceeding, before any court,

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arbitrator or other government body; (F) to pay any liabilities arising on
termination of any Plan, or (G) to reduce, terminate, or otherwise be applied to
any Pre-Petition Indebtedness of Borrowers or any other Credit Party, other than
payment of the Obligations under the Pre-Petition Credit Agreement and the
Approved Secured Derivative Transaction Liabilities; or
     (ii) to purchase or carry any margin stock (as defined in Regulation U of
the Board), directly or indirectly, or to extend credit for the purpose of
purchasing or carrying any such margin stock for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the loans or
extensions of credit under this Credit Agreement to be considered a “purpose
credit” within the meaning of Regulation T, U or X of the Board.
     6.30 Anti-Terrorism Law.
          (a) No Borrower is, and, to the knowledge of each Borrower, none of
its Affiliates is, in violation of any laws relating to terrorism or money
laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.
          (b) No Borrower is, and, to the knowledge of each Borrower, no
Affiliate or broker or other agent of any Borrower is, acting or benefiting in
any capacity in connection with any Loans hereunder is any of the following:
     (i) a person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;
     (ii) a person owned or controlled by, or acting for or on behalf of, any
person that is listed in the annex to, or is otherwise subject to the provisions
of, the Executive Order;
     (iii) a person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
     (iv) a person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order; or
     (v) a person that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control (“OFAC”) at its official website or any
replacement website or other replacement official publication of such list.
          (c) No Borrower is, and, to the knowledge of each Borrower, no broker
or other agent of any Borrower is, acting in any capacity in connection with any
Loans hereunder (i) conducts any business or engages in making or receiving any
contribution of funds, goods or

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services to or for the benefit of any person described in paragraph (b) above,
(ii) deals in, or otherwise engages in any transaction relating to, any property
or interests in property blocked pursuant to the Executive Order, or (iii)
engages in or conspires to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.
     6.31 Accounts. As of the Closing Date, except for the Depository Account,
the Investment Account and the Concentration Account and the accounts set forth
on Schedule B, Part 6.31, no Borrower and no Domestic Subsidiary of any Borrower
maintains or otherwise has any (a) checking, savings or other accounts at any
bank or other financial institution, (b) investment account, securities account,
commodity account or any similar account with any securities intermediary or
commodity intermediary or (c) other account where money is or may be deposited
or maintained with any Person. As of the Closing Date, Schedule B, Part 6.31
sets forth the name of each financial institution, securities intermediary,
commodity intermediary or other Person at which any account described above is
maintained and the purpose of each such account.
     6.32 Reorganization Matters.
          (a) Borrowers shall give, on a timely basis as specified in the
Financing Orders, all notices required to be given to all parties specified in
the Financing Orders.
          (b) After the entry of the Interim Financing Order, and pursuant to
and to the extent permitted in the Interim Financing Order, the Obligations will
constitute allowed administrative expense claims in the Chapter 11 Cases having
priority over all administrative expense claims and unsecured claims against
Borrowers and each of the other Credit Parties now existing or hereafter
arising, of any kind whatsoever, including, without limitation, all
administrative expense claims of the kind specified in Sections 105, 326, 328,
330, 331, 503(b), 504(a), 506(c), 507(a), 546(c), 726, 1113, 1114 or any other
provision of the Bankruptcy Code, as provided under the Section 364(c)(1) of the
Bankruptcy Code, subject as to priority only to the Carve-Out Reserve.
          (c) After the entry of the Interim Financing Order and pursuant to,
and to the extent provided in, the Interim Financing Order and the Final
Financing Order, the Obligations will be secured by a valid and perfected first
priority Lien on all the Collateral, subject to no prior Liens other than
Permitted Senior Liens and the Carve-Out Reserve and a valid and perfected
second priority lien on the Term Loan Collateral (as defined in the
Intercreditor Agreement) junior only to the Lien securing obligations under the
First Lien Term Credit Facility in existence on the Petition Date; provided,
however, that additional filings may be required in the United States Copyright
Office and/or United States Patent and Trademark Office to perfect the
Collateral Agent’s Lien on any Intellectual Property acquired after the date
hereof.
          (d) The Interim Financing Order (with respect to the period prior to
the Final Financing Order Date) or the Final Financing Order (with respect to
the period on and after Final Financing Order Date), as the case may be, is in
full force and effect and has not been reversed, stayed, vacated, modified or
amended.

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          (e) Notwithstanding the provisions of Section 362 of the Bankruptcy
Code, upon the maturity (whether by acceleration or otherwise) of any of the
Obligations, Agent and Lenders shall be entitled to immediate payment of such
Obligations and to enforce the remedies provided for hereunder, without further
application to or order by the Bankruptcy Court, subject to Required Notice
pursuant to Section 9.3.
ARTICLE VII
AFFIRMATIVE COVENANTS
     Until the Facility Termination Date and payment and satisfaction of all
Obligations (other than contingent indemnification obligations not due and
payable):
     7.1 Financial Information. Borrowers shall deliver to the Agent (and the
Agent shall distribute to the Lenders) the following information within the
following time periods:
          (a) as soon as available and in any event within ninety (90) days
(except with respect to clause (i)(b) of this Section 7.1(a)) after the end of
each Fiscal Year of Borrowers (commencing with the Fiscal Year ended
December 31, 2007) (i) audited Financial Statements as of the close of the
Fiscal Year and for the Fiscal Year, together with comparisons to the Financial
Statements for the prior year, accompanied by (a) an opinion of the Auditors
which opinion shall be unqualified in scope and otherwise in form and substance
reasonably satisfactory to the Agent (the addition of a going concern
qualification shall not in and of itself cause the opinion to be
unsatisfactory), (b) promptly upon delivery, such Auditors’ “Management Letter”
to Borrowers, (c) if such Auditors shall have obtained from the regular audit of
the business of the respective Borrowers, which audit was conducted by the
Auditors in accordance with generally accepted accounting standards, knowledge
of the existence of any Default or Event of Default, they shall disclose in a
written statement the existence of the Default or Event of Default and the
nature thereof, it being understood that such Auditors shall have no liability,
directly or indirectly, to anyone for failure to obtain knowledge of any such
Default or Event of Default (provided, no such statement shall be required in
the event the Auditors no longer provide such opinions under applicable
accounting or auditing standards), (ii) a narrative discussion of the
consolidated financial condition and results of operations and the consolidated
liquidity and capital resources of Borrowers for such Fiscal Year prepared by
management and (iii) a compliance certificate substantially in the form of
Exhibit D, along with a schedule in form and substance reasonably satisfactory
to the Agent of the calculations used in determining, as of the end of such
Fiscal Year, whether Borrowers were in compliance with the covenants set forth
in Section 8.1 of this Credit Agreement for such year. To the extent that
Wellman’s annual report on Form 10-K contains any financial information,
declarations, opinions, statements, reports, discussions and disclosures in form
and substance reasonably equivalent to the foregoing, the Lenders will accept
such Form 10-K in lieu of such items;
          (b) [Intentionally Omitted]
          (c) as soon as available and in any event within twenty-five (25) days
after the February 2008 fiscal month, and fifteen (15) days after the end of
each fiscal month thereafter (i)

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consolidated balance sheets for the Consolidated Entity as at the end of such
fiscal month and consolidated statements of operations and cash flows for such
fiscal month and for the Fiscal Year to date, together with a comparison to the
consolidated balance sheets, statements of operations and statements of cash
flows for the same periods in the prior year and for the prior month, all in
reasonable detail and duly certified (subject to year-end audit adjustments) by
a Responsible Officer of Wellman as having been prepared in accordance with GAAP
and (ii) a compliance certificate substantially in the form of Exhibit D along
with a schedule in form and substance reasonably satisfactory to the Agent of
the calculations used in determining, as of the end of such fiscal month,
whether Borrowers were in compliance with the covenants set forth in Articles 7
and 8 of this Credit Agreement for such fiscal month;
          (d) promptly following any Borrower’s receipt thereof, copies of all
consolidated financial or other consolidated reports or statements, if any,
submitted to any Borrowers or any Subsidiary of any Borrower by independent
public accountants relating to any annual or interim audit of the books of any
Borrower or any Subsidiary of any Borrower;
          (e) a copy of the state and federal income tax returns of each
Borrower and each Subsidiary of each Borrower within five (5) Business Days
after they are filed with the appropriate taxing authorities, if and when
requested by any Lender through the Agent;
          (f) (i) within fifteen (15) days after the last day of each fiscal
month, (ii) at the Agent’s request (A) upon the occurrence and during the
continuation of a Default or an Event of Default, (B) if the Agent believes the
latest Borrowing Base Certificate is materially inaccurate, or (C) there has
been an Asset Sale involving accounts receivable or inventory, and (iii) within
three (3) Business Days after Wednesday of each week, a borrowing base
certificate in the form of Exhibit E (the “Borrowing Base Certificate”) with all
supporting detail as Agent may from time to time reasonably require, duly
completed, detailing each Borrower’s understanding as to which Accounts or
Inventory constitute Eligible Accounts Receivable and Eligible Inventory as of
(x) in the case of a Borrowing Base Certificate delivered pursuant to clause (i)
above, the last day of such fiscal month, (y) in the case of a Borrowing Base
Certificate delivered pursuant to clause (ii), such date as the Agent may
specify in such request and (z) in the case of a Borrowing Base Certificate
delivered pursuant to clause (iii) above, Wednesday of such fiscal week, and
certified by a Responsible Officer of Wellman and subject only to monthly
adjustments and upon completion of the audit of physical inventory. In addition,
each Borrowing Base Certificate shall have attached to it such additional
schedules and/or other information as the Agent may reasonably request;
          (g) within fifteen (15) days after the last day of each fiscal month,
commencing on the first full month following the Petition Date, a report in the
form of Exhibit K testing EBITDA and reconciling Capital Expenditures as of the
last day of the applicable fiscal month;
          (h) promptly and in any event within five (5) Business Days after
becoming aware of the occurrence of a Default or Event of Default, a certificate
of the chief accounting officer or chief financial officer or Treasurer of
Wellman specifying the nature thereof and the proposed response thereto, each in
reasonable detail;

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          (i) promptly upon the earlier of the mailing or filing thereof, copies
of all 10-Ks, 10-Qs, 8-Ks, proxy statements, annual reports, quarterly reports,
registration statements and any other filings or other communications made by
any Borrower to holders of its publicly traded securities or the Securities
Exchange Commission from time to time pursuant to the Securities Exchange Act of
1934, as amended, or the Securities Act of 1933, as amended; and
          (j) from time to time, such further non-privileged information
regarding the Collateral, business affairs and prospects and financial condition
of each Borrower and each Subsidiary of each Borrower as the Agent may
reasonably request.
          (k) on or before:
     (i) the Closing Date, and thereafter by 12:00 Noon (New York City time) of
the third Business Day of each week after the Closing Date, furnish to Agent
cash flow projections in form and substance reasonably acceptable to the
Steering Committee showing (A) projected receipts and disbursements, on a weekly
basis for each week of the current and following thirteen (13) weeks, and
(B) such other information reasonably requested by Agent, which forecasts shall
be based on each Borrower’s good faith estimates of business conditions, known
material expenditures and receipts and typical intramonth cash movements;
     (ii) the Closing Date, and thereafter by 12:00 Noon (New York City time) of
the third Business Day of each week after the Closing Date, furnish to Agent a
report, in form and substance reasonably satisfactory to Agent, setting forth a
summary of Total Cash and Restricted Cash and a comparison of the previous
week’s cash flow to the most recently delivered thirteen (13) week cash flow
forecast and the initial Cash Budget Report to the extent applicable, as well as
a weekly and monthly comparison to the then effective Cash Budget (the “Weekly
Cash Management Report”); and
     (iii) the fifteenth day of each month, for such month, or at any time upon
Agent’s request, summary accounts payable and accounts receivable aging reports
(including the names and, if reasonably requested from time to time by Agent,
addresses of all account debtors, and with such accounts receivable and accounts
payable divided into such time intervals as Agent may reasonably request) of any
Borrower and any Subsidiary of any Borrower;
          (l) upon the occurrence of any material change thereto, or as
reasonably requested by Agent from time to time, furnish to Agent a report in a
form reasonably acceptable to Agent detailing, as applicable (A) the location of
any new chief executive office or new principal place of business, and (B) the
location of any storage location for any Collateral;
          (m) On each Business Day, a report in the form of Exhibit J attached
hereto to Agent of the Cash and Cash Equivalents balances held by Borrowers and
each Domestic Subsidiary of each Borrower and the Availability as of the close
of business on the immediately preceding Business Day, including detail of the
roll-forward of accounts receivable through the previous Business Day;

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          (n) Chapter 11 Cases. As soon as practicable, copies of all pleadings,
motion, applications, judicial information, financial information and other
documents and information filed by or on behalf of any Credit Party with the
Bankruptcy Court or the United States Trustee in any of the Chapter 11 Cases,
and of all reports, summaries or other details of Borrowers’ and the Credit
Parties’ financial condition or performance distributed by or on behalf of any
Credit Party to any official committee appointed in any of the Chapter 11 Cases;
and
          (o) Field Examination. Within fourteen (14) days following the
Petition Date, an updated field examination, in form, substance and scope
acceptable to the Agent.
     7.2 Certain Collateral. Promptly, upon the request of the Agent from time
to time, each Borrower shall provide to the Agent written statements listing
items of Inventory and Accounts in reasonable detail as reasonably requested by
the Agent. Each Borrower shall conduct or cause to be conducted (in a manner
consistent with the requirements for the physical count of the Inventory in
connection with Borrowers’ annual audit conducted by the Auditors) a physical
count of the Inventory at such times and as of such dates as the Agent shall
reasonably request and, if requested by the Agent, a copy of such count shall be
promptly supplied to the Agent accompanied by a report of the value (valued at
FIFO) of such Inventory. In addition to, and not in limitation of, the
foregoing, at any time and from time to time the Agent may conduct (or engage
third parties to conduct) such field examinations, appraisals, verifications and
evaluations of the Collateral as the Agent shall deem necessary or appropriate
in the exercise of its sole discretion and shall provide copies of such
examinations, appraisals, verifications and evaluations to the Lenders. If any
Inventory of a Borrower is at any time hereafter stored or located at any
warehouse not owned or leased by such Borrower, then such Borrower shall
promptly deliver to such warehouseman notification of the Agent’s Lien on such
Inventory and shall take such other steps as the Agent reasonably requires to
perfect its Liens thereon.
     7.3 Corporate Existence and Compliance with Laws. Each Borrower shall, and
shall cause each of its Subsidiaries to, (a) maintain its corporate existence
(except that Subsidiaries of any Borrower may merge with wholly-owned
Subsidiaries of such or any other Borrower upon providing the Agent with prior
written notice), (b) maintain in full force and effect all licenses, bonds,
franchises, leases, trademarks and qualifications to do business, and all
patents, contracts and other rights necessary or advisable to the profitable
conduct of their businesses except as would not reasonably be expected to have a
Material Adverse Effect, and (c) comply, in all material respects, with all
Requirements of Law applicable to its business, its operations and to the
Collateral.
     7.4 ERISA. Each Borrower shall deliver to the Agent for the benefit of the
Lenders, at the such Borrower’s expense, the following information at the times
specified below:
          (a) within ten (10) days after a request by the Agent, copies of each
annual report (form 5500 series), including Schedule B thereto, filed with
respect to each Title IV Plan;
          (b) within ten (10) days after a request by the Agent, copies of each
actuarial report for any Title IV Plan, Multiemployer Plan or Retiree Welfare
Plan and each annual report for any Multiemployer Plan;

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          (c) within ten (10) days upon the occurrence thereof, notification of
any increase in the benefits of any existing Title IV Plan or the establishment
of any new Title IV Plan or the commencement of contributions to any Title IV
Plan to which such Borrower, any Subsidiary of such Borrower or any ERISA
Affiliate was not previously contributing;
          (d) concurrent with (i) the filing of a notice with the PBGC with
respect to any Reportable Event which requires by regulation 30 days advance
notice and (ii) the date of the Reportable Event for any Reportable Event which
by regulation post-event notice is required to be filed with the PBGC, a
description of the facts and circumstances which constitute the Reportable Event
for which a filing with the PBGC is required under Section 4043 of ERISA; and
          (e) within three (3) days upon the occurrence thereof, any event or
condition referred to in clauses (i) through (vii) of Section 9.1(g), whether or
not such event or condition shall constitute an Event of Default.
     7.5 Books and Records. Each Borrower agrees to maintain, and to cause each
of its Subsidiaries to maintain, books and records, including those pertaining
to the Collateral, in such detail, form and scope as is consistent with good
business practice, and agrees that, upon the reasonable request of the Agent,
such books and records will reflect the Agent’s and Lenders’ respective
interests in its Accounts. Each Borrower agrees that the Agent or its agents
(including, without limitation, Alvarez & Marsal or any other financial advisor
to the Agent) may enter upon the premises of such Borrower or any Domestic
Subsidiary of such Borrower at any time and from time to time, for the purposes
of (a) conducting field examinations and appraisals and inspecting, evaluating
and verifying the Collateral, (b) inspecting and/or copying (at such Borrower’s
expense) any and all records pertaining thereto and the books and records of the
Borrowers and (c) discussing the business affairs and prospects and financial
condition of such or any other Borrower and each Subsidiary of such or any other
Borrower with any officers, employees and directors of such Borrower or such
Subsidiary or with the Auditors. Each Borrower shall give the Agent ten
(10) days prior written notice of any change in the location of any Collateral
or in the location of its chief executive office or place of business from the
locations specified in Schedule B, Part 6.7, and each Borrower shall execute in
advance of such change and cause to be filed and/or delivered to the Agent any
financing statements, Collateral Access Agreements or other documents reasonably
required by the Agent, all in form and substance satisfactory to the Agent. Each
Borrower agrees to advise the Agent promptly, in sufficient detail, of any
substantial changes relating to the type, quantity or quality of the Collateral,
or any event which singly or in the aggregate reasonably be expected to have a
Material Adverse Effect on the value of the Collateral or on the Liens granted
for the benefit of the Agent, the Lenders and the Issuing Banks thereon.
     7.6 Collateral Records. Each Borrower agrees to execute and promptly
deliver, and to cause each of its Domestic Subsidiaries to execute and promptly
deliver, to the Agent, from time to time, solely for the Agent’s convenience in
maintaining a record of the Collateral, such written statements and schedules as
the Agent may reasonably require, including those described in Section 7.1 of
this Credit Agreement, designating, identifying or describing the Collateral.
The failure by any Borrower or any Domestic Subsidiary of any Borrower, however,
to promptly give

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the Agent such statements or schedules shall not affect, diminish, modify or
otherwise limit the Liens on the Collateral granted pursuant to the Credit
Documents.
     7.7 Payment of Obligations. Each Borrower shall, and cause each of its
Subsidiaries to, pay or discharge or otherwise satisfy at maturity or, to the
extent permitted hereby, prior to maturity or before they become delinquent, as
the case may be, and cause each of its Subsidiaries to pay or discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be:
          (a) Post-Petition Indebtedness;
          (b) all Post-Petition taxes, assessments and governmental charges or
levies imposed upon any of them or upon any of their income or profits or any of
their respective properties or assets prior to the date on which penalties
attach thereto; and
          (c) all lawful claims prior to the time they become a Lien (other than
Permitted Liens and the Carve-Out Reserve) upon any of their respective
properties or assets;
provided, however, that neither Borrowers nor any of the Subsidiaries of each
Borrower shall be required to pay or discharge any such Indebtedness, tax,
assessment, charge, levy or claim (A) while the same is being contested by it in
good faith and by appropriate proceedings diligently pursued so long as the such
Borrower or such Subsidiary, as the case may be, shall have set aside on its
books adequate reserves in accordance with GAAP (segregated to the extent
required by GAAP) with respect thereto and title to any material properties or
assets is not jeopardized in any material respect or (B) which are otherwise not
required to be paid currently pursuant to the Bankruptcy Code.
     7.8 Insurance; Casualty Loss. Each Borrower agrees to maintain, and to
cause each of its Subsidiaries to maintain, public liability insurance, third
party property damage insurance and replacement value insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts and covering such risks as are at all times reasonably prudent. All
policies covering the Collateral (which for purposes hereof shall include
business interruption insurance) are to name the Agent as an additional insured
and the loss payee in case of loss, and are to contain such other commercially
reasonable provisions as the Agent may require to fully protect the interest of
the Lenders in the Collateral and to any payments to be made under such
policies. Each Borrower shall provide written notice to the Agent of the
occurrence of any of the following events within five (5) Business Days after
the occurrence of such event: any asset or property owned or used by such
Borrower or any of its Domestic Subsidiaries is (a) damaged or destroyed, or
suffers any other loss; or (b) condemned, confiscated or otherwise taken, in
whole or in part, or the use thereof is otherwise diminished so as to render
impracticable or unreasonable the use of such asset or property for the purposes
for which such asset or property was used immediately prior to such
condemnation, confiscation or taking, by exercise of the powers of condemnation
or eminent domain or otherwise, and in either case the amount of the damage,
destruction, loss or diminution in value which is in excess of $2,000,000 as
determined by the Funds Administrator and approved by the Agent (collectively, a
“Casualty Loss”). Each Borrower shall diligently file and prosecute, or cause to
be filed and prosecuted, all claims for any award or payment in connection with
a Casualty Loss with respect

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to such Borrower. In the event of a Casualty Loss with respect to any Borrower,
such Borrower shall deliver to Agent a Pro Forma Borrowing Base Certificate
setting forth the change in the Borrowing Base as a result of such Casualty Loss
and, promptly upon receipt of any and all insurance proceeds and payments
received by such Borrower or any of its Domestic Subsidiaries on account of such
Casualty Loss, shall pay to the Agent (i) if all of the conditions specified in
Section 5.2 are met at such time, the amount by which the Total Exposure exceeds
the Borrowing Base as reflected in such Pro Forma Borrowing Base Certificate or
(ii) if any condition specified in Section 5.2 is not met at such time, the
amount by which the Borrowing Base is reduced as a result of such Casualty Loss
as reflected in such Pro Forma Borrowing Base Certificate. The Agent shall apply
an amount of such proceeds equal to the change in the Borrowing Base as
reflected in the Pro Forma Borrowing Base Certificate to payment of accrued and
unpaid interest or outstanding principal under Loans or any other Obligations
then due and payable hereunder. After the occurrence and during the continuance
of an Event of Default, (i) no settlement on account of any such Casualty Loss
with respect to any Borrower shall be made without the consent of the Agent and
(ii) the Agent may participate in any such proceedings and the applicable
Borrower shall deliver to the Agent such documents as may be requested by the
Agent to permit such participation and shall consult with the Agent, its
attorneys and agents in the making and prosecution of such claim or claims. Each
Borrower hereby irrevocably authorizes and appoints the Agent its
attorney-in-fact, and agrees that, upon request, it will cause each Subsidiary
of such Borrower to authorize and appoint the Agent its attorney-in-fact, after
the occurrence and during the continuance of an Event of Default, to collect and
receive any such award or payment and to file and prosecute such claim or
claims, which power of attorney shall be irrevocable and shall be deemed to be
coupled with an interest, and each Borrower shall, upon demand of the Agent,
make, execute and deliver, and cause each of its Domestic Subsidiary to make,
execute and deliver, any and all assignments and other instruments sufficient
for the purpose of assigning any such award or payment to the Agent for the
benefit of the Agent, the Lenders and the Issuing Banks, free and clear of any
encumbrances of any kind or nature whatsoever.
     7.9 Borrower’s Taxes. Each Borrower agrees to pay, when due, and to cause
each of its Subsidiaries to pay when due, all Borrower Taxes lawfully levied or
assessed against such Borrower, any Subsidiary of such Borrower or any of their
properties, including any of the Collateral, before any penalty or interest
accrues thereon; provided that, unless such Borrower’s Taxes have become a tax
or ERISA Lien on any of the assets of such Borrower or any such Subsidiary, no
such Borrower Taxes need be paid if the same is being contested, in good faith,
by appropriate proceedings promptly instituted and diligently conducted, and if
an adequate reserve or other appropriate provision shall have been made therefor
as required in order to be in conformity with GAAP.
     7.10 Environmental Matters. Each Borrower will comply, and will cause each
of its Subsidiaries to comply, in all material respects with all Environmental
Laws applicable to the ownership or use of its Real Property Assets now or
hereafter owned or operated by any Borrower or any of its Subsidiaries, will pay
or cause to be paid all costs and expenses incurred in connection with such
compliance, and will keep or cause to be kept all such Real Property Assets free
and clear of any Environmental Liens (other than Permitted Liens). No Borrower
nor any of its Subsidiaries will generate, use, treat, store, Release or dispose
of, or permit the generation, use, treatment, storage, Release or disposal of
Hazardous Materials on, at or from

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any Real Property Assets now or hereafter owned or operated by such Borrower or
any of its Subsidiaries, or transport or permit the transportation of Hazardous
Materials to or from any such Real Property Assets except for Hazardous
Materials used or stored at any such Real Property Assets in compliance with all
applicable Environmental Laws and reasonably required in connection with the
business of such Borrower and its Subsidiaries or the operation, use and
maintenance of any such Real Property Assets. If any Borrower or any of its
Subsidiaries or any tenant or occupant of any Real Property Assets owned or
operated by any Borrower or any of its Subsidiaries causes or permits any
intentional or unintentional act or omission resulting in the presence or
Release of any Hazardous Material in a quantity or concentration sufficient to
require reporting or to trigger an obligation to undertake investigation,
clean-up, response or other corrective action under applicable Environmental
Laws, each Borrower agrees to undertake, and/or to cause any of its
Subsidiaries, tenants or occupants to undertake, at their sole expense, any
action required pursuant to Environmental Laws with respect to such Hazardous
Materials except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect; provided that no Borrower nor any of its
Subsidiaries shall be required to undertake any action while the requirement to
undertake such action is being contested in good faith and by proper proceedings
so long as it has maintained adequate reserves with respect to such action to
the extent required in accordance with GAAP.
     7.11 Use of Proceeds. Borrowers shall use the proceeds of the Loans made
hereunder solely for the purposes set forth in Section 6.29. Borrowers shall not
use any portion of the proceeds of any such Loans for the purpose of purchasing
or carrying any “margin stock” (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) in any manner which violates the
provisions of Regulation T, U or X of said Board of Governors or for any other
purpose in violation of any applicable statute or regulation, or of the terms
and conditions of this Credit Agreement.
     7.12 Fiscal Year. Each Borrower agrees to maintain its Fiscal Year as a
year ending December 31 unless otherwise required by law, in which case such
Borrower will give the Agent at least thirty (30) days prior written notice
thereof.
     7.13 Notification of Certain Events. Each Borrower agrees that it shall
promptly (but, in the case of clause (g), in any event within two (2) Business
Days after such Borrower learns of any such proceeding, change, development or
event) notify the Agent (and the Agent shall promptly notify each Lender) of:
          (a) any Material Contract of such Borrower or any of its Subsidiaries
that is terminated or amended in any material respect or any new Material
Contract that is entered into (in which event such Borrower shall, upon request,
provide the Agent with a copy of such Material Contract);
          (b) the entry of any order, judgment or decree in excess of $250,000
against such Borrower or any of its Subsidiaries or any of their respective
properties or assets;
          (c) receipt by such Borrower or any of its Subsidiaries of any
notification of a material violation of any Requirement of Law from any
Governmental Authority;

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          (d) the enactment or promulgation of any Requirement of Law or any
other actual or prospective change, development or event which in each case has
had or would reasonably be expected to have a Material Adverse Effect;
          (e) any proceedings being instituted or threatened to be instituted by
or against such Borrower or any of its Subsidiaries, before any Governmental
Authority or arbitrator which is seeking injunctive relief or damages in excess
of $250,000;
          (f) any Event of Default or Default;
          (g) the occurrence of any “Event of Default” or “Default” (as each
such term is defined in the applicable credit agreement) under the First Lien
Credit Facility or the Second Lien Credit Facility; and
          (h) any other event which would reasonably be expected to have a
Material Adverse Effect.
     7.14 Intellectual Property. Each Borrower shall, and shall cause each of
its Subsidiaries to, do and cause to be done all things necessary to preserve
and keep in full force and effect all of such Person’s Intellectual Property
except for such Intellectual Property that is obsolete, unnecessary to any
Credit Party’s business or having no or negligible value.
     7.15 Maintenance of Property. Each Borrower agrees to keep, and to cause
each of its Subsidiaries to keep, all tangible property useful and necessary to
its respective businesses in good working order and condition (ordinary wear and
tear and damage by casualty excepted) in accordance with their past operating
practices and not to commit or suffer any waste with respect to any of its
properties; provided, such Borrower and its Subsidiaries may cease to maintain
in good working order and condition any such property which, in the reasonable
judgment of such Borrower, has become uneconomic, obsolete or worn out.
     7.16 Additional Security; Further Assurances.
          (a) Wellman agrees to cause each Domestic Subsidiary (other than
GuardWell) to become a party to the Domestic Subsidiary Guaranty and the
Domestic Security Agreement in accordance with the terms thereof;
          (b) Each Credit Party shall defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any interest
therein. Each Credit Party shall, upon the reasonable request of the Agent,
comply with the requirements of all state and federal laws in order to grant to
the Agent, the Lenders and the Issuing Banks valid and perfected first priority
security interests subject to Permitted Senior Liens and the Carve-Out Reserve,
with perfection, in the case of any investment property, being effected by
giving the Agent control of such investment property and by the filing of a UCC
financing statement with respect to such investment property. Each Borrower
shall, and shall cause each of its Subsidiaries to, do whatever the Agent may
reasonably request, from time to time, to effect the purposes of this Credit
Agreement and the other Credit Documents, including filing notices of liens, UCC
financing statements, fixture filings and amendments, renewals and continuations
thereof; entering into Control Agreements with respect to any deposit account,
investment account,

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securities account, commodity account or any other similar account permitted to
be maintained by any Borrower or any Domestic Subsidiary of any Borrower
hereunder; cooperating with the Agent’s representatives; keeping stock records;
to the extent commercially reasonable, obtaining waivers from landlords and
mortgagees and from warehousemen and their landlords and mortgagees; and, paying
claims which might, if unpaid, become a Lien on the Collateral. Furthermore,
Borrowers will use their reasonable best efforts to cause to be delivered to
Agent such Mortgage Policies with respect to the Mortgaged Properties and other
related documents as may be reasonably requested by Agent to assure itself that
this Section 7.16 has been complied with as permitted by the Final Financing
Order. Notwithstanding the foregoing, Wellman shall not be required to pledge a
percentage of the Capital Securities of any Foreign Subsidiary to the extent it
would cause an adverse tax consequence to Wellman
          (c) The security interests required to be granted pursuant to this
Section 7.16 shall be granted pursuant to such security documentation (which
shall be substantially similar to the Security Documents already executed and
delivered by Wellman) (the “Additional Security Documents”) reasonably
satisfactory in form and substance to Agent and the Majority Lenders and shall
constitute valid and enforceable first priority perfected security interests
subject to no other Liens except Permitted Liens; provided, however, that
additional filings may be required in the United States Copyright Office and/or
United States Patent and Trademark Office to perfect the Collateral Agent’s Lien
on any Intellectual Property acquired after the date hereof. The Additional
Security Documents and other instruments related thereto shall be duly recorded
or filed in such manner and in such places and at such times as are required by
law to establish, perfect, preserve and protect the Liens, in favor of
Collateral Agent for the benefit of the Lenders, required to be granted pursuant
to the Additional Security Document and, all taxes, duties, levies, imposes,
deductions, assessments, charges, withholdings, fees and other charges payable
in connection therewith shall be paid in full by Wellman. At the time of the
execution and delivery of the Additional Security Documents, Wellman shall cause
to be delivered to Agent such agreements, opinions of counsel and other related
documents as may be reasonably requested by Agent or the Majority Lenders to
assure themselves that this Section 7.16 has been complied with.
     7.17 Weekly Management Calls. Wellman shall participate in a Management
Call before the third Business Day of each week; after the one-month period
commencing on the Closing Date, if reasonably acceptable to the Steering
Committee, Management Calls may be held once every two weeks.
     7.18 Chief Restructuring Officer. The Borrowers shall sign an engagement
letter subject to Bankruptcy Court approval to retain a Chief Restructuring
Officer within ten (10) Business Days following the Closing Date and shall file
an application to retain a Chief Restructuring Officer within fifteen
(15) Business Days following the Closing Date.
ARTICLE VIII
NEGATIVE COVENANTS
     Until the Facility Termination Date and payment and satisfaction of all
Obligations (other than contingent indemnification obligations not due and
payable), each Borrower agrees that:

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     8.1 Cash Budget Compliance. Borrowers shall not, without the prior express
written consent of the Agent in its sole discretion in each instance, permit
cash expenditures during any Cash Budget Period to exceed (i) for raw material
purchases in the Cash Budget for such period, 105% of the budgeted amount
thereof, or (ii) 110% of the total cash expenditures (excluding to the extent
included therein, compensation and reimbursement of fees and expenses to the
professionals of the Borrowers and any official committee retained in the
Chapter 11 Cases) set forth in the Cash Budget for such period.
     8.2 Financial Covenants.
          (a) Minimum EBITDA. On the last day of each calendar month, commencing
March 1, 2008, Borrowers shall not permit EBITDA for the period commencing
March 1, 2008, through the last day of such calendar month, taking such period
as one accounting period, to be less than the amount listed below opposite such
month:

              Applicable Month   Minimum EBITDA
March 2008
  $ 2,100,000  
April 2008
  $ 5,610,000  
May 2008
  $ 10,370,000  
June 2008
  $ 15,810,000  
July 2008
  $ 19,635,000  
August 2008
  $ 22,865,000  
September 2008
  $ 23,800,000  
October 2008
  $ 27,455,000  
November 2008
  $ 28,560,000  
December 2008
  $ 30,855,000  
January 2009
  $ 31,500,000  

          (b) Maximum Capital Expenditures. No Borrower shall, or permit any of
its Subsidiaries to, directly or indirectly, make or incur Capital Expenditures
in any fiscal month, in the aggregate for all Borrowers and their respective
Subsidiaries combined, in excess of $1,000,000 (the “Basic Allocation”),
provided 50% of any unused portion of the Basic Allocation in any month may be
carried over and spent in the following month but not carried over thereafter.
     8.3 No Additional Indebtedness. No Borrower shall, or shall permit any of
its Subsidiaries to, directly or indirectly, incur, create, assume or suffer to
exist any Post-Petition Indebtedness other than:
          (a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
          (b) a Borrower and its Subsidiaries may incur and remain liable with
respect to Intercompany Indebtedness incurred in the ordinary course of
business, subject to no Lien held by any Person other than a Borrower or a
Subsidiary Guarantor or a Lien permitted by this Credit Agreement, provided,
however, that all Intercompany Indebtedness owed by Borrowers

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and/or any of the Subsidiary Guarantors, on the one hand, to the Subsidiaries
which are not Credit Parties, on the other, incurred under this clause (b) shall
be Subordinated Indebtedness;
          (c) Borrowers and the Subsidiaries of each of the Borrowers may incur
and remain liable with respect to Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or other similar
instrument inadvertently drawn against insufficient funds in the ordinary course
of business;
          (d) Borrowers and their Subsidiaries may incur and remain liable with
respect to Indebtedness incurred (i) in respect of Capitalized Lease Obligations
and (ii) to finance the purchase price of equipment, fixtures and any other
similar property or the remodeling or other improvement costs of any facility of
such Borrower or any of its Subsidiaries; provided that the aggregate amount of
Indebtedness incurred under this clause (d) shall not exceed $500,000 at any
time outstanding;
          (e) with the prior approval of the Steering Committee in each
instance, the Borrowers and their Subsidiaries may incur and remain liable with
respect to any Indebtedness permitted by any order of the Bankruptcy Court; and
          (f) with the prior approval of the Steering Committee in each
instance, the Borrowers and their Subsidiaries may incur and remain liable with
respect to adequate protection authorized by any order of the Bankruptcy Court
pursuant to Section 363(e) of the Bankruptcy Code to the extent deemed to
constitute Post-Petition Indebtedness.
Notwithstanding the foregoing, no Indebtedness under this Sections 8.3 other
than clause (a) shall be permitted to have an administrative expense claim under
the Bankruptcy Code senior to or pari passu with the superpriority
administrative expense claims of Agent and the Lenders as set forth herein and
in the Financing Orders.
     8.4 No Liens; Judgments. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, mortgage, assign, pledge, transfer,
create, incur, assume, suffer to exist or otherwise permit any Lien (whether as
a result of a purchase money or title retention transaction, or other security
interest, judgment or otherwise) to exist on any of its property, assets,
revenues or goods, whether real, personal or mixed, whether now owned or
hereafter acquired, except for the following (the “Permitted Liens”):
          (a) Liens granted by such Borrower or Subsidiary pursuant to any
Credit Document;
          (b) Liens listed on Schedule B, Part 8.4 encumbering only the assets
described therein and the proceeds thereof;
          (c) Liens of warehousemen, mechanics, material men, workers,
repairmen, common carriers, landlords and other similar Liens arising by
operation of law or otherwise, not waived in connection herewith, for amounts
that are not yet due and payable or which are being diligently contested in good
faith by such Borrower or Subsidiary by appropriate proceedings;

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          (d) attachment and judgment Liens securing outstanding liabilities
incurred Post-Petition of any Borrower or any Subsidiary of any Borrower which
individually or in the aggregate for all such Liens are not in excess of
$250,000 for all Borrowers and their respective Subsidiaries combined (exclusive
of (i) any amounts that are duly bonded to the reasonable satisfaction of the
Agent or (ii) any amount adequately covered by insurance as to which the
insurance company has not disclaimed or disputed in writing its obligations for
coverage);
          (e) Liens for Borrower’s Taxes not yet due and payable or which are
being diligently contested in good faith by such Borrower by appropriate
proceedings, provided that in any such case an adequate reserve is being
maintained by such Borrower for the payment of same;
          (f) Deposits or pledges made by Borrowers and the Subsidiaries of
Borrowers in the ordinary course of business consistent with past practices to
secure obligations under workmen’s compensation, social security or similar
laws, or under unemployment insurance;
          (g) Deposits or pledges made by Borrowers and any Subsidiary of any
Borrower to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of business;
          (h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not materially detract
from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of any Borrower or any Subsidiary of any
Borrower;
          (i) Liens securing the Pre-Petition Secured Debt pursuant to the
Pre-Petition Term Loan Agreements, the related Loan Documents (as defined
therein), and the Financing Orders;
          (j) Purchase Money Liens and Liens securing Capitalized Lease
Obligations to the extent permitted under Section 8.4(d) above;
          (k) Liens arising due to the arrangements set forth in Tax Reduction
Agreements on property subject to such agreements to the extent encumbering only
Term Loan Collateral (as defined in the Intercreditor Agreement);
          (l) with the prior approval of the Steering Committee in each
instance, Liens securing any Indebtedness permitted by any order of the
Bankruptcy Court;
          (m) with the prior approval of the Steering Committee in each
instance, Liens securing adequate protection authorized by any order of the
Bankruptcy Court pursuant to Section 363(e) of the Bankruptcy Code to the extent
deemed to constitute Post-Petition Indebtedness;
          (n) Permitted Senior Liens; and

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          (o) the Carve-Out Reserve (to the extent constituting a Lien).
          (p) junior liens arising under ERISA as a result of the Borrowers’ or
any ERISA Affiliate’s failure to satisfy funding requirements under Section 302
of ERISA and Section 412 of the Code, unless such Liens shall have been
perfected or any Person shall have obtained relief from the automatic stay to
enforce such Liens.
Permitted Liens, other than Permitted Senior Liens and the Carve-Out Reserve,
shall at all times be junior and subordinate to the security interests and liens
under the Security Documents and the Financing Orders, provided that the Liens
securing the Approved Secured Derivative Transaction Liabilities shall be pari
passu with the security interests and liens under the Security Documents and the
Financing Orders.
     8.5 No Sale of Assets. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, enter into any Asset Sale other than
(a) any disposition of Cash Equivalents or inventory in the ordinary course of
business or the lease or sublease of unused and vacant real property facilities
in the ordinary course of business, (b) any disposition of equipment in the
ordinary course of business to the extent such equipment is obsolete, worn out
or no longer useful in such Borrower’s or such Subsidiary’s business; and (c)
other dispositions of assets, provided that (i) such other dispositions are for
fair value; (ii) one hundred percent (100%) of the consideration (net of
disposal costs) for each of such other dispositions is received by the
applicable Borrower or Subsidiary in the form of cash; and (iii) the aggregate
consideration from and after the Closing Date for such other dispositions does
not exceed, in the aggregate for all Borrowers and their respective Subsidiaries
combined, $1,000,000 plus the proceeds from any sale of the Borrowers’ lanolin
business.
     8.6 No Corporate Changes. No Credit Party shall, or shall permit any of its
Subsidiaries to, directly or indirectly, merge, consolidate, liquidate, wind up,
dissolve or alter or modify any Credit Party’s Governing Documents, or enter
into or engage in any operation or activity materially different from that
currently being conducted by Wellman and its Subsidiaries, except that subject
to the requirements of Section 7.16 or any of the Security Documents, any
Foreign Subsidiary may liquidate, wind up or dissolve, or merge with or
consolidate into any Credit Party or any other Foreign Subsidiary.
     8.7 No Guaranties. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, issue or assume any Guaranty with
respect to the liabilities of any other Person, including any Subsidiary or
Affiliate of such or any other Borrower, except (a) by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, (b) by the giving of indemnities in connection with
the sale of Inventory or other asset dispositions permitted hereunder, and (c)
Indebtedness permitted to be incurred pursuant to Section 8.2. Notwithstanding
the foregoing or any other term or provision of this Credit Agreement to the
contrary, none of the Borrowers or any Domestic Subsidiaries shall issue or
assume any Guaranty with respect to the liabilities of any Foreign Subsidiary.
     8.8 No Restricted Payments or Payments of Pre-Petition Obligations. No
Borrower shall, or shall permit any of its Subsidiaries to, directly or
indirectly (i) make any Restricted Payment except dividends and distributions by
Subsidiaries of Wellman paid to Wellman or any

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other Wholly-Owned Subsidiary of Wellman, (ii) pay any management fees (other
than to any Credit Party in the ordinary course of business consistent with past
practice), or (iii) make any interest payment or principal payment on, purchase,
defease, redeem, prepay, decrease or otherwise acquire or retire for value any
Pre-Petition Indebtedness other than the Obligations outstanding under the
Pre-Petition Credit Agreement.
     8.9 No Investments. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, make any Investment in any Person or
consummate or agree to make an Acquisition other than:
          (a) Cash Equivalents, subject to the requirement of Section 2.4(e)
(excess cash prepayment provision);
          (b) Interest-bearing demand or time deposits (including certificates
of deposit) which are insured by the Federal Deposit Insurance Corporation
(“FDIC”) or a similar federal insurance program, subject to the requirement of
Section 2.4(e) (excess cash prepayment provision), however, provided that such
Borrower may, in the ordinary course of its business, maintain in its
disbursement accounts from time to time accounts in excess of then applicable
FDIC or other program insurance limits;
          (c) Guaranties permitted under Section 8.7;
          (d) Investments by Borrowers in any Borrower or Subsidiary Guarantor
or the Subsidiary Guarantors in other Subsidiary Guarantors or any Borrower made
in the ordinary course of business; provided that (i) each such Borrower and
Subsidiary Guarantor shall record all intercompany transactions on its books and
records in a manner reasonably satisfactory to Agent, (ii) no Default or Event
of Default exists or would occur after giving effect to such intercompany
transaction; and (iii) if in the form of an intercompany loan, the obligations
of each Borrower or Subsidiary Guarantor under any such intercompany loan shall
be subordinated to the Obligations of such Borrower or Subsidiary Guarantor
hereunder in a manner reasonably satisfactory to the Agent;
          (e) Investments existing on the Closing Date and set forth on
Schedule B, Part 8.9; and
          (f) Cash and Cash Equivalents in a depository account in the name of
the Agent and within the Agent’s sole dominion and control (the “Investment
Account”), in which the Agent shall have at all times a perfected security
interest for the benefit of the Secured Parties (as defined in the Security
Agreement).
     8.10 No Affiliate Transactions. No Borrower shall, or shall permit any of
its Subsidiaries to, directly or indirectly, enter into any transaction with an
Affiliate, including the purchase, sale or exchange of property or the rendering
of any service to any other Borrower or Subsidiary of a Borrower or other
Affiliate of a Borrower and whether or not such transaction would otherwise be
permitted under any of the other provisions of the Credit Documents, unless such
transaction is entered into in the ordinary course of and pursuant to the
reasonable requirements of such Borrower’s or such Subsidiary’s business, as the
case may be, and upon fair and reasonable terms no less favorable to such
Borrower or such Subsidiary than could be

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obtained in a comparable arms-length transaction with an unaffiliated Person.
The following transactions shall not be considered transactions with Affiliates
restricted by this Section 8.9, provided the same have been approved by order of
the Bankruptcy Court: (x) reasonable and customary fees paid to members of the
Board of Directors of Wellman and (y) reasonable and customary fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
consultants or employees of Wellman or any of its Subsidiaries, as determined by
the Board of Directors of Wellman or any such Subsidiary or the senior
management thereof in good faith, including without limitation, issuances of
stock, payment of bonuses and other transactions pursuant to employment or
compensation agreements, stock option agreements, indemnification agreements or
other arrangements. Notwithstanding the foregoing or any other term or provision
of this Credit Agreement to the contrary, none of the assets or property of the
Borrowers or any Domestic Subsidiaries shall be transferred to any Foreign
Subsidiary at any time.
     8.11 Limitation on Transactions Under ERISA. No Borrower shall, or shall
permit any of its Subsidiaries to, directly or indirectly:
          (a) amend, or permit any ERISA Affiliate to amend, a Title IV Plan
resulting in an increase in liabilities of such Title IV Plan by reason of
increases in benefits, establishment of new benefits, changing the rate of
benefit accrual or changing the rate at which benefits become non-forfeitable,
except as permitted in Section 436 of the Code;
          (b) allow the representation made in Section 6.14 to be untrue at any
time; or
          (c) adopt or terminate any Retiree Welfare Plan.
     8.12 Amendments of Governing Documents. Borrowers will not, and will not
permit any of their Subsidiaries to, directly or indirectly, amend or otherwise
change (or waive) the terms of its Governing Documents in any manner adverse to
the Agent or the Lenders.
     8.13 Additional Restrictive Covenants. No Borrower shall, or shall permit
any of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective (a) any consensual restriction limiting the
ability (whether by covenant, event of default, subordination or otherwise and
including any such the effect of which is to require the providing of equal and
ratable security to any other Person in the event a Lien is granted to or for
the benefit of the Agent and the Lenders) to (i) pay dividends or make any other
distributions on shares of its Capital Securities held by any Borrower or any
other Subsidiary of any Borrower; (ii) pay any Liability owed to any Borrower or
any other Subsidiary or any Borrower; (iii) make any loans or advances to other
Investments in any Borrower or in any other Subsidiary of any other Borrower; or
(iv) create or permit to exist any Lien upon the assets of any Borrower or any
Subsidiary of any Borrower, other than Liens permitted under Section 8.4; or (b)
any contractual obligation which may restrict or inhibit the Agent’s rights or
ability to sell or otherwise dispose of the Collateral or any part thereof after
the occurrence of an Event of Default.
     8.14 New Collateral Locations. No Borrower shall, or shall permit any of
its Subsidiaries to, open or establish any new location unless such Person (a)
provides Agent with ten (10) days prior written notice of any such new location,
(b) delivers to Agent, duly executed by the appropriate Person(s) where
applicable, such Collateral Access Agreements and other

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agreements, documents and instruments as Agent shall require to protect Agent’s
interests in the Collateral at such location and (c) delivers to Agent such
amendments to Schedule B, Parts 6.1 and 6.7 as are required to make such
disclosures complete and accurate.
     8.15 New Accounts. Except with the prior written notice to the Agent, no
Borrower shall, or shall permit any of its Domestic Subsidiaries to, directly or
indirectly, open, maintain or otherwise have any checking, savings or other
accounts at any bank or other financial institution, or any other account where
money is or may be deposited or maintained with any Person, other than the
Depository Accounts, the Concentration Account, the Investment Account and the
other accounts set forth on Schedule B, Part 6.31.
     8.16 Limitation on Preferred Stock of Subsidiaries. Except as set forth on
Schedule B, Part 8.16, no Borrower will permit any of its Subsidiaries to issue
any Preferred Stock or permit any Person to own any Preferred Stock of any
Subsidiary of a Borrower.
     8.17 Embargoed Person. No Borrower shall cause or permit (a) any of the
funds or properties of the Credit Parties that are used to repay the Loans to
constitute property of, or be beneficially owned directly or indirectly by, any
person subject to sanctions or trade restrictions under United States law
(“Embargoed Person”) that is identified on (1) the “List of Specially Designated
Nationals and Blocked Persons” (the “SDN List”) maintained by OFAC and/or on any
other similar list (“Other List”) maintained by OFAC pursuant to any authorizing
statute including, but not limited to, the International Emergency Economic
Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C.
App. 1 et seq., and any Executive Order or regulation promulgated thereunder,
with the result that the investment in the Credit Parties (whether directly or
indirectly) is prohibited by law, or the Loans made by the Lenders would be in
violation of law, or (2) the Executive Order, any related enabling legislation
or any other similar Executive Orders (collectively, “Executive Orders”), or (b)
any Embargoed Person to have any direct or indirect interest, of any nature
whatsoever in the Credit Parties, with the result that the investment in the
Credit Parties (whether directly or indirectly) is prohibited by law or the
Loans are in violation of law.
     8.18 No Accounting Changes. Wellman shall not make or permit to be made any
change in accounting policies affecting the presentation of Financial Statements
or reporting practices from those employed by it on the Closing Date (an
“Accounting Change”), unless (i) such change is in accordance with GAAP, (ii)
such change is disclosed to the Lenders through the Agent or otherwise and (iii)
Wellman provides to the Agent such information as the Agent may reasonably
request so that it may assess the impact of such Accounting Change. If any
Accounting Change occurs after the Closing Date and such change results in, in
the sole judgment of the Agent, a meaningful change in the calculation of any
financial covenants or restrictions set forth in this Credit Agreement, then the
parties hereto agree to enter into and diligently pursue negotiations to amend
the covenants employing financial calculations herein so as to equitably reflect
such changes, with the desired result that the criteria for evaluating the
financial condition and results of operations of Borrowers and their
Subsidiaries shall be the same after such changes as if such changes had not
been made. Until such amendment is made, Wellman shall continue to deliver the
compliance certificates required by Section 7.1 to the Agent, with such
supporting information as may be requested by the Agent, without giving effect
to such Accounting Change.

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     8.19 Insurance Subsidiary. Notwithstanding anything to the contrary in this
Credit Agreement, GuardWell shall not engage in any business other than the
business of serving as a captive insurance company for Wellman and its
Subsidiaries and engaging in such necessary activities related thereto as may be
permitted to be engaged in by a Vermont captive insurance company pursuant to
applicable Vermont captive insurance company rules and regulations and no Credit
Party shall make any Investment in GuardWell except to the extent required by
law or as reasonably permitted by the Agent.
     8.20 Anti-Terrorism Law; Anti-Money Laundering. No Borrower shall directly
or indirectly (a) (i) knowingly conduct any business or engage in making or
receiving any contribution of funds, goods or services to or for the benefit of
any person described in Section 6.30(b), (ii) knowingly deal in, or otherwise
engage in any transaction relating to, any property or interests in property
blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or
(iii) knowingly engage in or conspire to engage in any transaction that evades
or avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law (and each Borrower
shall deliver to the Lenders any certification or other evidence requested from
time to time by any Lender in its reasonable discretion, confirming such
Borrower’s compliance with this Section 8.20) or (b) cause or permit any of the
funds of any Borrower or any Credit Party that are used to repay the Loan to be
derived from any unlawful activity with the result that the making of the Loans
would be in violation of law.
     8.21 Returned Goods Under Section 546(h). No Credit Party shall enter into
any agreement other than in the ordinary course of business to return any of its
Inventory to any of its creditors for offset against any Pre-Petition
Indebtedness, Pre-Petition trade payables or other Pre-Petition claims under
Section 546(h) of the Bankruptcy Code if, after giving effect thereto, the
aggregate amount of Pre-Petition Indebtedness, Pre-Petition trade receivables
and other Pre-Petition claims subject to all such offsets since the Petition
Date would exceed $100,000.
     8.22 Chapter 11 Claims. No Credit Party shall incur, create, assume, suffer
to exist or permit any other superpriority administrative claim which is pari
passu with or senior to the superpriority administrative claims of Agent and
Lenders against Borrowers and the other Credit Parties.
     8.23 Financial Advisor. Borrowers shall not fail to have engaged at all
times a financial advisor to assist Borrowers with the Wellman Sale, which
advisor may be Lazard or such other financial advisor retained by the Borrowers
whose identity and retention agreement are satisfactory to the Agent in all
respects.
     8.24 Chief Restructuring Officer. Borrowers shall not fail to engage at all
times a Chief Restructuring Officer, employed pursuant to the requirements of
Section 7.18, unless otherwise approved by the Steering Committee.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES

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     9.1 Events of Default. The occurrence of any of the following events shall
constitute an Event of Default hereunder:
          (a) failure of Borrowers to pay when due, whether at stated maturity,
by acceleration or otherwise, principal of any Loan or reimbursement obligation
with respect to any Letter of Credit or within three (3) Business Days of the
date when due, any Interest, Fees or other Obligations.
          (b) failure of any Borrower or any Subsidiary of any Borrower to
perform, comply with or observe any term, covenant or agreement applicable to it
contained in Section 2.4(b)(iii) or in Article 7 (excluding Sections 7.1(f), 7.3
(other than as to the existence of any Credit Party), 7.9, 7.10, 7.14 and 7.15)
or Article 8;
          (c) (i) any representation or warranty made by any Borrower, any
Subsidiary of any Borrower or any other Credit Party under this Credit Agreement
or under any other Credit Document shall prove to have been incorrect or
misleading in any material respect when made or deemed made;
     (ii) any Borrower or any Subsidiary of any Borrower or any other Credit
Party shall fail to comply with any covenant contained in this Credit Agreement
(other than under a provision covered by Sections 9.1(a) or (b) above) or the
other Credit Documents, which failure to comply is not cured within ten
(3) Business Days of its occurrence; or
     (iii) failure of Borrowers to deliver the information required under
Section 7.1(f) and such failure is not cured within one (1) Business Day of its
occurrence.
          (d) (i) the direct or indirect acquisition by a Person or group of
Persons of any Credit Party other than pursuant to an Asset Sale permitted under
Section 8.5(b) or (ii) the occurrence of a Change of Control;
          (e) Borrowers or any of their Subsidiaries (i) shall default in the
payment when due (after giving effect to any applicable grace period), whether
at stated maturity or otherwise, of principal or interest in respect of
Post-Petition Indebtedness having an aggregate principal amount of $250,000 or
more; or (ii) shall fail to perform or observe any other condition or covenant,
or any other event shall occur or condition exist, under any agreement or
instrument relating to any such Post-Petition Indebtedness having an aggregate
principal amount of $250,000, if the effect of any such failure, event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause
(determined without regard to whether any notice of acceleration or similar
notice is required), such Indebtedness to be declared to be due and payable
prior to its stated maturity, or cash collateral in respect thereof to be
demanded;
          (f) any covenant, agreement or obligation of any party contained in or
evidenced by any of the Credit Documents shall cease to be enforceable in
accordance with its terms, or any party (other than the Agent or the Lenders, in
its capacity as such, and not in its capacity as an Issuing Bank) to any Credit
Document shall deny or disaffirm its obligations

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under any of the Credit Documents, or any Credit Document shall be cancelled,
terminated, revoked or rescinded without the express prior written consent of
the Agent, or any action or proceeding shall have been commenced by any Person
(other than the Agent or a Lender, in its capacity as such, and not in its
capacity as an Issuing Bank) seeking to cancel, revoke, rescind or disaffirm the
obligations of any party to any Credit Document, or any court or other
Governmental Authority shall issue a judgment, order, decree or ruling to the
effect that any of the obligations of any party to any Credit Document are
illegal, invalid or unenforceable;
          (g) (i) any Termination Event shall occur with respect to any Title IV
Plan of any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate,
(ii) any Accumulated Funding Deficiency, whether or not waived, shall exist with
respect to any Title IV Plan, (iii) any Borrower or any Subsidiary of any
Borrower shall engage in any Prohibited Transaction involving any such Title IV
Plan, (iv) any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate
shall be in “default” (as defined in ERISA Section 4219(c)(5)) with respect to
payments owing to any Multiemployer Plan as a result of such Person’s complete
or partial withdrawal (as described in ERISA Section 4203 or 4205) therefrom,
(v) any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate shall
fail to pay when due an amount that is payable by it to the PBGC or to any Title
IV Plan under Title IV of ERISA, (vi) a proceeding shall be instituted by a
fiduciary of any such Title IV Plan against any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate to enforce ERISA Section 515 and such proceeding
shall not have been dismissed within 30 days thereafter or (vii) any other event
or condition shall occur or exist with respect to any such Title IV Plan, except
that no event or condition referred to in clauses (i) through (vii) shall
constitute an Event of Default if it, together with all other such events or
conditions at the time existing, has not subjected, and in the reasonable
determination of the Majority Lenders will not subject, any Borrower or any
Subsidiary of any Borrower to any liability that, alone or in the aggregate with
all such liabilities for all such Persons, exceeds $2,500,000; or
          (h) one or more judgments or decrees shall be entered against any
Borrower or any of its Subsidiaries involving, individually or in the aggregate,
a Post-Petition liability (to the extent not paid or covered by insurance (to
the extent coverage has not been denied or repudiated in writing) of $250,000 or
more and all such judgments or decrees shall not have been vacated, discharged,
satisfied, stayed or bonded pending appeal within sixty (60) days from the entry
thereof.
          (i) Bankruptcy Matters.
     (i) The Final Financing Order shall not have (1) been approved by the
Bankruptcy Court by the earlier of (x) the date of expiration of the Interim
Financing Order, or (y) 45 days after the Petition Date or (2) shall not have
been entered by the Bankruptcy Court within two (2) Business Days after such
forty-five (45) day period or the date of expiration of the Interim Financing
Order, if earlier; or
     (ii) The entry of an order dismissing any Chapter 11 Case or converting any
such case to one under Chapter 7 of the Bankruptcy Code, or any Credit Party
shall file a motion or other pleading seeking the dismissal or conversion of any
of the Chapter 11 Cases under Section 1112 of the Bankruptcy Code or otherwise;
or

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     (iii) The entry of an order appointing a Chapter 11 trustee in any of the
Chapter 11 Cases; or
     (iv) The entry of an order (other than the Financing Orders) in any of the
Chapter 11 Cases granting any other superpriority administrative claim or Lien
equal or superior to that granted (A) to Agent, on behalf of itself and Lenders
(or the filing of an application by any Credit Party to approve any such
superpriority administrative claim) or (B) to the lenders under the First Lien
Credit Facility; or
     (v) The entry of an order in any of the Chapter 11 Cases modifying,
staying, vacating, reversing or amending any of the Financing Orders, without
the Agent’s prior express written consent in its sole discretion in each
instance; or
     (vi) The entry of an order in any of the Chapter 11 Cases modifying,
staying, vacating, reversing or amending this Credit Agreement or any other Loan
Document, without the Agent’s prior express written consent in its sole
discretion in each instance; or
     (vii) The entry of an order in any of the Chapter 11 Cases appointing an
examiner having enlarged powers under Bankruptcy Code Section 1106(a)(3) and
(4) or Person having similar powers and functions; or
     (viii) The entry of an order in any of the Chapter 11 Cases avoiding or
requiring repayment of any portion of the payments made on account of the
Obligations owing under this Credit Agreement; or
     (ix) The approval by the Bankruptcy Court of any claims arising under
Section 506(c) of the Bankruptcy Code against Agent, any Lender or any of the
Collateral from and after the Final Order; or
     (x) The incurrence by any Credit Party of Indebtedness with an
administrative expense claim under the Bankruptcy Code senior to or pari passu
with the superpriority administrative expense claims of Agent and the Lenders as
set forth herein and in the Financing Order; or
     (xi) Any Credit Party shall file a motion or other pleading in any
Chapter 11 Case to: (1) obtain financing from any Person other than Agent and
Lenders under Section 364(d) of the Bankruptcy Code; (2) obtain financing from
any Person other than Agent and Lenders under Section 364(c) of the Bankruptcy
Code; or (3) grant any Lien upon or affecting any Collateral other than Liens
expressly permitted by Section 8.4; or
     (xii) The entry of an order by the Bankruptcy Court in any of the
Chapter 11 Cases granting relief from or modifying the automatic stay of
Section 362 of the Bankruptcy Code (1) as to any creditor (other than Agent and
Lenders) with respect to any claim in an amount equal to or greater than
$250,000 (other than the lifting of the automatic stay solely for the purpose of
liquidating a claim in another forum or to proceed against insurance), or (2) as
to any creditor (other than Agent and Lenders) with respect to any claim with
respect to any Lien of, or the granting of any Lien on any

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Collateral to, any state or local environmental or regulatory agency or
authority that could reasonably be expected to have a Material Adverse Effect,
or (3) as to any holder of any security interest (other than Agent and Lenders)
to permit foreclosure (or granting of a deed in lieu of foreclosure or the like)
on any assets of Borrowers or any Borrower’s Subsidiaries in excess of $100,000;
or
     (xiii) There shall be commenced any suit or action against Agent or any
Lender by or on behalf of any Credit Party, any official committee in any of the
Chapter 11 Cases, or any other party in interest in the Chapter 11 Cases, in
each case that (w) asserts a claim in excess of $250,000, (x) seeks a legal or
equitable remedy that would have the effect of subordinating the claims or Liens
of Agent or any Lender under the Credit Documents to any other claim, (y) would
otherwise have a Material Adverse Effect or (z) have a material adverse effect
on the rights and remedies of Agent under any Credit Document including without
limitation, any action which seeks to void, avoid, limit or otherwise adversely
affect any Lien by or in relation to the Credit Documents or any payment made
pursuant thereto, and, if such suit or action is commenced by or on behalf of
any Person other than any Credit Party (including any official committee in any
of the Chapter 11 Cases) or any Subsidiary, officer, or employee of any Credit
Party, such suit or action shall not have been withdrawn or dismissed with
prejudice within 60 days after service thereof on Agent or such Lender, as
applicable; or
     (xiv) The failure of any Credit Party to pay when due any interest or fees
payable under the Financing Orders, or to perform any of its material
obligations under any of the Financing Orders, which breach shall have not been
cured within two (2) Business Days; or
     (xv) Any Credit Party shall file or seek to prosecute a Reorganization Plan
in any of the Chapter 11 Cases which does not require as a condition to its
effective date cash payments to the Agent and Lenders sufficient to entitle the
Credit Parties to a release of the Collateral under Section 10.10; or
     (xvi) The failure of the Bankruptcy Court to enter an order in form and
substance reasonably satisfactory to the Agent and the Majority Lenders within
90 days after the Petition Date: (i) approving bidding procedures,
(ii) scheduling bidding deadline, auction date and sale hearing date, and
(iii) establishing procedures under Sections 363 and 365 of the Bankruptcy Code
for the Wellman Sale and the assignment and assumption of certain contracts
related thereto; or
     (xvii) The failure of the Bankruptcy Court to enter a sale order or
confirmation order, in form and substance satisfactory to the Agent and the
Majority Lenders, approving the Wellman Sale by July 31, 2008, or the failure of
Borrowers to close the Wellman Sale within 15 days of the later of (i) the date
of entry of the sale order or confirmation order approving the Wellman Sale if
no stay of such order is pending, or (ii) if a stay of such order is pending,
the date such order becomes final and nonappealable if, during the time of such
stay, a bond has been issued in form and amount satisfactory to the Agent in its
sole discretion; or

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     (xviii) The entry of an order in any of the Chapter 11 Cases confirming a
Reorganization Plan, which plan does not require as a condition to its becoming
effective cash payments to the Agent and Lenders sufficient to entitle the
Credit Parties to a release of the Collateral under Section 10.10;
     (xix) Upon closing the Wellman Sale and disbursement of the Net Sale
Proceeds in accordance with Section 2.4(f), Borrowers are not entitled to a
release of the Collateral under Section 10.10; or
     (xx) The Consummation Date occurs for a Reorganization Plan and the
Borrowers are not entitled on such date to a release of the Collateral pursuant
to Section 10.10.
     (xxi) The expiration of or termination in any of the Chapter 11 Cases of
any Borrower’s or any Subsidiary Guarantor’s exclusive right to file a
Reorganization Plan.
     9.2 Acceleration and Cash Collateralization. Upon the occurrence of an
Event of Default and which is continuing, the Agent may, but shall upon the
request of the Majority Lenders, and by delivery of notice to the Funds
Administrator from the Agent, take any or all of the following actions: (a)
declare all Obligations to be immediately due and payable without presentment,
demand, protest or any other action or obligation of the Agent or any Lender;
and (b) immediately terminate the Commitments hereunder.
     In addition, upon demand by the Agent or the Majority Lenders upon the
occurrence of any Event of Default and which is continuing, Borrowers shall
deposit with the Agent cash or Cash Equivalents in an amount equal to 105% of
the Letter of Credit Obligations. Such deposit shall be held by the Agent as
security for, and to provide for the payment of, Letter of Credit Obligations.
     If at any time after acceleration of the maturity of the Obligations,
Borrowers shall pay all arrears of interest and all payments on account of
principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in Section 4.4) and all Events of
Default and Defaults (other than nonpayment of principal of and accrued interest
on the Loans and other Obligations due and payable solely by virtue of
acceleration) shall be remedied or waived, then by written notice to the Funds
Administrator, the Majority Lenders may elect, in the sole discretion of such
Majority Lenders, to rescind and annul the acceleration and its consequences and
return any cash collateral; but such action shall not affect any subsequent
Default or Event of Default or impair any right or remedy consequent thereon.
The provisions of the preceding sentence are intended merely to bind the Lenders
to a decision which may be made at the election of the Majority Lenders; they
are not intended to benefit Borrowers and do not give any Borrower the right to
require the Lenders to rescind or annul any acceleration hereunder or to return
any cash collateral, even if the conditions set forth herein are met.
     9.3 Remedies. From and after the occurrence of any Event of Default which
is continuing, notwithstanding the provisions of Section 362 of the Bankruptcy
Code, without any application, motion or notice to, or order from, the
Bankruptcy Court (but upon Required

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Notice), the Agent may, in addition to exercising any other rights and remedies
now or hereafter existing under any Credit Document or applicable law: (a) make
copies of any and all documents, instruments, files and records (including the
copying of any computer records), and any receptacles or cabinets containing
same, relating to any or all of the Collateral, or the Agent may use (at the
expense of Borrowers) such of the supplies or space of any Borrower at any
Borrower’s place of business or otherwise, as may be necessary to properly
administer and control any or all of the Collateral or the handling of
collections and realizations thereon; (b) bring suit, in the name of a Borrower
or the Lenders and generally shall have all other rights respecting any or all
of the Collateral, including the right to: accelerate or extend the time of
payment, settle, compromise, release in whole or in part any amounts owing on
any or all of the Collateral and issue credits in the name of a Borrower or the
Lenders; and (c) foreclose the security interests created pursuant to the Credit
Documents by any available judicial procedure, or to take possession of any or
all of the Collateral without judicial process and enter any premises where any
Collateral may be located for the purpose of taking possession of or removing
same. To the extent not prohibited by applicable law, the Agent shall have the
right, without notice or advertisement, to sell, lease, or otherwise dispose of
all or any part of the Collateral, whether in its then condition or after
further preparation or processing, in the name of a Borrower or the Lenders, or
in the name of such other party as the Agent may designate, either at public or
private sale or at any broker’s board, in lots or in bulk, for cash or for
credit, with or without warranties or representations, and upon such other terms
and conditions as the Agent in its sole discretion may deem advisable, and the
Agent or any other Lender shall have the right to purchase at any such sale. If
any Collateral shall require rebuilding, repairing, maintenance or preparation,
the Agent shall have the right, at its option, to do such of the aforesaid as is
necessary, for the purpose of putting such Collateral in such saleable form as
the Agent shall deem appropriate. Each Borrower agrees, at the request of the
Agent, to assemble the Collateral and to make it available to the Agent at the
premises of such Borrower, and to make available to the Agent the premises and
facilities of such Borrower for the purpose of the Agent’s taking possession of,
removing or putting the Collateral in saleable form. However, if notice of
intended disposition of any Collateral is required by law, it is agreed that ten
(10) days notice shall constitute reasonable notification. Unless expressly
prohibited by the licensor thereof; if any, the Agent is hereby granted a
license to use all Intellectual Property, computer software programs, data
bases, processes and materials used by each Borrower in connection with its
businesses or in connection with the Collateral. The net cash proceeds resulting
from the Agent’s exercise of any of the foregoing rights (after deducting all
charges, costs and expenses, including reasonable attorneys’ fees) shall be
applied by the Agent to the payment of the Obligations, whether due or to become
due, in such order as the Agent may elect, and pending such payment shall be
held as security for such payment. Each Borrower shall remain liable to the
Agent and the Lenders for any deficiencies. The enumeration of the foregoing
rights is not intended to be exhaustive and the exercise of any right shall not
preclude the exercise of any other rights, all of which shall be cumulative.
     9.4 Actions in Concert. Anything in this Credit Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Credit Agreement or the other Credit Documents (including exercising any rights
of setoff) without first obtaining the prior written consent of Agent or
Majority Lenders, it being the intent of Lenders that any such action to

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protect or enforce rights under this Credit Agreement and the other Credit
Documents shall be taken in concert and at the direction or with the consent of
Agent or Majority Lenders.
     9.5 Distributions. Upon Agent commencing any action under Section 9.3
(unless the Wellman Sale has occurred in which event Section 2.4(f) shall govern
with respect to the proceeds thereof), and thereafter, all payments and proceeds
received by Agent or any Lender shall be applied as follows:
     First, to the payment, or reserve for payment, of the obligations included
in the Carve-Out Reserve, provided that any funds remaining after satisfying the
obligations included in the Carve-Out Reserve shall be paid to the Agent for
application pursuant to this Section 9.5;
     Second, to the payment of any amounts owed to Agent under Sections 10.6 or
11.8 or under any Credit Document and any expenses incurred by Agent in
connection with the maintenance, preservation or protection of any Collateral;
     Third, to all Lenders pro rata according to the then outstanding amount of
Obligations held by each such Lender other than the stated amount of Letters of
Credit;
     Fourth, to cash collateralize 105% of the stated amount of Letters of
Credit; and
     Fifth, if any balance remains after the Obligations under the Pre-Petition
Credit Agreement have been paid in full, then to Borrowers or as otherwise
required by applicable law or court order.
All amounts deposited in a reserve in accordance with the first clause of this
Section 9.5 shall be accomplished in a manner and pursuant to documentation in
form and substance satisfactory to the Agent such that the Agent shall have a
continuing first perfected security interest and lien in the funds reserved
(subject to Permitted Senior Liens and the Carve-Out Reserve) until the same
have been applied and reapplied as required by this Section 9.5.
ARTICLE X
THE AGENT
     10.1 Appointment of Agent.
          (a) Each Lender hereby designates DBTCo. as its contractual
representative to act as herein specified. Each Lender hereby irrevocably
authorizes, and each holder of a Note or an L/C Participation by the acceptance
of such Note or participation shall be deemed irrevocably to authorize, the
Agent to take such action on its behalf under the provisions of this Credit
Agreement, the other Credit Documents and any other instruments and agreements
referred to herein or therein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent shall hold all Collateral and all
payments of principal, interest, Fees, charges and Expenses received pursuant to
this Credit Agreement or any other Credit Document for the benefit of the
Lenders and the

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Issuing Banks to be distributed as provided herein. The Agent may perform any of
its duties hereunder by or through its agents or employees.
          (b) The provisions of this Article 10 are solely for the benefit of
the Agent, the Lenders and the Issuing Banks, and none of the Credit Parties
shall have any rights as a third party beneficiary of any of the provisions
hereof (other than Section 10.9). In performing its functions and duties under
this Credit Agreement, the Agent shall act solely as agent of the Lenders and
the Issuing Banks and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for any Credit
Party.
     10.2 Nature of Duties of Agent. The Agent shall have no duties or
responsibilities except those expressly set forth in this Credit Agreement and
the other Credit Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
by it as such hereunder or in connection herewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of
this Credit Agreement or the other Credit Documents a fiduciary relationship in
respect of any Lender or any Issuing Bank, and nothing in this Credit Agreement
or the other Credit Documents, expressed or implied, is intended to or shall be
so construed as to impose upon the Agent any obligations in respect of this
Credit Agreement or the other Credit Documents except as expressly set forth
herein or therein.
     10.3 Lack of Reliance on the Agent.
          (a) Independently and without reliance upon the Agent, any Lender or
any Issuing Bank, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial or other
condition and affairs of each Credit Party in connection with the taking or not
taking of any action in connection herewith and (ii) its own appraisal of (A)
the creditworthiness of each Credit Party, and (B) the Collateral, and, except
as expressly provided in this Credit Agreement, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
or any Issuing Bank with any credit or other information with respect thereto,
whether coming into its possession before the initial Credit Event or at any
time or times thereafter.
          (b) The Agent shall not be responsible to any Lender or Issuing Bank
for any recitals, statements, information, representations or warranties herein
or in any other Credit Document or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or sufficiency
of this Credit Agreement or any other Credit Document or the financial or other
condition of any Credit Party. The Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Credit Agreement or any other Credit Document,
or the financial condition of any Credit Party, or the existence or possible
existence of any Default or Event of Default, unless specifically requested to
do so in writing by any Lender or Issuing Bank, as the case may be.
     10.4 Certain Rights of the Agent. The Agent shall have the right to request
instructions from the Lenders at any time. If the Agent shall request
instructions from the Lenders with respect to any act or action (including the
failure to act) in connection with this

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Credit Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from the
Majority Lenders (or, to the extent required pursuant to Section 11.10, all
Lenders), and the Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender or Issuing Bank shall have
any right of action whatsoever against the Agent as a result of the Agent acting
or refraining from acting hereunder in accordance with the instructions of the
Majority Lenders.
     10.5 Reliance by the Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex or facsimile transmission, E-mail, telecopier
message, cablegram, order or other documentary, teletransmission or telephone
message believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person. The Agent may consult with legal counsel
(including counsel for Borrowers with respect to matters concerning Borrowers),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts. The Agent
may, but shall not be required to, rely on Borrowing Base Certificates and any
other schedules or reports delivered to the Agent in connection herewith in
determining the amount of the Borrowing Base and the then eligibility of
Accounts and Inventory of the respective Borrowers. Reliance thereon by the
Agent from time to time shall not be deemed to limit the right of the Agent to
revise advance rates or standards of eligibility as provided in the definition
of the term "Borrowing Base” set forth herein.
     10.6 Indemnification of Agent. To the extent the Agent is not reimbursed
and indemnified by Borrowers, each Lender will reimburse and indemnify the
Agent, in proportion to its respective Commitment, for and against any and all
Liabilities, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever (including all Expenses) which may be imposed on, incurred
by or asserted against the Agent, in any way relating to or arising out of this
Credit Agreement or any other Credit Document; provided that no Lender, shall be
liable for any portion of such Liabilities, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent it is
determined by a judgment of a court that is binding on the Agent, final and not
subject to review on appeal, to be the result of acts or omissions on the part
of the Agent, constituting gross negligence or willful misconduct.
     10.7 The Agent in its Individual Capacity. With respect to its obligation
to lend under this Credit Agreement, the Loans made by it and the Notes issued
to it, and its participation in Letters of Credit, the Agent shall have the same
rights and powers hereunder as any other Lender or holder of a Note or
participation interests and may exercise the same as though it was not
performing the duties specified herein; and the terms “Lenders,” “Majority
Lenders,” “holders of Notes,” or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, acquire equity interests in, and
generally engage in any kind of banking, trust, financial advisory or other
business with any Borrower or any Affiliate of any Borrower as if it were not
performing the duties specified herein, and may accept fees and other
consideration from any Borrower for services in connection with this Credit
Agreement and otherwise without having to account for the same to the Lenders or
any Issuing Bank.

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     10.8 Holders of Notes.
          (a) The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefore.
     10.9 Successor Agent.
          (a) The Agent may, upon five (5) Business Days’ notice to the Lenders
and the Funds Administrator, resign at any time (effective upon the appointment
of a successor Agent pursuant to the provisions of this Section 10.9) by giving
written notice thereof to the Lenders and the Funds Administrator. Upon such
resignation, the Majority Lenders shall have the right, upon five (5) days’
notice to the Funds Administrator, to appoint a successor Agent. If no successor
Agent (i) shall have been so appointed by the Majority Lenders and (ii) shall
have accepted such appointment, within thirty (30) days after the retiring
Agent’s giving of notice of resignation, then, upon five (5) days’ notice, the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent.
Resignation of the Agent under this Credit Agreement shall also constitute a
resignation of the Agent under the other Credit Documents and appointment of a
successor Agent shall constitute an appointment of the successor Agent under all
other Credit Documents.
          (b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Credit Agreement. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Article 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Credit
Agreement. The retiring Agent shall assign to the successor Agent all liens
granted under the Collateral Documents and deliver to the successor Agent all
pledged Collateral in its possession, and take all such other actions, at the
expense of Borrowers, as may be reasonably requested to effect the succession of
the successor Agent under the Credit Documents.
          (c) In the event of a material breach by the Agent of its duties
hereunder, the Agent may be removed by the Majority Lenders for cause and the
provisions of this Section 10.9 shall apply to the appointment of a successor
Agent. Such removal of the Agent shall also operate, if at the time any such
Person is serving as such, as a removal of DBTCo. and each of its Serving
Affiliates, if any, as an Issuing Bank, subject to Section 10.9(d).
          (d) No removal of DBTCo., Deutsche Bank, any Lender or any of their
respective Serving Affiliates pursuant to Section 10.9(c), as an Issuing Bank,
shall be effective unless its Liabilities under each Letter of Credit are
secured with cash or by letters of credit in form and substance, and issued by
issuers, satisfactory to DBTCo., Deutsche Bank, such Lender or such Serving
Affiliate.

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     10.10 Collateral Matters.
          (a) Each Lender and each Issuing Bank authorizes and directs the Agent
to enter into the Collateral Documents for the benefit of such Person. Each
Lender and each Issuing Bank hereby agrees, and each holder of any Note by the
acceptance thereof will be deemed to agree, that, except as otherwise set forth
in Section 11.10, any action taken by the Majority Lenders in accordance with
the provisions of this Credit Agreement or the Collateral Documents, and the
exercise by the Majority Lenders of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders and all the Issuing Banks. The
Agent is hereby authorized on behalf of all of the Lenders and all the Issuing
Banks, without the necessity of any notice to or further consent from any Lender
or any Issuing Bank from time to time prior to an Event of Default, to take any
action with respect to any Collateral or Collateral Documents which may be
necessary to perfect and maintain perfected the Liens upon the Collateral
granted pursuant to the Collateral Documents.
          (b) Each Lender and each Issuing Bank hereby authorize the Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and payment
and satisfaction in full in cash of all of the Obligations at any time arising
under or in respect of this Credit Agreement or the other Credit Documents or
the transactions contemplated hereby or thereby (or, in the case of outstanding
Letters of Credit, cash collateralization in accordance with Section 3.3(e)),
(ii) constituting property being sold or disposed of (other than pursuant to the
Wellman Sale, which shall be subject to satisfaction of clause (i) or (iii)
hereof) upon receipt of the proceeds of such sale by the Agent, if the Funds
Administrator certifies to the Agent that such sale or disposition is made in
compliance with Section 8.5 (and the Agent may rely conclusively on any such
certificate, without further inquiry), or (iii) if approved, authorized or
ratified in writing by the Majority Lenders, unless such release or
subordination is required to be approved by all of the Lenders pursuant to
Section 11.10; provided that, in the case of clauses (i) and (iii), such release
of Liens shall not be effective unless and until the Agent shall have received
adequate cash collateral in its reasonable judgment to secure payment of the
estimated amount of any known or unliquidated Obligations that have been
asserted by the Agent prior to such release. Upon request by the Agent at any
time, each Lender and each Issuing Bank will confirm in writing the Agent’s
authority to release or subordinate particular types or items of Collateral
pursuant to this Section 10.10.
          (c) Upon any sale and transfer of Collateral (including pursuant to
the Wellman Sale) which is expressly permitted pursuant to the terms of this
Credit Agreement, or consented to in writing by the Majority Lenders (or all
Lenders, if such release is required to be approved by all of the Lenders
pursuant to Section 11.10), and upon at least five (5) Business Days’ prior
written request by the Funds Administrator, the Agent shall (and is hereby
irrevocably authorized by each Lender and each Issuing Bank, to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Agent for the benefit of the Agent, the Lenders and the Issuing Banks herein
or pursuant hereto upon the Collateral that was sold or transferred; provided
that (i) the Agent shall not be required to execute any such document on terms
which, in the Agent’s opinion, would expose the Agent to or create any Liability
or entail any consequence other than the release of such Liens without recourse
or

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warranty and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of any Borrower or any
Credit Party in respect of) all interests retained by any Borrower or any Credit
Party, including the proceeds of the sale, all of which shall continue to
constitute part of the Collateral. In the event of any sale or transfer of
Collateral, or any foreclosure with respect to any of the Collateral, the Agent
shall be authorized to deduct all of the Expenses reasonably incurred by the
Agent from the proceeds of any such sale, transfer or foreclosure.
          (d) The Agent shall have no obligation whatsoever to any Lender, any
Issuing Bank or any other Person to assure that the Collateral exists or is
owned by any Borrower or any Subsidiary thereof or is cared for, protected or
insured or that the Liens granted to the Agent herein or in any of the
Collateral Documents or pursuant hereto or thereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to the Agent in this
Section 10.10 or in any of the Collateral Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Agent may act in any manner it may deem appropriate, in its sole
discretion, given the Agent’s own interest in the Collateral as one of the
Lenders and that the Agent shall have no duty or liability whatsoever to the
Lenders, except for its gross negligence or willful misconduct.
     10.11 Actions with Respect to Defaults. In addition to the Agent’s right to
take actions on its own accord as permitted under this Credit Agreement, the
Agent shall take such action with respect to a Default or Event of Default as
shall be directed by the Majority Lenders; provided that until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable and in the best interests
of the Lenders and the Issuing Banks; and, further, provided that the Agent
shall not be required under any circumstances to take any action that, in its
judgment, (a) is contrary to any provision of the Credit Documents or applicable
law or (b) will expose it to any liability or expense against which it has not
been indemnified to its satisfaction. If any indemnity furnished to Agent for
any purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
     10.12 Delivery of Information. The Agent shall not be required to deliver
to any Lender or any Issuing Bank originals or copies of any documents,
instruments, notices, communications or other information received by the Agent
from the Funds Administrator, any Borrower, any Subsidiary of any Borrower, the
Majority Lenders, any Lender, any Issuing Bank or any other Person under or in
connection with this Credit Agreement or any other Credit Document except (a) as
specifically provided in this Credit Agreement or any other Credit Document and
(b) as specifically requested from time to time in writing by any Lender, or any
Issuing Bank with respect to a specific document, instrument, notice or other
written communication received by and in the possession of the Agent at the time
of receipt of such request and then only in accordance with such specific
request. The Agent shall be permitted to deliver any notices or other
information required hereunder to the Lenders through email or the use of
Intralinks or any similar service.

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     10.13 Other Agents. Notwithstanding any provision to the contrary contained
elsewhere in this Credit Agreement or in any other Credit Documents, neither the
Syndication Agent nor any Documentation Agent shall have any duties or
responsibilities, nor shall the Syndication Agent nor any Documentation Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any other Credit
Documents or otherwise exist against the Syndication Agent or any Documentation
Agent.
ARTICLE XI
MISCELLANEOUS
     11.1 SUBMISSION TO JURISDICTION; WAIVERS. EACH BORROWER HEREBY IRREVOCABLY
AND UNCONDITIONALLY:
          (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO
WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NONEXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT AND IF
THE BANKRUPTCY COURT DOES NOT HAVE (OR ABSTAINS FROM) JURISDICTION, OR THE
CHAPTER 11 CASES HAVE BEEN DISMISSED, TO THE NONEXCLUSIVE GENERAL JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE LOCATED IN NEW YORK,
NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
          (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME;
          (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH BORROWER AT
THE ADDRESS OF THE FUNDS ADMINISTRATOR SET FORTH IN SECTION 11.5 OR AT SUCH
OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
          (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR
ANY LENDER TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING
AGAINST

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ANY BORROWER OR THE FUNDS ADMINISTRATOR, OR THEIR RESPECTIVE PROPERTY IN THE
COURTS OF OTHER JURISDICTIONS.
          (e) WAIVES THE RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR CROSS-CLAIM
IN RESPECT OF, AND ALL STATUTES OF LIMITATIONS WHICH MAY BE RELEVANT TO, SUCH
ACTION OR PROCEEDING; AND
          (f) WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY
NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT.
     11.2 JURY TRIAL. THE FUNDS ADMINISTRATOR, BORROWERS, THE AGENT, EACH
ISSUING BANK AND THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF THIS CREDIT AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
     11.3 GOVERNING LAW. THE RIGHTS AND DUTIES OF THE FUNDS ADMINISTRATOR,
BORROWERS, THE AGENT, EACH ISSUING BANK AND THE LENDERS UNDER THIS CREDIT
AGREEMENT, THE NOTES (INCLUDING MATTERS RELATING TO THE MAXIMUM PERMISSIBLE
RATE) AND THE OTHER CREDIT DOCUMENTS SHALL PURSUANT TO NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5 1401 BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK EXCEPT AS GOVERNED BY THE BANKRUPTCY CODE.
     11.4 Delays; Partial Exercise of Remedies. No delay or omission of the
Agent, any Issuing Bank or any Lender to exercise any right or remedy hereunder
or under any of the other Credit Documents, whether before or after the
happening of any Event of Default, shall impair any such right or shall operate
as a waiver thereof or as a waiver of any such Event of Default. No single or
partial exercise by the Agent, any Issuing Bank or any Lender of any right or
remedy shall preclude any other or further exercise thereof, or preclude any
other right or remedy.
     11.5 Notices. Except as otherwise provided herein, all notices and
correspondence hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, or by overnight delivery service, with all
charges prepaid, to the following addresses, if to the Agent, or any of the
Lenders, then to Deutsche Bank Trust Company Americas, 60 Wall Street, New York,
New York 10005, Attention: Marguerite Sutton, if to any Issuing Bank, to the
address specified in the applicable L/C Application, and if to the Funds
Administrator or any Borrower, then to the Funds Administrator at 1041 521
Corporate Center Drive, Fort Mill, South Carolina 29715, Attention: Chief
Financial Officer and Treasurer and Chief Accounting Officer; or by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to the
Agent, or any of the Lenders, at (212) 797-4655, if to an Issuing Bank, as
specified in the applicable L/C Application, and if to the Funds Administrator
or any Borrower at (732) 212-3349 and (803) 835-2003, with a copy to James I.
Rubens, Edwards Angell Palmer & Dodge

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LLP, 111 Huntington Avenue, Boston, Massachusetts 02199, facsimile
(888) 325-9130 and to Leonard Klingbaum, Kirkland & Ellis LLP, Citigroup Center,
153 E. 53rd St., New York, NY 10022, facsimile (212) 446-6460, email
lklingbaum@kirkland.com. All such notices and correspondence shall be deemed
given (a) if sent by certified or registered mail, three (3) Business Days after
being postmarked, (b) if sent by overnight delivery service, when received at
the above stated addresses or when delivery is refused and (c) if sent by
facsimile transmission, when receipt of such transmission is acknowledged
except, in the case of a notice from the Agent to the Funds Administrator under
Section 9.2, such notice shall be deemed given when sent by facsimile
transmission.
     11.6 Assignability.
          (a) Borrowers shall not have the right to assign this Credit Agreement
or any interest therein except with the prior written consent of the Agent.
          (b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender except to the extent such transfer would result in increased costs to
Borrowers.
          (c) Each Lender may assign to one or more banks, other financial
institutions or investment funds all or a portion of its rights and obligations
under this Credit Agreement, the Notes and the other Credit Documents; provided
that, except in the case of an assignment to a Federal Reserve Bank (which may
be made without condition or restriction), (i) such assignment shall be for a
fixed and not varying percentage of the assigning Lender’s Loans, L/C
Participations and Commitment, (ii) the Agent shall have consented to such
assignment (which consents shall not be unreasonably withheld), (iii) for each
such assignment, the parties thereto shall execute and deliver to the Agent, for
its acceptance and recording in the Register (as defined below), an Assignment
and Assumption Agreement, together with any Note or Notes subject to such
assignment the assignee or assignor shall have paid to Agent a processing and
recordation fee of $5,000 and (iv) except for any assignment covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Credit Agreement, the Notes and the other Credit Documents, no such assignment
shall be for less than $1,000,000 of the assigning Lender’s Commitment, unless
such assignment is to a then-current holder of a Note. Upon such execution and
delivery of the Assignment and Assumption Agreement to the Agent, from and after
the date specified as the effective date in the Assignment and Assumption
Agreement, (A) the assignee thereunder shall be a party hereto, and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Assumption Agreement, such assignee shall have the rights
and obligations of a Lender hereunder and (B) the assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Assumption Agreement, relinquish its rights
(other than any rights it may have pursuant to Section 11.8, which rights will
survive) and be released from its obligations (other than any obligations it may
have pursuant to Section 11.7, which obligations will survive under this Credit
Agreement) (and, in the case of an Assignment and Assumption Agreement covering
all or the remaining portion of an assigning Lender’s rights and obligations
under this Credit Agreement, such Lender shall cease to be a party hereto).

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          (d) By executing and delivering an Assignment and Assumption
Agreement, the assignee thereunder confirms and agrees as follows: (i) other
than as provided in such Assignment and Assumption Agreement, the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Credit Agreement or any other Credit Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Credit Agreement, the Notes, or any other Credit Document; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower, any
other Credit Parties or any Issuing Bank, the value of the Collateral, or the
performance or observance by (A) any Borrower or any other Credit Parties of any
of its obligations under this Credit Agreement or any other Credit Document, or
(B) any Issuing Bank of any of its obligations under any Letter of Credit; (iii)
such assignee confirms that it has received a copy of this Credit Agreement,
together with copies of the Financial Statements referred to in Section 7.1 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Assumption
Agreement; (iv) such assignee will continue, independently and without reliance
upon the Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, to make its
own credit decisions in taking or not taking action under this Credit Agreement;
(v) such assignee appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under this Credit Agreement and the
other Credit Documents as are delegated to the Agent by their terms, together
with such powers as are reasonably incidental thereto; and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Credit Agreement are required to be
performed by it as a Lender.
          (e) The Agent shall maintain at its address referred to in
Section 11.5 a copy of each Assignment and Assumption Agreement delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the “Register”). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Funds Administrator, Borrowers, the Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Credit Agreement. The Register and copies of each Assignment and Assumption
shall be available for inspection by any Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
          (f) Upon its receipt of an Assignment and Assumption Agreement
executed by an assigning Lender, together with the Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Assumption Agreement has
been completed and is in substantially the form of Exhibit A hereto, (i) accept
such Assignment and Assumption Agreement, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Funds
Administrator. Within five (5) Business Days after its receipt of such notice,
Borrowers shall execute and deliver to the Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of the assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and Assumption
Agreement and, if the assigning Lender has retained a Commitment hereunder, a
new Note or Notes to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Note or Notes shall re evidence
the

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Indebtedness outstanding under the old Note or Notes and shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the Closing Date and shall otherwise
be in substantially the form of the Note or Notes subject to such assignments.
          (g) Each Lender may sell participations (without the consent of the
Agent, any Borrower or any other Lender) to one or more parties in or to all or
a portion of its rights and obligations under this Credit Agreement (including
all or a portion of its Commitment, the Loans owing to it and the Note or Notes
held by it); provided that (i) such Lender’s obligations under this Credit
Agreement (including its Commitment to Borrowers hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Note for all purposes of this Credit Agreement, (iv) the
Funds Administrator, Borrowers, the Agent, and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Credit Agreement and such Notes and (v) such
Lender shall not transfer, grant, assign or sell any participation under which
the participant shall have rights to approve any amendment or waiver of this
Credit Agreement except to the extent such amendment or waiver would (A) extend
the final maturity date or the date for the payments of any installment of fees
or principal or interest of any Loans or Letter of Credit reimbursement
obligations in which such participant is participating; (B) reduce the amount of
any installment of principal of the Loans or the amount of any drawing under any
Letter of Credit in which such participant is participating; (C) except as
otherwise expressly provided in this Credit Agreement, reduce the interest rate
applicable to the Loans or the amount of any drawing under any Letter of Credit
in which such participant is participating; or (D) except as otherwise expressly
provided in this Credit Agreement, reduce any Fees payable hereunder in which
such participant participates. Each Lender selling or granting a participation,
including a participation sold pursuant to Section 2.10, shall indemnify
Borrowers and the Agent for any Taxes and Liabilities that either may sustain as
a result of such Lender’s failure to withhold and pay any Taxes applicable to
payments by such Lender to its participant in respect of such participation.
          (h) Each Lender agrees that, without the prior written consent of
Borrowers and the Agent, it will not make any assignment hereunder in any manner
or under any circumstances that would require registration or qualification of,
or filings in respect of, any Loan, Note or other Obligation under the
securities laws of the United States of America or of any jurisdiction.
          (i) In connection with the efforts of any Lender to assign its rights
or obligations or to participate interests, such Lender may disclose any
information in its possession regarding any Borrower, subject to the
confidentiality provisions of Section 11.7.
     11.7 Confidentiality. Each Lender agrees that it will use its reasonable
best efforts not to disclose without the prior consent of Borrowers (other than
to its employees, auditors, advisors, Affiliates and counsel, or to another
Lender if the disclosing Lender or such disclosing Lender’s holding or parent
company in its sole discretion determines that any such party should have access
to such information) any information with respect to any Borrower or any of its
Subsidiaries, which is furnished pursuant to this Credit Agreement and which is
designated by such Borrower to the Lenders in writing as confidential, provided
that any Lender may disclose

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any such information (a) as has become generally available to the public, (b) as
may be required or appropriate in any report, statement or testimony submitted
to or examination conducted by any Governmental Authority having or claiming to
have jurisdiction over such Lender, (c) as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation, (d) in
order to comply with any Requirement of Law, (e) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Notes or Commitments or any interest therein by such
Lender, to the extent such transferee has agreed in writing to be bound by the
terms of this Section 11.7, (f) to other financial institutions with respect to
which the respective Lender has a contractual relationship in accordance with
such Lender’s regular banking procedures, provided that each such other
financial institution agrees to be bound by the confidentiality provisions
contained in this Section 11.7, (g) to any nationally recognized rating agency
that requires access to information regarding the respective Lender’s investment
portfolio in connection with such rating agency’s issuance of ratings with
respect to such Lender, provided that such Lender advises such rating agency of
the confidential nature of such information, (h) as may be required or
appropriate in connection with protecting, preserving, exercising or enforcing
(or planning to exercise or enforce) any of its rights in, under or related to
the Collateral or the Credit Documents and (i) as may be required or appropriate
in consulting with any Person with respect to any of the foregoing matters.
     11.8 Indemnification. (a) Borrowers shall and hereby agree jointly and
severally to indemnify, defend and hold harmless the Agent, each Issuing Bank
and each of the Lenders and their respective directors, officers, agents,
employees, counsel, advisors and Affiliates (each, an "Indemnified Person”) from
and against (i) any and all losses, claims, damages, liabilities, deficiencies,
judgments or expenses incurred by any of them (except to the extent that it is
finally judicially determined to have resulted from their own gross negligence,
bad faith or willful misconduct) (including, but not limited to, reasonable
attorneys’ fees and expert fees) (collectively, “Losses”) arising out of or by
reason of any litigations, investigations, claims or proceedings which arise out
of or are in any way related to (A) this Credit Agreement or the transactions
contemplated thereby; (B) the issuance of Letters of Credit; (C) the failure of
an Issuing Bank to honor a drawing under any Letter of Credit, as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority; (D) any actual or
proposed use by any Borrower of (1) the proceeds of any Loans or (2) any Letter
of Credit; or (E) the Agent’s, the Lenders’ or any Issuing Bank’s entering into
this Credit Agreement, the other Credit Documents or any other agreements and
documents relating thereto, including amounts paid in-settlement, court costs
and the fees and disbursements of counsel incurred in connection with any such
litigation, investigation, claim or proceeding or any advice rendered in
connection with any of the foregoing; and (ii) any Losses that arise directly or
indirectly from or in connection with any Environmental Laws. If and to the
extent that the Obligations of Borrowers hereunder are unenforceable for any
reason, Borrowers hereby jointly and severally agree to make the maximum
contribution to the payment and satisfaction of such Obligations which is
permissible under applicable law. Borrowers’ joint and several Obligations
hereunder shall survive any termination of this Credit Agreement and the other
Credit Documents and the payment in full of the Obligations, and are in addition
to, and not in substitution of, any other of its Obligations. In addition,
Borrowers shall, upon demand, pay to the Agent and each Lender all costs and
expenses (including the reasonable fees and disbursements of counsel and other
professionals) paid or incurred by the Agent or such Lender

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in (w) enforcing or defending its rights under or in respect of this Credit
Agreement, the other Credit Documents or any other document or instrument now or
hereafter executed and delivered in connection herewith, (x) collecting the
Loans, (y) foreclosing or otherwise collecting upon the Collateral or any part
thereof and (z) obtaining any legal, accounting or other advice in connection
with any of the foregoing. Borrowers agree (without duplication) to pay promptly
(i) upon written request by Agent, which shall include reasonable detail, all
reasonable costs and expenses in connection with the review of pleadings and
documents related to any Chapter 11 Case and any subsequent Chapter 7 case,
attendance at all hearings and meetings related to any Chapter 11 Case and any
subsequent Chapter 7 case, including, in each case without limitation, the
reasonable fees and out-of-pocket expenses of Winston & Strawn LLP, special
counsel to Agent, and any local counsel retained by Agent relative thereto,
other attorney costs, independent public accountants and other outside experts
retained by Agent in connection with the administration of this Credit Agreement
and the other Credit Documents and (ii) upon written request by any other member
of the Steering Committee, which shall include reasonable detail, all reasonable
costs and expenses in connection with review of pleadings and documents related
to any Chapter 11 Case and any subsequent Chapter 7 case in their capacity as
members of the Steering Committee, including without limitation, recoverable
attorney fees and out-of-pocket expenses in such capacity.
     If any litigation, investigation, claim or proceeding is commenced by a
third party as to which an Indemnified Person proposes to demand
indemnification, it shall notify Wellman with reasonable promptness; provided,
however, that any failure by such Indemnified Person to notify Wellman shall not
relieve Borrowers from their obligations hereunder (except to the extent that
Borrowers are materially prejudiced by such failure to promptly notify).
Borrowers shall be entitled to assume the defense of any such action, suit,
proceeding or investigation, including the employment of counsel reasonably
satisfactory to the Indemnified Person. The Indemnified Person shall have the
right to counsel of its own choice to represent it, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i)
Borrowers have failed promptly to assume the defense and employ counsel
reasonably satisfactory to the Indemnified Person in accordance with the
preceding sentence or (ii) the Indemnified Person shall have been advised by
counsel that there exist actual or potential conflicting interests between
Borrowers and such Indemnified Person, including situations in which one or more
legal defenses may be available to such Indemnified Person that are different
from or additional to those available to Borrowers; provided, however, that
Borrowers shall not, in connection with any one such action or proceeding or
separate but substantially similar actions or proceedings arising out of the
same general allegations be liable for fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Persons; and such
counsel shall, to the extent consistent with its professional responsibilities,
cooperate with Borrowers and any counsel designated by Borrowers.
     Borrowers further agree that they will not, without the prior written
consent of the Agent, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not the
Agent or any other Indemnified Person is an actual or potential party to such
claim, action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of the Agent and each other Indemnified Person
from all liability and obligations arising therefrom. However, Borrowers will
not be liable hereunder for

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any amount paid by an Indemnified Person if such Indemnified Person settles or
compromises any claims or actions or consents to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding and such settlement,
compromise or consent to entry is entered into without Wellman’s prior written
consent (which consent may not be withheld or delayed unless such settlement is
unreasonable in light of such claims or actions against, and defenses available
to, such Indemnified Person) unless such Indemnified Person has provided notice
of such settlement or compromise and Wellman does not within five (5) Business
Days (or such shorter time as is reasonable under the circumstances) provide the
Indemnified Person with evidence that the Credit Parties have the financial
wherewithal to reimburse such Indemnified Person for all potential amounts
payable in connection with the underlying claim or proceeding to which such
settlement or compromise relates. Borrowers further agree that no Indemnified
Person shall have any liability to Wellman or any of its Subsidiaries arising
out of or in connection with the proposed transactions giving rise to or
contemplated by this Credit Agreement or any other Credit Document except for
such liability for losses, claims, damages, liabilities or expenses to the
extent they have resulted from the applicable Indemnified Person’s gross
negligence, bad faith or willful misconduct. No Indemnified Person shall be
responsible or liable to any Borrower or any other Person for consequential,
special or punitive damages which may be alleged as a result of this Credit
Agreement or the financing contemplated hereby.
     11.9 Entire Agreement; Successors and Assigns. This Credit Agreement and
the other Credit Documents constitute the entire agreement among the Funds
Administrator, Borrowers, the Agent and the Lenders (in their capacities as such
and not in their capacity, if any, as an Issuing Bank), supersedes any prior
agreements among them, and shall bind and benefit the Funds Administrator,
Borrowers, the Agent and the Lenders and their respective successors and
permitted assigns.
     11.10 Amendments, Etc. No amendment or waiver of any provision of this
Credit Agreement or any other Credit Document, nor consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Majority Lenders (or by the Agent on their
behalf), or if the Lenders shall not be parties thereto, by the parties thereto
and consented to by the Majority Lenders (or by the Agent on their behalf), and
each such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, that,
notwithstanding the foregoing:
     (a) no amendment, waiver or consent shall, unless in writing and signed by
all of the Lenders, increase the percentages in clause (a)(i) or (a)(ii) of the
definition of the term Borrowing Base.
     (b) no amendment, waiver or consent shall, unless in writing and signed by
all the Lenders, do any of the following: (i) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations (except pursuant to
an increase in Commitments or obligations arising under Section 11.6 hereof);
(ii) except as otherwise expressly provided in this Credit Agreement, reduce the
principal of, or interest on, the Notes or any drawing under any Letter of
Credit or any fees hereunder; (iii) postpone any date fixed for any payment in
respect of principal of, or interest on, the Notes or for the reimbursement of
any drawing under any Letter of Credit or any fees hereunder; (iv) change the
percentage of the Commitments, or any minimum requirement necessary for the
Lenders or the Majority Lenders to take any action

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hereunder; (v) amend or waive this Section 11.10, or change the definition of
Majority Lenders; (vi) except in connection with the financing, refinancing,
sale or other disposition of any Collateral of Borrowers permitted under this
Credit Agreement, release Agent’s Liens on all or a substantial portion of the
Collateral; or (vii) release any Borrower or Subsidiary Guarantor (other than a
Subsidiary Guarantor that is an Immaterial Subsidiary) from its obligations
under the Credit Documents except pursuant to a transaction permitted by this
Credit Agreement; and, provided that no amendment, waiver or consent affecting
the rights or duties of the Agent or any Issuing Bank under, (x) in the case of
the Agent, any term or provision of this Credit Agreement and (y) in the case of
any Issuing Bank, (1) Sections 3.3, 3.4, 3.6 and 3.8 of this Credit Agreement,
(2) any Letter of Credit or (3) any L/C Application, shall in any event be
effective, unless in writing and signed by the Agent or such Issuing Bank, as
applicable, in addition to the Lenders required hereinabove to take such action.
     Notwithstanding any of the foregoing to the contrary, the consent of
Borrowers shall not be required for any amendment, modification or waiver of the
provisions of Article 10 (other than the provisions of Section 10.9). In
addition, Borrowers and the Lenders hereby authorize the Agent to modify this
Credit Agreement by unilaterally amending or supplementing Annex I from time to
time in the manner requested by Borrowers, the Agent or any Lender in order to
reflect any assignments or transfers of the Loans as provided for hereunder;
however, provided that the Agent shall promptly deliver a copy of any such
modification to the Funds Administrator and each Lender.
          (c) If a Defaulting Lender exists or, in connection with any proposed
amendment, modification, waiver or termination requiring the consent of all
affected Lenders, the consent of Majority Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained (any such Lender
whose consent is not obtained as described in this Section 11.10(c) below being
referred to as a “Non-Consenting Lender”), then, in respect of any Defaulting
Lender or Non-Consenting Lender (so long as Agent is not a Non-Consenting
Lender), at Funds Administrator’s request, Agent or a Person reasonably
acceptable to Agent shall have the right with Agent’s consent and in Agent’s
sole discretion (but shall have no obligation) to purchase from such Defaulting
Lender or Non-Consenting Lender, as applicable, and such Defaulting Lender or
Non-Consenting Lender, as applicable, agrees that it shall, upon Agent’s
request, sell and assign to Agent or such Person, all of the Commitments of such
Defaulting Lender or Non-Consenting Lender, as applicable, for an amount equal
to the principal balance of all Loans held by such Defaulting Lender or
Non-Consenting Lender, as applicable, and all accrued interest and fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment and Assumption Agreement.
     11.11 Nonliability of Agent and Lenders. The relationship between Borrowers
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent, any Lender or any Issuing Bank shall have any fiduciary
responsibilities to the Funds Administrator or any Borrower. Neither the Agent,
any Lender or any Issuing Bank undertakes any responsibility to Borrowers to
review or inform Borrowers of any matter in connection with any phase of any
Borrowers’ business or operations.
     11.12 Counterparts. This Credit Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so

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executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
     11.13 Effectiveness. This Credit Agreement shall become effective on the
date on which all of the parties hereto shall have signed a copy hereof (whether
the same or different copies) and shall have delivered the same to the Agent
pursuant to Section 11.5 or, in the case of the Lenders, shall have given to the
Agent written or facsimile notice (actually received) at such office that the
same has been signed and mailed to it and the conditions precedent set forth in
Section 5.1 have been satisfied (or waived in accordance with Section 11.10).
     11.14 Severability. In case any provision in or obligation under this
Credit Agreement or the Notes or the other Credit Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
     11.15 Headings Descriptive. The headings of the several sections and
subsections of this Credit Agreement, and the Table of Contents, are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Credit Agreement.
     11.16 Maximum Rate. Notwithstanding anything to the contrary contained
elsewhere in this Credit Agreement or in any other Credit Document, Borrowers,
the Agent and the Lenders hereby agree that all agreements among them under this
Credit Agreement and the other Credit Documents, whether now existing or
hereafter arising and whether written or oral, are expressly limited so that in
no contingency or event whatsoever shall the amount paid, or agreed to be paid,
to the Agent or any Lender for the use, forbearance, or detention of the money
loaned to Borrowers and evidenced hereby or thereby or for the performance or
payment of any covenant or obligation contained herein or therein, exceed the
Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Credit Agreement or any of the other Credit Documents at the
time performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest Lawful
Rate, and if from any such circumstance any Lender should ever receive anything
of value deemed interest by applicable law which would exceed the Highest Lawful
Rate, such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to Borrowers. All
sums paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other Indebtedness of Borrowers
to the Agent or any Lender shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Indebtedness until payment in full so that the actual rate of interest on
account of all such Indebtedness does not exceed the Highest Lawful Rate
throughout the entire term of such Indebtedness. The terms and provisions of
this Section shall control every other provision of this Credit Agreement, the
other Credit Documents and all agreements among Borrowers, the Agent and the
Lenders.

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     11.17 Right of Setoff. In addition to and not in limitation of all rights
of offset that any Lender may have under applicable law, each Lender shall,
subject to Section 9.4 (and notwithstanding the provisions of Section 362 of the
Bankruptcy Code, without any application, motion or notice to, or order from,
the Bankruptcy Court), upon the occurrence and during the continuance of any
Event of Default subject to giving Required Notice pursuant to Section 9.3 and
whether or not such Lender has made any demand or the Obligations of any Credit
Party are matured, have the right to appropriate and apply to the payment of the
Obligations of such Credit Party all deposits (general or special, time or
demand, provisional or final) then or thereafter held by and other Indebtedness
or property then or thereafter owing by such Lender, including any and all
amounts in any Depository Account, Concentration Account or the DBTCo Loan
Account. For purposes of this Section 11.17, the Obligations of a Credit Party
to a Lender shall include, as fully as though such Obligations were the direct
Obligations of such Credit Party to such Lender, the Obligations of such Credit
Party in which such Lender has an L/C Participation, in each case, to the extent
of such participation. No Lender may exercise such rights without the prior
written consent of Agent or the Majority Lenders pursuant to Section 9.4. Any
amount received as a result of the exercise of such rights shall be reallocated
as set forth in Section 2.10.
     11.18 Defaulting Lender.
          (a) Unless the Agent shall have received notice from a Lender, prior
to the time specified in such Section, that such Lender will not make available
to the Agent a Loan required to be made by it pursuant to Section 2.2, the Agent
may assume that such Lender has made such amounts available to the Agent in
accordance with such Sections and the Agent in its sole discretion may, in
reliance upon such assumption, make available to Borrowers or the applicable
Issuing Bank a corresponding amount on behalf of such Lender.
          (b) If any amount referred to in subsection (a) of this Section 11.18
or in Section 2.3 is not made available to the Agent by a Lender (a “Defaulting
Lender”) and the Agent has made such amount available to Borrowers or an Issuing
Bank, the Agent shall be entitled to recover such amount on demand from such
Defaulting Lender together with interest as hereinafter provided. If such
Defaulting Lender does not pay such amount forthwith upon the Agent’s demand
therefore, the Agent shall promptly notify the Funds Administrator and Borrowers
shall immediately (but in no event later than five Business Days after such
demand) pay such amount to the Agent together with interest calculated as
hereinafter provided. The Agent shall also be entitled to recover from such
Defaulting Lender and/or Borrowers, as the case may be, (i) interest on such
amount in respect of each day from the date such corresponding amount was made
available by the Agent to Borrowers to the date such amount is recovered by the
Agent, at a rate per annum equal to either (A) if paid by such Defaulting
Lender, the overnight Federal Funds Rate or (B) if paid by Borrowers, the then
applicable rate of interest, calculated in accordance with Section 4.1 or
Section 4.2, plus (ii) in each case, an amount equal to any costs (including
legal expenses) and losses incurred as a result of the failure of such
Defaulting Lender to provide such amount as provided in this Credit Agreement.
Nothing herein shall be deemed to relieve any Lender from its duty to fulfill
its obligations hereunder or to prejudice any rights which Borrowers or any
Issuing Bank, may have against any Lender as a result of any default by such
Lender hereunder, including the right of Borrowers to seek reimbursement from
any Defaulting Lender for any amounts paid by Borrowers under clause (ii) above
on account of such Defaulting Lender’s default.

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          (c) (i) Notwithstanding anything contained herein to the contrary, so
long as any Lender is a Defaulting Lender or has rejected its Commitment, the
Agent shall not be obligated to transfer to such Lender (A) any payments made by
Borrowers to the Agent for the benefit of such Lender or (B) any amounts
contemplated by Section 2.3(b)(i); and, such Lender shall not be entitled to the
sharing of any payments pursuant to Section 2.10. Amounts otherwise payable to
such Lender under Section 2.10 shall instead be paid to the Agent.
     (ii) For purposes of voting or consenting to matters with respect to the
Credit Documents and determining Proportionate Share, such Defaulting Lender
shall be deemed not to be a “Lender” and such Lender’s Commitment shall be
deemed to be zero (0).
     (iii) This Section 11.18(c) shall remain effective with respect to a
Defaulting Lender until (a) the Obligations under this Credit Agreement shall
have been declared or shall have become immediately due and payable or (b) the
Majority Lenders, the Agent and Borrowers shall have waived such Lender’s
default in writing.
     (iv) No Lender’s Commitment shall be increased or otherwise affected, and
performance by the respective Borrowers shall not be excused, by the operation
of this Section 11.18(c). Any payments of principal or interest which would, but
for this subsection (c), be paid to any Lender, shall be paid to the Lenders who
shall not be in default under their respective Commitments and who shall not
have rejected any Commitment, for application to the Loans then due and payable
or to the other Obligations then due and payable or to provide cash collateral
to secure Obligations not then due and payable in such manner and order as shall
be determined by the Agent.
     11.19 Rights Cumulative. Each of the rights and remedies of the Agent, each
Issuing Bank and the Lenders under the Credit Documents shall be in addition to
all of their other rights and remedies under the Credit Documents and applicable
law, and nothing in the Credit Documents shall be construed as limiting any such
rights or remedies.
     11.20 Third Party Beneficiaries. Each Issuing Bank shall be deemed to be a
third party beneficiary of its rights under this Credit Agreement, provided
that, except as otherwise provided in Section 11.10, such rights may be amended
or waived, and any departure therefrom by any Credit Party consented to, without
their respective consents.
     11.21 Joint and Several Liability of Borrowers.
          (a) Each of the Borrowers shall be jointly and severally liable
hereunder and under each of the other Credit Documents with respect to all
Obligations, regardless of which of the Borrowers actually receives the proceeds
of the Loans or the benefit of any other extensions of credit hereunder, or the
manner in which the Funds Administrator, Borrowers, the Agent, the Lenders or
any of the Issuing Banks account therefore in their respective books and
records. In furtherance and not in limitation of the foregoing, (i) each
Borrower’s obligations and liabilities with respect to proceeds of Loans which
it receives or Letters of Credit issued for its account, and related fees, costs
and expenses, and (ii) each Borrower’s obligations and liabilities arising as a
result of the joint and several liability of Borrowers hereunder with respect to
proceeds of

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Loans received by, or Letters of Credit issued for the account of, any of the
other Borrowers, together with the related fees, costs and expenses, shall be
separate and distinct obligations, both of which are primary obligations of such
Borrower. Neither the joint and several liability of, nor the Liens granted to
the Agent under the Collateral Documents by, any of the Borrowers shall be
impaired or released by (A) the failure of the Agent, any Lender or any Issuing
Bank, any successors or assigns thereof, or any holder of any Note or any of the
Obligations to assert any claim or demand or to exercise or enforce any right,
power or remedy against the Funds Administrator, any Borrower, any Subsidiary of
any Borrower, any other Person, the Collateral or otherwise; (B) any extension
or renewal for any period (whether or not longer than the original period) or
exchange of any of the Obligations or the release or compromise of any
obligation of any nature of any Person with respect thereto; (C) the surrender,
release or exchange of all or any part of any property (including without
limitation the Collateral) securing payment, performance and/or observance of
any of the Obligations or the compromise or extension or renewal for any period
(whether or not longer than the original period) of any obligations of any
nature of any Person with respect to any such property; (D) any action or
inaction on the part of the Agent, any Lender or any Issuing Bank, or any other
event or condition with respect to any other Borrower, including any such action
or inaction or other event or condition, which might otherwise constitute a
defense available to, or a discharge of, such Borrower, or a guarantor or surety
of or for any or all of the Obligations; and (E) any other act, matter or thing
(other than payment or performance of the Obligations) which would or might, in
the absence of this provision, operate to release, discharge or otherwise
prejudicially affect the obligations of such Borrower or any other Borrower.
          (b) Notwithstanding any provision to the contrary contained herein or
in any other of the Credit Documents, to the extent the joint obligations of a
Borrower shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law) then the
Obligations of each Borrower hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the federal Bankruptcy Code).
          (c) To the extent that any Borrower shall make a payment under this
Section 11.21 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount that such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount”
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment. As of any date of
determination, the “Allocable Amount” of any Borrower shall be equal to the
maximum amount of the claim that could then be recovered from such Borrower
under this Section 11.21 without rendering such claim

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voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law. This Section 11.21(c) is
intended only to define the relative rights of Borrowers and nothing set forth
in this Section 11.21(c) is intended to or shall impair the obligations of
Borrowers, jointly and severally, to pay any amounts as and when the same shall
become due and payable in accordance with the terms of this Credit Agreement,
including Section 11.21(a). Nothing contained in this Section 11.21(c) shall
limit the liability of any Borrower to pay the Loans made directly or indirectly
to that Borrower and accrued interest, Fees and Expenses with respect thereto
for which such Borrower shall be primarily liable. The parties hereto
acknowledge that the rights of contribution and indemnification hereunder shall
constitute assets of the Borrower to which such contribution and indemnification
is owing. The rights of the indemnifying Borrowers against other Credit Parties
under this Section 11.21(c) shall be exercisable upon the full and indefeasible
payment of the Obligations and the termination of the Commitments.
          (d) The liability of Borrowers under this Section 11.21 is in addition
to and shall be cumulative with all liabilities of each Borrower to Agent and
Lenders under this Credit Agreement and the other Credit Documents to which such
Borrower is a party, without any limitation as to amount.
     11.22 Appointment and Authorization of Funds Administrator.
          (a) Each Borrower hereby designates, appoints, authorizes and empowers
Wellman as its agent to act as specified in the capacity of Funds Administrator
under this Credit Agreement and each of the other Credit Documents and Wellman
hereby acknowledges such designation, authorization and empowerment, and accepts
such appointment. Each Borrower hereby irrevocably authorizes and directs the
Funds Administrator to take such action on its behalf under the respective
provisions of this Credit Agreement and the other Credit Documents, and any
other instruments, documents and agreements referred to herein or therein, and
to exercise such powers and to perform such duties hereunder and thereunder as
are specifically delegated to or required of the Funds Administrator by the
respective terms and provisions hereof and thereof, and such other powers as are
reasonably incidental thereto, including, without limitation, to take the
following actions for and on such Borrower’s behalf:
     (i) to submit on behalf of each Borrower Notices of Borrowing, Notices of
Conversion and Notices of Continuation to Agent in accordance with the
provisions of this Credit Agreement, each such notice to be submitted by the
Funds Administrator to Agent as soon as practicable after its receipt of a
request to do so from a Borrower; and
     (ii) to submit on behalf of each Borrower requests for the issuance of
Letters of Credit in accordance with the provisions of this Credit Agreement,
each such request for the issuance of a Letter of Credit to be submitted by the
Funds Administrator as soon as practicable after its receipt of a request to do
so from any Borrower.
The Funds Administrator is further authorized and directed by each of the
Borrowers to take all such actions on behalf of such Borrower necessary to
exercise the specific powers granted in clauses (i) and (ii) above and to
perform such other duties hereunder and under

120

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the other Credit Documents, and deliver such documents as delegated to or
required of the Funds Administrator by the terms hereof or thereof. Agent and
each Lender may regard any notice or other communication pursuant to any Credit
Documents from the Funds Administrator as a notice or communication from all
Borrowers, and may give any notice or communication required or permitted to be
given to any Borrower or Borrowers hereunder to the Funds Administrator on
behalf of such Borrower or Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made
on its behalf by the Funds Administrator shall be deemed for all purposes to
have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly
by such Borrower.
          (b) The Funds Administrator may perform any of its duties hereunder or
under any of the other Credit Documents by or through its agents or employees.
     11.23 Parties Including Trustees; Bankruptcy Court Proceedings. This Credit
Agreement, the other Credit Documents, and all Liens and other rights and
privileges created hereby or pursuant to the Security Agreements or any other
Loan Document shall be binding upon each Credit Party, the estate of each Credit
Party, and any trustee or successor in interest of any Credit Party in the
Chapter 11 Cases or any subsequent case commenced under Chapter 7 of the
Bankruptcy Code, and shall not be subject to Section 365 of the Bankruptcy Code.
This Credit Agreement and the other Credit Documents shall be binding upon, and
inure to the benefit of, the successors of Agent and each Lender and each of
their respective assigns, transferees and endorsees. The Liens created by this
Credit Agreement, the Security Agreements and the other Credit Documents shall
be and remain valid and perfected in the event of the substantive consolidation
or conversion of any Chapter 11 Case or any other bankruptcy case of any Credit
Party to a case under Chapter 7 of the Bankruptcy Code or in the event of
dismissal of any Chapter 11 Case or the release of any Collateral from the
jurisdiction of the Bankruptcy Court for any reason, without the necessity that
Agent file financing statements or otherwise perfect its security interests or
Liens under applicable law; provided, however, that additional filings may be
required in the United States Copyright Office and/or United States Patent and
Trademark Office to perfect the Collateral Agent’s Lien on any Intellectual
Property acquired after the date hereof.
     11.24 Effect of Financing Orders. To the extent of any inconsistency with
this Credit Agreement or any of the other Credit Documents, the terms and
provisions of the Financing Orders shall govern.
     11.25 Reservation of Rights. Nothing contained in this Credit Agreement
shall prevent the Agent or any Lender from appearing and being heard on any
matter in the Chapter 11 Cases.
[Signature Page Follows]

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     IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be executed and delivered by their proper and duly authorized officers as of the
date set forth above.

           

BORROWERS:

WELLMAN, INC.,
a Delaware corporation, individually, as a Borrower
and as Funds Administrator
      By:   /s/ Keith R. Phillips       Title: Chief Financial Officer         
      PRINCE, INC., as a Borrower
      By:   /s/ Keith R. Phillips       Title: President                WELLMAN
OF MISSISSIPPI, INC.,
as a Borrower
      By:   /s/ Keith R. Phillips       Title: Vice President               
CARPET RECYCLING OF GEORGIA, INC.,
as a Borrower
      By:   /s/ Keith R. Phillips       Title: Vice President               
ALG, INC.,
as a Borrower
      By:   /s/ Keith R. Phillips       Title: President             

[Signature Page to Wellman DIP Facility]

                                   

 

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            FIBER INDUSTRIES, INC.,
as a Borrower
      By:   /s/ Keith R. Phillips       Title: Vice President                PTA
RESOURCES, LLC,
as a Borrower
      By:   /s/ Keith R. Phillips       Title: President                AGENT:

DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Agent and Collateral Agent
      By:   /s/ MargueriteSutton       Title: Director                     
By:   /s/ David J. Bell       Title: Managing Director             

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

DEUTSCHE BANK TRUST COMPANY
AMERICAS
      By:   /s/ Marguerite Sutton       Title: Director                     
By:   /s/ David J. Bell       Title: Managing Director             

[Signature Page to Wellman DIP Facility]

                                   

 

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            LENDERS:

JPMORGAN CHASE BANK, N.A.
      By:   /s/ Peter A. Dedousis       Title: Managing Director           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

GENERAL ELECTRIC CAPITAL
CORPORATION
      By:   /s/ James R. Persico       Title: Duly Authorized Signatory         
 

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

LASALLE BUSINESS CREDIT, LLC
      By:     /s/ Steven J. Chalmers      Title: V.P.           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL)
      By:   /s/ Barry Felker      Title: Vice President           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

WELLS FARGO FOOTHILL, LLC
      By:   /s/ Rohan Damani       Title: Vice President           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

GMAC COMMERCIAL FINANCE LLC
      By:   /s/ Thomas Brent     Title: Director           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

MERRILL LYNCH CAPITAL
      By:   /s/ James R. Persico       Title: Duly Authorized Signatory         
 

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

PNC BANK, NATIONAL ASSOCIATION
      By:   /s/ John Cunningham       Title: VP           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

ALLIED IRISH BANK, PLC
      By:   /s/ Albert D. Perez       Title: Vice President                     
By:   /s/ Eanna P. Mulkere       Title: Assistant Vice President           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

WEBSTER BUSINESS CREDIT CORPORATION
      By:   /s/ Bradford Mitch       Title: Vice President           

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

UPS CAPITAL CORPORATION
      By:   /s/ John P. Holloway       Title: Director of Portfolio Management 
         

[Signature Page to Wellman DIP Facility]

 

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            LENDERS:

E*TRADE BANK
      By:   /s/ Matthew J. Geary       Title: Executive Vice President         
 

[Signature Page to Wellman DIP Facility]

 

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ANNEX I
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 26, 2008
LENDERS; COMMITMENTS; LENDING OFFICES
Lending offices on file with Agent.
COMMITMENTS

                      COMMITMENT         LENDER   (US dollars)     % COMMITMENT
 
Deutsche Bank Trust Company Americas
  $ 18,000,000       8.00 %
JPMorgan Chase Bank, N.A.
  $ 18,000,000       8.00 %
General Electric Capital Corporation
  $ 18,000,000       8.00 %
LaSalle Business Credit, LLC
  $ 18,000,000       8.00 %
Wachovia Capital Finance Corporation (Central)
  $ 18,000,000       8.00 %
Wells Fargo Foothill, LLC
  $ 15,000,000       6.67 %
GMAC Commercial Finance LLC
  $ 18,000,000       8.00 %
Merrill Lynch Capital
  $ 18,000,000       8.00 %
PNC Bank, National Association
  $ 18,000,000       8.00 %
Allied Irish Bank, plc
  $ 15,000,000       6.67 %
Webster Business Credit Corporation
  $ 15,000,000       6.67 %
UPS Capital Corporation
  $ 18,000,000       8.00 %
E*Trade Bank
  $ 18,000,000       8.00 %

ANNEX I