exv10w13



 




Exhibit 10.13





 

 









NEENAH FOUNDRY COMPANY

AND

THE SUBSIDIARIES OF NEENAH FOUNDRY COMPANY

IDENTIFIED ON THE SIGNATURE PAGES HERETO,

AS BORROWERS




 






AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT




Dated as of December 29, 2006




$100,000,000

(with a possible increase up to $110,000,000)




 






BANK OF AMERICA, N.A.,

Individually and as Agent for any Lender which is

or becomes a Party hereto,




BANC OF AMERICA SECURITIES LLC AND CREDIT SUISSE SECURITIES (USA) LLC,

as Co-Lead Arrangers and Book Managers,




CREDIT SUISSE SECURITIES (USA) LLC,

as Syndication Agent, and




THE ADDITIONAL LENDERS NOW AND FROM TIME TO TIME

PARTY HERETO





 

 






 









 












TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 
	SECTION 1. CREDIT FACILITY	 	1
	 
	 	1.1.	 	Loans.	 	1
	 
	 	1.2.	 	Letters of Credit; LC Guaranties.	 	6
	 
	 	1.3.	 	[Intentionally Omitted].	 	7
	 
	 	1.4.	 	Borrowing Agent.	 	7
	 
	 	 	 	 	 	 
	SECTION 2. INTEREST, FEES AND CHARGES	 	8
	 
	 	2.1.	 	Interest.	 	8
	 
	 	2.2.	 	Computation of Interest and Fees.	 	8
	 
	 	2.3.	 	Fee Letter; Prepayment Fee under Original Loan Agreement.	 	9
	 
	 	2.4.	 	Letter of Credit and LC Guaranty Fees.	 	9
	 
	 	2.5.	 	Unused Line Fee.	 	10
	 
	 	2.6.	 	[Intentionally Omitted].	 	10
	 
	 	2.7.	 	Audit Fees.	 	10
	 
	 	2.8.	 	Reimbursement of Expenses.	 	11
	 
	 	2.9.	 	Bank Charges.	 	11
	 
	 	2.10.	 	Collateral Protection Expenses; Appraisals.	 	12
	 
	 	2.11.	 	Payment of Charges.	 	12
	 
	 	2.12.	 	No Deductions.	 	12
	 
	 	2.13.	 	Joint and Several Obligations.	 	13
	 
	 	 	 	 	 	 
	SECTION 3. LOAN ADMINISTRATION.	 	15
	 
	 	3.1.	 	Manner of Borrowing Revolving Credit Loans/LIBOR Option.	 	15
	 
	 	3.2.	 	Payments.	 	19
	 
	 	3.3.	 	Mandatory and Optional Prepayments.	 	20
	 
	 	3.4.	 	Application of Payments and Collections.	 	22
	 
	 	3.5.	 	All Loans to Constitute One Obligation.	 	23
	 
	 	3.6.	 	Loan Account.	 	24
	 
	 	3.7.	 	Statements of Account.	 	24
	 
	 	3.8.	 	Increased Costs.	 	24
	 
	 	3.9.	 	Basis for Determining Interest Rate Inadequate.	 	25
	 
	 	3.10.	 	Sharing of Payments, Etc.	 	26
	 
	 	3.11.	 	Optional Prepayment/Replacement of Lenders.	 	26
	 
	 	 	 	 	 	 
	SECTION 4. TERM AND TERMINATION	 	27
	 
	 	4.1.	 	Term of Agreement.	 	27
	 
	 	4.2.	 	Termination.	 	27
	 
	 	 	 	 	 	 
	SECTION 5. SECURITY INTERESTS	 	28






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	 	 	 	 	 	 	Page
	 
	 	5.1.	 	Security Interest in Collateral.	 	28
	 
	 	5.2.	 	Other Collateral.	 	30
	 
	 	5.3.	 	Lien Perfection; Further Assurances.	 	31
	 
	 	5.4.	 	Lien on Realty.	 	31
	 
	 	 	 	 	 	 
	SECTION 6. COLLATERAL ADMINISTRATION	 	32
	 
	 	6.1.	 	General.	 	32
	 
	 	6.2.	 	Administration of Accounts.	 	33
	 
	 	6.3.	 	Administration of Inventory.	 	35
	 
	 	6.4.	 	Administration of Equipment.	 	36
	 
	 	6.5.	 	Payment of Charges.	 	36
	 
	 	 	 	 	 	 
	SECTION 7. REPRESENTATIONS AND WARRANTIES	 	36
	 
	 	7.1.	 	General Representations and Warranties.	 	36
	 
	 	7.2.	 	Continuous Nature of Representations and Warranties.	 	44
	 
	 	7.3.	 	Survival of Representations and Warranties.	 	44
	 
	 	 	 	 	 	 
	SECTION 8. COVENANTS AND CONTINUING AGREEMENTS	 	44
	 
	 	8.1.	 	Affirmative Covenants.	 	44
	 
	 	8.2.	 	Negative Covenants.	 	49
	 
	 	8.3.	 	Specific Financial Covenants.	 	62
	 
	 	 	 	 	 	 
	SECTION 9. CONDITIONS PRECEDENT	 	62
	 
	 	9.1.	 	Conditions Precedent to Initial Loans and Other Initial Credit Accommodations.	 	62
	 
	 	9.2.	 	Conditions Precedent to all Loans and other Credit Accommodations.	 	64
	 
	 	 	 	 	 	 
	SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT	 	64
	 
	 	10.1.	 	Events of Default.	 	64
	 
	 	10.2.	 	Acceleration of the Obligations.	 	68
	 
	 	10.3.	 	Other Remedies.	 	68
	 
	 	10.4.	 	Set Off and Sharing of Payments.	 	70
	 
	 	10.5.	 	Remedies Cumulative; No Waiver.	 	70
	 
	 	 	 	 	 	 
	SECTION 11. THE AGENT	 	71
	 
	 	11.1.	 	Authorization and Action.	 	71
	 
	 	11.2.	 	Agent’s Reliance, Etc.	 	71
	 
	 	11.3.	 	BofA and Affiliates.	 	72
	 
	 	11.4.	 	Lender Credit Decision.	 	72
	 
	 	11.5.	 	Indemnification.	 	73
	 
	 	11.6.	 	Rights and Remedies to be Exercised by Agent Only.	 	73
	 
	 	11.7.	 	Agency Provisions Relating to Collateral.	 	74
	 
	 	11.8.	 	Agent’s Right to Purchase Commitments.	 	74
	 
	 	11.9.	 	Right of Sale, Assignment, Participations.	 	75
	 
	 	11.10.	 	[Intentionally Omitted].	 	77






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	 	 	 	 	 	 	Page
	 
	 	11.11.	 	Resignation of Agent; Appointment of Successor.	 	77
	 
	 	11.12.	 	Audit and Examination Reports; Disclaimer by Lenders.	 	77
	 
	 	11.13.	 	Syndication Agent and Arrangers.	 	78
	 
	 	11.14.	 	Real Property Collateral.	 	78
	 
	 	 	 	 	 	 
	SECTION 12. MISCELLANEOUS	 	79
	 
	 	12.1.	 	Power of Attorney.	 	79
	 
	 	12.2.	 	Indemnity.	 	80
	 
	 	12.3.	 	Amendments.	 	81
	 
	 	12.4.	 	Sale of Interest.	 	82
	 
	 	12.5.	 	Severability.	 	82
	 
	 	12.6.	 	Successors and Assigns.	 	82
	 
	 	12.7.	 	Cumulative Effect; Conflict of Terms.	 	82
	 
	 	12.8.	 	Execution in Counterparts.	 	82
	 
	 	12.9.	 	Notice.	 	82
	 
	 	12.10.	 	Consent.	 	83
	 
	 	12.11.	 	Credit Inquiries.	 	84
	 
	 	12.12.	 	Time of Essence.	 	84
	 
	 	12.13.	 	Entire Agreement.	 	84
	 
	 	12.14.	 	Interpretation.	 	84
	 
	 	12.15.	 	Confidentiality.	 	84
	 
	 	12.16.	 	GOVERNING LAW; CONSENT TO FORUM.	 	84
	 
	 	12.17.	 	WAIVERS.	 	85
	 
	 	12.18.	 	Advertisement.	 	86







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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT




          THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of this 29th day
of December, 2006, by and among BANK OF AMERICA, N.A. (“BofA”), with an office at One South Wacker
Drive, Suite 3400, Chicago, Illinois 60606, individually as a Lender and as Agent (“Agent”) for
itself and the other Lenders, each other financial institution which is or becomes a party hereto
and any registered assigns of any such Person (each such financial institution, including BofA, is
referred to hereinafter individually as a “Lender” and collectively as the “Lenders”), CREDIT
SUISSE SECURITIES (USA) LLC, as Syndication Agent for Lenders, BANC OF AMERICA SECURITIES LLC
(“BAS”) and CREDIT SUISSE SECURITIES (USA) LLC, as Co-Lead Arrangers and Book Managers (together,
“Arrangers”), and each of NEENAH FOUNDRY COMPANY, a Wisconsin corporation with its chief executive
office and principal place of business at 2121 Brooks Avenue, Neenah, Wisconsin 54956 (“Neenah”)
and EACH SUBSIDIARY OF NEENAH THAT IS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS A BORROWER;
Neenah and each such Subsidiary are hereafter referred to collectively, as “Borrowers” and
individually, as “Borrower”. Capitalized terms used in this Agreement have the meanings assigned
to them in Appendix A, General Definitions. Accounting terms not otherwise specifically defined
herein shall be construed in accordance with GAAP consistently applied. This Agreement amends and
restates in its entirety that certain Loan and Security Agreement dated October 8, 2003, as amended
or otherwise modified through the date hereof, by and among Agent, the syndication agent,
documentation agent and arranger party thereto, the financial institutions party thereto as
Lenders, and Borrowers (the “Original Loan Agreement”), and, with respect to the Loan Documents,
following the execution and delivery of this Agreement, all references to the “Loan Agreement” in
the Loan Documents shall be deemed to refer to this Agreement (as it may be amended, restated,
supplemented or otherwise modified from time to time); provided, that the “Obligations”
arising under the Original Loan Agreement shall remain outstanding and in full force and effect
hereunder; and, provided further, that the execution and delivery of this Agreement shall
not constitute a novation of any such Obligations.




SECTION 1. CREDIT FACILITY




          Subject to the terms and conditions of, and in reliance upon the representations and
warranties made in, this Agreement and the other Loan Documents, Lenders agree to make available to
Borrowers a Total Credit Facility of up to $100,000,000 (with a possible increase up to
$110,000,000 pursuant to the provisions of subsection 1.1.7) upon a Borrower’s request therefor, as
follows:




          1.1. Loans.





     1.1.1. Revolving Credit Loans. Subject to the terms and conditions hereof,
each Lender agrees, severally and not jointly, to make Revolving Credit Loans to
Borrowers from time to time during the period from the date hereof to but not including
the last day of the Term, as requested by Borrowers in the manner set forth



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in Section 1.4
and subsection 3.1.1, up to a maximum principal amount at any time outstanding equal to the
lesser of (i) such Lender’s Revolving Loan Commitment minus the product of such
Lender’s Revolving Loan Percentage and the LC Amount minus the product of such
Lender’s Revolving Loan Percentage and Reserves, if any and (ii) the product of (A) such
Lender’s Revolving Loan Percentage and (B) an amount equal to the Borrowing Base at such
time minus the LC Amount minus Reserves, if any. Subject to the third to
last sentence of this subsection 1.1.1, Agent shall have the right to establish Reserves,
including without limitation or duplication with respect to (i) price adjustments, damages,
unearned discounts, returned products or other matters for which a Borrower issues credit
memoranda in the ordinary course of such Borrower’s business; (ii) potential dilution
related to Accounts; (iii) shrinkage, spoilage and obsolescence of Inventory; (iv) slow
moving Inventory; (v) other sums due and payable within ninety (90) days and chargeable (but
not yet charged) against a Borrower’s Loan Account as Revolving Credit Loans under any
section of this Agreement; (vi) amounts owing by a Borrower to any Person to the extent
secured by a Lien on, or trust over, any Property of a Borrower (excluding Liens permitted
under subsection 8.2.5(iv) or subsection 8.2.5(ix)); (vii) amounts owing by a Borrower to
Bank, Agent or any Affiliate of Bank or Agent in connection with Product Obligations; (viii)
Inventory that consists of coke, sand or grinding wheels; (ix) wages and other amounts
payable under the Wisconsin Business Closing/Mass Layoff Law; (x) any Rent Reserves and (xi)
such other specific events, conditions or contingencies as to which Agent, in its reasonable
credit judgment exercised in good faith, determines Reserves should be established from time
to time hereunder. Notwithstanding anything contained in this Agreement to the contrary,
Agent shall not establish any Reserves in respect of any matters relating to any items of
Collateral that have been taken into account in determining Eligible Inventory, Eligible
Patterns and Core Boxes or Eligible Accounts, as applicable. Agent agrees that it shall
provide Borrowers with reasonably prompt notice of the establishment of a Reserve. The
Revolving Credit Loans shall be repayable in accordance with the terms of the Revolving
Notes and shall be secured by all of the Collateral. Borrowers, Lenders and Agent agree
that, effective as of the Closing Date (but immediately prior to the making of the
inter-Lender transfers provided in subsection 1.1.6), (i) any and all “Revolving Credit
Loans” under and as defined in the Original Loan Agreement that are outstanding as of the
Closing Date shall be deemed to be Revolving Credit Loans advanced by the Lenders under this
Agreement and (ii) the outstanding principal balance of the “Term Loan” under and as defined
in the Original Loan Agreement as of the Closing Date shall convert to and be reconstituted
as Revolving Credit Loans outstanding under this Agreement.




     1.1.2. Overadvances. Insofar as a Borrower may request and Agent or all
Lenders (as provided below) may be willing in their sole and absolute discretion to make
Revolving Credit Loans to such Borrower at a time when the unpaid balance of Revolving
Credit Loans plus the sum of the LC Amount plus the amount of LC
Obligations that have not been reimbursed by Borrowers or funded with a Revolving
Credit Loan, plus reserves, exceeds, or would exceed with the making of any such



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Revolving
Credit Loan, the Borrowing Base (such Loan or Loans being herein referred to individually as
an “Overadvance” and collectively, as “Overadvances”), Agent shall enter such Overadvances
as debits in the Loan Account. All Overadvances shall be repaid on demand, shall be secured
by the Collateral and shall bear interest as provided in this Agreement for Revolving Credit
Loans generally. Any Overadvance made pursuant to the terms hereof shall be made by all
Lenders ratably in accordance with their respective Revolving Loan Percentages.
Overadvances in the aggregate amount of $2,500,000 or less may, unless a Default or Event of
Default has occurred and is continuing (other than a Default or Event of Default caused by
the existence or making of such Overadvance), be made in the sole and absolute discretion of
Agent. Overadvances in an aggregate amount of more than $2,500,000 and Overadvances to be
made after the occurrence and during the continuation of a Default or an Event of Default
(other than a Default or Event of Default caused by the existence or making of such
Overadvance) shall require the consent of all Lenders. The foregoing notwithstanding, in no
event, unless otherwise consented to by all Lenders, (w) shall any Overadvances be
outstanding for more than sixty (60) consecutive days, (x) after all outstanding
Overadvances have been repaid, shall Agent or Lenders make any additional Overadvances
unless sixty (60) days or more have expired since the last date on which any Overadvances
were outstanding, (y) shall Overadvances be outstanding on more than ninety (90) days within
any one hundred eighty day (180) period or (z) shall Agent make Revolving Credit Loans on
behalf of Lenders under this subsection 1.1.2 to the extent such Revolving Credit Loans
would cause a Lender’s share of the Revolving Credit Loans to exceed such Lender’s Revolving
Loan Commitment minus such Lender’s Revolving Loan Percentage of the LC Amount.




     1.1.3. Use of Proceeds. The Revolving Credit Loans shall be used solely for (i)
the satisfaction of existing Indebtedness of Borrowers, (ii) the payment of fees and
expenses associated with the transactions contemplated hereby, (iii) Borrowers’ general
operating capital needs (including Capital Expenditures permitted hereunder) in a manner
consistent with the provisions of this Agreement and all applicable laws, (iv) to fund
Permitted Acquisitions, and (v) other purposes permitted under this Agreement.




     1.1.4. Swingline Loans. Subject to the terms and conditions hereof, in order
to reduce the frequency of transfers of funds from Lenders to Agent for making Revolving
Credit Loans, Agent shall be permitted (but not required) to make Revolving Credit Loans to
Borrowers upon request by Borrowers (such Revolving Credit Loans to be designated as
“Swingline Loans”) provided that the aggregate amount of Swingline Loans outstanding at any
time will not (i) exceed $5,000,000; (ii) when added to the principal amount of Agent’s
other Revolving Credit Loans then outstanding plus Agent’s Revolving Loan Percentage
of the LC Amount, exceed Agent’s Revolving Credit Commitment; or (iii) when added to the
principal amount of all other Revolving Credit Loans then outstanding plus the LC Amount, exceed
the Borrowing Base. Within the foregoing limits, each Borrower may borrow, repay and



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reborrow Swingline Loans. All Swingline Loans shall be treated as Revolving Credit Loans
for purposes of this Agreement, except that (a) all Swingline Loans shall be Base Rate
Portions and (b) notwithstanding anything herein to the contrary (other than as set forth in
the next succeeding sentence), all principal and interest paid with respect to Swingline
Loans shall be for the sole account of Agent in its capacity as the lender of Swingline
Loans. Notwithstanding the foregoing, not more than 2 Business Days after (1) Lenders
receive notice from Agent that a Swingline Loan has been advanced in respect of a drawing
under a Letter of Credit or LC Guaranty or (2) in any other circumstance, demand is made by
Agent during the continuance of an Event of Default, each Lender shall irrevocably and
unconditionally purchase and receive from Agent, without recourse or warranty from Agent, an
undivided interest and participation in each Swingline Loan to the extent of such Lender’s
Revolving Loan Percentage thereof, by paying to Agent, in same day funds, an amount equal to
such Lender’s Revolving Loan Percentage of such Swingline Loan. Swingline Loans will be
settled between the Agent and the Lenders in the manner set forth in subsection 3.1.3.
Borrowers, Agent and the Lenders hereby agree that any and all “Swingline Loans” under and
as defined in the Original Loan Agreement that are outstanding as of the Closing Date shall
be deemed to be Swingline Loans advanced under this Agreement.




     1.1.5. Agent Loans. Upon the occurrence and during the continuance of an Event
of Default, Agent, in its sole discretion, may make Revolving Credit Loans on behalf of
Lenders, in an aggregate amount not to exceed $5,000,000 (such maximum amount being reduced
by the outstanding balance of any Overadvances that have been authorized by Agent alone
pursuant to subsection 1.1.2), if Agent, in its reasonable business judgment, deems that
such Revolving Credit Loans are necessary or desirable (i) to protect all or any portion of
the Collateral, (ii) to enhance the likelihood, or maximize the amount of, repayment of the
Loans and the other Obligations, or (iii) to pay any other amount chargeable to any Borrower
pursuant to this Agreement, including without limitation costs, fees and expenses as
described in Sections 2.8 and 2.9 (hereinafter, “Agent Loans”); provided, that in no event
shall (a) the maximum principal amount of the Revolving Credit Loans exceed the aggregate
Revolving Loan Commitments and (b) Majority Lenders may at any time revoke Agent’s
authorization to make further Agent Loans. Any such revocation must be in writing and shall
become effective prospectively upon Agent’s receipt thereof. Each Lender shall be obligated
to advance its Revolving Loan Percentage of each Agent Loan. If Agent Loans are made
pursuant to this subsection 1.1.5, then (a) the Borrowing Base shall be deemed increased by
the amount of such permitted Agent Loans, but only for so long as Agent allows such Agent
Loans to be outstanding, and (b) notwithstanding any terms contained herein to the contrary
(including, without limitation, the terms of subsection 10.2.2), all Lenders that have
committed to make Revolving Credit Loans shall be bound to make, or permit to remain
outstanding, such Agent Loans based upon their Revolving Loan Percentages in accordance with the
terms of this Agreement.



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     1.1.6. Inter-Lender Assignments. Each “Lender” party to the Original Loan
Agreement hereby sells and assigns to each other Lender, without recourse, representation or
warranty (except as set forth below), and each such Lender hereby purchases and assumes from
each “Lender” party to the Original Loan Agreement a percentage interest in the Revolving
Loan Commitments and Revolving Credit Loans hereunder as may be required to reflect the
allocation of Revolving Loan Commitments as set forth on the signature pages hereto. The
Lenders agree to make such inter-Lender wire transfers as may be required to give effect to
the foregoing assignments and assumptions and, as a result of such assignments and
assumptions, each “Lender” party to the Original Loan Agreement shall be absolutely released
from any obligations, covenants or agreements with respect to the Revolving Loan Commitments
and Revolving Credit Loans so assigned. With respect to such Revolving Loan Commitments and
Revolving Credit Loans so assigned, each “Lender” party to the Original Loan Agreement makes
no representation or warranty whatsoever, except that it represents and warrants that it is
the legal and beneficial owner of the same, free and clear of any adverse claim.




     1.1.7. Request for Increase of Revolving Credit Commitments. The Lenders agree
that Borrowers may, on any Business Day from time to time after the Closing Date and so long
as (i) no Default or Event of Default has occurred and is continuing, (ii) Agent has
consented in writing to any increase of the Revolving Loan Commitments that is requested
pursuant to this subsection 1.1.7, such consent to be provided or withheld by Agent in its
sole discretion and (iii) the increased Revolving Loan Commitments provided for under this
subsection 1.1.7 are syndicated to the satisfaction of Agent, deliver a written notice to
Agent and each Lender (an “Increase Notice”) requesting an increase in the Revolving Loan
Commitments in an aggregate amount for all such increases collectively of up to $10,000,000
(a “Requested Revolver Increase”). If Borrowers deliver an Increase Notice, each Lender
shall have the option to participate in the Requested Revolver Increase to the extent of its
Revolving Loan Percentage thereof by delivering a written notice to the Agent and Borrowers
within ten Business Days of such Lender’s receipt of the Increase Notice (it being agreed
and understood that such Lender shall be deemed to have elected not to participate in the
Requested Revolver Increase if it does not respond to the Increase Notice within ten
Business Days of its receipt thereof). If one or more of the Lenders elect not to
participate in the Requested Revolver Increase, then the Lenders participating in the
Requested Revolver Increase may, at their option, elect to participate in such remaining
portion of the Requested Revolver Increase (with such remaining portion to be allocated
ratably among such participating Lenders based on their respective Revolving Loan
Percentages or as otherwise may be agreed by such participating Lenders). If there is less
than full participation by existing Lenders in the Requested Revolver Increase after the
foregoing procedures are completed, then one or more new Lenders reasonably acceptable to
the Agent, and Borrowers may be added as parties to this Agreement for purposes of participating in such remaining
portion. After giving effect to the procedures described in this subsection 1.1.7, each
Lender participating in the Requested Revolver Increase shall have its Revolving



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Loan Commitment increase to the extent of its participation and, upon the request of such Lender,
Borrowers will execute a replacement Revolving Note for such Lender reflecting the increased
amount of its Revolving Loan Commitment. Each Borrower agrees to execute such amendments
and supplements to the Security Documents as Agent reasonably deems necessary in connection
with a Requested Revolver Increase. No Increase Notice may be given unless it relates to a
Requested Revolver Increase of at least $5,000,000 and no more than three Increase Notices
may be delivered by Borrowers pursuant to this subsection 1.1.7. In connection with any
increase of the Revolving Loan Commitments that occurs pursuant to this subsection 1.1.7,
Borrowers shall pay any closing fees as may be agreed among Borrowers and the Lenders
participating in such increase.




     1.2. Letters of Credit; LC Guaranties.




     1.2.1. Issuance of Letters of Credit and LC Guarantees. Subject to the terms
and conditions hereof, each of Agent and, if applicable, any Lender designated by Agent and
Neenah as a Letter of Credit Issuer (each such Lender, a “Letter of Credit Issuer”) agrees,
if requested by a Borrower, to (i) issue its, or, in the case of Agent, cause to be issued
by Bank or another Affiliate of Agent, on the date requested by such Borrower, Letters of
Credit for the account of a Borrower or (ii) execute LC Guaranties by which Agent, such
Letter of Credit Issuer, Bank, or another Affiliate of Agent, on the date requested by a
Borrower, shall guaranty the payment or performance by a Borrower of its reimbursement
obligations with respect to letters of credit issued for a Borrower’s account by other
Persons; provided that the LC Amount shall not exceed $20,000,000 at any time. No
Letter of Credit or LC Guaranty may have an expiration date after the last day of the Term.
Borrowers, Lenders, Agent and Letter of Credit Issuer agree that each “Letter of Credit” and
“LC Guaranty”, and all “LC Obligations”, under and as defined in the Original Loan Agreement
that are outstanding on the Closing Date shall continue as and shall constitute a Letter of
Credit, LC Guaranty and LC Obligations under this Agreement.




     1.2.2. Lender Participation. Immediately upon the issuance of a Letter of
Credit or an LC Guaranty under this Agreement (or, in the case of any “Letters of Credit”,
“LC Guaranties” and “LC Obligations” under and as defined in the Original Loan Agreement
that are outstanding on the Closing Date, on the Closing Date), each Lender shall be deemed
to have irrevocably and unconditionally purchased and received from Agent, without recourse
or warranty, an undivided interest and participation therein equal to the applicable LC
Obligations multiplied by such Lender’s Revolving Loan Percentage. Agent
will notify each Lender on a weekly basis, or if determined by Agent, a more frequent basis,
upon presentation to it of a draw under a Letter of Credit or a demand for payment under a
LC Guaranty. On a weekly basis, or more frequently if requested by Agent, each Lender shall
make payment to Agent in immediately available funds, of an amount equal to such Lender’s pro rata share of the amount of any payment made by Agent in respect to any
Letter of Credit or LC Guaranty. The obligation of each Lender to reimburse Agent under
this subsection 1.2.2 shall be unconditional, continuing, irrevocable and



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absolute, except in respect of indemnity claims arising out of Agent’s gross negligence or willful
misconduct. In the event that any Lender fails to make payment to Agent of any amount due
under this subsection 1.2.2, Agent shall be entitled to receive, retain and apply against
such obligation the principal and interest otherwise payable to such Lender hereunder until
Agent receives such payment from such Lender or such obligation is otherwise fully
satisfied; provided, however, that nothing contained in this sentence shall
relieve such Lender of its obligation to reimburse the Agent for such amount in accordance
with this subsection 1.2.2.




     1.2.3. Reimbursement. Notwithstanding anything to the contrary contained
herein, Borrowers, Agent, each Letter of Credit Issuer and Lenders hereby agree that all LC
Obligations and all obligations of each Borrower relating thereto shall be satisfied by the
prompt issuance of one or more Revolving Credit Loans that are Base Rate Portions, which
Borrowers hereby acknowledge are requested and Lenders hereby agree to fund. In the event
that Revolving Credit Loans are not, for any reason, promptly made to satisfy all then
existing LC Obligations, each Lender hereby agrees to pay to Agent, on demand, an amount
equal to such LC Obligations multiplied by such Lender’s Revolving Loan
Percentage, and until so paid, such amount shall be secured by the Collateral and shall bear
interest and be payable at the same rate and in the same manner as Base Rate Portions. In
no event shall Agent or any Lender make any Revolving Credit Loan in respect of any
Obligation that has already been satisfied by any Borrower.




     1.3. [Intentionally Omitted].




     1.4. Borrowing Agent.



          For ease of administration of this Agreement, each Borrower other than Neenah hereby appoints
Neenah as its borrowing agent hereunder. In such capacity, Neenah will request all Revolving
Credit Loans to be made pursuant to Section 1.1, will request all Letters of Credit and LC
Guaranties to be issued pursuant to Section 1.2, will deliver any Increase Notices pursuant to
subsection 1.1.7, and will submit all LIBOR Requests with respect to obtaining any LIBOR Portion
pursuant to subsection 3.1.7, converting any Base Rate Portion into a LIBOR Portion pursuant to
subsection 3.1.8 or continuing any LIBOR Portion into a subsequent Interest Period pursuant to
subsection 3.1.9, in each case pursuant to the procedures set forth in Section 3.1.
Notwithstanding anything to the contrary contained in this Agreement, no Borrower other than Neenah
shall be entitled to request any Revolving Credit Loans, Letters of Credit or LC Guaranties, to
deliver any Increase Notices pursuant to subsection 1.1.7, or to submit any LIBOR Requests
hereunder. The proceeds of all Revolving Credit Loans made hereunder shall be advanced to or at
the direction of Neenah and used solely for the purposes described in subsection 1.1.3.




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SECTION 2. INTEREST, FEES AND CHARGES





     2.1. Interest.




     2.1.1. Rates of Interest. Interest shall accrue on the principal amount of the
Base Rate Portions outstanding at the end of each day at a fluctuating rate per annum equal
to the Applicable Margin then in effect for the Base Rate Portions plus the Base
Rate. Said rate of interest shall increase or decrease by an amount equal to any increase
or decrease in the Base Rate, effective as of the opening of business on the day that any
such change in the Base Rate occurs. If a Borrower exercises its LIBOR Option as provided
in Section 3.1, interest shall accrue on the principal amount of the LIBOR Portions
outstanding at the end of each day at a rate per annum equal to the Applicable Margin then
in effect for the LIBOR Portions plus the LIBOR applicable to each LIBOR Portion for
the corresponding Interest Period.




     2.1.2. Default Rate of Interest. At the option of Agent or the Majority
Lenders, upon and after the occurrence of an Event of Default arising under subsection
10.1.1, subsection 10.1.3 (as a result of a breach of subsection 8.1.3, subsection 8.1.4,
subsection 8.2.4, subsection 8.2.6, subsection 8.2.7, subsection 8.2.8, subsection 8.2.12 or
Section 8.3) or subsection 10.1.8, and during the continuation thereof, the principal amount
of all Loans shall bear interest at a rate per annum equal to 2.0% plus the interest
rate otherwise applicable thereto (the “Default Rate”).




     2.1.3. Maximum Interest. In no event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under the Notes and charged or collected pursuant to
the terms of this Agreement or pursuant to the Notes exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. If any provisions of this Agreement or the Notes are in contravention of
any such law, such provisions shall be deemed amended to conform thereto (the “Maximum
Rate”). If at any time, the amount of interest paid hereunder is limited by the Maximum
Rate, and the amount at which interest accrues hereunder is subsequently below the Maximum
Rate, the rate at which interest accrues hereunder shall remain at the Maximum Rate, until
such time as the aggregate interest paid hereunder equals the amount of interest that would
have been paid had the Maximum Rate not applied.




     2.2. Computation of Interest and Fees.



          Interest, Letter of Credit and LC Guaranty fees and Unused Line Fees hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over a year of 360
days.




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     2.3. Fee Letter; Prepayment Fee under Original Loan Agreement.



          Borrowers shall jointly and severally pay to Agent certain fees and other amounts in
accordance with the terms of the fee letter among Borrowers and Agent (the “Fee Letter”). In
addition, for any “Lenders” under and as defined in the Original Loan Agreement that have not
agreed to waive the prepayment fee payable to such “Lenders” pursuant to the provisions of Section
2.6 of the Original Loan Agreement, on the Closing Date Borrowers shall jointly and severally pay
to any such “Lenders” the amount of such prepayment fee (it being agreed and understood that BofA
has waived the amount of such prepayment fee to which BofA would otherwise be entitled pursuant to
the provisions of Section 2.6 of the Original Loan Agreement).





     2.4. Letter of Credit and LC Guaranty Fees.



          Borrowers shall jointly and severally pay to Agent:





     (i) for standby Letters of Credit and LC Guaranties of standby letters of
credit, for the ratable benefit of Lenders a per annum fee equal to the Applicable
Margin then in effect for LIBOR Portions multiplied by the weighted average
daily balance of the aggregate undrawn face amount of such Letters of Credit and LC
Guaranties outstanding from time to time during the term of this Agreement,
plus all normal and customary charges associated with the issuance thereof,
which fees and charges shall be deemed fully earned upon issuance of each such
Letter of Credit or LC Guaranty, shall be due and payable in arrears on the first
Business Day of each month and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason; provided that at any time that the
Default Rate is in effect, the fee applicable under this subsection shall be equal
to the otherwise applicable fee plus 2.00%;




     (ii) for documentary Letters of Credit and LC Guaranties of documentary letters
of credit, for the ratable benefit of Lenders a per annum fee equal to the
Applicable Margin then in effect for LIBOR Portions multiplied by the
weighted average daily balance of the aggregate undrawn face amount of such Letters
of Credit and LC Guaranties outstanding from time to time during the term of this
Agreement, plus all normal and customary charges associated with the
issuance and administration of each such Letter of Credit or LC Guaranty (which fees
and charges shall be fully earned upon issuance, renewal or extension (as the case
may be) of each such Letter of Credit or LC Guaranty, shall be due and payable in
arrears on the first Business Day of each month, and shall not be subject to rebate
or proration upon the termination of this Agreement for any reason); provided that
at any time that the Default Rate is in effect, the fee applicable under this
subsection shall be equal to the otherwise applicable fee plus 2.00%;



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     (iii) with respect to all Letters of Credit and LC Guaranties issued by Agent,
Bank or another Affiliate of Agent, for the account of Agent only, a fronting fee
equal to 0.125% per annum of the weighted average daily balance of the aggregate
undrawn face amount of such Letters of Credit and LC Guaranties outstanding from
time to time during the term of this Agreement issued by such Person, which fronting
fees shall be due and payable monthly in arrears on the first Business Day of each
month and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason; and




     (iv) with respect to all Letters of Credit and LC Guaranties issued by a Letter
of Credit Issuer, for the account of such Letter of Credit Issuer only, a fronting
fee equal to 0.125% per annum of the weighted average daily balance of the aggregate
undrawn face amount of such Letters of Credit and LC Guaranties outstanding from
time to time during the term of this Agreement issued by such Letter of Credit
Issuer, which fronting fees shall be due and payable monthly in arrears on the first
Business Day of each month and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.




     2.5. Unused Line Fee.




     Borrowers shall jointly and severally pay to Agent, for the ratable benefit of Lenders, a fee
(the “Unused Line Fee”) equal to the Applicable Margin per annum for the Unused Line Fee multiplied
by the average daily amount by which the Revolving Credit Maximum Amount exceeds the sum of (i) the
outstanding principal balance of the Revolving Credit Loans plus (ii) the LC Amount. The
Unused Line Fee shall be payable monthly in arrears on the first day of each month hereafter.




     2.6. [Intentionally Omitted].




     2.7. Audit Fees.



          Borrowers shall jointly and severally pay to Agent audit fees (for auditors that are employees of
BofA, at a rate of $850 per auditor per day, and, for third-party auditors, at the daily rates
actually charged by such third-party auditors) in connection with audits of the books and records
and Properties of each Borrower and its Subsidiaries and such other matters as Agent shall deem
appropriate in its reasonable credit judgment, plus all reasonable out-of-pocket expenses incurred
by Agent in connection with such audits; provided, that so long as no Event of Default has
occurred and is continuing, Borrowers shall not be liable for such audit fees incurred in
connection with more than three complete audits during any fiscal year, whether such audits are
conducted by employees of Agent or by third parties hired by Agent. Such audit fees and
out-of-pocket expenses shall be payable on the first day of the month following the date of
issuance by Agent of a request for payment thereof to Neenah. Agent may, in its discretion,
provide for the payment of such amounts by making appropriate Revolving Credit Loans to one or more
Borrowers and charging the appropriate Loan Account or Loan Accounts therefor.





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          2.8. Reimbursement of Expenses.




          If, at any time or times regardless of whether or not an Event of Default then exists, (i)
Agent or either Arranger incurs reasonable and documented legal or accounting expenses or any other
costs or out-of-pocket expenses in connection with (1) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or modification of this Agreement or
any of the other Loan Documents, or any syndication or attempted syndication of the Obligations
(including, without limitation, printing and distribution of materials to prospective Lenders and
all costs associated with bank meetings, but excluding any closing fees paid to Lenders in
connection therewith) or (2) the administration of this Agreement or any of the other Loan
Documents and the transactions contemplated hereby and thereby; or (ii) Agent or any Lender incurs
reasonable and documented legal or accounting expenses or any other costs or out-of-pocket expenses
in connection with (1) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, any Borrower or any other Person) relating to the Collateral, this
Agreement or any of the other Loan Documents or any Borrower’s, any of its Subsidiaries’ or any
Guarantor’s affairs; (2) any amendment, modification, waiver or consent with respect to the Loan
Documents that is requested of Lenders at a time when an Event of Default is in existence
(provided, that Borrowers shall only be responsible under this clause (2) for the
reasonable and documented fees of one law firm, acting on behalf of all Lenders other than BofA),
(3) any attempt to enforce any rights of Agent or any Lender against any Borrower or any other
Person which may be obligated to Agent or any Lender by virtue of this Agreement or any of the
other Loan Documents, including, without limitation, the Account Debtors; or (4) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or
realize upon the Collateral; then all such legal and accounting expenses, other costs and out of
pocket expenses of Agent or any Lender, as applicable, shall be charged to Borrowers on a joint and
several basis; provided, that Borrowers shall not be responsible for such expenses, costs
and out-of-pocket expenses to the extent incurred because of the gross negligence, bad faith or
willful misconduct (as determined by a court of competent jurisdiction in a final nonappealable
judgment) of Agent or any Lender seeking reimbursement. All amounts chargeable to Borrowers under
this Section 2.8 shall be Obligations secured by all of the Collateral, shall be payable within 15
days following demand to Agent or such Lender, as the case may be, and shall bear interest from the
date due and owing until paid in full at the rate applicable to Base Rate Portions from time to
time. Borrowers shall also jointly and severally reimburse Agent for expenses incurred by Agent in
its administration of the Collateral to the extent and in the manner provided in Sections 2.9 and
2.10 hereof.




          2.9. Bank Charges.




          Borrowers shall jointly and severally pay to Agent and each applicable Lender, on demand, any
and all fees, costs or expenses which Agent or any such Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to any Borrower or any other
Person on behalf of any Borrower, by Agent or any Lender, of proceeds of Loans made to any Borrower
pursuant to this Agreement and (ii) the depositing for collection by Agent or any Lender of any
check or item of payment received or delivered to Agent or any Lender on account of the
Obligations.




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          2.10. Collateral Protection Expenses; Appraisals.




          All out-of-pocket expenses incurred in protecting, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral, and any and all excise, property, sales, and use taxes
imposed by any state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be jointly and severally borne and paid by Borrowers. If Borrowers fail to
promptly pay any portion thereof when due, Agent may, at its option, but shall not be required to,
pay the same and charge one or more Borrowers therefor. On an annual basis, Agent may, and, at the
request of Majority Lenders, shall, at Borrowers’ joint and several expense, obtain an appraisal of
the Patterns and Core Boxes of Borrowers from a third party appraiser reasonably acceptable to
Agent, which appraisal shall include an assessment of the net orderly liquidation percentage of
each category or type of Eligible Patterns and Core Boxes. Further, if average Availability for
any 30-day period during any fiscal year of Borrowers (as determined by Agent in its reasonable
credit judgment) is less than $40,000,000, Agent may, and, at the request of Majority Lenders,
shall, on an annual basis for such fiscal year and each fiscal year thereafter and at Borrowers’
joint and several expense, obtain an appraisal of the Inventory of Borrowers from a third party
appraiser reasonably acceptable to Agent, which appraisal shall include an assessment of the net
orderly liquidation percentage of each category or type of Eligible Inventory. Additionally, from
time to time, if obtaining appraisals is necessary in order for Agent or any Lender to comply with
applicable laws or regulations, and at any time if an Event of Default shall have occurred and be
continuing, Agent may, at Borrowers’ joint and several expense, obtain appraisals from appraisers
(who may be personnel of Agent), stating the then current fair market value and/or net orderly
liquidation value of all or any portion of the real Property or personal Property of any Borrower
or any of its Subsidiaries, including without limitation the Inventory and the Patterns and Core
Boxes of any Borrower or any of its Subsidiaries.




          2.11. Payment of Charges.




          All amounts chargeable to any Borrower under this Agreement shall be Obligations secured by
all of the Collateral, shall be, unless specifically otherwise provided, payable on demand and
shall bear interest from the date demand was made or such amount is due, as applicable, until paid
in full at the rate applicable to Base Rate Portions from time to time.




          2.12. No Deductions.





     2.12.1. Any and all payments or reimbursements made hereunder shall be made free and
clear of and without deduction for any and all taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto; excluding, however, the
following: taxes imposed on the income of Agent or any Lender or franchise taxes by the
jurisdiction under the laws of which Agent or any Lender is organized or doing business or
any political subdivision thereof and taxes imposed on its income by the jurisdiction of
Agent’s or such Lender’s applicable lending office or any political subdivision thereof or
franchise taxes (all such taxes, levies, imposts, deductions, charges or withholdings and
all liabilities with respect thereto but



-12-









 






excluding such taxes imposed on net income, “Tax Liabilities”). If any Borrower shall be required by law to
deduct any such Tax Liabilities from or in respect of any sum payable hereunder to Agent or any Lender, then the sum
payable hereunder by Borrowers shall be increased as may be necessary so that, after all required deductions are
made, Agent or such Lender receives an amount equal to the sum it would have received had no
such deductions been made.




     2.12.2. Each Lender that is organized in a jurisdiction outside the United States
hereby agrees that it shall, no later than the Closing Date or, if later, the date on which
such Lender became a party hereto (and from time to time thereafter, upon reasonable request
of Borrowers or Agent), (i) furnish to Borrowers and Agent two accurate, complete and signed
copies of either United States Internal Revenue Service Form W-8BEN or United States
Internal Revenue Service Form W-8ECI (on which such Lender claims entitlement to complete
exemption from United States federal withholding tax on all interest payments hereunder) and
(ii) to the extent that such Lender is legally able to do so, provide Borrowers and Agent a
new Form W-8BEN or Form W-8ECI upon the obsolescence of any previously delivered form, duly
executed and completed by such Lender, and comply with all applicable United States laws and
regulations as in effect from time to time with regard to such withholding tax exemption.
Notwithstanding anything to the contrary in this Section 2.12, for the avoidance of doubt,
(A) Borrowers shall be entitled, to the extent they are required to do so by law, to deduct
or withhold Taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from any amounts payable hereunder to any Lender that is not a
United States person (as defined in Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended) to the extent the Lender has not provided to Borrowers the United States
Internal Revenue Service forms described above, and (B) after the date a Lender becomes a
party hereto, Borrowers shall have no obligation to make additional payments under this
Section 2.12 to any Lender organized outside the United States if the Lender has not
provided such forms to the Borrower.



          2.13. Joint and Several Obligations.




          Each Borrower acknowledges that it is jointly and severally liable for all of the Obligations
and as a result hereby unconditionally guaranties the full and prompt payment when due, whether at
maturity or earlier, by reason of acceleration or otherwise, and at all times thereafter, of all
indebtedness, liabilities and obligations of every kind and nature of each other Borrower to Agent
and Lenders and, howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, joint or several, now or hereafter existing, or due or to become due, and howsoever
owned, held or acquired by Agent or any Lender. Each Borrower agrees that if this guaranty, or any
Liens securing this guaranty, would, but for the application of this sentence, be unenforceable
under applicable law, this guaranty and each such Lien shall be valid and enforceable to the
maximum extent that would not cause this guaranty or such Lien to be unenforceable under applicable
law, and this guaranty shall automatically be deemed to have been amended accordingly at all
relevant times.




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          Each Borrower hereby agrees that its obligations under this guaranty shall be unconditional,
irrespective of (a) the validity or enforceability of the Obligations or any part thereof, or of
any promissory note or other document evidencing all or any part of the Obligations, (b) the
absence of any attempt to collect the Obligations from any other Borrower or any Guarantor or other action to enforce the same,
(c) the waiver or consent by Agent or any Lender with respect to any provision of any agreement, instrument or document evidencing or
securing all or any part of the Obligations, or any other agreement, instrument or document now or
hereafter executed by any other Borrower and delivered to Agent or any Lender (other than a waiver,
forgiveness or consent by Agent and Lenders that reduces the amount of any of the Obligations), (d)
the failure by Agent or any Lender to take any steps to perfect and maintain its security interest
in, or to preserve its rights to, any security or Collateral for the Obligations, for its benefit,
(e) Agent’s or any Lender’s election, in any proceeding instituted under the United States
Bankruptcy Code or any other similar bankruptcy or insolvency legislation, of the application of
Section 1111(b)(2) of the United States Bankruptcy Code or any other similar bankruptcy or
insolvency legislation, (f) any borrowing or grant of a security interest by any Borrower as
debtor-in-possession, under Section 364 of the United States Bankruptcy Code or any other similar
bankruptcy or insolvency legislation, (g) the disallowance, under Section 502 of the United States
Bankruptcy Code or any other similar bankruptcy or insolvency legislation, of all or any portion of
Agent’s or any Lender’s claim(s) for repayment of the Obligations or (h) any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a borrower or a
guarantor.




          Each Borrower hereby waives diligence, presentment, demand of payment, filing of claims with a
court in the event of receivership or bankruptcy of any Borrower, protest or notice with respect to
the Obligations and all demands whatsoever, and covenants that this guaranty will not be
discharged, except by complete and irrevocable payment and performance of the Obligations. No
notice to any Borrower or any other party shall be required for Agent or any Lender to make demand
hereunder. Such demand shall constitute a mature and liquidated claim against the applicable
Borrower. Upon the occurrence of any Event of Default, Agent or any Lender may, in its sole
election, proceed directly and at once, without notice, against all or any Borrower to collect and
recover the full amount or any portion of the Obligations, without first proceeding against any
other Borrower or any other Person, or any security or collateral for the Obligations. During the
existence of an Event of Default, Agent and each Lender shall have the exclusive right to determine
the application of payments and credits, if any from any Borrower, any other Person or any security
or collateral for the Obligations, on account of the Obligations or of any other liability of any
Borrower to Agent or any Lender.




          Each Borrower expressly waives all rights it may have now or in the future under any statute,
or at common law, or at law or in equity, or otherwise, to compel Agent or Lenders to marshal
assets or to proceed in respect of the Obligations guaranteed hereunder against any other Borrower
or any Guarantor, any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It
is agreed among each Borrower, Agent and Lenders that the foregoing waivers are of the essence of
the transaction contemplated by this Agreement and the




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other Loan Documents and that, but for the provisions of this Section 2.13 and such waivers, Agent and Lenders would decline to enter into
this Agreement.




          Notwithstanding anything to the contrary set forth in this Section 2.13, it is the intent of
the parties hereto that the liability incurred by each Borrower in respect of the Obligations of
the other Borrowers (and any Lien granted by each Borrower to secure such Obligations), not
constitute a fraudulent conveyance under Section 548 of the United States Bankruptcy Code or a
fraudulent conveyance or fraudulent transfer under the provisions of any applicable law of any state or other
governmental unit (“Fraudulent Conveyance”). Consequently, each Borrower, Agent and each Lender hereby agree that if a court of competent
jurisdiction determines that the incurrence of liability by any Borrower in respect of the
Obligations of any other Borrower (or any Liens granted by such Borrower to secure such
Obligations) would, but for the application of this sentence, constitute a Fraudulent Conveyance,
such liability (and such Liens) shall be valid and enforceable only to the maximum extent that
would not cause the same to constitute a Fraudulent Conveyance, and this Agreement and the other
Loan Documents shall automatically be deemed to have been amended accordingly.




SECTION 3. LOAN ADMINISTRATION.




          3.1. Manner of Borrowing Revolving Credit Loans/LIBOR Option.




          Borrowings under the credit facility established pursuant to Section 1 hereof shall be as
follows:





     3.1.1. Loan Requests. A request for a Revolving Credit Loan shall be made, or
shall be deemed to be made, in the following manner: (a) subject to the terms of Section
1.4, a Borrower may give Agent notice of its intention to borrow, in which notice such
Borrower shall specify the amount of the proposed borrowing of a Revolving Credit Loan and
the proposed borrowing date, which shall be a Business Day, no later than 11:00 a.m.
(Chicago, Illinois time) on the proposed borrowing date (or in accordance with subsection
3.1.7, 3.1.8 or 3.1.9, as applicable, in the case of a request for a LIBOR Portion); and (b)
the becoming due and payable of any amount required to be paid under this Agreement, or the
Notes, whether as interest or for any other Obligation, shall be deemed irrevocably to be a
request by a Borrower for a Revolving Credit Loan on the due date in the amount required to
pay such interest or other Obligation in accordance with subsection 3.1.4.




     3.1.2. Disbursement. Each Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of each Loan requested, or deemed to be requested, pursuant to
subsection 3.1.1 as follows: (i) the proceeds of each Revolving Credit Loan requested under
subsection 3.1.1(a) shall be disbursed by Agent in lawful money of the United States of
America in immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrowers, and in the case of each
subsequent borrowing, by wire transfer to such bank account as may be agreed upon by
Borrowers and Agent from time to time (it being agreed and



-15-









 






understood that such bank account may be any operating account of Borrowers, with no requirement that such amount that is
disbursed to an operating account be deposited in a Dominion Account) or elsewhere if
pursuant to a written direction from a Borrower and (ii) the proceeds of each Revolving
Credit Loan deemed requested under subsection 3.1.1(b) shall be disbursed by Agent by way of
direct payment of the relevant interest or other Obligation. If at any time any Loan is
funded by Agent or Lenders in excess of the amount requested or deemed requested by a
Borrower, such Borrower agrees to repay the excess to Agent immediately upon the earlier to
occur of (a) such Borrower’s discovery of the error and (b) notice thereof to such Borrower from
Agent or any Lender.




     3.1.3. Payment by Lenders. Promptly, and in no event later than 12:00 noon
(Chicago time) on a proposed borrowing date, Agent shall give to each Lender written notice
by facsimile, telex or cable of the receipt by Agent from a Borrower of any request for a
Revolving Credit Loan. Each such notice shall specify the requested date and amount of such
Revolving Credit Loan, whether such Revolving Credit Loan shall be subject to the LIBOR
Option, and the amount of each Lender’s advance thereunder (in accordance with its
applicable Revolving Loan Percentage). Each Lender shall, not later than 2:00 p.m. (Chicago
time) on such requested date, wire to a bank designated by Agent the amount of that Lender’s
Revolving Loan Percentage of the requested Revolving Credit Loan. The failure of any Lender
to make the Revolving Credit Loans to be made by it shall not release any other Lender of
its obligations hereunder to make its Revolving Credit Loan. Neither Agent nor any other
Lender shall be responsible for the failure of any other Lender to make the Revolving Credit
Loan to be made by such other Lender. The foregoing notwithstanding, Agent, in its sole
discretion, may from its own funds make a Revolving Credit Loan on behalf of any Lender. In
such event, the Lender on behalf of whom Agent made the Revolving Credit Loan shall
reimburse Agent for the amount of such Revolving Credit Loan made on its behalf, on a weekly
(or more frequent, as determined by Agent in its sole discretion) basis. In addition, Agent
shall notify Lenders on a weekly (or more frequent, as determined by Agent in its sole
discretion) basis regarding settlement of the Swingline Loans, and promptly following such
notice, each Lender shall reimburse Agent (in accordance with its applicable Revolving Loan
Percentage) for the amount of the Swingline Loans outstanding. On each such settlement
date, Agent will pay to each Lender the net amount owing to such Lender in connection with
such settlement, including without limitation amounts relating to Loans, fees, interest and
other amounts payable hereunder. The entire amount of interest attributable to such
Revolving Credit Loan for the period from the date on which such Revolving Credit Loan was
made by Agent on such Lender’s behalf until Agent is reimbursed by such Lender, shall be
paid to Agent for its own account.




     3.1.4. Authorization. Each Borrower hereby irrevocably authorizes Agent, in
Agent’s sole discretion, to advance to Neenah or another Borrower, and to charge to the
appropriate Borrower’s Loan Account hereunder as a Revolving Credit Loan



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(which shall be a Base Rate Portion), a sum sufficient to pay all interest accrued on the Obligations during
the immediately preceding month, to pay all regularly scheduled payments of principal and
mandatory prepayments of principal due and payable at any time and to pay all fees, costs
and expenses and other Obligations due and payable at any time by Borrowers to Agent or any
Lender hereunder.




     3.1.5. Letter of Credit and LC Guaranty Requests. A request for a Letter of
Credit or LC Guaranty shall be made in the following manner: a Borrower shall give Agent
and Bank (or, if the same is to be issued by a Letter of Credit Issuer, Agent and such
Letter of Credit Issuer) a written notice of its request for the issuance of a Letter of
Credit or LC Guaranty, not later than 11:00 a.m. (Chicago, Illinois time), at least
one Business Day before the proposed issuance date thereof, in which notice such
Borrower shall specify the proposed issuer, issuance date and format and wording for the
Letter of Credit or LC Guaranty being requested (which shall be satisfactory to Agent and
the Person being asked to issue such Letter of Credit or LC Guaranty). Such request shall
be accompanied by an executed application and reimbursement agreement in form and substance
satisfactory to Agent and the Person being asked to issue the Letter of Credit or LC
Guaranty, as well as any required corporate resolutions or other documents reasonably
requested by Agent or the Person being asked to issue the Letter of Credit or LC Guaranty.
In the event of any inconsistency or conflict between any such application and reimbursement
agreement between a Borrower and the Person issuing a Letter of Credit or LC Guaranty, and
this Agreement, the terms and provisions of this Agreement shall govern and control.




     3.1.6. Method of Making Requests. As an accommodation to Borrowers, unless a
Default or an Event of Default is then in existence, (i) Agent shall permit telephonic or
electronic requests for Revolving Credit Loans to Agent, (ii) Agent and Bank, or a Letter of
Credit Issuer, as applicable, may, in their discretion, permit electronic transmittal of
requests for Letters of Credit and LC Guaranties to them, and (iii) Agent may, in Agent’s
discretion, permit electronic transmittal of instructions, authorizations, agreements or
reports to Agent. Unless a Borrower specifically directs Agent, Bank or a Letter of Credit
Issuer, as applicable in writing not to accept or act upon telephonic or electronic
communications from such Borrower (which direction shall only be applicable to the Persons
who have received the same in writing), neither Agent, Bank, any Letter of Credit Issuer,
nor any Lender shall have any liability to any Borrower for any loss or damage suffered by
any Borrower as a result of Agent’s, Bank’s or a Letter of Credit Issuer’s honoring of any
requests, execution of any instructions, authorizations or agreements or reliance on any
reports communicated to it telephonically or electronically and purporting to have been sent
to Agent, Bank or a Letter of Credit Issuer by any Borrower (except for any such loss or
damage resulting from Agent’s, Bank’s or any Letter of Credit Issuer’s gross negligence or
willful misconduct), and neither Agent, Bank nor any Letter of Credit Issuer shall have any
duty to verify the origin of any such communication or the authority of the Person sending
it. Each telephonic request for a Letter of Credit or LC Guaranty accepted by Agent, Bank
or a Letter of Credit Issuer, as applicable,



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hereunder shall be promptly followed by a written confirmation of such request from the applicable Borrower
to Agent and Bank or such Letter of Credit Issuer, if applicable.




     3.1.7. LIBOR Portions. In the event a Borrower desires to obtain a LIBOR
Portion, such Borrower shall give Agent a LIBOR Request no later than 11:00 a.m. (Chicago,
Illinois time) on the third Business Day prior to the requested borrowing date;
provided, that neither Agent nor any Lender shall be obligated to honor such request
if a Default or Event of Default exists as of the date of the LIBOR Request or as of the
first day of the Interest Period for the requested LIBOR Portion. Each LIBOR Request shall
be irrevocable and binding on Borrowers. In no event shall Borrowers be permitted to have
outstanding at any one time LIBOR Portions with more than seven (7) different Interest
Periods.




     3.1.8. Conversion of Base Rate Portions. Provided that as of both the date of
the LIBOR Request and the first day of the Interest Period, no Default or Event of Default
exists, a Borrower may, on any Business Day, convert any Base Rate Portion of such Borrower
into a LIBOR Portion. If a Borrower desires to convert a Base Rate Portion, such Borrower
shall give Agent a LIBOR Request no later then 11:00 a.m. (Chicago, Illinois time) on the
third Business Day prior to the requested conversion date. After giving effect to any
conversion of Base Rate Portions to LIBOR Portions, Borrowers shall not be permitted to have
outstanding at any one time LIBOR Portions with more than seven (7) different Interest
Periods.




     3.1.9. Continuation of LIBOR Portions. Provided that as of both the date of
the LIBOR Request and the first day of the Interest Period, no Default or Event of Default
exists, a Borrower may, on any Business Day, continue any LIBOR Portions of such Borrower
into a subsequent Interest Period of the same or a different permitted duration. If a
Borrower desires to continue a LIBOR Portion, such Borrower shall give Agent a LIBOR Request
no later than 11:00 a.m. (Chicago, Illinois time) on the second Business Day prior to the
requested continuation date. After giving effect to any continuation of LIBOR Portions,
Borrowers shall not be permitted to have outstanding at any one time LIBOR Portions with
more than seven (7) different Interest Periods. If a Borrower shall fail to give timely
notice of its election to continue any LIBOR Portion or portion thereof as provided above,
or if such continuation shall not be permitted, such LIBOR Portion or portion thereof,
unless such LIBOR Portion shall be repaid, shall automatically be converted into a Base Rate
Portion at the end of the Interest Period then in effect with respect to such LIBOR Portion.




     3.1.10. Inability to Make LIBOR Portions. Notwithstanding any other provision
hereof, if any applicable law, treaty, regulation or directive, or any change therein or in
the interpretation or application thereof, shall make it unlawful for any Lender (for
purposes of this subsection 3.1.10, the term “Lender” shall include the office or branch
where such Lender or any corporation or bank then controlling such Lender makes or maintains
any LIBOR Portions) to make or maintain its LIBOR



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Portions, or if with respect to any Interest Period, Agent is unable to determine the LIBOR relating thereto, or adverse or
unusual conditions in, or changes in applicable law relating to, the London interbank market
make it, in the reasonable judgment of Agent, impracticable to fund therein any of the LIBOR
Portions, or make the projected LIBOR unreflective of the actual costs of funds therefor to
any Lender, the obligation of Agent and Lenders to make or continue LIBOR Portions or
convert Base Rate Portions to LIBOR Portions hereunder shall forthwith be suspended during
the pendency of such circumstances and the applicable Borrower shall, if any affected LIBOR
Portions are then outstanding, promptly upon request from Agent, convert such affected LIBOR
Portions into Base Rate Portions.



          3.2. Payments.




          Except where evidenced by notes or other instruments issued or made by one or more Borrowers
to any Lender and accepted by such Lender specifically containing payment instructions that are in
conflict with this Section 3.2 (in which case the conflicting provisions of said notes or other
instruments shall govern and control), the Obligations shall be payable as follows:




          3.2.1. Principal.





     Principal on account of Revolving Credit Loans shall be payable by Borrowers to
Agent for the ratable benefit of Lenders immediately upon the earliest of (i) at any
time when a Dominion Period is in effect, the receipt by Agent or any Borrower of
any proceeds of any of the Collateral (except as otherwise provided herein),
including without limitation as required pursuant to subsections 3.3.1 and 6.2.4, to
the extent of said proceeds, subject to Borrowers’ rights to reborrow such amounts
in compliance with subsection 1.1.1 hereof, (ii) the acceleration of the Revolving
Credit Loans in accordance with the terms of Section 10.2, (iii) subject to the
provisions of subsection 1.1.2 and the proviso to this subsection 3.2.1, at all
times that the calculations set forth in subsection 1.1.1 reflect a negative amount,
to the extent of such amount on demand by Agent or Majority Lenders therefor, or
(iv) termination of this Agreement pursuant to Section 4 hereof; provided,
however, that, if an Overadvance shall exist at any time, Borrowers shall,
on demand therefor (or, in the case of an Overadvance caused by, and created at the
time of, Agent’s establishment of a new reserve or a new eligibility criterion,
within 5 days of demand therefor), jointly and severally repay the Overadvance.
Each payment (including principal prepayment) by a Borrower on account of principal
of the Revolving Credit Loans shall be applied first to Base Rate Portions and then
to LIBOR Portions.



          3.2.2. Interest.





     (i) Base Rate Portion. Interest accrued on Base Rate Portions shall be
due and payable on the earliest of (1) the first calendar day of each month



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(for the immediately preceding month), computed through the last calendar day of the
preceding month, (2) the acceleration of such Base Rate Portion in accordance with
the terms of Section 10.2 or (3) termination of this Agreement pursuant to Section 4
hereof.




     (ii) LIBOR Portion. Interest accrued on each LIBOR Portion shall be
due and payable on each LIBOR Interest Payment Date and on the earlier of (1) the
acceleration of such LIBOR Portion in accordance with the terms of Section 10.2 or
(2) termination of this Agreement pursuant to Section 4 hereof.




     3.2.3. Costs, Fees and Charges. Costs, fees and charges payable pursuant to
this Agreement shall be jointly and severally payable by Borrowers to Agent, as and when
provided in Section 2 or Section 3 hereof, as applicable to Agent or a Lender, as
applicable, or to any other Person designated by Agent or such Lender in writing.




     3.2.4. Other Obligations. The balance of the Obligations (other than
unasserted contingent indemnity obligations) requiring the payment of money, if any, shall
be jointly and severally payable by Borrowers to Agent for distribution to
Lenders, as appropriate, as and when provided in this Agreement, the Other Agreements
or the Security Documents, or on demand, whichever is later.




     3.2.5. Prepayment of/Failure to Borrow LIBOR Portions. Borrowers may prepay a
LIBOR Portion only upon at least three (3) Business Days prior written notice to Agent
(which notice shall be irrevocable). Subject to the terms of subsection 3.3.4, in the event
of (i) the payment of any principal of any LIBOR Portion other than on the last day of the
Interest Period applicable thereto (including as a result of an Event of Default), (ii) the
conversion of any LIBOR Portion other than on the last day of the Interest Period applicable
thereto, or (iii) the failure to borrow, convert, continue or prepay any LIBOR Portion on
the date specified in any notice delivered pursuant hereto, then, in any such event,
Borrowers shall compensate each Lender for the actual loss, cost and expense incurred by
such Lender that is attributable to such event, together with any normal, reasonable and
customary administrative charges applicable thereto.



          3.3. Mandatory and Optional Prepayments.





     3.3.1. Proceeds of Sale, Loss, Destruction or Condemnation of Collateral.
Except for dispositions of assets permitted by subsection 8.2.9(ii) and dispositions in
accordance with this Agreement of assets that are subject to a Lien permitted by subsection
8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is
in effect, be applied to reduce the outstanding principal balance of the Revolving Credit
Loans, but shall not permanently reduce the Revolving Loan Commitments), if any Borrower or
any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost,
damaged or destroyed or taken by condemnation, at any time when a Dominion Period is in
effect, the applicable Borrower shall, unless otherwise agreed by Majority Lenders, pay to
Agent for the ratable benefit of Lenders



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as and when received by such Borrower or such
Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to
the proceeds (including insurance payments but net of costs and taxes incurred in connection
with such sale or event) received by such Borrower or such Subsidiary from such sale, loss,
damage, destruction or condemnation.




     Prepayments pursuant to this subsection 3.3.1 shall, subject to the third sentence of
subsection 3.4.1, be applied first, to Agent’s costs and expenses relating to the relevant
transaction, and second, to reduce the outstanding principal balance of the Revolving Credit
Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood
that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as
set forth in this sentence). In addition, if the Collateral subject to such sale, loss,
damage, destruction or condemnation consists of Eligible Accounts, Eligible Extended
Municipal Accounts, Eligible Extra Extended Municipal Accounts, Eligible Inventory or
Eligible Patterns and Core Boxes, such prepayment shall be specifically applied against the
portion of the Borrowing Base predicated on such Collateral.




     Notwithstanding anything to the contrary set forth in this subsection 3.3.1, if with
respect to any disposition, loss, damage, destruction or condemnation of Property that
constitutes “Noteholder Priority Collateral” under and as defined in the Secured Bond
Intercreditor Agreement, Borrowers use the proceeds thereof to permanently reduce the
outstanding principal balance of, and/or pay accrued and unpaid interest, costs and expenses
relating to, the Secured Bonds, Borrowers shall not be obligated to make any prepayment of
the Loans otherwise required by this subsection 3.3.1 with respect to such proceeds. In
addition, the provisions of this subsection 3.3.1 shall be subject to the terms and
conditions of the Secured Bond Intercreditor Agreement and, in the event of any conflict
between the application of proceeds contemplated by this subsection 3.3.1 and the
application of such proceeds provided for under the Secured Bond Intercreditor Agreement,
the Secured Bond Intercreditor Agreement shall govern and control.




     Nothing in this subsection 3.3.1 shall be construed to constitute Agent’s or any
Lender’s consent to the consummation of any disposition or other transaction that is not
otherwise permitted by another provision of this Agreement (including, without limitation,
subsection 8.2.9 hereof) or another Loan Document.




     3.3.2. Proceeds from Issuance of Additional Indebtedness or Equity. If a
Dominion Period is in effect and Ultimate Parent, Parent or any Borrower issues any
additional Indebtedness or issues any additional equity for cash (other than equity
(including stock options) issued to officers and employees in connection with incentive
plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting
in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the
proceeds of such equity are promptly used as consideration for all or a portion of the
purchase price for such Capital Expenditure or Permitted Acquisition), Borrowers shall pay
to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent
or any Borrower and as a mandatory



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prepayment of the Obligations, a sum equal to 50% of the
net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such
Indebtedness or equity; provided, that the foregoing shall not apply in connection
with an issuance of Indebtedness or equity to a Person that is a Related Person of a
Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the
second sentence of subsection 3.3.1 until payment thereof in full.




     3.3.3. Other Mandatory Prepayments. At any time when a Dominion Period is in
effect, if any Borrower or any Subsidiary receives any cash proceeds from any tax refunds
actually received, indemnity payments or pension plan reversions, Borrowers shall jointly
and severally pay to Agent for the benefit of Lenders, when and as received by such Borrower
or such Subsidiary, and as a mandatory prepayment of the Obligations, a sum equal to 100% of
such proceeds of such tax refund, indemnity payment or pension plan reversions. Any such
prepayment shall be applied to the Obligations in the manner specified in the second
sentence of subsection 3.3.1 until payment thereof in full.




     3.3.4. LIBOR Portions. If the application of any payment made in accordance
with the provisions of this Section 3.3 at a time when no Event of Default has occurred and
is continuing would result in termination of a LIBOR Portion prior to the last day of the
Interest Period for such LIBOR Portion, the amount of such prepayment shall not be applied
to such LIBOR Portion, but will, at Borrowers’ option, be held by Agent in a non-interest bearing account at a Lender or another bank
satisfactory to Agent in its discretion, which account is in the name of Agent and from
which account only Agent can make any withdrawal, in each case to be applied as such amount
would otherwise have been applied under this Section 3.3 at the earlier to occur of (i) the
last day of the relevant Interest Period or (ii) the occurrence of a Default or an Event of
Default.



          3.3.5. [Intentionally Omitted]





     3.3.6. Optional Reductions of Revolving Loan Commitments. Borrowers may, at
their option from time to time upon not less than 3 Business Days’ prior written notice to
Agent, terminate in whole or permanently reduce ratably in part, the unused portion of the
Revolving Loan Commitments, provided, however, that (i) each such partial reduction shall be
in an amount of $5,000,000 or integral multiples of $1,000,000 in excess thereof and (ii)
unless the Agreement is terminated pursuant to subsection 4.2.2, the aggregate of all
optional reductions to the Revolving Credit Commitments may not exceed $30,000,000 during
the Term. Except for charges under subsection 3.2.5 applicable to prepayments of LIBOR
Portions, such prepayments shall be without premium or penalty.



          3.4. Application of Payments and Collections.





     3.4.1. Collections. All items of payment received by Agent in immediately
available funds by 12:00 noon, Chicago, Illinois, time, on any Business Day shall be



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deemed received on that Business Day. All items of payment received after 12:00 noon, Chicago,
Illinois, time, on any Business Day shall be deemed received on the following Business Day.
If as the result of collections of Accounts as authorized by subsection 6.2.4 hereof or
otherwise (including, without limitation, as authorized under subsection 3.3.3 and under
subsection 6.1.2), a credit balance exists in the Loan Account, such credit balance shall
not accrue interest in favor of Borrowers, but shall be disbursed to a Borrower or otherwise
at a Borrower’s direction in the manner set forth in subsection 3.1.2, upon a Borrower’s
request at any time, so long as no Event of Default then exists (it being acknowledged and
agreed that such Borrower may direct the disbursement of such credit balance to an operating
account, with no requirement that such amount that is disbursed to such operating account be
deposited in a Dominion Account). Agent may at its option, offset such credit balance
against any of the Obligations upon and during the continuance of an Event of Default.




     3.4.2. Apportionment, Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among Lenders (according to the unpaid
principal balance of the Loans to which such payments relate held by each Lender). All
payments shall be remitted to Agent and all such payments not relating to principal or
interest of specific Loans, or not constituting payment of specific fees, and all proceeds
of Accounts, or, except as provided in subsection 3.3.1, other Collateral received by Agent,
including without limitation all amounts deposited in a Dominion Account, shall be applied,
ratably, subject to the provisions of this Agreement and whether or not an Event of Default
exists, first, to pay any fees, indemnities, or expense reimbursements (other than
amounts related to Product Obligations) then due to Agent or Lenders from any Borrower; second, to pay
interest due from Borrowers in respect of all Loans, including Swingline Loans and Agent
Loans; third, to pay or prepay principal of Swingline Loans and Agent Loans;
fourth, to pay or prepay principal of the Revolving Credit Loans (other than
Swingline Loans and Agent Loans) and unpaid reimbursement obligations in respect of Letters
of Credit; fifth, to pay an amount to Agent equal to all outstanding Letter of
Credit Obligations to be held as cash Collateral for such Obligations (in an amount of 105%
of the aggregate amount thereof); sixth, to the payment of any other Obligation
(other than amounts related to Product Obligations) due to the Agent or any Lender by any
Borrower; and seventh, to pay any amounts owing in respect of Product Obligations.
As between Agent and Borrowers, after the occurrence and during the continuance of an Event
of Default, Agent shall have the continuing exclusive right to apply and reapply any and all
such payments and collections received at any time or times hereafter by Agent or its agent
against the Obligations, in such manner as Agent may deem advisable, notwithstanding any
entry by Agent or any Lender upon any of its books and records.



          3.5. All Loans to Constitute One Obligation.





          The Loans, Letters of Credit and LC Guarantees shall constitute one general joint and several
Obligation of Borrowers, and shall be secured by Agent’s Lien upon all of the Collateral.




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          3.6. Loan Account.




          Agent shall enter all Loans as debits to one or more loan accounts (each, a “Loan Account”)
and shall also record in the Loan Account all payments made by or on behalf of each Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Agent, and may record therein,
in accordance with customary accounting practice, other debits and credits, including interest and
all charges and expenses properly chargeable to each Borrower.




          3.7. Statements of Account.




          Agent will account to Borrowers monthly with a statement of Loans, charges and payments made
pursuant to this Agreement during the immediately preceding month, and such account rendered by
Agent shall be deemed final, binding and conclusive upon Borrowers absent demonstrable error unless
Agent is notified by Borrowers in writing to the contrary within 90 days of the date each
accounting is received by Borrowers. Such notice shall only be deemed an objection to those items
specifically objected to therein.




          3.8. Increased Costs.




          If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law, but if not having the force of law, being a
guideline or directive with which such Lender is accustomed to comply) adopted or implemented after
the date of this Agreement and having general applicability to all banks or finance companies
within the jurisdiction in which any Lender operates (excluding, for the avoidance of doubt, the
effect of and phasing in of capital requirements or other regulations or guidelines passed prior to
the date of this Agreement), or any interpretation or application thereof by any governmental
authority charged with the interpretation or application thereof, or the compliance of such Lender
therewith, shall:





     (i) (1) subject such Lender to any United States taxes with respect to this
Agreement (other than (a) any tax based on or measured by net income or otherwise in
the nature of a net income tax, including, without limitation, any franchise tax or
any similar tax based on capital, net worth or comparable basis for measurement and
(b) any tax collected by a withholding on payments and which neither is computed by
reference to the net income of the payee nor is in the nature of an advance
collection of a tax based on or measured by the net income of the payee) or (2)
change the basis of taxation of payments to such Lender of principal, fees, interest
or any other amount payable hereunder or under any Loan Documents (other than in
respect of (a) any tax based on or measured by net income or otherwise in the nature
of a net income tax, including, without limitation, any franchise tax or any similar
tax based on capital, net worth or comparable basis for measurement and (b) any tax
collected by a withholding on payments and which neither is computed by reference to
the net income of the payee nor is in the nature of an advance collection of a tax
based on or measured by the net income of the payee;



-24-









 







provided, that in either case the Lender shall have complied with the
requirements of Section 2.12.2 to the extent applicable to such Lender);




     (ii) impose, modify or hold applicable any reserve (except any reserve taken
into account in the determination of the applicable LIBOR), special deposit,
assessment or similar requirement against assets held by, or deposits in or for the
account of, advances or loans by, or other credit extended by, any office of such
Lender, including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or




     (iii) impose on such Lender or the London interbank market any other condition
with respect to any Loan Document;


and the result of any of the foregoing is to increase the cost to such Lender of making, renewing
or maintaining Loans hereunder or the result of any of the foregoing is to reduce the rate of
return on such Lender’s capital as a consequence of its obligations hereunder, or the result of any
of the foregoing is to reduce the amount of any payment (whether of principal, interest or
otherwise) in respect of any of the Loans, then, in any such case, Borrowers shall jointly and
severally pay such Lender, upon demand and certification not later than sixty (60) days following
its receipt of notice of the imposition of such increased costs, such additional amount as will
compensate such Lender for such additional cost or such reduction, as the case may be, to the
extent such Lender has not otherwise been compensated, with respect to a particular Loan, for such
increased cost as a result of an increase in the Base Rate or the LIBOR. An officer of the
applicable Lender shall reasonably determine the amount of such additional cost or reduced amount
using reasonable averaging and attribution methods and shall certify the amount of such additional
cost or reduced amount to Borrowers, which certification shall include a written explanation of
such additional cost or reduction to Borrowers. Such certification shall be conclusive absent
manifest error. If a Lender claims any additional cost or reduced amount pursuant to this Section
3.8, then such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to designate a different lending office (and update the Register, as applicable) or
to file any certificate or document reasonably requested by Borrowers, or take any other action
requested by Borrowers that is not inconsistent with such Lender’s internal policies, if the making
of such designation or filing or the taking of such action would avoid the need for, or reduce the
amount of, any such additional cost or reduced amount and would not in good faith, in the sole
reasonable discretion of such Lender, be otherwise disadvantageous to such Lender.




          3.9. Basis for Determining Interest Rate Inadequate.




          In the event that Agent or any Lender shall have determined that:





     (i) reasonable means do not exist for ascertaining the LIBOR for any Interest
Period; or




     (ii) Dollar deposits in the relevant amount and for the relevant maturity are
not available in the London interbank market with respect to a



-25-









 







proposed LIBOR Portion, or a proposed conversion of a Base Rate Portion into a
LIBOR Portion; then


Agent or such Lender shall give Borrowers prompt written, telephonic or electronic notice of the
determination of such effect. If such notice is given, (i) any such requested LIBOR Portion shall
be made as a Base Rate Portion, unless Borrowers shall notify Agent no later than 10:00 a.m.
(Chicago, Illinois time) three (3) Business Days prior to the date of such proposed borrowing that
the request for such borrowing shall be canceled or made as an unaffected type of LIBOR Portion,
and (ii) any Base Rate Portion which was to have been converted to an affected type of LIBOR
Portion shall be continued as or converted into a Base Rate Portion, or, if Borrowers shall notify
Agent, no later than 10:00 a.m. (Chicago, Illinois time) three (3) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of LIBOR Portion.




          3.10. Sharing of Payments, Etc.




          If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of any Loan made by it in excess of its ratable
share of payments on account of Loans made by all Lenders, such Lender shall forthwith purchase
from each other Lender such participation in such Loan as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each other Lender; 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 such Lender shall repay to the
purchasing Lenders 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 (i) the amount of such Lender’s
required repayment to (ii) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of the total amount so
recovered. Borrowers agree that any Lender so purchasing a participation from another Lender
pursuant to this Section 3.10 may, to the fullest extent permitted by law, exercise all 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 each Borrower in the amount of such participation.
Notwithstanding anything to the contrary contained herein, all purchases and repayments to be made
under this Section 3.10 shall be made through Agent.




          3.11. Optional Prepayment/Replacement of Lenders.




          If (a) Borrowers are required to pay increased sums to a particular Lender pursuant to the
last sentence of subsection 2.12.1 or Section 3.8, (b) Borrowers are notified that a Lender will
not make or maintain LIBOR Portions pursuant to subsection 3.1.10 or Section 3.9, (c) a particular
Lender refuses or fails to execute a waiver of any provision hereof or a consent to any amendment
hereto that has been requested by Borrowers and approved by Majority Lenders or (d) a particular
Lender has exercised its option to refuse to fund additional Revolving Credit Loans during the
existence of a Default or Event of Default pursuant to subsection 10.2.2 at a time when Majority
Lenders continue funding Revolving Credit Loans notwithstanding the existence of such Default or
Event of Default (any such Lender, an “Affected Lender”), Borrowers may obtain, at Borrowers’
expense, a replacement Lender

-26-









 








(“Replacement Lender”) for such Affected Lender, which Replacement Lender shall be reasonably
satisfactory to Agent. In the event Borrowers obtain a Replacement Lender that will refinance all
outstanding Obligations owed to such Affected Lender and assume its entire Revolving Loan
Commitment hereunder within one hundred twenty (120) days following notice of Borrowers’ intention
to do so, the Affected Lender shall sell and assign all of its rights and delegate all of its
obligations under this Agreement to such Replacement Lender in accordance with the provisions of
subsection 11.9.1, provided that Borrowers have reimbursed such Affected Lender for (1) any
fees owing by such Affected Lender under subsection 11.9.1 and (2) the amount of fees and expenses
as to which such Affected Lender is entitled to reimbursement by Borrowers hereunder through the
date of such sale and assignment.




SECTION 4. TERM AND TERMINATION




          4.1. Term of Agreement.




          Subject to the right of Lenders to cease making Loans to Borrowers during the continuance of
any Default or Event of Default, this Agreement shall be in effect through and including December
31, 2011 (the “Term”), unless terminated as provided in Section 4.2 hereof.




          4.2. Termination.





     4.2.1. Termination by Lenders. Agent may, and at the direction of Majority
Lenders shall, terminate this Agreement upon notice during the continuance of an Event of
Default.




     4.2.2. Termination by Borrowers. Upon at least 10 days prior written notice to
Agent and Lenders, Borrowers may, at their option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrowers
have paid or collateralized to Agent’s reasonable satisfaction all of the Obligations (other
than unasserted contingent indemnity obligations) in immediately available funds, all
Letters of Credit and LC Guaranties have expired, terminated or have been cash
collateralized (in an amount equal to 105% of the LC Amount) to Agent’s reasonable
satisfaction and Borrowers have complied with subsection 3.2.5. Without limiting Borrowers’
right to reduce the amount of the Revolving Loan Commitments pursuant to subsection 3.3.6,
Borrowers may elect to terminate this Agreement in its entirety only. No section of this
Agreement or type of Loan available hereunder may be terminated singly.




     4.2.3. Effect of Termination. All of the Obligations shall be immediately due
and payable upon the termination date stated in any notice of termination of this Agreement.
All undertakings, agreements, covenants, warranties and representations of Borrowers
contained in the Loan Documents shall survive any such termination and Agent shall retain
its Liens in the Collateral and Agent and each Lender shall retain all of its rights and
remedies under the Loan Documents notwithstanding such termination until Borrowers have paid
or collateralized to Agent’s reasonable satisfaction all of the Obligations (other than
unasserted contingent indemnity



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obligations) in immediately available funds, all Letters of Credit and LC Guaranties have
expired, terminated or have been cash collateralized (in an amount equal to 105% of the LC
Amount) to Agent’s reasonable satisfaction and Borrowers have complied with subsection
3.2.5; and, upon such payments and other events having occurred, Agent’s Liens on the
Collateral shall terminate (other than Collateral specifically retained to collateralize
outstanding Obligations) and Agent shall, at the expense of Borrowers, execute and deliver
any and all termination statements, releases and other documents reasonably requested by
Borrowers to evidence such termination. Notwithstanding the foregoing, Agent shall not be
required to terminate its Liens in the Collateral unless, solely to the extent necessary to
protect against any loss or damage Agent may incur as a result of dishonored checks or other
returned items of payment received by Agent from any Borrower or any Account Debtor and
applied to the Obligations, Agent shall, at its option, (i) have received a written
agreement reasonably satisfactory to Agent, executed by Borrowers and by any Person whose
loans or other advances to any Borrower are used in whole or in part to satisfy the
Obligations, indemnifying Agent and each Lender from any such loss or damage or (ii) have
retained cash Collateral or other Collateral for such period of time as Agent, in its
reasonable discretion, may deem necessary to protect Agent and each Lender from any such
loss or damage.



SECTION 5. SECURITY INTERESTS



Notwithstanding anything herein to the contrary, the liens and security
interests granted to the Agent pursuant to this Agreement and the exercise of
any right or remedy by the Agent hereunder, are subject to the limitations and
provisions of the Intercreditor Agreement dated as of December 29, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Intercreditor Agreement”), among Agent, The Bank of New York Trust Company,
N.A., Neenah and the Subsidiaries of Neenah party thereto. In the event of any
conflict between the terms of the Intercreditor Agreement and the terms of this
Agreement, the terms of the Intercreditor Agreement shall govern.




          5.1.Security Interest in Collateral.




          To secure the prompt payment and performance to Agent and each Lender of the Obligations, each
Borrower hereby grants to Agent for the benefit of itself and each Lender (and hereby reaffirms its
prior grant, pursuant to the terms of the Original Loan Agreement, to Agent for the benefit of
itself and each Lender, of) a continuing Lien upon all of such Borrower’s assets, including all of
the following Property and interests in Property of such Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:





     (i) Accounts;




     (ii) Certificated Securities;




     (iii) Chattel Paper;



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     (iv) Computer Hardware and Software and all rights with respect thereto,
including, any and all licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any substitutions, replacements, additions
or model conversions of any of the foregoing;




     (v) Contract Rights;




     (vi) Deposit Accounts;




     (vii) Documents;




     (viii) Equipment;




     (ix) Financial Assets;




     (x) Fixtures;




     (xi) General Intangibles, including Payment Intangibles and Software;




     (xii) Goods (including all of its Equipment, Fixtures and Inventory), and all
accessions, additions, attachments, improvements, substitutions and replacements
thereto and therefor;




     (xiii) Instruments;




     (xiv) Intellectual Property;




     (xv) Inventory;




     (xvi) Investment Property;




     (xvii) money (of every jurisdiction whatsoever);




     (xviii) Letter-of-Credit Rights;




     (xix) Payment Intangibles;




     (xx) Security Entitlements;




     (xxi) Software;




     (xxii) Supporting Obligations;




     (xxiii) Uncertificated Securities; and



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     (xxiv) to the extent not included in the foregoing, all other personal property
of any kind or description;


together with all books, records, writings, data bases, information and other property relating to,
used or useful in connection with, or evidencing, embodying, incorporating or referring to any of
the foregoing, and all Proceeds, products, offspring, rents, issues, profits and returns of and
from any of the foregoing; provided, that to the extent that the provisions of any lease,
license, contract, permit, Document or Instrument expressly prohibit (which prohibition is
enforceable under applicable law) any assignment thereof (unless such prohibition specifically
excludes from its scope an assignment for collateral security purposes) or the grant of a Lien
therein, (i) Agent will not enforce its Lien in the applicable Borrower’s rights under such lease,
license, contract, permit, Document or Instrument (other than in respect of the Proceeds thereof)
for so long as such prohibition continues, and (ii) to the extent a violation of any such
prohibition caused by the Lien under this Section 5.1 would allow the counterparty to any such
lease, license, contract, permit, Document or Instrument to terminate the same under applicable
law, then such lease, license, contract, permit, Document or Instrument (other than in respect of
the Proceeds thereof) shall not constitute Collateral for so long as such prohibition continues; it
being understood that upon request of Agent, such Borrower will in good faith use reasonable
efforts to obtain consent for the creation of a Lien in favor of Agent (and to Agent’s enforcement
of such Lien) in any lease, license, contract, permit, Document or Instrument that prohibits any
assignment thereof or the grant of a Lien therein; and provided, further, that no
Lien is granted in any “intent to use” trademark applications until such time as a verified
statement of use is filed.





     5.2. Other Collateral.




     5.2.1. Commercial Tort Claims. The applicable Borrower shall promptly notify
Agent in writing upon having a Commercial Tort Claim that arises after the Closing Date
against any third party and, upon request of Agent, promptly enter into an amendment to this
Agreement and take such other action reasonably deemed necessary by Agent to give Agent a
security interest in any such Commercial Tort Claim. Each Borrower represents and warrants
that as of the date of this Agreement, to its knowledge, it does not have any Commercial
Tort Claims.




     5.2.2. Other Collateral. The applicable Borrower shall (i) promptly notify
Agent in writing upon acquiring or otherwise obtaining any Collateral after the date hereof
that consists of, Deposit Accounts, Investment Property or Letter-of-Credit Rights in (or
relating to) an amount in excess of $250,000 or Electronic Chattel Paper in (or relating to)
an amount in excess of $1,000,000 and, upon the request of Agent, promptly execute such
other documents, and do such other acts or things deemed appropriate by Agent to deliver to
Agent control with respect to such Collateral; (ii) promptly notify Agent in writing upon
acquiring or otherwise obtaining any Collateral after the date hereof that consists of,
Documents or Instruments in (or relating to) an amount in excess of $250,000 and, upon the
request of Agent, will promptly execute such other documents, and take such other action
deemed appropriate by Agent to deliver to Agent possession of such Documents which are



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negotiable and Instruments, and, with respect to nonnegotiable Documents, to have such
nonnegotiable Documents issued in the name of Agent; (iii) promptly notify Agent in writing
upon acquiring or otherwise obtaining any Collateral after the date hereof that consists of,
motor vehicles and other Goods subject to a certificate of title statute having an aggregate
amount in excess of $250,000 and, upon the request of Agent, promptly deliver such
certificates of title, execute such other documents, and do such other acts or things deemed
appropriate by Agent to cause Agent to have a perfected security interest with respect to
such Collateral; and (iv) with respect to any Collateral having a value in excess of
$250,000 that is in the possession of a third party, other than Certificated Securities and
Goods covered by a Document, obtain an acknowledgement from the third party that it is
holding the Collateral for the benefit of Agent.



          5.3. Lien Perfection; Further Assurances.




          Each Borrower shall execute such instruments, assignments or documents as are necessary to
perfect Agent’s Lien upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Agent’s Lien upon the Collateral. Unless prohibited by
applicable law, each Borrower hereby authorizes Agent to execute and file any such financing
statement, including, without limitation, financing statements that indicate the Collateral (i) as
all assets of such Borrower or words of similar effect, or (ii) as being of an equal or lesser
scope, or with greater or lesser detail, than as set forth in Section 5.1, on such Borrower’s
behalf. Each Borrower also hereby ratifies its authorization for Agent to have filed in any
jurisdiction any like financing statements or amendments thereto if filed prior to the date hereof.
The parties agree that a carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. At
Agent’s request, each Borrower shall also promptly execute or cause to be executed and shall
deliver to Agent any and all documents, instruments and agreements reasonably deemed necessary by
Agent to give effect to or carry out the terms of the Loan Documents.




          5.4. Lien on Realty.




          The due and punctual payment and performance of the Obligations shall also be secured by the
Lien created by Mortgages upon all real Property of each Borrower now or hereafter owned. Each
Mortgage (and, in the case of Mortgages dated on or about the Original Closing Date, Mortgage
amendments reflecting the amended and restated loan facility provided for hereunder and Mortgage
subordinations reflecting the subordination of the Liens in favor of Agent on such real Property to
the Liens on such real Property in favor of the Secured Bond Trustee securing the Secured Bonds)
shall be executed by the applicable Borrower in favor of Agent. Each Mortgage and Mortgage
amendment, as applicable, shall be duly recorded, at Borrowers’ joint and several expense, in each
office where such recording is required to constitute a fully perfected first Lien (subject to
Permitted Liens) on the real Property covered thereby. If so requested by Agent or Majority
Lenders, the applicable Borrower shall deliver to Agent, at Borrowers’ joint and several expense,
mortgagee title insurance policies (or, in the case of title insurance policies issued in
connection with Mortgages dated on or about the Original Closing Date, date-down endorsements)
issued by a title insurance company that is

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selected by Borrowers and reasonably satisfactory to Agent, which policies and endorsements,
as applicable, shall be in form and substance reasonably satisfactory to Agent and shall insure a
valid first Lien (subject to Permitted Liens) in favor of Agent, for the benefit of itself and the
Lenders, on the Property covered by each Mortgage (other than with respect to the Ashland Parcel
and the real Property of Neenah located at 500 Winneconne Avenue in Neenah, Wisconsin), subject
only to those exceptions reasonably acceptable to Agent and its counsel. The applicable Borrower
shall deliver to Agent such other documents, including, without limitation, as-built survey prints
of the real Property, as Agent and its counsel may reasonably request relating to the real Property
subject to the Mortgages, other than with respect to the Ashland Parcel and the real Property of
Neenah located at 500 Winneconne Avenue in Neenah, Wisconsin.




SECTION 6. COLLATERAL ADMINISTRATION




          6.1. General.





     6.1.1. Location of Collateral. All Collateral, other than Goods in transit,
motor vehicles, Goods (other than Eligible Inventory) in the possession of employees in the
ordinary course of business and other miscellaneous immaterial items of Collateral not
having a value that exceeds $250,000 in the aggregate, will at all times be kept by a
Borrower or one of its Subsidiaries, or a bailee, distributor, consignee, warehousemen or
similar party of a Borrower or one of its Subsidiaries, at one or more of the business
locations set forth in Exhibit 6.1.1 hereto, as updated by Borrowers providing prior
written notice to Agent of any new location.




     6.1.2. Insurance of Collateral. Borrowers shall maintain and pay for insurance
upon all Collateral wherever located and with respect to the business of each Borrower and
each of its Subsidiaries, covering casualty, hazard, public liability, workers’
compensation, business interruption and such other risks in such amounts and with such
insurance companies as are reasonably satisfactory to Agent. Borrowers shall deliver
certified copies of such policies to Agent as promptly as practicable, with satisfactory
lender’s loss payable endorsements, naming Agent (on behalf of the Lenders) as a loss payee,
assignee or additional insured, as appropriate, as its interest may appear, showing only
such other loss payees, assignees and additional insureds as are satisfactory to Agent and
with respect to business interruption insurance, an executed collateral assignment thereof.
Each policy of insurance or endorsement shall contain a clause requiring the insurer to give
not less than 10 days’ prior written notice to Agent in the event of cancellation of the
policy for nonpayment of premium and not less than 30 days’ prior written notice to Agent in
the event of cancellation of the policy for any other reason whatsoever and a clause
specifying that the interest of Agent shall not be impaired or invalidated by any act or
neglect of any Borrower, any of its Subsidiaries or the owner of the Property or by the
occupation of the premises for purposes more hazardous than are permitted by said policy.
Borrowers agree to deliver to Agent, promptly as rendered, true copies of all reports made
in any reporting forms to insurance companies. At any time when a Dominion Period is in
effect, all net proceeds of business interruption insurance (if



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any) of each Borrower and its Subsidiaries shall be remitted to Agent for application
to the outstanding balance of the Revolving Credit Loans (subject to the third sentence of
subsection 3.4.1).




     By its execution of this Agreement, Agent acknowledges that, as of the date hereof, the
insurance coverages of Borrowers and its Subsidiaries and the insurance companies providing
such coverages are satisfactory to Agent in its reasonable judgment.




     Unless Borrowers provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may purchase insurance at Borrowers’ joint and several expense to protect
Agent’s interests in the Properties of each Borrower and its Subsidiaries. This insurance
may, but need not, protect the interests of each Borrower and its Subsidiaries. The
coverage that Agent purchases may not pay any claim that a Borrower or any Subsidiary of
such Borrower makes or any claim that is made against a Borrower or any such Subsidiary in
connection with said Property. Borrowers may later cancel any insurance purchased by Agent,
but only after providing Agent with evidence that Borrowers and their Subsidiaries have
obtained insurance as required by this Agreement. If Agent purchases insurance, Borrowers
will be jointly and severally responsible for the costs of that insurance, including
interest and any other charges Agent may impose in connection with the placement of
insurance, until the effective date of the cancellation or expiration of the insurance. The
costs of the insurance may be added to the Obligations. The costs of the insurance may be
more than the cost of insurance that Borrowers and the Subsidiaries may be able to obtain on
their own.




     6.1.3. Protection of Collateral. Neither Agent nor any Lender shall be liable
or responsible in any way for the safekeeping of any of the Collateral or for any loss or
damage thereto (except for reasonable care in the custody thereof while any Collateral is in
Agent’s or any Lender’s actual possession) or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrowers’ sole risk.




     6.2. Administration of Accounts.




     6.2.1. Records, Schedules and Assignments of Accounts. Each Borrower shall
keep accurate and complete records in all material respects of its Accounts and all payments
and collections thereon and shall submit to Agent on such periodic basis as Agent shall
reasonably request a sales and collections report for the preceding period, in form
consistent with the reports currently prepared by such Borrower with respect to such
information. Concurrently with the delivery of each Borrowing Base Certificate described in
subsection 8.1.4, or more frequently as reasonably requested by Agent, from and after the
date hereof, each Borrower shall deliver to Agent a detailed aged trial balance of all of
its Accounts, specifying the names, addresses, face values, dates of invoices and due dates
for each Account Debtor obligated on an Account so listed (“Schedule of Accounts”), and upon
Agent’s request therefor, copies of proof of delivery and the original copy of all
documents, including, without



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limitation, repayment histories and present status reports relating to the Accounts so
scheduled and such other matters and information relating to the status of then existing
Accounts as Agent shall reasonably request. During the continuance of an Event of Default,
if requested by Agent, each Borrower shall execute and deliver to Agent formal written
assignments of all of its Accounts weekly, which shall include all Accounts that have been
created since the date of the last assignment, together with copies of invoices or invoice
registers related thereto.




     6.2.2. Discounts, Allowances, Disputes. If a Borrower grants any discounts,
allowances or credits that are not shown on the face of the invoice for the Account
involved, such Borrower shall report such discounts, allowances or credits, as the case may
be, to Agent as part of the next required Schedule of Accounts.




     6.2.3. Account Verification. Any of Agent’s officers, employees or agents
shall have the right, at any time or times hereafter, in the name of Agent, any designee of
Agent or a Borrower, to verify the validity and amount of any Accounts by mail, telephone,
electronic communication or otherwise; provided, that Agent shall conduct Account
verifications with appropriate discretion in accordance with its customary practices and
procedures solely to verify the validity and amounts of Accounts and, so long as no Event of
Default has occurred and is continuing, (a) Agent shall provide Borrowers with at least 1
Business Day’s prior notice that Agent will be conducting Account verifications pursuant to
this subsection 6.2.3 (it being understood that Agent shall have no duty to identify any of
the specific Account Debtors to be contacted by Agent in connection therewith) and (b) Agent
shall afford Borrowers the opportunity to have an observational role with respect to any
Account verifications conducted pursuant to this subsection 6.2.3 (it being understood that
Borrowers shall have no right to be an active participant with respect to any such Account
verifications). Each Borrower shall cooperate with all reasonable requests of Agent in an
effort to facilitate and promptly conclude any such verification process.




     6.2.4. Maintenance of Dominion Account. Each Borrower shall maintain a
Dominion Account or Accounts pursuant to lockbox and blocked account arrangements acceptable
to Agent with such banks as may be selected by such Borrower and be acceptable to Agent.
Each Borrower shall issue to any such banks an irrevocable letter of instruction directing
such banks to deposit all payments or other remittances received in the lockbox and blocked
accounts to the Dominion Account. Each Borrower shall obtain the agreement by the
applicable banks in favor of Agent to waive any recoupment, setoff rights, and any security
interest in, or against, the funds so deposited. All funds deposited in the Dominion
Account shall be available to Borrowers at their discretion unless a Dominion Period is in
effect. If a Dominion Period is in effect, all funds in the Dominion Account shall (i)
immediately become the property of Agent, for the ratable benefit of Lenders and (ii) be
applied on account of the Obligations as provided in subsection 3.2.1. If a Dominion Event
occurs at any time, Agent may, and, at the direction of Majority Lenders Agent, shall, send
the appropriate notice to Borrowers to commence a Dominion Period. The provisions of this
subsection 6.2.4 shall not apply to any



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collateral proceeds account that is established pursuant to and in accordance with the
provisions of the Secured Bond Indenture for the purpose of holding only proceeds of
“Noteholder Priority Collateral” under and as defined in the Secured Bond Intercreditor
Agreement.




     6.2.5. Collection of Accounts, Proceeds of Collateral. Each Borrower agrees
that all invoices rendered and other requests made by such Borrower for payment in respect
of Accounts shall contain a written statement directing payment in respect of such Accounts
to be paid to a lockbox or a blocked account established pursuant to subsection 6.2.4. To
expedite collection, each Borrower shall endeavor in the first instance to make collection
of its Accounts for Agent in a manner that is consistent with the ordinary course of its
business. All remittances received by each Borrower on account of Accounts, together with
the proceeds of any other Collateral, shall be immediately deposited in kind in the Dominion
Account and shall, at any time when a Dominion Period is in effect, be held by such Borrower
until such deposit has occurred as trustee of an express trust on behalf of Agent (for its
benefit and the benefit of the Lenders). Agent retains the right at all times after the
occurrence and during the continuance of an Event of Default to notify Account Debtors that
each Borrower’s Accounts have been assigned to Agent and to collect each Borrower’s Accounts
directly in its own name, or in the name of Agent’s agent, and to charge the collection
costs and expenses, including attorneys’ fees, jointly and severally to Borrowers.




     6.2.6. Taxes. If an Account includes a charge for any tax payable to any
governmental taxing authority, Agent is authorized, in its sole discretion, to pay the
amount thereof to the proper taxing authority for the account of any Borrower and to charge
that Borrower for such tax, except for taxes that (i) are being actively contested in good
faith and by appropriate proceedings and for which the applicable Borrower maintains
reasonable reserves on its books and (ii) would not reasonably be expected to result in any
Lien other than a Permitted Lien. In no event shall Agent or any Lender be liable for any
taxes of any Borrower due and payable to any governmental taxing authority.



          6.3. Administration of Inventory.




          Each Borrower shall keep records of its Inventory which records shall be complete and accurate
in all material respects. Each Borrower shall furnish to Agent Inventory reports concurrently with
the delivery of each Borrowing Base Certificate described in subsection 8.1.4 or more frequently as
reasonably requested by Agent, which reports will be in such format and detail as Agent shall
reasonably request and shall include a current list of all locations of such Borrower’s Inventory.
Each Borrower shall conduct a physical inventory no less frequently than annually and shall provide
to Agent a report based on each such physical inventory promptly thereafter, together with such
supporting information as Agent shall reasonably request.





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     6.4. Administration of Equipment.



          Each Borrower shall keep records of its Equipment (including, without limitation, all Patterns
and Core Boxes) which shall be complete and accurate in all material respects itemizing and
describing the kind, type, quality, quantity and book value of its Equipment and all dispositions
made in accordance with subsection 8.2.9 hereof, and each Borrower shall, and shall cause each of
its Subsidiaries to, furnish Agent with a current schedule containing the foregoing information on
at least an annual basis and more often during the continuance of an Event of Default if reasonably
requested by Agent. In addition to the foregoing, each Borrower shall furnish to Agent reporting
on Patterns and Core Boxes concurrently with the delivery of each Borrowing Base Certificate
described in subsection 8.1.4 or more frequently as reasonably requested by Agent, which reporting
will be in such format and detail as Agent shall reasonably request and shall include a current
list of all locations of such Borrower’s Patterns and Core Boxes. Promptly after the request
therefor by Agent, each Borrower shall deliver to Agent any and all evidence of ownership, if any,
of any of its Equipment.





     6.5. Payment of Charges.



          All amounts chargeable to any Borrower under Section 6 hereof shall be Obligations secured by
all of the Collateral, shall be payable on demand and shall bear interest from the date such
advance was made until paid in full at the rate applicable to Base Rate Portion from time to time.



SECTION 7. REPRESENTATIONS AND WARRANTIES





     7.1. General Representations and Warranties.




          To induce Agent and each Lender to enter into this Agreement and to make advances hereunder,
each Borrower warrants, represents and covenants to Agent and each Lender that:




     7.1.1. Qualification. Each Borrower and each of its Subsidiaries is a
corporation, limited partnership or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or
organization. Each Borrower and each of its Subsidiaries is duly qualified and is
authorized to do business and is in good standing as a foreign limited liability company,
limited partnership or corporation, as applicable, in (a) as of the date hereof, each state
or jurisdiction listed on Exhibit 7.1.1 hereto and (b) all states and jurisdictions
in which the failure of such Borrower or any of its Subsidiaries to be so qualified would
reasonably be expected to have a Material Adverse Effect.




     7.1.2. Power and Authority. Each Borrower and each of its Subsidiaries is duly
authorized and empowered to enter into, execute, deliver and perform this Agreement and each
of the other Loan Documents to which it is a party. The execution, delivery and performance of this Agreement and each of the other Loan



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Documents have been duly authorized by all necessary corporate or other relevant action and
do not and will not (i) require any consent or approval of the shareholders of such Borrower
or any of the shareholders, partners or members, as the case may be, of any Subsidiary of
such Borrower; (ii) contravene such Borrower’s or any of its Subsidiaries’ charter, articles
or certificate of incorporation, partnership agreement, certificate of formation, by-laws,
limited liability agreement, operating agreement or other organizational documents (as the
case may be); (iii) violate, or cause such Borrower or any of its Subsidiaries to be in
default under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to such Borrower
or any of its Subsidiaries, the violation of which would reasonably be expected to have a
Material Adverse Effect; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or instrument to which
such Borrower or any of its Subsidiaries is a party or by which it or its Property may be
bound or affected, the breach of or default under which could reasonably be expected to have
a Material Adverse Effect; or (v) result in, or require, the creation or imposition of any
Lien (other than Permitted Liens) upon or with respect to any of the Property now owned or
hereafter acquired by such Borrower or any of its Subsidiaries.




     7.1.3. Legally Enforceable Agreement. This Agreement is, and each of the other
Loan Documents when delivered under this Agreement will be, a legal, valid and binding
obligation of each Borrower and each of its Subsidiaries party thereto, enforceable against
it in accordance with its respective terms, subject to the effects of applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors’ rights generally
and equitable principles of general applicability (regardless of whether such enforceability
is considered in a proceeding at law or in equity).




     7.1.4. Capital Structure. Exhibit 7.1.4 hereto states, as of the date
hereof, (i) the correct name of each of the Subsidiaries of each Borrower, its jurisdiction
of incorporation or organization and the percentage of its Voting Stock owned by such
Borrower, (ii) the name of each Borrower’s and each of its Subsidiaries’ corporate or joint
venture relationships and the nature of the relationship, (iii) the number, nature and
holder of all outstanding Securities of each Borrower and the holder of Securities of each
Subsidiary of such Borrower and (iv) the number of authorized, issued and treasury
Securities of each Borrower. Each Borrower has good title to all of the Securities it
purports to own of each of such Subsidiaries, free and clear in each case of any Lien other
than Permitted Liens. All such Securities have been duly issued and are fully paid and
non-assessable. As of the date hereof, there are no outstanding options to purchase, or any
rights or warrants to subscribe for, or any commitments or agreements to issue or sell any
Securities or obligations convertible into, or any powers of attorney relating to any
Securities of any Borrower or any of its Subsidiaries. Except as set forth on Exhibit
7.1.4, as of the date hereof, there are no outstanding agreements or instruments binding
upon any of any Borrower’s or any of



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its Subsidiaries’ partners, members or shareholders, as the case may be, relating to
the ownership of its Securities.




     7.1.5. Names; Organization. As of the date hereof, within the last five years
neither any Borrower nor any of its Subsidiaries has been known as or has used any legal,
fictitious or trade names except those listed on Exhibit 7.1.5 hereto. Except as
set forth on Exhibit 7.1.5, during the last 5 years neither any Borrower nor any of
its Subsidiaries has been the surviving entity of a merger or consolidation or has acquired
all or substantially all of the assets of any Person. As of the date hereof, each
Borrower’s and each of its Subsidiaries’ state(s) of incorporation or organization, Type of
Organization and Organizational I.D. Number is set forth on Exhibit 7.1.5. As of
the date hereof, the exact legal name of each Borrower and each of its Subsidiaries is set
forth on Exhibit 7.1.5.




     7.1.6. Business Locations; Agent for Process. Each Borrower’s and each of its
Subsidiary’s chief executive office, location of books and records and other places of
business are as listed on Exhibit 6.1.1 hereto, as updated from time to time by
Borrowers in accordance with the provisions of subsection 6.1.1. During the preceding
six-month period, neither any Borrower nor any of its Subsidiaries has had a principal place
of business, chief executive office or location of tangible Collateral (except for
miscellaneous immaterial items of Collateral not having a value that exceeds $250,000 in the
aggregate), other than as listed on Exhibit 6.1.1. All tangible Collateral is kept
by a Borrower and its Subsidiaries in accordance with subsection 6.1.1. Except for
miscellaneous immaterial items of Collateral not having a value that exceeds $250,000 in the
aggregate or as shown on Exhibit 6.1.1, as of the date hereof, no Inventory is
stored with a bailee, distributor, warehouseman or similar party, nor is any Inventory
consigned to any Person.




     7.1.7. Title to Properties; Priority of Liens. Each Borrower and each of its
Subsidiaries has good, indefeasible and marketable title to and fee simple ownership of, or,
to the extent relating to the leased location at 135 Church Street in Wheatland,
Pennsylvania or at any leased property that involves rental payments exceeding $50,000 in
the aggregate per fiscal year, valid leasehold interests in, all of its real Property, and
good title to all of the Collateral and all of its other Property, in each case, free and
clear of all Liens except Permitted Liens. Each Borrower and each of its Subsidiaries has
paid or discharged all lawful claims that are due and payable which, if unpaid, would
reasonably be expected to become a Lien against any of such Borrower’s or such Subsidiary’s
Properties that is not a Permitted Lien. The Liens granted to Agent under Section 5 hereof
are first priority Liens, subject only to Permitted Liens.




     7.1.8. Accounts. Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by each Borrower with respect to any
Account or Accounts. With respect to each of each Borrower’s Eligible Accounts, unless
otherwise disclosed to Agent in writing:



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     (i) It is genuine and in all respects what it purports to be, and it is not
evidenced by a judgment;




     (ii) It arises out of a completed, bona fide sale and delivery
of goods (excluding any goods that constitute “Noteholder Priority Collateral” under
and as defined in the Secured Bond Intercreditor Agreement) or rendition of services
by such Borrower, in the ordinary course of its business and in accordance with the
material terms and conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between such Borrower and the
Account Debtor;




     (iii) It is for a liquidated amount maturing as stated in the duplicate invoice
covering such sale or rendition of services, a copy of which has been furnished or
is available to Agent;




     (iv) There are no facts, events or occurrences which in any material way impair
the validity or enforceability of any Eligible Accounts or tend to reduce the amount
payable thereunder from the face amount of the invoice and statements delivered or
made available to Agent with respect thereto;




     (v) To the best of such Borrower’s knowledge, the Account Debtor thereunder (1)
had the capacity to contract at the time any contract or other document giving rise
to the Eligible Account was executed and (2) such Account Debtor is Solvent; and




     (vi) To the best of such Borrower’s knowledge, there are no proceedings or
actions which are threatened or pending against the Account Debtor thereunder which
would reasonably be expected to result in any material adverse change in such
Account Debtor’s financial condition or the collectibility of such Account.



     7.1.9. [Intentionally Omitted].




     7.1.10. Financial Statements; Fiscal Year. The audited Consolidated and
consolidating balance sheets of Neenah and Neenah’s Subsidiaries (including the accounts of
all Borrowers and their respective Subsidiaries for the respective periods during which a
Subsidiary relationship existed) as of September 30, 2005, and the related statements of
income, changes in shareholders’ equity, and changes in financial position for the period
ended on such date, have been prepared in accordance with GAAP, and present fairly in all
material respects the financial positions of Neenah and Neenah’s Subsidiaries, taken as a
whole, at such date and the results of the operations of Neenah and Neenah’s Subsidiaries,
taken as a whole, as reflected in the balance sheets as of such date. The unaudited
Consolidated and consolidating balance sheets of Neenah and Neenah’s Subsidiaries (including
the accounts of all Borrowers and their respective Subsidiaries for the respective periods
during which a Subsidiary relationship existed) as of November 30, 2006, and the


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related statements of income, changes in shareholder’s equity, and changes in financial
position for the period ended on such date, have been prepared in accordance with GAAP
(except for the absence of footnotes and subject to audit and year-end adjustments), and
present fairly in all material respects the financial positions of Neenah and Neenah’s
Subsidiaries, taken as a whole, at such date and the results of the operations of Neenah and
Neenah’s Subsidiaries, taken as a whole, for such period. Since September 30, 2005, no
Material Adverse Effect has occurred, it being understood that changes or events affecting
general economic conditions, but not otherwise materially and adversely affecting the
business, assets or financial condition of Borrowers’ and Borrowers’ Subsidiaries, shall not
be considered a Material Adverse Effect for purposes of the foregoing. As of the date
hereof, the fiscal year of Parent and each of its Subsidiaries ends on September 30 of each
year.




    7.1.11. Full Disclosure. The financial statements referred to in subsection
7.1.10 hereof do not, nor does this Agreement, or any other written statement of any
Borrower to Agent or any Lender contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not misleading in
light of the circumstances in which they were made. To the best of Borrowers’ knowledge
after reasonable inquiry, there is no fact which any Borrower has failed to disclose to
Agent or any Lender in writing which would reasonably be expected to have a Material Adverse
Effect.




     7.1.12. Solvent Financial Condition. After giving effect to the initial Loans
to be made and the initial Letters of Credit and LC Guaranties to be issued hereunder, the
issuance of the Secured Bonds and the Subordinated Bonds and the consummation of the other
transactions contemplated hereby, each of Ultimate Parent, Parent, Borrowers and the
Subsidiaries of Borrowers will be Solvent on a consolidated basis (after giving effect to
all rights of contribution and the like).




     7.1.13. Surety Obligations. Except as set forth on Exhibit 7.1.13, as
of the date hereof, neither any Borrower nor any of its Subsidiaries is obligated as surety
or indemnitor under any surety or similar bond or other contract issued for the benefit of
any Person (including without limitation a Borrower or a Subsidiary of a Borrower) that in
any case involves an amount exceeding $250,000, or has issued or entered into any agreement
to assure payment, performance or completion of performance of any undertaking or obligation
of any Person (including, without limitation, a Borrower or a Subsidiary of a Borrower) that
in any case involves an amount exceeding $250,000, except as otherwise expressly permitted
under subsection 8.2.3 hereof.




     7.1.14. Taxes. Each Borrower and each of its Subsidiaries has filed all
applicable federal, state and local tax returns and other reports relating to taxes it is
required by law to file, other than such returns and reports where the amounts due and
payable as shown do not exceed $100,000 individually or $250,000 in the aggregate, and each
Borrower and each of its Subsidiaries has paid when due and payable, or made provision for
the payment of when due and payable, all taxes shown on its returns and all assessments,
fees, levies and other governmental charges shown


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thereon or therein, other than taxes, assessments, fees, levies and other governmental
charges that do not exceed $100,000 individually or $250,000 in the aggregate, unless and to
the extent any thereof are being actively contested in good faith and by appropriate
proceedings and each Borrower and each of its Subsidiaries maintains reasonable reserves on
its books therefor. The provision for taxes on the books of each Borrower and its
Subsidiaries is adequate for the current fiscal year.




     7.1.15. Brokers. Except as shown on Exhibit 7.1.15 hereto, there are
no claims for brokerage commissions, finder’s fees or investment banking fees payable by any
Borrower or any of its Subsidiaries in connection with the transactions contemplated by this
Agreement, including, without limitation, the issuance of the Secured Bonds and the
Subordinated Bonds.




     7.1.16. Patents, Trademarks, Copyrights and Licenses. Each Borrower and each
of its Subsidiaries owns, possesses or licenses or has the right to use all the patents,
trademarks, service marks, trade names, copyrights, licenses and other Intellectual Property
necessary for the present and planned future conduct of its business without any known
conflict with the rights of others, except for such conflicts as could not reasonably be
expected to have a Material Adverse Effect. All patents, U.S. federally registered
trademarks, U.S. federally registered service marks, U.S. federally registered trade names,
U.S. federally registered copyrights, material licenses, and other material similar rights
owned by a Borrower or a Subsidiary of a Borrower as of the date hereof (and not abandoned)
are listed on Exhibit 7.1.16 hereto, as updated from time to time by notice to
Agent. As of the date hereof, no claim has been asserted to any Borrower or any of its
Subsidiaries which is currently pending that their use of their Intellectual Property or the
conduct of their business does or may infringe upon the Intellectual Property rights of any
third party. To the knowledge of each Borrower and except as set forth on Exhibit
7.1.16 hereto, as of the date hereof, no Person is engaging in any activity that
infringes in any material respect upon any Borrower’s or any of its Subsidiaries material
Intellectual Property. Except as set forth on Exhibit 7.1.16, each Borrower’s and
each of its Subsidiaries’ (i) material trademarks, service marks, and copyrights are
registered with the U.S. Patent and Trademark Office or in the U.S. Copyright Office, as
applicable and (ii) neither any Borrower nor any of its Subsidiaries has any material
license agreements. The consummation and performance of the transactions and actions
contemplated by this Agreement and the other Loan Document, including without limitation,
the exercise by Agent of any of its rights or remedies under Section 10, will not result in
the termination or impairment of any of any Borrower’s or any of its Subsidiaries ownership
or rights relating to its Intellectual Property, except for such Intellectual Property
rights the loss or impairment of which could not reasonably be expected to have a Material
Adverse Effect.




     7.1.17. Governmental Consents. Except as disclosed on Exhibit 7.1.17,
each Borrower and each of its Subsidiaries has, and is in good standing with respect to, all
governmental consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as heretofore


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or proposed to be conducted by it and to own or lease and operate its Property as now
owned or leased by it, except where the failure to obtain, possess or so maintain such
rights, consents, approvals, licenses, authorizations, permits, certificates, inspections
and franchises would not reasonably be expected to have a Material Adverse Effect.




     7.1.18. Compliance with Laws. Each Borrower and each of its Subsidiaries has
duly complied, and its Property, business operations and leaseholds are in compliance with,
the provisions of all federal, state and local laws, rules and regulations applicable to
such Borrower or such Subsidiary, as applicable, its Property or the conduct of its
business, except for such non-compliance as would not reasonably be expected to have a
Material Adverse Effect, and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of its Subsidiaries under any such law, rule or
regulation, except where such noncompliance would not reasonably be expected to have a
Material Adverse Effect or as disclosed on Exhibit 7.1.18. No Inventory has been
produced in violation of the Fair Labor Standards Act (29 U.S.C. §201 et
seq.), as amended.




     7.1.19. Restrictions. Neither any Borrower nor any of its Subsidiaries is a
party or subject to any contract or agreement which by its terms limits the right or ability
of such Borrower or such Subsidiary to incur Indebtedness, other than as set forth on
Exhibit 7.1.19 hereto, none of which prohibit the execution of or compliance with
this Agreement or the other Loan Documents by any Borrower or any of its Subsidiaries, as
applicable.




     7.1.20. Litigation. Except as set forth on Exhibit 7.1.20 hereto,
there are no actions, suits, proceedings or investigations pending, or to the knowledge of
each Borrower, threatened, against or affecting any Borrower or any of its Subsidiaries, or
the business, operations, Property, prospects, profits or condition of any Borrower or any
of its Subsidiaries which, singly or in the aggregate, would reasonably be expected to have
a Material Adverse Effect. Neither any Borrower nor any of its Subsidiaries is in default
with respect to any order, writ, injunction, judgment, decree or rule of any court,
governmental authority or arbitration board or tribunal, which, singly or in the aggregate,
would reasonably be expected to have a Material Adverse Effect, except as disclosed on
Exhibit 7.1.20.




     7.1.21. No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or any Borrower’s
performance hereunder, constitute a Default or an Event of Default. Neither any Borrower
nor any of its Subsidiaries is in default in (and no event has occurred and no condition
exists which constitutes, or which the passage of time or the giving of notice or both would
constitute, a default in) the payment of any Indebtedness to any Person in excess of
$500,000.




     7.1.22. Leases. Exhibit 7.1.22 hereto is a complete listing as of the
date hereof of all capitalized and operating personal property leases of each Borrower and
its Subsidiaries and all real property leases of each Borrower and its Subsidiaries, in


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each case having annual lease payments in excess of $150,000. Each Borrower and each of its
Subsidiaries is not in breach or default under any of its respective capitalized and
operating leases, except where the failure to so comply would not reasonably be expected to
have a Material Adverse Effect or except as disclosed on Exhibit 7.1.22.




     7.1.23. Pension Plans. As of the date hereof, except as disclosed on
Exhibit 7.1.23 hereto, neither any Borrower nor any of its Subsidiaries has any
Plan. Each Borrower and each of its Subsidiaries is in compliance with the requirements of
ERISA with respect to each Plan, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect. No fact or situation that could reasonably
be expected to result in a Material Adverse Effect exists in connection with any Plan.
Except as disclosed on Exhibit 7.1.23 hereto, neither any Borrower nor any of its
Subsidiaries has any withdrawal liability in connection with a Multiemployer Plan.




     7.1.24. Trade Relations. There exists no actual or, to each Borrower’s
knowledge, threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship between any Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the aggregate are
material to the business of such Borrower and its Subsidiaries, or with any material
supplier, except in each case, where the same could not reasonably be expected to have a
Material Adverse Effect, and there exists no present condition or state of facts or
circumstances which would prevent any Borrower or any of its Subsidiaries from conducting
such business after the consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.




     7.1.25. Labor Relations. Except as described on Exhibit 7.1.25 hereto,
as of the date hereof, neither any Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement. Except as described on Exhibit 7.1.25 hereto,
there are no material grievances, disputes or controversies with any union or any other
organization of any Borrower’s or any of its Subsidiaries’ employees, or, to the best of
Borrowers’ knowledge after reasonable inquiry, threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization, except
those that would not reasonably be expected to have a Material Adverse Effect.




     7.1.26. [Intentionally Omitted].




     7.1.27. Business Activity. As of the date hereof, neither Ultimate Parent,
Parent nor any Inactive Subsidiary is engaged in any active operating business or incurs any
Indebtedness, other than the ownership of the equity interests of Parent (in the case of
Ultimate Parent) and Neenah (in the case of Parent), the ownership of the Ashland Parcel (in
the case of Dalton — Ashland), the performance of the Obligations, the performance of the
Indebtedness evidenced by the Secured Bonds and the


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Subordinated Bonds, the guaranty of Indebtedness incurred by a Borrower or an
active Subsidiary, and the performance of its obligations under intercompany agreements
and agreements with its shareholders that have been disclosed to Agent in writing.





     7.2. Continuous Nature of Representations and Warranties.



          Each representation and warranty contained in this Agreement and the other Loan Documents
shall be deemed to have been remade at the time of each request for a Loan, Letter of Credit or LC
Guaranty hereunder and at the time that any Loan is deemed to have been made under subsection
3.1.1. Each such request for a Loan, Letter of Credit or LC Guaranty (and the making of any Loan
deemed to have been made under subsection 3.1.1) shall constitute a representation by Borrowers
that such representations and warranties remain accurate, complete and not misleading at such time,
except to the extent that such representations and warranties relate solely to an earlier date and
except for changes in the nature of a Borrower’s or one of such Borrower’s Subsidiary’s business or
operations that would render the information in any exhibit attached hereto or to any other Loan
Document either inaccurate, incomplete or misleading, so long as Majority Lenders have consented to
such changes, such changes are expressly permitted by this Agreement, or such changes have been
indicated in an update to an Exhibit that has been made in accordance with subsection 8.1.12.





     7.3. Survival of Representations and Warranties.



          All representations and warranties of each Borrower contained in this Agreement or any of the
other Loan Documents shall survive the execution, delivery and acceptance thereof by Agent and each
Lender and the parties thereto and the closing of the transactions described therein or related
thereto.




SECTION 8. COVENANTS AND CONTINUING AGREEMENTS





     8.1. Affirmative Covenants.



          During the Term, and thereafter for so long as there are any Obligations (other than
unasserted contingent indemnity obligations) outstanding, Borrowers jointly and severally covenant
that they shall:





     8.1.1. Visits and Inspections; Lender Meeting. Permit (i) representatives of
Agent, and during the continuation of any Event of Default, any Lender, from time to time,
as often as may be reasonably requested, but only during normal business hours, to visit and
inspect the Properties of each Borrower and each of its Subsidiaries, inspect, audit and
make extracts from its books and records, and discuss with its officers and its independent
accountants, each Borrower’s and each of its Subsidiaries’ business, assets, liabilities,
financial condition, business prospects and results of operations; provided that (a)
unless an Event of Default is in existence, Borrowers shall not have a reimbursement
obligation with respect to more than two such visits and inspections during any fiscal year,
(b) Neenah shall be afforded the reasonable



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opportunity to be involved in any such discussions or communications with such
independent accountants and (c) Agent and, to the extent applicable, Lenders, shall use
their respective best efforts not to interfere with the business of any Borrower or any
Subsidiary of a Borrower in conducting any such visits, inspections or discussions and (ii)
appraisers engaged pursuant to Section 2.10 (whether or not personnel of Agent), from time
to time, but only during normal business hours, to visit and inspect the Properties of each
Borrower and each of its Subsidiaries, to the extent necessary to complete the appraisals
that are specifically provided for under Section 2.10. Agent, if no Event of Default then
exists, shall give the applicable Borrower reasonable prior notice of any such inspection or
audit. Without limiting the foregoing, Borrowers will participate and will cause their key
management personnel to participate in a meeting with Agent and Lenders once during each
fiscal year (except that during the continuation of an Event of Default such meetings may be
held more frequently as requested by Agent or Majority Lenders), which meeting(s) shall be
held at such times at Neenah’s principal place of business as may be reasonably requested by
Agent. It is agreed and understood that so long as no Event of Default has occurred and is
continuing, a failure by Borrowers to comply with any reasonable request made pursuant to
the terms of this subsection 8.1.1 shall not constitute a breach of this subsection 8.1.1
unless such failure has continued for more than 1 Business Day.




     8.1.2. Notices. Promptly notify Agent, any Letter of Credit Issuers and
Lenders in writing of the occurrence of a Default or an Event of Default.




     8.1.3. Financial Statements. Keep, and cause each of its Subsidiaries,
Ultimate Parent and Parent to keep, adequate records and books of account with respect to
its business activities in which proper entries are made in accordance with customary
accounting practices reflecting all its material financial transactions; and cause to be
prepared and furnished to Agent (with Agent then promptly furnishing the same to the
Lenders), the following, all to be prepared in accordance with GAAP applied on a consistent
basis, unless Neenah’s certified public accountants concur in any change therein and such
change is disclosed to Agent and is consistent with GAAP:




     (i) not later than 90 days after the close of each fiscal year of Neenah,
unqualified (except for a qualification for a change in accounting principles with
which the accountant concurs) audited financial statements of Neenah and Neenah’s
Subsidiaries as of the end of such year, on a Consolidated and consolidating basis,
certified by a firm of independent certified public accountants of recognized
standing selected by Neenah but acceptable to Agent and, within a reasonable time
thereafter a copy of any management letter issued in connection therewith;




     (ii) not later than 30 days after the end of each month hereafter, including
the last month of each fiscal year of Neenah, unaudited interim financial statements
of Neenah and Neenah’s Subsidiaries as of the end of such



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month and of the portion of the fiscal year then elapsed, on a Consolidated and
consolidating basis, certified by the chief financial officer of Neenah as prepared
in accordance with GAAP and fairly presenting in all material respects the financial
position and results of operations of Neenah and Neenah’s Subsidiaries for such
month and period subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes;




     (iii) together with each delivery of financial statements pursuant to clause
(i) of this subsection 8.1.3, a management report (1) setting forth in comparative
form the corresponding figures for the corresponding periods of the previous fiscal
year and the corresponding figures from the most recent Projections for the current
fiscal year delivered pursuant to subsection 8.1.7 and (2) identifying the reasons
for any significant variations. The information above shall be presented in
reasonable detail and shall be certified by the chief financial officer of Neenah to
the effect that such information fairly presents in all material respects the
financial position and the results of operation of Neenah and Neenah’s Subsidiaries
as of the dates and for the periods indicated;




     (iv) promptly after the sending or filing thereof, as the case may be, copies
of any proxy statements, financial statements or reports and copies of any regular,
periodic and special reports or registration statements which Ultimate Parent,
Parent, any Borrower or any Subsidiary of such Borrower files with the Securities
and Exchange Commission or any governmental authority which may be substituted
therefor, or any national securities exchange;




     (v) upon request of Agent, copies of any annual report to be filed pursuant to
ERISA in connection with each Plan;




     (vi) not later than 120 days after the close of each fiscal year of Neenah, a
written statement by Neenah’s independent public accountants stating whether, in
connection with their audit examination, any Event of Default has come to their
attention and, if such an Event of Default has come to their attention, specifying
the nature and period of the existence thereof; provided, that if Neenah’s
independent public accountants are unable to provide such written statement due to
the existence of a rule, regulation or policy prohibiting such accountants from
delivering such written statement, then the requirement to provide such written
statement hereunder will not apply; and




     (vii) within a reasonably prompt time after request therefor, such other data
and information (financial and otherwise) as Agent or any Lender, from time to time,
may reasonably request, bearing upon or related to the Collateral or Ultimate
Parent’s, Parent’s, any Borrower’s or any of its Subsidiaries’ financial position or
results of operations.



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          Concurrently with the delivery of the financial statements described in paragraph (i)
and (ii) (but solely for the last month of each fiscal quarter of Borrowers) of this
subsection 8.1.3, or more frequently if reasonably requested by Agent, Borrowers shall cause
to be prepared and furnished to Agent a Compliance Certificate in the form of Exhibit
8.1.3 hereto executed by the Chief Financial Officer of Neenah (a “Compliance
Certificate”) in such Person’s capacity as such.




     8.1.4. Borrowing Base Certificates. On or before the 15th day of each month
from and after the date hereof, Borrowers shall deliver to Agent, in form acceptable to
Agent, a Borrowing Base Certificate as of the last day of the immediately preceding month,
with such supporting materials as Agent shall reasonably request which shall include,
without limitation, a report of Eligible Inventory on a category-by-category basis and a
location-by-location basis. If Borrowers deem it advisable, or if Agent or Majority Lenders
so request at any time that Availability (as determined by Agent in its reasonable credit
judgment) is less than $15,000,000, Borrowers shall execute and deliver to Agent Borrowing
Base Certificates more frequently than monthly. Such Borrowing Base Certificates shall
reflect all information for each Borrower on a Consolidated and consolidating basis.




     8.1.5. Landlord, Processor and Storage Agreements. Provide Agent with copies
of all agreements between any Borrower or any of its Subsidiaries and any landlord,
processor, distributor, warehouseman or consignee which owns any premises at which any
Collateral having a value in excess of $250,000 may, from time to time, be kept.




     8.1.6. Guarantor Financial Statements. Deliver or cause to be delivered to
Agent financial statements, if any, for each Guarantor (to the extent not consolidated with
the financial statements delivered to Agent under subsection 8.1.3) in form and substance
satisfactory to Agent at such intervals and covering such time periods as Agent may request.




     8.1.7. Projections. Within thirty (30) days after the beginning of each fiscal
year of Borrowers, deliver to Agent (with Agent then promptly furnishing the same to the
Lenders) Projections of Neenah and Neenah’s Subsidiaries for such fiscal year, on a
month-by-month basis and for the remaining portion of the Term, on a year-by-year basis
(provided, that a Default (but not an Event of Default) arising solely due a breach of this
subsection 8.1.7 shall not be used as a basis by Agent or any Lender to refuse to honor a
request for a Loan hereunder that otherwise complies with the terms and conditions hereof).




     8.1.8. Subsidiaries. Cause each of its newly created domestic Subsidiaries,
promptly upon Agent’s request therefor, to execute and deliver to Agent a Guaranty Agreement
and a security agreement pursuant to which such domestic Subsidiary guaranties the payment
of all Obligations and grants to Agent a first priority Lien (subject only to Permitted
Liens) on all of its Properties (of the types, and subject to the exclusions, described in
Section 5). Additionally, each Borrower and Parent shall



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execute and deliver to Agent a Pledge Agreement pursuant to which such Person grants to
Agent a first priority Lien (subject only to Permitted Liens) with respect to all of the
issued and outstanding Securities of each Subsidiary of such Person. In connection with the
foregoing documentation, Borrowers shall also cause Agent to be provided with such legal
opinions, certificates and corporate authority materials that Agent may reasonably request.




     8.1.9. Deposit and Brokerage Accounts. For each deposit account (other than
payroll and trust accounts) or brokerage account that any Borrower at any time opens or
maintains, such Borrower shall, pursuant to an agreement in form and substance reasonably
satisfactory to Agent, cause the depository bank or securities intermediary, as applicable,
to agree to comply at any time that an Event of Default has occurred and is continuing with
instructions from Agent to such depository bank or securities intermediary, as applicable,
directing the disposition of funds from time to time credited to such deposit or brokerage
account to the Dominion Account (with respect to accounts covered by subsection 6.2.4) or to
such other accounts as Agent may direct, without further consent of such Borrower. The
provisions of this subsection 8.1.9 shall not apply to any collateral proceeds account that
is established pursuant to and in accordance with the provisions of the Secured Bond
Indenture for the purpose of holding only proceeds of “Noteholder Priority Collateral” under
and as defined in the Secured Bond Intercreditor Agreement.




     8.1.10. Redemption of Remaining Subordinated Bonds (2003 Series). With respect
to the Subordinated Bonds (2003 Series) that are not redeemed, exchanged or otherwise
retired as of the Closing Date, (x) such Subordinated Bonds (2003 Series) shall be redeemed
or otherwise retired in full on or before February 15, 2007 and (y) pending such redemption
or retirement on or before February 15, 2007, funds shall be set aside by Borrowers, or
reserves shall otherwise be established, in either case in a manner reasonably acceptable to
Agent, for the purpose of effectuating such redemption or retirement on or before February
15, 2007.




     8.1.11. Intercompany Loans. Upon request by Agent from time to time, Borrowers
shall provide Agent with written statements, with reasonable detail, of the current balances
of the Intercompany Loans. At all times, Borrowers shall cause the Intercompany Loans to be
evidenced by revolving promissory notes, in form and substance reasonably satisfactory to
Agent, which notes are assigned to Agent as security for the Obligations.




     8.1.12. Updated Information. Promptly notify Agent in writing of (a) each
state or jurisdiction in which any Borrower or any Subsidiary qualifies to do business after
the date hereof, (b) the use by any Borrower or any Subsidiary of a legal, fictitious or
trade name not listed on Exhibit 7.1.5 hereto, (c) any change after the date hereof
in the tax identification number of any Borrower or any of its Subsidiaries, (d) any change
after the date hereof in the list of surety obligations listed on Exhibit 7.1.13,
(e) on a quarterly basis, the ownership by any Borrower or any Subsidiary of any registered
patent, registered trademark, registered service mark, registered trade



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name, registered copyright, material license or other similar material rights not
listed on Exhibit 7.1.16, (f) the assertion by any Person in writing of a claim
against any Borrower or any Subsidiary that its use of its Intellectual Property or the
conduct of its business does or may infringe upon the Intellectual Property rights of any
third party, (g) any change after the date hereof in the list of capitalized and operating
personal property leases and real property leases of any Borrower or any Subsidiary listed
on Exhibit 7.1.22 hereto, (h) any change after the date hereof in the list of Plans
listed on Exhibit 7.1.23 hereto and (i) any change after the date hereof in the list
of collective bargaining agreements listed on Exhibit 7.1.25 hereto.




     8.1.13. Equipment. Keep the Equipment (including, without limitation, any
Patterns and Core Boxes) of each Borrower and each Subsidiary of a Borrower in good
operating condition and repair, reasonable wear and tear excepted; prevent any material
Equipment of a Borrower or a Subsidiary of a Borrower from becoming affixed to any real
Property leased to such Borrower or such Subsidiary such that an interest arises therein
under the real estate laws of the applicable jurisdiction, unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in favor of and in form
reasonably acceptable to Agent; and prevent any material Equipment of a Borrower or a
Subsidiary of a Borrower from becoming an accession to any personal Property other than
Equipment that is subject to first priority (except for Permitted Liens) Liens in favor of
Agent.




     8.2. Negative Covenants.



          During the Term, and thereafter for so long as there are any Obligations (other than
unasserted contingent indemnity obligations) outstanding, Borrowers jointly and severally covenant
that they shall not:





     8.2.1. Mergers; Consolidations; Acquisitions; Structural Changes. Merge or
consolidate, or permit any of its Subsidiaries to merge or consolidate, with any Person; nor
change its or any of its Subsidiaries’ state of incorporation or organization, Type of
Organization or Organizational I.D. Number; nor change its or any of its Subsidiaries’ legal
name; nor acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Properties of any Person, except for:




     (i) mergers of any wholly-owned Subsidiary of a Borrower into such Borrower or
another wholly-owned Subsidiary of such Borrower;




     (ii) acquisitions of assets consisting of fixed assets or real property that
constitute Capital Expenditures permitted under subsection 8.2.8;




     (iii) liquidations or dissolutions of Subsidiary Guarantors, so long as Agent
has received prior written notice of any such liquidation or dissolution and any
assets of any such Subsidiary Guarantor to be liquidated or dissolved have been
transferred to a Borrower or to another Subsidiary Guarantor;



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     (iv) Permitted Acquisitions;




     (v) mergers and consolidations permitted under subsection 8.2.9(iv)(B); and




     (vi) the Neenah Reorganization, if consummated, so long as all of the following
conditions are satisfied: (a) the Neenah Reorganization is consummated on terms, and
pursuant to documents, reasonably acceptable to Agent in all respects, and (b) if
Neenah is reincorporated in the State of Delaware (“Reincorporated Neenah”) as part
of the Neenah Reorganization, (i) Reincorporated Neenah succeeds to all of all of
the obligations, liabilities, indebtedness and rights of Neenah (as currently
incorporated in the State of Wisconsin) under this Agreement and each of the other
Loan Documents, (ii) Reincorporated Neenah shall have executed and delivered to
Agent such joinder and ratification documents as are reasonably requested by Agent
to confirm that Reincorporated Neenah is subject to and bound by all of the terms
and conditions of this Agreement and the other Loan Documents, (iii) Agent shall
have received a certificate of an executive officer of Reincorporated Neenah that
includes a section as to incumbency of officers and that attaches the final
organizational documents for Reincorporated Neenah and the resolutions of the board
of directors of Reincorporated Neenah as to the Loan Documents and the Obligations,
which certificate, organizational documents and resolutions shall be reasonably
acceptable to Agent in all respects, (iv) if requested, Agent shall have received an
opinion of legal counsel to Reincorporated Neenah regarding Reincorporated Neenah
and the Loan Documents by which such Reincorporated Neenah is becoming bound, which
legal opinion shall be reasonably acceptable to Agent in all respects and (v) Agent
shall have received such other documents as are reasonably deemed necessary by Agent
to carry out the purposes of the Loan Documents in respect of Reincorporated Neenah.



     8.2.2. Loans. Make, or permit any of its Subsidiaries to make, any loans or other advances
of money to any Person, other than (i) for salary, travel advances, entertainment, relocation,
advances against commissions and other similar advances to employees in the ordinary course of
business, (ii) extensions of trade credit in the ordinary course of business, (iii) deposits with
financial institutions permitted under this Agreement, (iv) prepaid expenses, (v) extensions of
credit consisting of Investments not prohibited by subsection 8.2.12, (vi) non-cash loans made to
managers to enable such managers to acquire stock issued in connection with incentive plans and
(vii) loans by a Borrower to another Borrower or to any domestic wholly-owned Subsidiary (other
than any Inactive Subsidiary) of a Borrower (“Intercompany Loans”).




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     8.2.3. Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any of its Subsidiaries to create, incur or suffer to exist, any Indebtedness,
except:




     (i) Obligations owing to Agent or any Lender under this Agreement or any of the
other Loan Documents;




     (ii) Indebtedness evidenced by the Subordinated Bonds and the other
Subordinated Bond Documents (each as in effect as of the date hereof or as modified
in compliance with subsection 8.2.6, subject to clause (xiii) below), so long as
such Indebtedness remains subordinated to the Obligations pursuant to the
subordination provisions provided for in the Subordinated Bonds;




     (iii) Indebtedness evidenced by the Secured Bonds and the other Secured Bond
Documents, each as in effect as of the date hereof or as modified in compliance with
subsection 8.2.6 (subject to clause (xiii) below);




     (iv) Indebtedness, including without limitation Subordinated Debt and
intercompany indebtedness, existing as of the date of this Agreement and listed on
Exhibit 8.2.3;




     (v) Capitalized Lease Obligations and Permitted Purchase Money Indebtedness not
to exceed in the aggregate at any time outstanding the greater of (x) $10,000,000 or
(y) the amount that is equal to 3% of Tangible Assets (measured at the time of the
incurrence of any such Capitalized Lease Obligations or Permitted Purchase Money
Indebtedness), in each case less the amount of any refinancing Capitalized Lease
Obligations and Permitted Purchase Money Indebtedness outstanding pursuant to clause
(xiii) below; provided, that no Indebtedness may be incurred pursuant to
this clause (v) in order to finance any part of the purchase price or cost of
construction or improvement of the New Mold Line;




     (vi) contingent liabilities arising out of endorsements of checks and other
negotiable instruments for deposit or collection in the ordinary course of business;




     (vii) guaranties of any Indebtedness permitted under this subsection 8.2.3;




     (viii) Indebtedness in respect of Intercompany Loans;




     (ix) unsecured Derivative Obligations incurred in the ordinary course of
business in respect of the Loans hereunder;




     (x) [intentionally omitted];



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     (xi) Indebtedness incurred in the ordinary course of business with respect to
surety and appeal bonds, performance bonds and other similar obligations not to
exceed $2,000,000 in the aggregate at any time outstanding;




     (xii) Indebtedness not included in paragraphs (i) through (xi) above which does
not exceed at any time, in the aggregate, $15,000,000;




     (xiii) subject to the limitations set forth in subsection 8.2.6, refinancings
of any Indebtedness permitted under the foregoing clauses (i) through (xii) of this
subsection 8.2.3, so long as (a) such refinancing Indebtedness has a maximum
principal amount not in excess of the sum of the principal amount of, and accrued
interest in respect of, the Indebtedness being refinanced at the time of
refinancing, plus reasonable direct expenses of such refinancing, (b) the
refinancing Indebtedness is secured only by Liens on assets, if any, that secured
the Indebtedness being refinanced, (c) the average weighted average life to maturity
of the refinancing Indebtedness is not shorter than that of the Indebtedness being
refinanced, (d) the refinancing Indebtedness has terms that are not more adverse in
any material respect to Agent, Lenders or the applicable Borrower or Subsidiary of a
Borrower than the Indebtedness being refinanced (it being understood that the
foregoing restriction shall not prohibit refinancing Indebtedness from having (1) a
term that is longer, or that ends later, than the term of the Indebtedness being
refinanced or (2) a then current market rate of interest that is not more than 200
basis points higher than the interest rate applicable to the Indebtedness being
refinanced), (e) if such Indebtedness being refinanced is Subordinated Debt, any
such refinancing Indebtedness includes subordination terms that are at least as
beneficial to Agent and Lenders as the subordination terms associated with such
Subordinated Debt being refinanced, (f) if any of the Liens securing such
Indebtedness being refinanced are subordinated to the Liens securing the
Obligations, the Liens securing any such refinancing Indebtedness are subordinated
to the Liens securing the Obligations pursuant to terms that are at least as
beneficial to Agent and Lenders as the terms associated with the Liens securing such
Indebtedness being refinanced and (g) if such Indebtedness being refinanced is the
Indebtedness evidenced by the Secured Bonds, any such refinancing Indebtedness shall
be subject to an intercreditor agreement that is at least as beneficial to Agent and
Lenders as the terms of the Secured Bond Intercreditor Agreement; and




     (xiv) Indebtedness incurred where (a) average Availability (as determined by
Agent in its reasonable credit judgment) for the thirty (30) day period ending on
the date of any such incurrence of Indebtedness (giving effect to such incurrence of
Indebtedness and the consummation of any transactions occurring in connection
therewith for each day in such thirty (30) day period) is not less than $25,000,000
and (b) actual Availability (as determined by Agent in its reasonable credit
judgment) on the date of any such incurrence of Indebtedness, after giving effect to
such incurrence of



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Indebtedness and the consummation of any transactions occurring
in connection therewith, is not less than $25,000,000.




     8.2.4. Affiliate Transactions. Enter into, or be a party to, or permit any of
its Subsidiaries to enter into or be a party to, any transaction with any Affiliate of any
Borrower or any holder of any Securities of any Borrower or any of its Subsidiaries,
including without limitation any management, consulting or similar fees, except (i) in
the ordinary course of and pursuant to the reasonable requirements of such Borrower’s or
such Subsidiary’s business and upon fair and reasonable terms which are fully disclosed to
Agent and are no less favorable to such Borrower or such Subsidiary than would be obtained
in a comparable arms-length transaction with a Person not an Affiliate or Security holder of
such Borrower or such Subsidiary, as determined and certified by the applicable Borrower’s
or Subsidiary’s board of directors in good faith (provided, that with respect to any
transaction involving aggregate payments exceeding $20,000,000, except for any such
transaction that results in the repayment of the Obligations (other than unasserted
contingent indemnity obligations) in full, Agent shall have received an opinion as to the
fairness to the applicable Borrower or Subsidiary from a financial point of view issued by a
nationally recognized independent financial advisor), (ii) employment agreements and other
incentive compensation with management shareholders approved from time to time by the board
of directors of such Borrower and employee arrangements and related incentive compensation
arrangements entered into with other full time employees of such Borrower or such Subsidiary
in the ordinary course of business, (iii) reasonable directors’ fees and expenses approved
from time to time by the board of directors of such Borrower, (iv) with respect to
Intercompany Loans, (v) with respect to the Secured Bonds and the Subordinated Bonds (and
with respect to the retirement of the Subordinated Bonds (2003 Series)), (vi) non-exclusive
intercompany licenses of Intellectual Property, (vii) with respect to Indebtedness permitted
hereunder that is provided by an Affiliate, (viii) with respect to equity issued in
compliance with the terms hereof that is issued to an Affiliate, (ix) the agreements listed
on Exhibit 8.2.4, and (x) transactions entered into where (a) average Availability
(as determined by Agent in its reasonable credit judgment) for the thirty (30) day period
ending on the date of any such transaction (giving effect to such transaction and the
consummation of any other transactions occurring in connection therewith for each day in
such thirty (30) day period) is not less than $25,000,000 and (b) actual Availability (as
determined by Agent in its reasonable credit judgment) on the date of any such transaction,
after giving effect to such transaction and the consummation of any other transactions
occurring in connection therewith, is not less than $25,000,000.




     8.2.5. Limitation on Liens. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien upon any of its Property, income or
profits, whether now owned or hereafter acquired, except:




     (i) Liens at any time granted in favor of Agent for the benefit of Agent and
Lenders;



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     (ii) Liens for taxes, assessments or governmental charges (excluding any Lien
imposed pursuant to any of the provisions of ERISA, but including, without
limitation, those for non-delinquent taxes or assessments in respect of real
Property) not yet due, or being contested in the manner described in subsection
7.1.14 hereto;




     (iii) Liens arising in the ordinary course of the business of such Borrower or
any of its Subsidiaries by operation of law or regulation
(including, without limitation, mechanic’s liens, materialmen’s liens,
warehousemen’s liens and the like) but only if (a) payment in respect of any such
Lien is not at the time required or is being contested in good faith by appropriate
proceedings (with appropriate reserves established in respect thereof in accordance
with GAAP) and (b) such Liens do not, in the aggregate, materially detract from the
value of the Property of such Borrower or any of its Subsidiaries or materially
impair the use thereof in the operation of the business of such Borrower or any of
its Subsidiaries;




     (iv) Purchase Money Liens securing Permitted Purchase Money Indebtedness and
Liens securing Capitalized Lease Obligations permitted to be incurred under
subsection 8.2.3, in each case so long as such Liens are confined to the assets that
are the subject of such Permitted Purchase Money Indebtedness and Capitalized Lease
Obligations; provided, that no Liens may be granted pursuant to this clause
(iv) in order to secure Indebtedness incurred to finance any part of the purchase
price or cost of construction or improvement of the New Mold Line;




     (v) such other Liens as appear on Exhibit 8.2.5 hereto;




     (vi) Liens incurred or deposits or pledges made in the ordinary course of
business in connection with (1) worker’s compensation, social security, unemployment
insurance and other like laws or (2) sales contracts, leases, statutory obligations,
work in progress advances and other similar obligations not incurred in connection
with the borrowing of money or the payment of the deferred purchase price of
property;




     (vii) reservations, easements, covenants, zoning and other land use
regulations, title exceptions or encumbrances that are granted in the ordinary
course of business or shown on surveys or inspections that have been required by,
delivered to and accepted by Agent (or, if not required by Agent, that would be
disclosed by an accurate survey or inspection), affecting real Property owned or
leased by a Borrower or any of its Subsidiaries; provided that such
exceptions do not or would not in the aggregate materially interfere with the use of
such Property in the ordinary course of such Borrower’s or such Subsidiary’s
business;



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     (viii) judgment Liens that do not give rise to an Event of Default under
subsection 10.1.15;




     (ix) Liens created under the Secured Bond Documents on the Collateral and on
the Securities of Neenah and the Subsidiaries of Neenah, so long as such Liens
remain subject to the terms of the Secured Bond Intercreditor Agreement;




     (x) Liens in favor of customs and revenues authorities which secure payment of
customs duties in connection with the importation of Inventory;




     (xi) Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto;




     (xii) Liens consisting of rights of set-off of a customary nature or banker’s
liens on amounts on deposit in accounts of such Borrower or any of its Subsidiaries
(other than in a Dominion Account), whether arising by contract or operation of law,
incurred in the ordinary course of business;




     (xiii) Liens on fixed assets acquired in compliance with the terms of this
Agreement to the extent that such Liens existed prior to such acquisition;




     (xiv) Liens incurred or deposits made to secure the performance of bids,
tenders, leases, trade contracts (other than Indebtedness), public or statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;




     (xv) Leases or subleases and licenses and sublicenses granted to others in the
ordinary course of such Borrower’s or such Subsidiary’s business which do not
interfere in any material respect with the business of such Borrower or such
Subsidiary, and any interest or title of a lessor, licensor, sublessor or
sublicensor under a lease or license;




     (xvi) Liens arising from the filing of UCC financing statements for
precautionary purposes relating solely to operating leases under which such Borrower
or any of its Subsidiaries is a lessee;




     (xvii) such other Liens as Majority Lenders may hereafter approve in writing;
and




     (xviii) Liens granted or otherwise arising where (a) average Availability (as
determined by Agent in its reasonable credit judgment) for the thirty (30) day
period ending on the date of any such granting or creation of Liens (giving effect
to such granting or creation of Liens and the consummation of any transactions
occurring in connection therewith for each day in such thirty (30) day period) is
not less than $25,000,000 and (b) actual Availability (as determined by Agent in its
reasonable credit judgment) on the



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date of any such granting or creation of Liens,
after giving effect to such granting or creation of Liens and the consummation of
any transactions occurring in connection therewith, is not less than $25,000,000.




     8.2.6. Payments and Amendments of Certain Debt.




     (i) make or permit any of its Subsidiaries to make any voluntary prepayment,
purchase or redemption of the Indebtedness evidenced by the Secured Bonds (or any
Indebtedness that has refinanced the Secured Bonds), except (x) voluntary
prepayments of principal on the Secured Bonds where (a) average Availability (as
determined by Agent in its reasonable credit judgment) for the thirty (30) day
period ending on the date of any such voluntary prepayment (giving effect to such
voluntary prepayment and the
consummation of any transactions occurring in connection therewith for each day
in such thirty (30) day period) is not less than $25,000,000 and (b) actual
Availability (as determined by Agent in its reasonable credit judgment) on the date
of any such voluntary prepayment, after giving effect to such voluntary prepayment
and the consummation of any transactions occurring in connection therewith, is not
less than $25,000,000, and (y) a voluntary prepayment of the remaining principal
balance of the Secured Bonds that is made using the proceeds of refinancing
Indebtedness permitted to be incurred under subsection 8.2.3 (it being agreed and
understood that this clause (i) shall not apply to the making of regularly scheduled
payments of interest under the Secured Bond Documents as in effect as of the date
hereof or as modified in compliance with this subsection 8.2.6);




     (ii) make or permit any of its Subsidiaries to make any payment of any part or
all of the Subordinated Debt evidenced by the Subordinated Bonds and the other
Subordinated Bond Documents (including, without limitation, any mandatory or
voluntary prepayment, purchase or redemption), except, in each case so long as any
such payment of interest is made in accordance with the subordination terms included
in the Subordinated Bond Documents, (w) regularly scheduled cash payments of
interest pursuant to the Subordinated Bond Documents (each as in effect as of the
date hereof or as modified in compliance with this subsection 8.2.6) at a rate of up
to 12.5% per annum, (x) cash payments of interest previously deferred pursuant to
the terms of the Subordinated Bond Documents (as in effect as of the date hereof or
as modified in compliance with this subsection 8.2.6), so long as both immediately
prior to and after giving effect to any such payment of deferrable interest, (1)
average Availability (as determined by Agent in its reasonable credit judgment) for
the thirty (30) day period ending on the date of any such payment (giving effect to
such payment of deferrable interest for each day in such thirty (30) day period) is
not less than $10,000,000 and (2) actual Availability (as determined by Agent in its
reasonable credit judgment) on the date of any such payment is not less than
$10,000,000, (y) mandatory and voluntary repayments or prepayments of principal
amounts owing under the



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Subordinated Bond Documents, either (I) using the proceeds
of a concurrent issuance of common equity to a Related Person of a Borrower at a
time when no Default or Event of Default exists or (II) where (1) average
Availability (as determined by Agent in its reasonable credit judgment) for the
thirty (30) day period ending on the date of any such prepayment (giving effect to
such prepayment and the consummation of any transactions occurring in connection
therewith for each day in such thirty (30) day period) is not less than $25,000,000
and (2) actual Availability (as determined by Agent in its reasonable credit
judgment) on the date of any such voluntary prepayment, after giving effect to such
voluntary prepayment and the consummation of any transactions occurring in
connection therewith, is not less than $25,000,000, and (z) a voluntary prepayment
of the remaining principal balance of the Subordinated Bonds that is made using the
proceeds of refinancing Indebtedness permitted to be incurred under subsection
8.2.3;




     (iii) with respect to any Subordinated Debt other than that evidenced by the
Subordinated Bonds and the other Subordinated Bond Documents, make or permit any of
its Subsidiaries to make any payment of any part or all of any Subordinated Debt or
take any other action or omit to take any other action in respect of any
Subordinated Debt, except in accordance with the subordination agreement relative
thereto or the subordination provisions thereof; or




     (iv) (1) amend or modify any Secured Bond Document (or the documentation any
Indebtedness that has refinanced the Secured Bonds), or (2) amend or modify any
Subordinated Bond Document or any agreement, instrument or document evidencing or
relating to any other Subordinated Debt, in each case to the extent that any such
amendment or modification would (a) increase the interest rate on such Indebtedness
or the principal amount of such Indebtedness; (b) move forward the dates upon which
any payments of principal or interest on such Indebtedness are due; (c) add any
event of default or make more restrictive any existing event of default with respect
to such Indebtedness; (d) add or make more restrictive any covenant with respect to
such Indebtedness; (e) move forward any redemption or prepayment dates with respect
to such Indebtedness, or add or increase any redemption or prepayment amounts; (f)
if applicable, change the subordination or intercreditor provisions applicable to
such Indebtedness; (g) change or amend any other term if such change or amendment
would materially increase the obligations of the obligor or confer additional
material rights on the holder of such Indebtedness in a manner adverse to any
Borrower or Lenders; or (h) require to be paid in cash any interest which may be
paid in kind instead of cash.




     8.2.7. Distributions. Declare or make, or permit any of its Subsidiaries to
declare or make, any Distributions, except for:



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     (i) Distributions by any Subsidiary of a Borrower (including any such
Subsidiary that is a Borrower) to such Borrower;




     (ii) Distributions paid solely in Securities of a Borrower or any of its
Subsidiaries;




     (iii) Distributions by each Borrower in amounts necessary to permit such
Borrower to repurchase Securities of such Borrower from officers, directors or
employees, or former officers, directors or employees, of such Borrower or any of
its Subsidiaries upon death, disability, retirement, severance or termination of
employment or pursuant to any agreement pursuant to which such Securities were
issued, so long as no Default or Event of Default exists at the time of or would be
caused by the making of such Distributions and the aggregate cash amount of all such
Distributions by all Borrowers, measured at the time when made, does not exceed
$1,000,000 in any fiscal year of Borrowers;




     (iv) until the consummation, if ever, of the Neenah Full Reorganization,
Distributions by each Borrower in an amount sufficient to permit Ultimate Parent to
pay its consolidated combined unitary U.S. federal, state or local tax liabilities
relating to the business of Borrowers and Borrowers’ Subsidiaries; provided that
Ultimate Parent applies the amount of such Distributions for such purpose at such
time;




     (v) until the consummation, if ever, of the Neenah Full Reorganization,
Distributions by Borrowers to the extent necessary to permit Parent (unless a Neenah
Partial Reorganization has occurred) and Ultimate Parent to (a) pay audit fees
related to the business of Borrowers and Borrowers’ Subsidiaries, (b) make payments
in respect of its indemnification obligations owing to directors and officers, (c)
make payments in respect of indemnification obligations and cost and expenses
(including initial and annual listing fees, SEC registration fees and legal fees and
expenses) incurred by Ultimate Parent in connection with any offering or public
listing of common stock of Ultimate Parent and (d) pay other costs and expenses
related to the business of Borrowers and Borrowers’ Subsidiaries of up to $500,000
in the aggregate per fiscal year, not to exceed $2,000,000 in the aggregate for all
such payments under this clause (v) in any fiscal year of Borrowers and in each so
long as Parent or Ultimate Parent, as applicable, applies the amount of such
Distributions for such purposes; and




     (vi) Distributions made where (a) average Availability (as determined by Agent
in its reasonable credit judgment) for the thirty (30) day period ending on the date
of any such Distribution (giving effect to such Distribution and the consummation of
any transactions occurring in connection therewith for each day in such thirty (30)
day period) is not less than $25,000,000 and (b) actual Availability (as determined
by Agent in its



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reasonable credit judgment) on the date of any such Distribution,
after giving effect to such Distribution and the consummation of any transactions
occurring in connection therewith, is not less than $25,000,000.




     8.2.8. Capital Expenditures. For fiscal years through and including the fiscal
year of Borrowers ending on September 30, 2008, make Capital Expenditures (including,
without limitation, by way of capitalized leases, but excluding (i) Capital Expenditures
made using the proceeds of equity securities issued in compliance with the terms hereof and
(ii) the principal portion of Capitalized Lease Obligations incurred in compliance with the
terms hereof) which, in the aggregate, as to all Borrowers and all of Borrowers’
Subsidiaries, exceed (x) $65,000,000, during the fiscal year of Borrowers ending on
September 30, 2007 or (y) $60,000,000, during the fiscal year of Borrowers ending on
September 30, 2008, except that 75% of the unused portion of the Capital Expenditure
allowance for any fiscal year may be carried over to the immediately succeeding fiscal year
only, to be used in such succeeding fiscal year after all of the Capital Expenditure
allowance for that year has been used. For the fiscal quarter ending on December 31, 2008,
make Capital Expenditures (including, without limitation, by way of capitalized leases, but
excluding (i) Capital Expenditures made using the proceeds of equity securities issued
in compliance with the terms hereof and (ii) the principal portion of Capitalized Lease
Obligations incurred in compliance with the terms hereof) which, in the aggregate, as to all
Borrowers and all of Borrowers’ Subsidiaries, exceed $15,000,000 for such fiscal quarter.




     8.2.9. Disposition of Assets. Sell, lease or otherwise dispose of any of, or
permit any of its Subsidiaries to sell, lease or otherwise dispose of any of, its
Properties, including any disposition of Property as part of a sale and leaseback
transaction, to or in favor of any Person, except for:




     (i) sales of Inventory and collections of Accounts in the ordinary course of
business;




     (ii) transfers of Property to a Borrower by another Borrower or by a
wholly-owned Subsidiary of such Borrower;




     (iii) dispositions of investments described in paragraphs (iv), (v), (vi) and
(vii) of the definition of the term “Restricted Investments”;




     (iv) (A) the merger or consolidation of any Inactive Subsidiary or any Person
that does not own any assets with any other Person that is a Borrower or a
Subsidiary Guarantor (provided that such other Person that is a Borrower or
Subsidiary Guarantor is the Person surviving such merger or consolidation) and (B)
the liquidation, dissolution or winding up of any Inactive Subsidiary;



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     (v) sales, leases and other dispositions of Property with a fair market value
of up to $12,000,000 in the aggregate in any fiscal year, in each case so long as
(a) no Event of Default is in existence or would result therefrom, (b) with respect
to a transaction involving any Accounts, Inventory or Patterns and Core Boxes, not
less than one hundred percent (100%) of the consideration received in respect of
such Accounts, Inventory or Patterns and Core Boxes is in the form of cash, (c)
after giving effect to any such transaction and the application of the proceeds
thereof, no Overadvance shall exist and (d) the consideration received in respect of
such Property is equal to the fair market value thereof;




     (vi) so long as no Event of Default exists, sales, leases or other dispositions
of Equipment or other fixed assets that are worn, excess, damaged or obsolete or
consist of scrap and that (other than in the case of scrap) are replaced with
Equipment or other fixed assets that are usable in the ordinary course of business
of the applicable Borrower or Subsidiary of a Borrower; and




     (vii) licenses of Intellectual Property in the ordinary course of business.




     8.2.10. Securities of Subsidiaries. Permit any of its Subsidiaries to issue
any additional Securities except to such Borrower and except for director’s qualifying
Securities.




     8.2.11. Bill-and-Hold Sales, Etc. Except for sales to customers in the
ordinary course of Borrowers’ business consistent with past practice, make, or permit any of
its Subsidiaries to make, a sale to any customer on a bill-and-hold, guaranteed sale, sale
and return, sale on approval, repurchase or return or consignment basis.




     8.2.12. Restricted Investment. Make or have, or permit any of its Subsidiaries
of such Borrower to make or have, any Restricted Investment.




     8.2.13. Subsidiaries and Joint Ventures. Create, acquire or otherwise suffer
to exist, or permit any Subsidiary of such Borrower to create, acquire or otherwise suffer
to exist, any Subsidiary or joint venture arrangement not in existence as of the date
hereof, except in connection with a Permitted Acquisition.




     8.2.14. Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than Ultimate Parent, Parent, Borrowers and
Borrowers’ Subsidiaries.




     8.2.15. Organizational Documents. Agree to, or suffer to occur, any amendment,
supplement or addition to its or any of its Subsidiaries’ charter, articles or certificate
of incorporation, certificate of formation, limited partnership agreement, bylaws, limited
liability agreement, operating agreement or other organizational



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documents (as the case may
be), that would reasonably be expected to have a Material Adverse Effect.




     8.2.16. Fiscal Year End. Change, or permit any of its Subsidiaries, Ultimate
Parent or Parent to change, its fiscal year end.




     8.2.17. Negative Pledges. Enter into any agreement (other than the Loan
Documents, the Secured Bond Documents and the Subordinated Bond Documents) limiting the
ability of such Borrower or any of its Subsidiaries to (i) voluntarily create Liens upon any
of its Property, (ii) pay dividends or make any other Distributions on its Securities; (iii)
make loans or advances to any Borrower or any Subsidiary; (iv) pay any Indebtedness owed to
any Borrower or any Subsidiary of a Borrower; or (v) transfer any of its Property to any
Borrower or any Subsidiary.




     8.2.18. Incurrence of Credit Facilities other than this Agreement. Create,
incur, assume, or suffer to exist, or permit any of its Subsidiaries to create, incur or
suffer to exist, any “Credit Facilities” under and as defined in the Secured Note Indenture,
other than this Agreement and the Obligations, that exceed $5,000,000 in aggregate principal
amount at any time outstanding.




     8.2.19. Leases. Become, or permit any of its Subsidiaries to become, a lessee
under any operating lease (other than a lease under which such Borrower or such Subsidiary
is lessor) of Property if the aggregate Rentals payable during any current or future period
of twelve (12) consecutive months under the lease in question and all
other leases under which any Borrowers or any of its Subsidiaries is then lessee would
exceed $6,000,000. The term “Rentals” means, as of the date of determination, all payments
which the lessee is required to make by the terms of any lease.




     8.2.20. Business Activity. Permit Ultimate Parent, Parent or any Inactive
Subsidiary to engage in any business activity or incur any Indebtedness other than the
ownership of the equity interests of Parent (in the case of Ultimate Parent) and Neenah (in
the case of Parent), the performance of such Person’s obligations under the Loan Documents
to which it is a party (in the case of Parent and the Inactive Subsidiaries), the
performance of the Obligations, the performance of the Indebtedness evidenced by the Secured
Bonds and the Subordinated Bonds, the guaranty of Indebtedness incurred by a Borrower or an
active Subsidiary in compliance with the terms hereof and the performance of its obligations
under intercompany agreements and agreements with its shareholders that are permitted
hereunder and have been disclosed to Agent in writing (with Agent disclosing to Lenders any
such agreements that are disclosed to Agent in writing and, if requested by a Lender,
providing to such Lender copies of any documents evidencing any such agreements that have
been furnished to Agent).



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          8.3. Specific Financial Covenants.




          During the Term, and thereafter for so long as there are any Obligations (other than
unasserted contingent indemnity obligations) outstanding, each Borrower covenants that it shall
comply with all of the financial covenants set forth in Exhibit 8.3 hereto;
provided, however, that such financial covenants shall only be tested for a fiscal
period if Availability is less than $15,000,000 for any period of three consecutive Business Days
during the final fiscal quarter in such fiscal period.




SECTION 9. CONDITIONS PRECEDENT




          9.1. Conditions Precedent to Initial Loans and Other Initial Credit
Accommodations.




          Notwithstanding any other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Agent or any Lender under the other sections of this
Agreement, no Lender shall be required to make any Loan on the Closing Date, nor shall Agent or any
Letter of Credit Issuer be required to or issue or procure any Letter of Credit or LC Guaranty on
the Closing Date unless and until each of the following conditions has been and continues to be
satisfied:





     9.1.1. Documentation. Agent and the Lenders shall have received, in form and
substance satisfactory to Agent and its counsel and the Lenders, a duly executed copy of
this Agreement and the other Loan Documents, together with such additional documents,
instruments, opinions and certificates as Agent and its counsel shall reasonably require in
connection therewith from time to time (including, without limitation, the Secured Bond
Documents, and the lockbox and blocked account
documentation to be executed in connection with the requirements of subsection 6.2.4),
all in form and substance satisfactory to Agent and its counsel and the Lenders.




     9.1.2. No Default. No Default or Event of Default shall exist.




     9.1.3. Availability. Agent shall have determined in its reasonable credit
judgment that immediately after giving effect to the consummation of the transactions
contemplated hereby to occur on the Closing Date, the making of any Revolving Credit Loans
to be made on the Closing Date, and the issuance of any Letters of Credit or LC Guaranties
to be issued on the Closing Date, and after Borrowers have paid (or, if accrued, treated as
paid), all closing costs incurred in connection with the transactions contemplated hereby
(including, without limitation, the issuance of the Secured Bonds), and have reserved an
amount sufficient to pay all trade payables greater than 60 days past due, Availability
shall not be less than $50,000,000.




     9.1.4. No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain
damages in respect of, or which is materially adversely related to or arises out of this



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Agreement, the Secured Bond Documents, or the consummation of the transactions contemplated
hereby or thereby.




     9.1.5. Secured Bonds and Subordinated Bonds. Neenah shall have received not
less than $220,000,000 in net cash proceeds from the issuance of the Secured Bonds in
accordance with the terms of the Secured Bond Documents and all applicable laws; the net
cash proceeds from such issuance of the Secured Bonds shall have been used by Neenah to
satisfy certain existing Indebtedness of Borrowers, as more particularly set forth in the
flow of funds statement delivered by Borrowers to Agent on the Closing Date; and a Secured
Bond Intercreditor Agreement shall have been entered into with the Secured Bond Trustee.
Neenah shall have issued the Subordinated Bonds in an initial principal amount of
$75,000,000 in accordance with the terms of the Subordinated Bond Documents and all
applicable laws in exchange for Subordinated Bonds (2003 Series) in a corresponding
aggregate principal amount; and the Subordinated Bond Documents shall contain subordination
provisions that are acceptable to Agent and Lenders.




     9.1.6. Material Adverse Effect. As of the Closing Date, since September 30,
2005, there has not been (i) any material adverse change in the business, assets,
liabilities, financial condition, business prospects or results of operations of Borrowers
(taken as a whole), it being understood that changes or events affecting general economic
conditions, but not otherwise materially and adversely affecting the business, assets,
liabilities, financial condition, business prospects or results of operations of Borrowers’
and Borrowers’ Subsidiaries, shall not be considered material adverse changes for purposes
of the foregoing or (ii) any material disruption or material adverse change in the
financial, banking or capital markets that is material to the syndication of the Revolving
Loan Commitments and Revolving Credit Loans.




     9.1.7. Existing Bonds. Not less than $75,000,000 in aggregate principal amount
of the Subordinated Bonds (2003 Series) shall have been defeased, exchanged for Subordinated
Bonds, redeemed or otherwise retired, and a notice of redemption for the remaining balance
of the Subordinated Bonds (2003 Series) shall have been issued to the trustee for the
Subordinated Bonds (2003 Series) in accordance with the provisions of the “Subordinated Bond
Indenture” as defined in the Original Loan Agreement and shall provide for a redemption no
later than February 15, 2007. All of the Secured Bonds (2003 Series) shall have been
repurchased by Neenah pursuant to the tender offer documents issued by Neenah on December
15, 2006.




     9.1.8. Audits, Appraisals and Environmental Reports. All of the appraisals and
audits of the real and personal Property and business of Borrowers being conducted by Agent
(or a third party designated by Agent) prior to the Closing Date, and all of the Phase I
environmental assessments of the real Property of Borrowers being conducted by Agent (or a
third party designated by Agent) prior to the Closing Date, shall have been completed to
Agent’s reasonable satisfaction.




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          9.2. Conditions Precedent to all Loans and other Credit
Accommodations.



          Notwithstanding any other provision of this Agreement or any other Loan Documents, and without
affecting in any manner the rights of any Agent or any Lender under the other sections of this
Agreement, no Lender shall be required to make any Loan, nor shall Agent or any Letter of Credit
Issuer be required to issue or procure any Letter of Credit or LC Guaranty unless and until each of
the following conditions has been and continues to be satisfied:




     9.2.1. No Default. No Default or Event of Default shall exist.




     9.2.2. No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect
of, or which is materially adversely related to or arises out of, any of the Loan Documents.



SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT




          10.1. Events of Default.



          The occurrence of one or more of the following events shall constitute an “Event of Default”:




     10.1.1. Payment of Obligations. Borrowers shall (i) fail to pay any of the
Obligations hereunder (other than the Obligations described in the following clause (ii)) or
under any Note on the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise) or (ii) fail to pay any audit fees required to be paid by
Borrowers pursuant to Section 2.7 or satisfy any expenses required to be satisfied by
Borrowers pursuant to subsection 2.8 within five days following receipt by Borrowers of
written notice of such failure.




     10.1.2. Misrepresentations. Any representation, warranty or other statement
made or furnished to Agent or any Lender by or on behalf of any Borrower, any of its
Subsidiaries or any Guarantor in this Agreement, any of the other Loan Documents or any
instrument, certificate or financial statement furnished in compliance with or in reference
thereto proves to have been false or misleading in any material respect when made, furnished
or reaffirmed pursuant to Section 7.2 hereof; provided, that no breach of a
representation or warranty occurring solely in respect of an Inactive Subsidiary (other than
a breach of the representation and warranty contained in subsection 7.1.27) shall result in
an Event of Default unless such event would reasonably be expected to have a Material
Adverse Effect.




     10.1.3. Breach of Specific Covenants. Borrowers shall fail or neglect to
perform, keep or observe any covenant contained in Section or subsection 6.2.4, 6.2.5,
8.1.1, 8.1.2, 8.1.3(vi), 8.1.4 (at a time when Borrowing Base Certificates are required to
be delivered more frequently than monthly), 8.1.10, 8.2 (other than



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subsection 8.2.20) or 8.3 hereof on the date that Borrowers are required to perform,
keep or observe such covenant, shall fail or neglect to perform, keep or observe any
covenant contained in Section 8.1.4 hereof (at a time when Borrowing Base Certificates are
required to be delivered on a monthly basis) within 1 Business Day following the date on
which Borrowers are required to perform, keep or observe such covenant, or shall fail or
neglect to perform, keep or observe any covenant contained in subsection 8.1.3(ii) or
8.1.3(iv) hereof within 5 days following the date on which Borrowers are required to
perform, keep or observe such covenant.




     10.1.4. Breach of Other Covenants. Borrowers shall fail or neglect to perform,
keep or observe any covenant contained in this Agreement (other than a covenant which is
dealt with specifically elsewhere in Section 10.1 hereof) and the breach of such other
covenant is not cured to Agent’s reasonable satisfaction within 30 days after the sooner to
occur of Borrowers’ receipt of notice of such breach from Agent or the date on which such
failure or neglect first becomes known to any officer of any Borrower.




     10.1.5. Default Under Security Documents or Other Agreements. Any event of
default shall occur under, or any Borrower, any of its Subsidiaries or any Guarantor shall
default in the performance or observance of any term, covenant, condition or agreement
applicable to such Person contained in, any of the Security Documents or the Other
Agreements (excluding any representations and warranties set forth in such Security
Documents and Other Agreements) and such default shall continue, after the sooner to occur
of such Person’s receipt of notice of such default from Agent or the date on which such
default first becomes known to any officer of such Person, beyond any applicable grace
period; provided, that no event covered by this subsection 10.1.5 and occurring
solely in respect of an Inactive Subsidiary shall result in an Event of Default unless such
event would reasonably be expected to have a Material Adverse Effect.




     10.1.6. Other Defaults. There shall occur any event of default on the part of
any Borrower, any of its Subsidiaries or any Guarantor under any agreement, document or
instrument to which such Borrower, such Subsidiary or such Guarantor is a party or by which
such Borrower, such Subsidiary or such Guarantor or any of its Property is bound, evidencing
or relating to any Indebtedness (other than the Obligations) with an outstanding principal
balance in excess of $1,000,000, if the payment or maturity of such Indebtedness is or could
be accelerated in consequence of such event of default or demand for payment of such
Indebtedness is made or could be made in accordance with the terms thereof; or there shall
occur any event which permits the holders of the Indebtedness under any such agreement,
document or instrument to require the repurchase or redemption of such Indebtedness.




     10.1.7. Uninsured Losses. Any material loss, theft, damage or destruction of
any portion of the Collateral having a fair market value of $2,000,000, in the aggregate, if
not fully covered (subject to such deductibles and self-insurance retentions as Agent shall
have permitted) by insurance.



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     10.1.8. Insolvency and Related Proceedings. Ultimate Parent, Parent, any
Borrower, any of its Subsidiaries or any Guarantor shall cease to be Solvent or shall suffer
the appointment of a receiver, trustee, custodian or similar fiduciary, or shall make an
assignment for the benefit of creditors, or any petition for an order for relief shall be
filed by or against Parent, any Borrower, any of its Subsidiaries or any Guarantor under
U.S. federal bankruptcy laws (if against Parent, any Borrower, any of its Subsidiaries or
any Guarantor the continuation of such proceeding for more than 60 days), or Parent, any
Borrower, any of its Subsidiaries or any Guarantor shall make any offer of settlement,
extension or composition to their respective unsecured creditors generally;
provided, that no event covered by this subsection 10.1.8 and occurring solely in
respect of an Inactive Subsidiary shall result in an Event of Default unless such event
would reasonably be expected to have a Material Adverse Effect.




     10.1.9. Business Disruption; Condemnation. There shall occur a cessation of a
substantial part of the business of Borrowers and their Subsidiaries (taken as a whole) for
a period which materially adversely affects the capacity of Borrowers and their Subsidiaries
to continue their business on a profitable basis; or any Borrower, any of its Subsidiaries
or any Guarantor shall suffer the loss or revocation of any material license or permit now
held or hereafter acquired by such Borrower, such Subsidiary or such Guarantor which is
necessary to the continued or lawful operation of a material portion of the business of
Borrowers and their Subsidiaries (taken as a whole); or any Borrower, any of its
Subsidiaries or any Guarantor shall be enjoined, restrained or in any way prevented by
court, governmental or administrative order from conducting all or any material part of the
business affairs of Borrowers and their Subsidiaries (taken as a whole); or any material
lease or agreement pursuant to which any Borrower, any of its Subsidiaries or any Guarantor
leases, uses or occupies any Property shall be canceled or terminated prior to the
expiration of its stated term, except any such lease or agreement the cancellation or
termination of which could not reasonably be expected to have a Material Adverse Effect; or
any material portion of the Collateral shall be taken through condemnation or the value of
such Property shall be materially impaired through condemnation, except for any such
condemnation that would not reasonably be expected to have a Material Adverse Effect.




     10.1.10. Change of Control. (a) any transaction is consummated the result of
which is that any “person” or “group” (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act) other than the Permitted Holders is or becomes the
“beneficial owner” (as such term is used in Rule 13d-3 under the Exchange Act), directly or
indirectly, of, in the aggregate, more than 50% of the total Voting Stock of Ultimate Parent
(or, upon and after the consummation of the Neenah Full Reorganization, if it occurs,
Neenah), whether as a result of the purchase of Securities of Ultimate Parent (or, upon and
after the consummation of the Neenah Full Reorganization, if its occurs, Neenah) then
outstanding, the issuance of Securities of Ultimate Parent (or, upon and after the
consummation of the Neenah Full Reorganization, if its occurs, Neenah), any merger,
consolidation, liquidation or



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dissolution of Ultimate Parent (or, upon and after the consummation of the Neenah Full
Reorganization, if it occurs, Neenah) or otherwise; (b) individuals who on the date hereof
constituted the board of directors of Neenah together with any new directors whose election
by the board of directors or whose nomination for election by the stockholders of Neenah was
approved by a majority of the directors then still in office who were either directors or
whose election or nomination for election was previously so approved, cease for any reason
to constitute a majority of the board of directors of Neenah then in office; (c) until the
consummation of a Neenah Reorganization, if ever, Ultimate Parent shall cease to own and
control, beneficially and of record (directly or indirectly), 100% of the issued and
outstanding Securities of Parent; (d) until the consummation of the Neenah Reorganization,
if ever, Parent shall cease to own and control, beneficially and of record (directly or
indirectly), 100% of the issued and outstanding Securities of Neenah; (e) after the
consummation of a Neenah Partial Reorganization, if ever, Ultimate Parent shall cease to own
and control, beneficially and of record (directly or indirectly), 100% of the issued and
outstanding Securities of Neenah; (f) Neenah shall cease to own and control, beneficially
and of record (directly or indirectly), 100% of the issued and outstanding Securities of
each other Borrower and each of its other Subsidiaries (provided, that this clause
(e) shall not prohibit the sale of all of the issued and outstanding Securities of a
Subsidiary of Neenah that is permitted under the terms of subsection 8.2.9, it being agreed
and understood that if any such Subsidiary is a Borrower, such Subsidiary shall cease to be
a Borrower in all respects upon the consummation of such sale); (g) any “Change of Control”
under and as defined in the Secured Bond Indenture, or in any documentation evidencing
Indebtedness that has refinanced the Secured Bonds, shall occur; or (h) any “Change of
Control” under and as defined in the Subordinated Bond Indenture, or in any documentation
evidencing Indebtedness that has refinanced the Subordinated Bonds, shall occur.




     10.1.11. ERISA. A Reportable Event shall occur which constitutes grounds for
the termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any Plan under
Section 4042 of ERISA, or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or any Borrower or any of its Subsidiaries is in “default” (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from such Borrower’s or such Subsidiary’s complete or partial withdrawal from such
Plan and any such event could reasonably be expected to have a Material Adverse Effect.




     10.1.12. Challenge to Agreement. Parent, any Borrower, any Subsidiary of any
Borrower (other than an Inactive Subsidiary) or any Guarantor (other than an Inactive
Subsidiary), or any Affiliate of any of them, shall challenge or contest in any action, suit
or proceeding the validity or enforceability of this Agreement or any of the other Loan
Documents, the legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Agent.



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     10.1.13. Repudiation of or Default Under Guaranty Agreement. Any Guarantor
(other than an Inactive Subsidiary) shall revoke or attempt to revoke the Guaranty Agreement
signed by such Guarantor, or shall repudiate such Guarantor’s liability thereunder or shall
be in default under the terms thereof.




     10.1.14. Criminal Forfeiture. Any Borrower or any of its Subsidiaries shall be
criminally indicted or convicted under any law that could lead to a forfeiture of any
Property of such Borrower or such Subsidiary, except for any Property the forfeiture of
which would not reasonably be expected to have a Material Adverse Effect.




     10.1.15. Judgments. Any money judgments, writ of attachment or similar
processes (collectively, “Judgments”) are issued or rendered against any Borrower, any of
its Subsidiaries or any Guarantor, or any of their respective Property (i) in the case of
money judgments, in an amount of $1,000,000 or more for any single judgment, attachment or
process or $2,000,000 or more for all such judgments, attachments or processes in the
aggregate, in each case in excess of any applicable insurance (or indemnity from a
creditworthy source that is reasonably acceptable to Agent) with respect to which the
insurer (or the indemnifying party, if applicable) has admitted liability, and (ii) in the
case of non-monetary Judgments, such Judgment or Judgments (in the aggregate) could
reasonably be expected to have a Material Adverse Effect, in each case which Judgment is not
stayed, released or discharged within 60 days; provided, that no event covered by
this subsection 10.1.15 and occurring solely in respect of an Inactive Subsidiary shall
result in an Event of Default unless such event would reasonably be expected to have a
Material Adverse Effect.




     10.2. Acceleration of the Obligations.



          Upon or at any time after the occurrence and during the continuance of an Event of Default,
(i) the Revolving Loan Commitments shall, at the option of Agent or Majority Lenders be terminated
and/or (ii) Agent or Majority Lenders may declare all or any portion of the Obligations at once due
and payable without presentment, demand protest or further notice by Agent or any Lender, and
Borrowers shall forthwith pay to Agent, the full amount of such Obligations, provided, that
upon the occurrence of an Event of Default specified in subsection 10.1.8 hereof, the Revolving
Loan Commitments shall automatically be terminated and all of the Obligations shall become
automatically due and payable, in each case without declaration, notice or demand by Agent or any
Lender.




          10.3. Other Remedies.




          Upon the occurrence and during the continuance of an Event of Default, Agent shall have and
may exercise from time to time the following other rights and remedies:





     10.3.1. All of the rights and remedies of a secured party under the UCC or under other
applicable law, and all other legal and equitable rights to which Agent or



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Lenders may be entitled, all of which rights and remedies shall be cumulative and shall
be in addition to any other rights or remedies contained in this Agreement or any of the
other Loan Documents, and none of which shall be exclusive.




     10.3.2. The right to take immediate possession of the Collateral, and to (i) require
each Borrower and each of its Subsidiaries to assemble the Collateral, at Borrower’s joint
and several expense, and make it available to Agent at a place designated by Agent which is
reasonably convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said premises until sold
(and if said premises be the Property of any Borrower or any of its Subsidiaries, such
Borrower agrees not to charge, or permit such Subsidiary to charge, Agent for storage
thereof).




     10.3.3. The right to sell or otherwise dispose of all or any Collateral in its then
condition, or after any further manufacturing or processing thereof, at public or private
sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or
on credit, all as Agent, in its sole discretion, may deem advisable. Agent may, at Agent’s
option, disclaim any and all warranties regarding the Collateral in connection with any such
sale. Each Borrower agrees that 10 days’ written notice to such Borrower or any of its
Subsidiaries of any public or private sale or other disposition of Collateral shall be
reasonable notice thereof, and such sale shall be at such locations as Agent may designate
in said notice. Agent shall have the right to conduct such sales on any Borrower’s or any
of its Subsidiaries’ premises, without charge therefor, and such sales may be adjourned from
time to time in accordance with applicable law. Agent shall have the right to sell, lease
or otherwise dispose of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Agent, on behalf of Lenders, may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of
such purchase price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral shall be applied in the manner provided
for in subsection 3.4.2. If any deficiency shall arise, each Borrower and each Guarantor
shall remain jointly and severally liable to Agent and Lenders therefore. Any surplus shall
be remitted to whomsoever shall be legally entitled to the same.




     10.3.4. Agent is hereby granted a non-exclusive license or other right to use, without
charge, effective upon the occurrence and continuance of an Event of Default, each
Borrower’s and each of its Subsidiaries’ labels, patents, copyrights, licenses, rights of
use of any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in completing, advertising
for sale and selling any Collateral and each Borrower’s and each of its Subsidiaries’ rights
under all licenses and all franchise agreements shall inure to Agent’s benefit.




     10.3.5. Agent may, at its option, require Borrowers to deposit with Agent funds equal
to 105% of the LC Amount and, if Borrowers fail to promptly make such deposit, Agent may
advance such amount as a Revolving Credit Loan (whether or not



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an Overadvance is created thereby). Each such Revolving Credit Loan shall be secured
by all of the Collateral and shall constitute a Base Rate Portion. Any such deposit or
advance shall be held by Agent as a reserve to fund future payments on such LC Guaranties
and future drawings against such Letters of Credit. At such time as all LC Guaranties have
been paid or terminated and all Letters of Credit have been drawn upon or expired, any
amounts remaining in such reserve shall be applied against any outstanding Obligations, or,
if all Obligations have been indefeasibly paid in full, returned to Borrowers.



          10.4. Set Off and Sharing of Payments.




          In addition to any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, during the continuance of any Event of Default, each Lender is
hereby authorized by each Borrower at any time or from time to time, with prior written consent of
Agent and with reasonably prompt subsequent notice to such Borrower (any prior or contemporaneous
notice to such Borrower being hereby expressly waived) to set off and to appropriate and to apply
any and all (i) balances held by such Lender at any of its offices for the account of such Borrower
or any of its Subsidiaries (regardless of whether such balances are then due to such Borrower or
its Subsidiaries), and (ii) other property at any time held or owing by such Lender to or for the
credit or for the account of such Borrower or any of its Subsidiaries, against and on account of
any of the Obligations. Any Lender exercising a right to set off shall, to the extent the amount
of any such set off exceeds its Revolving Loan Percentage of the amount set off, purchase for cash
(and the other Lenders shall sell) interests in each such other Lender’s pro rata share of the
Obligations as would be necessary to cause such Lender to share such excess with each other Lender
in accordance with their respective Revolving Loan Percentages. Each Borrower agrees, to the
fullest extent permitted by law, that any Lender may exercise its right to set off with respect to
amounts in excess of its pro rata share of the Obligations and upon doing so shall deliver such
excess to Agent for the benefit of all Lenders in accordance with the Revolving Loan Percentages.




          10.5. Remedies Cumulative; No Waiver.




          All covenants, conditions, provisions, warranties, guaranties, indemnities, and other
undertakings of each Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto or in any schedule
or in any Guaranty Agreement given to Agent or any Lender or contained in any other agreement
between any Lender and such Borrower or between Agent and such Borrower heretofore, concurrently,
or hereafter entered into, shall be deemed cumulative to and not in derogation or substitution of
any of the terms, covenants, conditions, or agreements of such Borrower herein contained. The
failure or delay of Agent or any Lender to require strict performance by any Borrower of any
provision of this Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or security or Collateral
shall not operate as a waiver of such performance, Liens, rights, powers and remedies, but all such
requirements, Liens, rights, powers, and remedies shall continue in full force and effect until all
Loans and other Obligations owing or to become owing from such Borrower to Agent and each Lender
have

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been fully satisfied. None of the undertakings, agreements, warranties, covenants and
representations of any Borrower contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Borrower under this Agreement or any other Loan Documents
shall be deemed to have been suspended or waived by Lenders, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by a duly authorized
representative of Agent and directed to Borrowers.




SECTION 11. THE AGENT




          11.1. Authorization and Action.




          Each Lender hereby appoints and authorizes Agent to take such action on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Each
Lender hereby acknowledges that Agent shall not have by reason of this Agreement assumed a
fiduciary relationship in respect of any Lender. In performing its functions and duties under this
Agreement, Agent shall act solely as agent of Lenders and shall not in its capacity as such assume,
or be deemed to have assumed, any obligation toward, or relationship of agency or trust with or
for, any Borrower. As to any matters not expressly provided for by this Agreement and the other
Loan Documents (including without limitation enforcement and collection of the Notes), Agent may,
but shall not be required to, exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, whenever such instruction shall be requested by
Agent or required hereunder, or a greater or lesser number of Lenders if so required hereunder, and
such instructions shall be binding upon all Lenders; provided, that Agent shall be fully
justified in failing or refusing to take any action which exposes Agent to any liability or which
is contrary to this Agreement, the other Loan Documents or applicable law, unless Agent is
indemnified to its satisfaction by the other Lenders against any and all liability and expense
which it may incur by reason of taking or continuing to take any such action. If Agent seeks the
consent or approval of the Majority Lenders (or a greater or lesser number of Lenders as required
in this Agreement), with respect to any action hereunder, Agent shall send notice thereof to each
Lender and shall notify each Lender at any time that the Majority Lenders (or such greater or
lesser number of Lenders) have instructed Agent to act or refrain from acting pursuant hereto.




          11.2. Agent’s Reliance, Etc.




          Neither Agent, any Affiliate of Agent, nor any of their respective directors, officers, agents
or employees shall be liable in their capacity as such for any action taken or omitted to be taken
by it or them under or in connection with this Agreement or the other Loan Documents, except for
its or their own gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, Agent: (i) may treat each Lender party hereto as the holder of Obligations until
Agent receives written notice of the assignment or transfer of such Lender’s portion of the Obligations signed by such Lender and in form
reasonably satisfactory to Agent; (ii) may consult with legal counsel, independent public

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accountants and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants
or experts, (iii) makes no warranties or representations to any Lender and shall not be responsible
to any Lender for any recitals, statements, warranties or representations made in or in connection
with this Agreement or any other Loan Documents; (iv) shall not have any duty beyond Agent’s
customary practices in respect of loans in which Agent is the only lender, to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Borrower, to inspect the property
(including the books and records) of any Borrower, to monitor the financial condition of any
Borrower or to ascertain the existence or possible existence or continuation of any Default or
Event of Default; (v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan
Documents or any other instrument or document furnished pursuant hereto or thereto; (vi) shall not
be liable to any Lender for any action taken, or inaction, by Agent upon the instructions of
Majority Lenders pursuant to Section 11.1 hereof or refraining to take any action pending such
instructions; (vii) shall not be liable for any apportionment or distributions of payments made by
it in good faith pursuant to Section 3 hereof; (viii) shall incur no liability under or in respect
of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate,
message or other instrument or writing (which may be by telephone, facsimile, telegram, cable or
telex) believed in good faith by it to be genuine and signed or sent by the proper party or
parties; and (ix) may assume that no Event of Default has occurred and is continuing, unless Agent
has actual knowledge of the Event of Default, has received notice from a Borrower or a Borrower’s
independent certified public accountants stating the nature of the Event of Default, or has
received notice from a Lender stating the nature of the Event of Default and that such Lender
considers the Event of Default to have occurred and to be continuing. In the event any
apportionment or distribution described in clause (vii) above is determined to have been made in
error, the sole recourse of any Person to whom payment was due but not made shall be to recover
from the recipients of such payments any payment in excess of the amount to which they are
determined to have been entitled.




          11.3. BofA and Affiliates.




          With respect to its commitment hereunder to make Loans, BofA shall have the same rights and
powers under this Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not Agent; and the terms “Lender,” “Lenders” or “Majority Lenders” shall,
unless otherwise expressly indicated, include BofA in its individual capacity as a Lender. BofA
and its Affiliates may lend money to, and generally engage in any kind of business with, each
Borrower, and any Person who may do business with or own Securities of each Borrower all as if BofA
were not Agent and without any duty to account therefor to any other Lender.




          11.4. Lender Credit Decision.




          Each Lender acknowledges that it has, independently and without reliance upon Agent or any
other Lender and based on the financial statements referred to herein and

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such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and without reliance
upon Agent or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under this Agreement. Agent shall not have any duty or responsibility, either initially or on an
ongoing basis, to provide any Lender with any credit or other similar information regarding any
Borrower.




          11.5. Indemnification.




          Lenders agree to indemnify Agent and each Arranger (to the extent not reimbursed by
Borrowers), in accordance with their respective Aggregate Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Agent or either Arranger in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by Agent or either Arranger under this
Agreement; provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent’s gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender agrees to reimburse Agent and each Arranger promptly upon demand for its
ratable share, as set forth above, of any out-of-pocket expenses (including reasonable attorneys’
fees) incurred by Agent or either Arranger in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through negotiation, legal
proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this
Agreement and each other Loan Document, to the extent that Agent or either Arranger, as applicable,
is not reimbursed for such expenses by Borrowers. The obligations of Lenders under this Section
11.5 shall survive the payment in full of all Obligations and the termination of this Agreement.
If after payment and distribution of any amount by Agent to Lenders, any Lender or any other
Person, including any Borrower, any creditor of any Borrower, a liquidator, administrator or
trustee in bankruptcy, recovers from Agent or either Arranger any amount found to have been
wrongfully paid to Agent or either Arranger or disbursed by Agent or either Arranger to Lenders,
then Lenders, in accordance with their respective Aggregate Percentages, shall reimburse Agent or
such Arranger, as applicable, for all such amounts.




          11.6. Rights and Remedies to be Exercised by Agent Only.




          Each Lender agrees that, except as set forth in Section 10.4, no Lender shall have any right
individually (i) to realize upon the security created by this Agreement or any other Loan Document,
(ii) to enforce any provision of this Agreement or any other Loan Document, or (iii) to make demand
for payment by Borrower or any Guarantor under this Agreement or any other Loan Document.




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          11.7. Agency Provisions Relating to Collateral.




          Each Lender authorizes and ratifies Agent’s entry into this Agreement and the Security
Documents for the benefit of Lenders. Each Lender agrees that any action taken by Agent with
respect to the Collateral in accordance with the provisions of this Agreement or the Security
Documents, and the exercise by Agent 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
Lenders. Agent is hereby authorized on behalf of all Lenders, without the necessity of any notice
to or further consent from any Lender to take any action with respect to any Collateral or the Loan
Documents which may be necessary to perfect and maintain perfected Agent’s Liens upon the
Collateral, for its benefit and the ratable benefit of Lenders. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien granted to or held by
Agent upon any Collateral (i) upon termination of the Agreement and payment and satisfaction of all
Obligations; it being understood that Agent shall release its Lien on the Collateral upon
termination of the Agreement pursuant to release documentation that is reasonably requested by
Borrowers (and Agent agrees with Borrowers to provide such release); or (ii) constituting property
being sold or disposed of if the sale or disposition is made in compliance with subsection 8.2.9,
as it may be amended from time to time in accordance with the provisions of Section 12.3; it being
understood that Agent shall release its Lien on any Collateral that is sold or otherwise disposed
of in compliance with subsection 8.2.9 pursuant to release documentation that is reasonably
requested by Borrowers (and Agent agrees with Borrowers to provide such releases); or (iii)
constituting property in which no Borrower owned any interest at the time the Lien was granted or
at any time thereafter; or (iv) in connection with any foreclosure sale or other enforcement action
with respect to Collateral or in connection with the other exercise by Agent of remedies hereunder
or under another Loan Document, in each case after the occurrence and during the continuation of an
Event of Default or (v) if approved, authorized or ratified in writing by Agent at the direction of
all Lenders. Upon request by Agent at any time, Lenders will confirm in writing Agent’s authority
to release particular types or items of Collateral pursuant hereto. Agent shall have no obligation
whatsoever to any Lender or to any other Person to assure that the Collateral exists or is owned by
any Borrower or is cared for, protected or insured or has been encumbered or that the Liens granted
to Agent herein or pursuant to the Security Documents have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity,
or to continue exercising, any of its rights, authorities and powers granted or available to Agent
in this Section 11.7 or in any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its sole discretion, but consistent with the provisions of this
Agreement, including given Agent’s own interest in the Collateral as a Lender and that Agent shall
have no duty or liability whatsoever to any Lender.




          11.8. Agent’s Right to Purchase Commitments.




          Agent shall have the right, but shall not be obligated, at any time upon written notice to any
Lender and with the consent of such Lender, which may be granted or withheld

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in such Lender’s sole discretion, to purchase for Agent’s own account all of such Lender’s
interests in this Agreement, the other Loan Documents and the Obligations, for the face amount of
the outstanding Obligations owed to such Lender, including without limitation all accrued and
unpaid interest and fees.




          11.9. Right of Sale, Assignment, Participations.




          Each Borrower hereby consents to any Lender’s participation, sale, assignment, transfer or
other disposition, at any time or times hereafter, of this Agreement and any of the other Loan
Documents, or of any portion hereof or thereof, including, without limitation, such Lender’s
rights, title, interests, remedies, powers, and duties hereunder or thereunder subject to the terms
and conditions set forth below:





     11.9.1. Sales, Assignments. Each Lender hereby agrees that, with respect to
any sale or assignment (i) no such sale or assignment shall be for an amount of less than
$5,000,000 or any integral multiple of $1,000,000 in excess thereof (or, if less, the
aggregate amount of the Loans and Loan Commitments of such Lender), (ii) Agent and, in the
absence of a Default or Event of Default, Borrowers, must consent, such consent not to be
unreasonably withheld, to each such assignment to a Person that is not an original signatory
to this Agreement, (iii) the assigning Lender shall pay to Agent a processing and
recordation fee of $3,500 and any out-of-pocket attorneys’ fees and expenses incurred by
Agent in connection with any such sale or assignment and (iv) Agent, the assigning Lender
and the assignee Lender shall each have executed and delivered an Assignment and Acceptance
Agreement. After such sale or assignment has been consummated and the Register is updated
(x) the assignee Lender thereupon shall become a “Lender” for all purposes of this Agreement
and (y) the assigning Lender shall have no further liability for funding the portion of
Revolving Loan Commitments assumed by such other Lender.




     11.9.2. Participations. Upon the consent of Agent and, in the absence of an
Event of Default, Borrowers (such consent not to be unreasonably withheld), any Lender may
grant participations in its extensions of credit hereunder to any other Lender or other
lending institution (a “Participant”), provided that (i) no such participation shall
be for an amount of less than $5,000,000 or any integral multiple of $1,000,000 in excess
thereof (or, if less, the aggregate amount of the Loans and Loan Commitments of such
Lender), (ii) no Participant shall thereby acquire any direct rights under this Agreement,
(iii) no Participant shall be granted any right to consent to any amendment, except to the
extent any of the same pertain to (1) reducing the aggregate principal amount of, or
interest rate on, or fees applicable to, any Loan or (2) extending the final stated maturity
of any Loan or the stated maturity of any portion of any payment of principal of, or
interest or fees applicable to, any of the Loans; provided, that the rights
described in this subclause (2) shall not be deemed to include the right to consent to any
amendment with respect to or which has the effect of requiring any mandatory prepayment of
any portion of any Loan or any amendment or waiver of any Default or Event of Default, (iv)
no sale of a participation in extensions of credit shall in any manner relieve the
originating Lender



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of its obligations hereunder, (v) the originating Lender shall remain solely
responsible for the performance of such obligations, (vi) Borrowers and Agent shall continue
to deal solely and directly with the originating Lender in connection with the originating
Lender’s rights and obligations under this Agreement and the other Loan Documents, (vii) in
no event shall any financial institution purchasing the participation grant a participation
in its participation interest in the Loans without the prior written consent of Agent, and,
in the absence of a Default or an Event of Default, Borrowers, which consents shall not
unreasonably be withheld and (viii) all amounts payable by Borrowers hereunder shall be
determined as if the originating Lender had not sold any such participation.




     11.9.3. Certain Agreements of Borrowers. Each Borrower agrees that (i) it will
use its commercially reasonable efforts to cooperate with each Lender to effect the sale of
participation in or assignments of any of the Loan Documents or any portion thereof or
interest therein, including, without limitation, assisting in the preparation of appropriate
disclosure documents and making members of management available at reasonable times to meet
with and answer questions of potential assignees and Participants; and (ii) subject to the
provisions of Section 12.15 hereof, such Lender may disclose credit information regarding
each Borrower to any potential Participant or assignee.




     11.9.4. Non U.S. Resident Transferees. If, pursuant to this Section 11.9, any
interest in this Agreement or any Loans is transferred to any transferee which is organized
under the laws of any jurisdiction other than the United States or any state thereof, the
transferor Lender shall cause such transferee (other than any Participant), and may cause
any Participant, concurrently with and as a condition precedent to the effectiveness of such
transfer, to (i) represent to the transferor Lender (for the benefit of the transferor
Lender, Agent, and Borrowers) that under applicable law and treaties no taxes will be
required to be withheld and paid by Agent, Borrowers or the transferor Lender with respect
to any payments to be made to such transferee in respect of the interest so transferred and
(ii) comply with the provisions of Section 2.12(b).




     11.9.5. Register. Pursuant to this subsection 11.9.5, Borrowers hereby
designate Agent to serve as agent for the purposes of this subsection 11.9.5, and Agent
agrees, to maintain, or cause to be maintained at its offices, a listing of the name and
address of each Lender and the Revolving Loan Commitment of, the principal balance of and
stated interest on the Loans owing to, each Lender (the “Register”). The entries in such
listing shall be conclusive and binding for all purposes, absent manifest error, and
Borrowers, Agent and Lenders shall treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. Loans and Commitments may be
assigned or sold in whole or in part only by recordation of such assignment or sale in the
Register. The Register shall be available for inspection by Borrowers and any Lender at any
reasonable time upon reasonable prior notice.



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          11.10. [Intentionally Omitted].




          11.11. Resignation of Agent; Appointment of Successor.




          Agent may resign as Agent by giving not less than thirty (30) days’ prior written notice to
Lenders and Borrowers. If Agent shall resign under this Agreement, then, (i) subject to the
consent of Borrowers (which consent shall not be unreasonably withheld and which consent shall not
be required during any period in which a Default or an Event of Default exists), Majority Lenders
shall appoint from among Lenders a successor agent for Lenders or (ii) if a successor agent shall
not be so appointed and approved within the thirty (30) day period following Agent’s notice to
Lenders and Borrowers of its resignation, then Agent shall appoint a successor agent who shall
serve as Agent until such time as Majority Lenders appoint a successor agent, subject to Borrowers’
consent as set forth above. Upon its appointment, such successor agent shall succeed to the
rights, powers and duties of Agent and the term “Agent” shall mean such successor effective upon
its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated
without any other or further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the resignation of any Agent hereunder, the provisions of this Section 11
shall inure to the benefit of such former Agent and such former Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not taken by it while
it was an Agent under this Agreement.




          11.12. Audit and Examination Reports; Disclaimer by Lenders.




          By signing this Agreement, each Lender:





     (a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each audit or examination report (each a “Report”
and collectively, “Reports”) prepared by or on behalf of Agent;




     (b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, and (ii) shall not be
liable for any information contained in any Report;




     (c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding each Borrower and will
rely significantly upon each Borrower’s books and records, as well as on
representations of each Borrower’s personnel;




     (d) agrees to keep all Reports confidential and strictly for its internal use,
and not to distribute except to its assignees or participants, or use any Report in
any other manner, in accordance with the provisions of Section 12.15; and




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     (e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in connection
with any loans or other credit accommodations that the indemnifying Lender has made
or may make to any Borrower, or the indemnifying Lender’s participation in, or the
indemnifying Lender’s purchase of, a loan or loans of any Borrower; and (ii) to pay
and protect, and indemnify, defend and hold Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses and other amounts (including attorney’s fees and expenses)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.




     11.13. Syndication Agent and Arrangers.




     None of the Syndication Agent or the Arrangers identified in the introductory
paragraph of this Agreement, in its capacity as such, shall have any rights, powers,
duties or responsibilities, and no rights, powers, duties or responsibilities shall
be read into this Agreement or any other Loan Document or otherwise exist on behalf
of or against such entity, in its capacity as such. If any of the Syndication Agent
or the Arrangers resigns, in its capacity as such, no successor Syndication Agent or
Arranger (as applicable) shall be appointed.




     11.14. Real Property Collateral.




     Notwithstanding any provision of this Agreement or any other Loan Document to
the contrary, Agent shall not take any action to foreclose upon, acquire or take
possession of or occupy, or exercise any remedies by which it will take title or
otherwise come into ownership in respect of Collateral consisting of real Property
(the “Affected Collateral”) or purchase or otherwise acquire (including in lieu of
actual payment of a purchase price) any stock or other equity interest in any
Borrower or other Person that owns the Affected Collateral unless and until (i)
Lenders have obtained, at Borrowers’ joint and several expense, a Phase II
environmental site assessment with respect to the Affected Collateral, prepared by
an environmental consultant reasonably acceptable to Lenders and (ii) each Lender
has confirmed that no remediation is required by such Lender or that any remediation
has been completed to the satisfaction of such Lender with respect to the Affected
Collateral.



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SECTION 12. MISCELLANEOUS




          12.1. Power of Attorney.




          Each Borrower hereby irrevocably designates, makes, constitutes and appoints Agent (and all
Persons designated by Agent) as such Borrower’s true and lawful attorney (and agent-in-fact),
solely with respect to the matters set forth in this Section 12.1, and Agent, or Agent’s agent,
may, without notice to any Borrower and in such Borrower’s or Agent’s name, but at the cost and
expense of such Borrower:





     12.1.1. Subject to the third sentence of subsection 3.4.1 to the extent that the taking
of any action pursuant to this subsection 12.1.1 causes a credit balance to exist in the
Loan Account, at such time or times as Agent or said agent, in its sole discretion, may
determine, endorse such Borrower’s name on any checks, notes, acceptances, drafts, money
orders or any other evidence of payment or proceeds of the Collateral which come into the
possession of Agent or under Agent’s control.




     12.1.2. At such time or times after the occurrence and during the continuance of an
Event of Default (provided that the occurrence of an Event of Default shall not be required
with respect to clauses (iv), (vi)(except as set forth below in such clause (vi)), (viii)
and (ix) below), as Agent or its agent in its sole discretion may determine: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the Accounts by legal
proceedings or otherwise, and generally exercise all of such Borrower’s rights and remedies
with respect to the collection of the Accounts; (ii) settle, adjust, compromise, discharge
or release any of the Accounts or other Collateral or any legal proceedings brought to
collect any of the Accounts or other Collateral; (iii) sell or assign any of the Accounts
and other Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable, and at Agent’s option, with all warranties regarding the Collateral
disclaimed; (iv) take control, in any manner, of any item of payment or proceeds relating to
any Collateral at any time when a Dominion Period is in effect; (v) prepare, file and sign
such Borrower’s name to a proof of claim in bankruptcy or similar document against any
Account Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to such Borrower and, if an Event of Default has occurred and is continuing,
notify postal authorities to change the address for delivery thereof to such address as
Agent may designate until such time as no Event of Default exists; provided, that
any contents of such mail other than any checks, notes, acceptances, drafts, money orders or
other evidence of payment or proceeds of the Collateral shall be furnished by Agent to such
Borrower in accordance with written instructions provided by such Borrower; (vii) endorse
the name of such Borrower upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Agent on account of the Obligations;
(viii) endorse the name of such Borrower upon any chattel paper, document, instrument,
invoice, freight bill, bill of lading or similar document or agreement relating to any Collateral; (ix) use such
Borrower’s stationery and sign the name of



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such Borrower to verifications of the Accounts
and notices thereof to Account Debtors (provided that Agent shall deliver drafts of any such
written communication to such Borrower prior to the delivery thereof to any Account
Debtors); (x) use the information recorded on or contained in any data processing equipment
and Computer Hardware and Software relating to the Accounts, Inventory, Equipment and any
other Collateral; (xi) make and adjust claims under policies of insurance to the extent
related to the Collateral; and (xii) do all other acts and things necessary, in Agent’s
determination, to fulfill such Borrower’s obligations under this Agreement.



          The power of attorney granted hereby shall constitute a power coupled with an interest and
shall be irrevocable.




          12.2. Indemnity.




          Each Borrower hereby agrees to jointly and severally indemnify Agent, each Arranger and each Lender
(and each of their Affiliates) and hold Agent, each Arranger and each Lender (and each of their
Affiliates) harmless from and against any liability, loss, damage, suit, action or proceeding
suffered or incurred by any such Person (including reasonable documented attorneys fees and legal
expenses) as the result of such Borrower’s failure to observe, perform or discharge such Borrower’s
duties hereunder (subject to subsection 2.12) or arising from or relating to this Agreement, the
other Loan Documents or the transactions contemplated hereby or thereby, except those determined by
a court of competent jurisdiction in a final nonappealable judgment to have arisen out of the bad
faith, gross negligence or willful misconduct of, or breach of the terms of this Agreement or any
other Loan Document by, Agent, either Arranger or such Lender. In addition, each Borrower shall
defend Agent, each Arranger and each Lender (and each of their Affiliates) against and hold it
harmless from all claims of any Person with respect to the Collateral (except those determined by a
court of competent jurisdiction in a final nonappealable judgment to have resulted from the bad
faith, gross negligence or intentional misconduct of, or breach of the terms of this Agreement or
any other Loan Document by, any such Person seeking indemnity). Without limiting the generality of
the foregoing, each Borrower shall indemnify and hold harmless Agent, each Arranger and each Lender
(and each of their Affiliates) from and against any loss, damage, cost, expense or liability
directly or indirectly arising out of or under the Environmental Laws, or attributable to the use,
generation, storage, release, threatened release, discharge, disposal or presence of any
pollutants, flammables, explosives, petroleum (including crude oil) or any fraction thereof,
radioactive materials, hazardous wastes, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of toxic or hazardous
substances, wastes, or materials under any Environmental Law, except for those losses, damages,
costs, expenses or liabilities determined by a court of competent jurisdiction in a final
nonappealable judgment to have arisen out of the bad faith, gross negligence or willful misconduct
of Agent, either Arranger or such Lender. Notwithstanding any contrary provision in this
Agreement, the obligation of each Borrower under this Section 12.2 shall survive the payment in
full of the non-indemnity Obligations and the termination of this Agreement.





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          12.3. Amendments.




          No amendment or waiver of any provision of this Agreement or any other Loan Document
(including without limitation any Note), nor consent to any departure by any Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed by the Majority
Lenders and Borrowers, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, that no amendment, waiver
or consent shall be effective, unless (i) in writing and signed by each Lender, if it does any of
the following: (1) increase or decrease the aggregate Loan Commitments, or any Lender’s Revolving
Loan Commitment, (2) reduce the principal of, or interest on, any amount payable on any date
hereunder or under any Note, other than those payable only to BofA in its capacity as Agent, which
may be reduced by BofA unilaterally, (3) decrease any interest rate payable hereunder, the Unused
Line Fee or any other fee payable to Lenders (as opposed to Agent or either Arranger), (4) postpone
any date fixed for any payment of principal of, or interest on, any amounts payable hereunder or
under any Note, other than those payable only to BofA in its capacity as Agent, which may be
postponed by BofA unilaterally; provided, that notwithstanding the foregoing or any other
provision of this Section 12.3 to the contrary, the extension of a due date for a mandatory
prepayment of the Obligations required under subsection 3.3.1, 3.3.2 or 3.3.3 or a modification of
the manner in which any such prepayment is applied to the Obligations shall be subject to the
approval of the Majority Lenders and Borrowers, (5) modify the definitions of any of the terms
Borrowing Base (including, without limitation, the percentages set forth in the definition
of such term), Eligible Account, Eligible Inventory, Eligible Extended
Municipal Accounts, Eligible Extra Extended Municipal Accounts, and Eligible
Patterns and Core Boxes if the effect of such modification is to increase the amount available
to be borrowed in respect of the Revolving Loans, or modify the definitions of any of the terms
Dominion Event and Dominion Period, (6) reduce the number of Lenders that shall be
required for Lenders or any of them to take any action hereunder, (7) release or discharge any
Person (other than an Inactive Subsidiary) liable for the performance of any obligations of any
Borrower hereunder or under any of the Loan Documents, (8) amend any provision of this Agreement
that requires the consent of all Lenders or consent to or waive any breach thereof, (9) amend the
definition of the term “Majority Lenders”, (10) amend this Section 12.3, subsection 1.1.2,
subsection 1.1.4(i) or subsection 1.1.5, (11) release Collateral having a fair market value that
exceeds $5,000,000 in the aggregate, unless otherwise permitted pursuant to Section 11.7 hereof or
(12) subordinate the Obligations to any other Indebtedness or subordinate any of the Liens on the
Collateral securing the Obligations to any other Liens, except in the case of subordination of
Agent’s Liens on assets subject to permitted Capitalized Lease Obligations or Permitted Purchase
Money Indebtedness or pursuant to the terms of the Secured Bond Intercreditor Agreement or any
intercreditor agreement applicable to Indebtedness that has refinanced the Secured Bonds in
compliance with subsection 8.2.3 (in each case which Agent shall be permitted to effect without the
consent of any other Lender), or amend the terms of the Secured Bond Intercreditor Agreement in a
manner that is adverse to the Lenders; or (ii) in writing and signed by Agent in addition to the
Lenders required above to affect the rights or duties of Agent under this Agreement, any Note or
any other Loan Document. If a fee is to be paid by Borrowers in connection with any waiver or
amendment hereunder, the agreement evidencing


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such amendment or waiver may, at the discretion of Agent (but shall not be required to),
provide that only Lenders executing such agreement by a specified date may share in such fee (and
in such case, such fee shall be divided among the applicable Lenders on a pro rata basis without
including the interests of any Lenders who have not timely executed such agreement).




          12.4. Sale of Interest.




          No Borrower may sell, assign or transfer any interest in this Agreement, any of the other Loan
Documents, or any of the Obligations, or any portion thereof, including, without limitation, such
Borrower’s rights, title, interests, remedies, powers, and duties hereunder or thereunder, without
the prior written consent of Agent and each Lender.




          12.5. Severability.




          Wherever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.




          12.6. Successors and Assigns.




          This Agreement, the Other Agreements and the Security Documents shall be binding upon and
inure to the benefit of the successors and assigns of Borrowers, Agent and each Lender permitted
under Section 11.9 hereof.




          12.7. Cumulative Effect; Conflict of Terms.




          The provisions of the Other Agreements and the Security Documents are hereby made cumulative
with the provisions of this Agreement. Except as otherwise provided in any of the other Loan
Documents by specific reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with, any provision in any
of the other Loan Documents, the provision contained in this Agreement shall govern and control.




          12.8. Execution in Counterparts.




          This Agreement may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute but one and the same
instrument.




          12.9. Notice.




          Except as otherwise provided herein, all notices, requests and demands to or upon a party
hereto, to be effective, shall be in writing, return receipt requested, by personal delivery
against receipt, by overnight courier or by facsimile and, unless otherwise expressly

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provided herein, shall be deemed to have been validly served, given, delivered or received, as
applicable, immediately when delivered against receipt, one Business Day after deposit with an
overnight courier or, in the case of facsimile notice, when sent, addressed as follows:




	 	 	 	 	 
	 
	 	If to Agent:	 	Bank of America, N.A.
	 
	 	 	 	One South Wacker Drive
	 
	 	 	 	Suite 3400
	 
	 	 	 	Chicago, Illinois  60606
	 
	 	 	 	Attention:  Business Capital, Senior Portfolio Manager
	 
	 	 	 	Facsimile No.:  (312) 332-6537
	 
	 	 	 	 
	 
	 	With a copy to:	 	Goldberg, Kohn, Bell, Black,
	 
	 	 	 	Rosenbloom & Moritz, Ltd.
	 
	 	 	 	55 East Monroe Street
	 
	 	 	 	Suite 3700
	 
	 	 	 	Chicago, Illinois  60603
	 
	 	 	 	Attention:  David L. Dranoff, Esq.
	 
	 	 	 	Facsimile No.:  (312) 332-2196
	 
	 	 	 	 
	 
	 	If to any Borrower:	 	c/o Neenah Foundry Company
	 
	 	 	 	2121 Brooks Avenue
	 
	 	 	 	Neenah, Wisconsin 54956
	 
	 	 	 	Attention:  Mr. Gary LaChey
	 
	 	 	 	Facsimile No.:  (920) 729-3633
	 
	 	 	 	 
	 
	 	With a copy to:	 	Quarles & Brady LLP
	 
	 	 	 	411 East Wisconsin Avenue
	 
	 	 	 	Milwaukee, Wisconsin 53202-4497
	 
	 	 	 	Attention:  Andrew M. Barnes, Esq.
	 
	 	 	 	Facsimile No.:  (414) 978-8990





or to such other address as each party may designate for itself by notice given in accordance with
this Section 12.9; provided, however, that any notice, request or demand to or upon Agent
or a Lender pursuant to subsection 3.1.1 or 4.2.2 hereof shall not be effective until received by
Agent or such Lender.




          12.10. Consent.




          Whenever Agent’s, Majority Lenders’ or all Lenders’ consent is required to be obtained under
this Agreement, any of the Other Agreements or any of the Security Documents as a condition to any
action, inaction, condition or event, except as otherwise specifically provided herein, Agent,
Majority Lenders or all Lenders, as applicable, shall be authorized to give or withhold such
consent in their sole and absolute discretion and to condition its consent upon the giving of
additional Collateral security for the Obligations, the payment of money or any other matter.




-83-








 








          12.11. Credit Inquiries.




          Each Borrower hereby authorizes and permits Agent and each Lender to respond to usual and
customary credit inquiries from third parties concerning such Borrower or any of its Subsidiaries,
subject to the provisions of Section 12.15.




          12.12. Time of Essence.




          Time is of the essence of this Agreement, the Other Agreements and the Security Documents.




          12.13. Entire Agreement.




          Except as otherwise expressly provided herein with respect to the Original Loan Agreement,
this Agreement and the other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference thereto, embody the
entire understanding and agreement between the parties hereto and thereto with respect to the
subject matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.




          12.14. Interpretation.




          No provision of this Agreement or any of the other Loan Documents shall be construed against
or interpreted to the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have structured or dictated
such provision.




          12.15. Confidentiality.




          Agent and each Lender shall keep confidential (and shall use best efforts to cause its
respective agents to keep confidential) all nonpublic information obtained pursuant to the
requirements of this Agreement in accordance with Agent’s and such Lender’s customary procedures
for handling confidential information of this nature and in accordance with safe and sound banking
practices and in any event may make disclosure reasonably required by a prospective participant or
assignee in connection with the contemplated participation or assignment or as required or
requested by any governmental authority or representative thereof or pursuant to legal process and
shall require any such participant or assignee to agree to comply with this Section 12.15. The
provisions of this Section 12.15 shall remain operative and in full force and effect regardless of
the expiration or termination of this Agreement.




          12.16. GOVERNING LAW; CONSENT TO FORUM.




          THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN
MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS);




-84-









 







PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE
FOR FORECLOSURE OF AGENT’S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT’S OTHER REMEDIES
IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED,
AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER,
AGENT OR ANY LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF COOK
COUNTY, ILLINOIS, OR, AT AGENT’S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN BORROWERS ON THE ONE HAND AND AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING
TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN ANY AGREEMENT TO WHICH ANY BORROWER IS A PARTY, EACH BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH
BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY
SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN THIS
AGREEMENT OR OTHERWISE PROVIDED TO AGENT AS A NEW NOTICE ADDRESS IN ACCORDANCE WITH THE TERMS
HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER’S
ACTUAL RECEIPT THEREOF OR 5 BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT
OR ANY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER
THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.




          12.17. WAIVERS.




          EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND EACH LENDER HEREBY ALSO
WAIVES) IN ANY ACTION,

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SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR
RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH SUCH BORROWER MAY IN ANY WAY
BE LIABLE; (iii) NOTICE PRIOR TO AGENT’S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND
OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF AGENT’S
REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF
ACCEPTANCE HEREOF AND (vi) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES (SUCH DAMAGES BEING WAIVED BY BORROWERS ALSO BEING WAIVED BY AGENT AND EACH LENDER). EACH
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT’S AND EACH
LENDER’S ENTERING INTO THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH SUCH BORROWER. EACH BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.




          12.18. Advertisement.




          Each Borrower hereby authorizes Agent to publish the name of such Borrower and the amount of
the credit facility provided hereunder in any “tombstone” or comparable advertisement which Agent
elects to publish. In addition, each Borrower agrees that, notwithstanding the provisions of
Section 12.15, Agent may provide lending industry trade organizations with information necessary
and customary for inclusion in league table measurements after the Closing Date.




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          IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year specified at the
beginning of this Agreement.




	 	 	 	 	 
	 

	 	BORROWERS:	 	 
	 
	 	 	 	 
	 

	 	NEENAH FOUNDRY COMPANY

DEETER FOUNDRY, INC.

MERCER FORGE CORPORATION

DALTON CORPORATION

DALTON CORPORATION, STRYKER MACHINING FACILITY CO.

DALTON CORPORATION, WARSAW MANUFACTURING FACILITY

ADVANCED CAST PRODUCTS, INC.

GREGG INDUSTRIES, INC.

A & M SPECIALTIES, INC.

NEENAH TRANSPORT, INC.

DALTON CORPORTION, KENDALLVILLE MANUFACTURING FACILITY

	 	 






	 	 	 	 	 
	 	 	 
	 	By  	/s/ Gary W. LaChey
 	 
	 	 	Its  	Corporate Vice President — Finance and Chief Financial Officer
	 	 	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	AGENT, LENDERS AND LETTER OF CREDIT ISSUERS:



BANK OF AMERICA, N.A., as Agent and as a Lender

 	 
	 	By  	/s/ Robert Lund
 	 
	 	 	Title Senior Vice President
 	 
	 	Revolving Loan Commitment: $75,000,000 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	CREDIT SUISSE SECURITIES (USA) LLC, as Syndication Agent, Co-Lead Arranger and

Co-Book Manager

 	 
	 	By  	/s/ Joseph Adipietro
 	 
	 	 	Title Managing Director 	 
	 	 	 	 



	 	 	 	 	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as a Lender

 	 
	 	By  	/s/ Ian Nalitt
 	 
	 	 	Title Vice President 	 
	 	 	 	 
	 
	 	By  	/s/ Thomas Cantello
 	 
	 	 	Title Vice President
 	 
	 	Revolving Loan Commitment:  $25,000,000 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANC OF AMERICA SECURITIES LLC, as Co-Lead Arranger and Co-Book Manager

 	 
	 	By  	/s/ Janet Jarrett
 	 
	 	 	Title Principal 	 
	 	 	 	 
	 




 









 





APPENDIX A




GENERAL DEFINITIONS




          When used in the Amended and Restated Loan and Security Agreement dated as of December 29,
2006, by and among BANK OF AMERICA, N.A., individually as a Lender and as Agent for Lenders, CREDIT
SUISSE SECURITIES (USA) LLC, as Syndication Agent for Lenders, BANC OF AMERICA SECURITIES LLC AND
CREDIT SUISSE SECURITIES (USA) LLC, as Co-Lead Arrangers and Book Managers, the other financial
institutions which are or become parties thereto as Lenders and NEENAH FOUNDRY COMPANY AND EACH
SUBSIDIARY OF NEENAH FOUNDRY COMPANY IDENTIFIED ON THE SIGNATURES PAGES THERETO AS A BORROWER, (a)
the terms Account, Certificated Security, Chattel Paper, Commercial
Tort Claims, Deposit Account, Document, Electronic Chattel Paper,
Equipment, Financial Asset, Fixture, General Intangibles,
Goods, Instruments, Inventory, Investment Property,
Letter-of-Credit Rights, Payment Intangibles, Proceeds, Security
Entitlement, Software, Supporting Obligations, Tangible Chattel Paper
and Uncertificated Security have the respective meanings assigned thereto under the UCC;
(b) all terms reflecting Collateral having the meanings assigned thereto under the UCC shall be
deemed to mean such Property, whether now owned or hereafter created or acquired by a Borrower or
in which such Borrower now has or hereafter acquires any interest; (c) capitalized terms which are
not otherwise defined have the respective meanings assigned thereto in said Amended and Restated
Loan and Security Agreement; and (d) the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and vice versa):





     Account Debtor — any Person who is or may become obligated under or on account
of any Account, Contract Right, Chattel Paper or General Intangible.




     Advanced Cast — Advanced Cast Products, Inc., a Delaware corporation.




     Affected Collateral — as defined in subsection 11.14 of the Agreement.




     Affiliate — a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or is under
common control with, a Person; (ii) which beneficially owns or holds 10% or more of any
class of the Voting Stock of a Person; or (iii) 10% or more of the Voting Stock (or in the
case of a Person which is not a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by a Person or a Subsidiary of a Person.




     Agent — Bank of America, N.A. in its capacity as agent for the Lenders under
the Agreement and any successor in that capacity appointed pursuant to subsection 11.11 of
the Agreement.




     Agent Loans — as defined in subsection 1.1.5 of the Agreement.




     Aggregate Percentage — with respect to each Lender, the percentage equal to the
quotient of (i) such Lender’s Loan Commitment divided by (ii) the aggregate of all
Loan Commitments.



 









 






     Agreement — the Amended and Restated Loan and Security Agreement referred to in
the first sentence of this Appendix A, all Exhibits and Schedules thereto and this Appendix
A, as each of the same may be amended from time to time.




     Applicable Margin — from the Closing Date to, but not including, the first
Adjustment Date (as hereinafter defined) the percentages set forth below with respect to the
Base Rate Portion, the LIBOR Portion, and the Unused Line Fee:



	 	 	 	 	 
	Base Rate Portion
	 	 	0.00	%
	LIBOR Portion
	 	 	1.25	%
	Unused Line Fee
	 	 	0.25	%







     The percentages set forth above will be adjusted on the first day of the month
following delivery by Borrowers to Agent of the Borrowing Base Certificate required to be
delivered pursuant to subsection 8.1.4, and the financial statements required to be
delivered pursuant to subsection 8.1.3(ii) of the Agreement (and the related Compliance
Certificate), for each March 31, June 30, September 30 and December 31 during the Term,
commencing with the Borrowing Base Certificate, and financial statements (and the related
Compliance Certificate), required to be delivered for the month ending on December 31, 2007
(each such date, an “Adjustment Date”), effective prospectively, by reference to the
applicable “Financial Measurement” (as defined below) for the fiscal quarter most recently
ending in accordance with the following:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial Measurement	 	Base Rate Portion	 	LIBOR Portion	 	Unused Line Fee
	Less than $35,000,000

	 	 	0.25	%	 	 	1.75	%	 	 	0.25	%
	Greater than or equal to
$35,000,000 but less than
$70,000,000

	 	 	0.00	%	 	 	1.50	%	 	 	0.25	%
	Greater than or equal to
$70,000,000

	 	 	0.00	%	 	 	1.25	%	 	 	0.25	%







     provided; that (i) if Borrowers fail to deliver the Borrowing Base
Certificate required to be delivered pursuant to subsection 8.1.4, or the financial
statements required to be delivered pursuant to subsection 8.1.3(ii) of the Agreement (and
the related Compliance Certificate), on or before the due date thereof, the Applicable
Margin shall automatically adjust to the highest pricing tier set forth above, effective
prospectively from such due date until the date such financial statements have been
delivered and (ii) if the Total Leverage Ratio as of the last day of any fiscal quarter of
Borrowers is less than 3.0:1.0, the Applicable Margin as it relates to Base Rate Portions
and LIBOR Portions shall be reduced by 0.25% for the period commencing on the Adjustment
Date immediately following such fiscal quarter end date and ending on the next succeeding
Adjustment Date (provided, further, that (x) in no



A-2









 







event shall any adjustment pursuant to this clause (ii) cause the Applicable Margin as it relates to Base
Rate Portions to be less than 0.00%) and (y) if Borrowers’ audited
financial statements for any fiscal year delivered pursuant to subsection 8.1.3(i) of
the Agreement (and the related Compliance Certificate) reflect a Total Leverage Ratio that
yields a higher Applicable Margin than that yielded by the monthly financial statements
previously delivered pursuant to subsection 8.1.3(ii) of the Agreement (and the related
Compliance Certificate) for the last month of such fiscal year, the Applicable Margin shall
be readjusted retroactively for the period that was incorrectly calculated).




     For purposes hereof, “Financial Measurement” shall mean, as of any Adjustment Date,
average Availability (as determined by Agent in its reasonable credit judgment) for the most
recently completed fiscal quarter of Borrowers.




     Arrangers — Banc of America Securities LLC and Credit Suisse Securities (USA)
LLC, in their respective capacities as Co-Lead Arrangers and Book Managers under the
Agreement.




     Ashland Parcel — the real Property of Dalton — Ashland located at 1681 Orange
Road, Ashland, Ohio.




     Assignment and Acceptance Agreement — an assignment and acceptance agreement
in the form attached hereto as Exhibit A-1 pursuant to which a Lender assigns to
another Lender all or any portion of any of such Lender’s Revolving Loan Commitment, as
permitted pursuant to the terms of this Agreement.




     Availability — the aggregate amount of additional money which Borrowers are
entitled to borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit Loans then
outstanding (including any amounts which Agent or any Lender may have paid for the account
of any Borrower pursuant to any of the Loan Documents and which have not been reimbursed by
Borrowers), the LC Amount and any Reserves is subtracted from the Borrowing Base (as the
Borrowing Base is reflected on the most recent Borrowing Base Certificate that has been
delivered by Borrowers to Agent pursuant to subsection 8.1.4 of the Agreement). If the
amount outstanding is equal to or greater than the Borrowing Base, Availability is 0.




     Bank —Bank of America, N.A..




     Base Rate — the higher of (i) the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers (and, if such prime rate for
commercial loans is discontinued by Bank as a standard, a comparable reference rate
designated by Bank as a substitute therefor) or (ii) the Federal Funds Rate plus 50 basis
points per annum.



A-3









 






     Base Rate Portion — that portion of the Revolving Credit Loans that is not
subject to a LIBOR Option.




     Belcher — Belcher Corporation, a Delaware corporation.




     Borrowing Base — as at any date of determination thereof, an amount equal to
the least of:




     (i) the Revolving Credit Maximum Amount;




     (ii) an amount equal to the sum of




	 	(a)	 	85% of the net amount of Eligible
Accounts outstanding at such date; plus
	 
	 	(b)	 	the lesser of (1) $3,000,000 or
(2) the sum of (i) 50% of the net amount of Eligible Extended
Municipal Accounts outstanding at such date plus (ii) 25% of the
net amount of Eligible Extra Extended Municipal Accounts
outstanding at such date; plus
	 
	 	(c)	 	the lesser of (1) (i) during the
period beginning on January 1 of each year and ending on March
31 of such year, 95% of the net orderly liquidation percentage
of each category or type of Eligible Inventory at such date and
(ii) during the period beginning on April 1 of each year and
ending on December 31 of such year, 85% of the net orderly
liquidation percentage of each category or type of Eligible
Inventory at such date; or (2) 75% of the amount of each
category or type of Eligible Inventory at such date;
plus
	 
	 	(d)	 	the lesser of (1) $5,000,000 or
(2) 85% of the net orderly liquidation percentage of Eligible
Patterns and Core Boxes; or






     (iii) the “Borrowing Base Amount” under and as defined in the Secured Bond Indenture.




     During the occurrence and continuance of an Event of Default, the limitations set forth
in the immediately preceding sentence may be adjusted downward by Agent and the requirements
in the definitions of Eligible Accounts, Eligible Extended Municipal Accounts, Eligible
Extra Extended Municipal Accounts, Eligible Inventory and Eligible Patterns and Core Boxes
may be supplemented by Agent, as Agent shall deem necessary or appropriate in its reasonable
credit judgment (with Agent agreeing to provide Borrowers with reasonably prompt notice of
the making of any such adjustment or the establishment of any such supplement). For
purposes hereof,



A-4









 







(1) the net amount of Eligible Accounts at any time shall be the face
amount of such Eligible Accounts less any and all returns, rebates, discounts (which may, at
Agent’s option, be calculated on shortest terms), credits, allowances or excise taxes of any
nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or
payable in connection with such Accounts at such time, (2) the amount of Eligible Inventory
shall be determined on a first-in, first-out, lower of cost or market basis in accordance
with GAAP and (3) the net orderly liquidation percentage of each
category or type of Eligible Inventory and of Eligible Patterns and Core Boxes shall be
determined by a third party appraiser reasonably acceptable to Agent and shall be as
reflected in the most recent appraisal of Inventory or Patterns and Core Boxes, as
applicable, that has been delivered to Agent under this Agreement.




     Borrowing Base Certificate — a certificate by a responsible officer of Neenah,
substantially in the form of Exhibit 8.1.4 (or another form reasonably acceptable to
Agent) setting forth the calculation of the Borrowing Base, including a calculation of each
component thereof, all in such detail as shall be reasonably satisfactory to Agent. All
calculations of the Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by Neenah and certified to Agent.




     Business Day — any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of Wisconsin, the State of Connecticut or the State of
Illinois or is a day on which banking institutions located in any of such states are closed.




     Capital Expenditures — expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or additions
thereto which have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations, that are required to be capitalized under GAAP.




     Capitalized Lease Obligation — any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.




     Cast Alloys — Cast Alloys, Inc., a California corporation.




     Closing Date — the date on which all of the conditions precedent in Section 9
of the Agreement are satisfied or waived and the initial Loan is made (or otherwise becomes
outstanding) or the initial Letter of Credit or LC Guaranty is issued (or otherwise becomes
outstanding) under the Agreement.




     Collateral — all of the Property and interests in Property described in Section
5 of the Agreement, and all other Property and interests in Property that now or hereafter
secure the payment and performance of any of the Obligations.



A-5









 






     Compliance Certificate — as defined in subsection 8.1.3 of the Agreement.




     Computer Hardware and Software — all of each Borrower’s rights (including
rights as licensee and lessee) with respect to (i) computer and other electronic data
processing hardware, including all integrated computer systems, central processing units,
memory units, display terminals, printers, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware; (ii) all Software and
all software programs designed for use on the computers and electronic data processing
hardware described in clause (i) above, including all
operating system software, utilities and application programs in any form (source code
and object code in magnetic tape, disk or hard copy format or any other listings
whatsoever); (iii) any firmware associated with any of the foregoing; and (iv) any
documentation for hardware, Software and firmware described in clauses (i), (ii) and (iii)
above, including flow charts, logic diagrams, manuals, specifications, training materials,
charts and pseudo codes.




     Consolidated — the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.




     Contract Right — any right of each Borrower to payment under a contract for
the sale or lease of goods or the rendering of services, which right is at the time not yet
earned by performance.




     Current Assets — at any date means all of the current assets of a Person would
be properly classified as current assets shown on a balance sheet at such date in accordance
with GAAP.




     Dalton — Dalton Corporation, an Indiana corporation.




     Dalton — Ashland — Dalton Corporation, Ashland Manufacturing Facility, an Ohio
corporation.




     Deeter — Deeter Foundry, Inc., a Nebraska corporation.




     Default — an event or condition the occurrence of which would, with the lapse
of time or the giving of notice, or both, become an Event of Default.




     Default Rate — as defined in subsection 2.1.2 of the Agreement.




     Derivative Obligations — every obligation of a Person under any forward
contract, futures contract, exchange contract, swap, option or other financing agreement or
arrangement (including, without limitation, caps, floors, collars and similar agreement),
the value of which is dependent upon interest rates, currency exchange rates, commodities or
other indices.



A-6









 






     Distribution — in respect of any Person means and includes: (i) the payment of
any dividends or other distributions on Securities (except distributions in such Securities)
and (ii) the redemption or acquisition of Securities of such Person, as the case may be,
unless made contemporaneously from the net proceeds of the sale of Securities.




     Dominion Account — a special bank account or accounts of Agent established by a
Borrower pursuant to subsection 6.2.4 of the Agreement at banks selected by such Borrower,
but acceptable to Agent in its reasonable discretion, and over which Agent shall have sole
and exclusive access and control for withdrawal purposes.




     Dominion Event — the occurrence of either one of the following events on any
date: (a) Availability (as determined by Agent in its reasonable credit judgment) is less
than $15,000,000 or (b) an Event of Default occurs.




     Dominion Period — the period commencing with prior written notice by Agent to
Borrowers of the occurrence of a Dominion Event and ending (a) no less than 60 days
thereafter and (b) only after such Dominion Event is no longer in existence or has been
waived by Majority Lenders for a period of at least 60 consecutive days, provided, that no
other Dominion Event has been in existence during such 60 consecutive day period.




     Eligible Account — an Account arising in the ordinary course of the business of
a Borrower from the sale of goods or rendition of services; provided, that no
Account shall be an Eligible Account if:




     (i) it arises out of a sale made or services rendered by a Borrower to a
Subsidiary of a Borrower or an Affiliate of a Borrower or to a Person controlled by
an Affiliate of a Borrower (unless it is an Account arising out of an arms-length
transaction with a Person that is an Affiliate of a Borrower, or a Person controlled
by an Affiliate of a Borrower, solely by virtue of being a portfolio company of a
Permitted Holder); or




     (ii) (1) it is not a Municipal Account and it remains unpaid more than 90 days
after the original invoice date shown on the invoice or more than 60 days after the
original due date shown on the invoice; or (2) it is a Municipal Account and it
remains unpaid more than 120 days after the original invoice date shown on the
invoice or more than 90 days after the original due date shown on the invoice; or




     (iii) the total Accounts of the Account Debtor exceed 20% of the net amount of
all Eligible Accounts, but only to the extent of such excess; or




     (iv) any covenant, representation or warranty contained in the Agreement with
respect to such Account has been breached; or



A-7









 






     (v) the Account Debtor is also a creditor or supplier of a Borrower or any
Subsidiary of a Borrower, or the Account Debtor has disputed liability with respect
to such Account, or the Account Debtor has made any claim with respect to any other
Account due from such Account Debtor to a Borrower or any Subsidiary of a Borrower,
or the Account otherwise is subject to right of setoff by the Account Debtor,
provided, that in each case any such Account shall be eligible to the extent
such amount thereof exceeds such contract, dispute, claim, setoff or similar right;
or




     (vi) the Account Debtor (other than Dana Corporation relating to Accounts
arising from Dana Corporation on a post-petition basis) 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 a decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in an involuntary case
under the federal bankruptcy laws, as now constituted or hereafter amended, or any
other petition or other application for relief under the federal bankruptcy laws, as
now constituted or hereafter amended, has been filed against the Account Debtor, or
if the Account Debtor has suspended business or 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; or




     (vii) it arises from a sale made or services rendered to an Account Debtor
outside the United States, unless the sale is either (1) to an Account Debtor
located in Ontario or any other province of Canada in which the Personal Property
Security Act has been adopted in substantially the same form as currently in effect
in Ontario or (2) on letter of credit, guaranty or acceptance terms (with the rights
thereunder having been assigned to Agent), in each case acceptable to Agent in its
reasonable credit judgment; or




     (viii) (1) it arises from a sale to the Account Debtor on a bill-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment, or any other
repurchase or return basis, except to the extent that (a) the sale has been
completed, (b) an invoice has been generated, (c) such goods are no longer subject
to return and (d) payment of the invoice is unconditionally due from the Account
Debtor; or (2) it is subject to a reserve established by a Borrower for potential
returns or refunds, to the extent of such reserve; or




     (ix) the Account Debtor is the United States of America or any department,
agency or instrumentality thereof, unless the applicable Borrower assigns its right
to payment of such Account to Agent, in a manner satisfactory to Agent, in its
reasonable credit judgment, so as to comply with the Assignment of Claims Act of
1940 (31 U.S.C. §203 et seq., as amended); or



A-8









 






     (x) it is not subject to Agent’s duly perfected, first priority security
interest or is subject to a Lien that is not a Permitted Lien (but only to the
extent of the underlying obligation which such Lien secures); or




     (xi) the goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such Account have not
been performed by the applicable Borrower and accepted by the Account Debtor or the
Account otherwise does not represent a final sale; or




     (xii) the Account is evidenced by chattel paper or an instrument of any kind,
or has been reduced to judgment; or




     (xiii) a Borrower or a Subsidiary of a Borrower has made any agreement with the
Account Debtor for any extension, compromise, settlement or modification of the
Account or deduction therefrom, except for volume discounts and discounts or
allowances which are made in the ordinary course
of business (in each case which discounts or allowances are reflected in the
calculation of the face value of each invoice related to such Account); or




     (xiv) 50% or more of the Accounts owing from the Account Debtor are not
Eligible Accounts hereunder; or




     (xv) it represents service charges, late fees or similar charges; or




     (xvi) it arises out of a sale of any goods that constitute “Noteholder Priority
Collateral” under and as defined in the Secured Bond Intercreditor Agreement.




     Eligible Extended Municipal Account — a Municipal Account that (a) would
constitute an “Eligible Account” without the application of the requirements in clause (ii)
of the definition thereof and (b) does not remain unpaid more than 180 days after the
original invoice date shown on the invoice or more 150 days after the original due date
shown on the invoice.




     Eligible Extra Extended Municipal Account — a Municipal Account that (a) would
constitute an “Eligible Extended Municipal Account” without the application of the
requirements in clause (b) of the definition thereof and (b) does not remain unpaid more
than 270 days after the original invoice date shown on the invoice or more 240 days after
the original due date shown on the invoice.




     Eligible Inventory — Inventory of a Borrower (other than packing and shipping
materials, tooling, patterns, samples and literature); provided, that no Inventory
shall be Eligible Inventory if:




     (i) it is not raw materials, work in process or supplies that are, in Agent’s
opinion, readily marketable in its current form, or finished goods



A-9









 







which meet the
specifications of the purchase order or contract for such Inventory, if any; or




     (ii) it is not in good, new and saleable condition; or




     (iii) it is slow-moving, obsolete, defective or unmerchantable; or




     (iv) it does not meet all standards imposed by any governmental agency or
authority; or




     (v) it does not conform in all respects to any covenants, warranties and
representations set forth in the Agreement; or




     (vi) it is not subject to Agent’s duly perfected, first priority security
interest or is subject to a Lien that is not a Permitted Lien; or




     (vii) it is not situated at a location in compliance with the Agreement,
provided that Inventory situated at a location not owned by a Borrower will
be Eligible Inventory only if Agent has received a satisfactory landlord’s
agreement or bailee’s letter, as applicable, with respect to such location or
if it is a leased location and Agent has established a Rent Reserve with respect to
such location; or




     (viii) it has been consigned to a Borrower’s customer, unless (a) it is has
been delivered to a customer location in respect of which a satisfactory access
agreement has been received by Agent, (b) it is segregated or otherwise separately
identifiable from any goods of any other Person at the applicable customer location,
(c) a UCC-1 financing statement has been filed in the jurisdiction of the applicable
customer’s organization, which names such customer as debtor, the applicable
Borrower as secured party and Agent as assignee of secured party and which
identifies the Inventory in the possession of such customer as the collateral and
(d) a notice that complies with the terms of Section 9-324 of the UCC has been
delivered to the secured creditors, if any, of the applicable customer that have a
perfected lien in the Inventory of such customer; provided, up to an
aggregate amount of $1,000,000 of Inventory that has been consigned to customers of
Borrowers shall be excluded from the requirements of this clause (viii) so long any
such Inventory so excluded from such requirements is at a location that has been
approved by Agent where at least $100,000 of Inventory of a Borrower is located; and
provided, further, that in no event shall the amount of Eligible
Inventory that consists of consigned Inventory exceed $5,000,000 in the aggregate;
or




     (ix) it contains or bears any Intellectual Property that is licensed to a
Borrower by any third-party or is otherwise owned by any third-party, unless Agent
is satisfied that it may sell or otherwise dispose of such Inventory in connection
with any exercise of remedies pursuant to the terms of this



A-10









 







Agreement and any
applicable Security Documents (1) without infringing upon the rights of such
third-party, (2) without violating any contract with such third-party (and without
payment of any royalties other than any royalties due with respect to the sale or
disposition of such Inventory pursuant to the existing license agreement with such
third-party), and (3) otherwise without interference from such third-party; or




     (x) it is Inventory in transit; or




     (xi) it is located outside of the continental United States of America; or




     (xii) it represents capitalization of freight charges.




     Eligible Patterns and Core Boxes — Patterns and Core Boxes of a Borrower;
provided, that no Patterns and Core Boxes shall be Eligible Patterns and Core Boxes
if:




     (i) it is not owned and fully paid for by a Borrower; or




     (ii) it has become affixed to any real Property (other than real Property that
is owned by a Borrower and subject to a Mortgage); or




     (iii) it is not subject to Agent’s duly perfected, first priority security
interest or is subject to a Lien that is not a Permitted Lien; or




     (iv) it is not situated at a location in compliance with the Agreement,
provided that Patterns and Core Boxes situated at a location not owned by a
Borrower will be Eligible Patterns and Core Boxes only if it is a leased location
and Agent has received a satisfactory landlord’s agreement with respect to such
location or Agent has established a Rent Reserve with respect to such location; or




     (v) it is not in good and saleable condition; or




     (vi) it does not consist of municipal Patterns and Core Boxes; or




     (vii) it does not meet all standards imposed by any governmental agency or
authority; or




     (viii) it does not conform in all respects to any covenants, warranties and
representations set forth in the Agreement; or




     (ix) it is located outside of the continental United States of America.



A-11









 






     Environmental Laws — all federal, state and local laws, rules, regulations,
ordinances, orders and consent decrees relating to health, safety and environmental matters.




     ERISA — the Employee Retirement Income Security Act of 1974, as amended, and
any successor statute, and all rules and regulations from time to time promulgated
thereunder.




     Event of Default — as defined in Section 10.1 of the Agreement.




     Exchange Act — the Securities and Exchange Act of 1934, as amended.




     Federal Funds Rate — means, for any day, a floating rate equal to the weighted
average of the rates on overnight federal funds transactions among members of the Federal
Reserve System, as determined by Agent in its sole discretion, which determination shall be
final, binding and conclusive (absent manifest error).




     Fee Letter — as defined in Section 2.3 of the Agreement.




     Fixed Charge Coverage Ratio — as defined in Exhibit 8.3 to the
Agreement.




     GAAP — generally accepted accounting principles in the United States of America
in effect from time to time.




     Gregg — Gregg Industries, Inc., a California corporation.




     Guarantors — Parent, each Subsidiary Guarantor and each other Person who now or
hereafter guarantees payment or performance of the whole or any part of the Obligations.




     Guaranty Agreements — the Continuing Guaranty Agreement which is to be executed
on the Closing Date by each of Parent and each Subsidiary Guarantor, in form and substance
satisfactory to Agent, together with each other guaranty hereafter executed by any
Guarantor, each as amended from time to time in accordance with its respective terms.




     Inactive Subsidiaries — each of Cast Alloys; Belcher; Peerless Corporation; and
Dalton — Ashland.




     Increase Notice — as defined in subsection 1.1.7 of the Agreement.




     Indebtedness — as applied to a Person means, without duplication:




     (i) indebtedness arising from the lending of money by any Person to any Borrower or any
of its Subsidiaries;




     (ii) indebtedness, whether or not in any such case arising from the lending by any
Person of money to any Borrower or any of its Subsidiaries, (1) which is



A-12









 







represented by
notes payable or drafts accepted that evidence extensions of credit, (2) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, or (3) upon which
interest charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property;




     (iii) Capitalized Lease Obligations and Purchase Money Indebtedness;




     (iv) reimbursement obligations with respect to letters of credit or guaranties of
letters of credit,




     (v) Derivative Obligations; and




     (vi) indebtedness of any Borrower or any of its Subsidiaries under any guaranty of
obligations that would constitute Indebtedness under clauses (i) through (iii) hereof, if
owed directly by a Borrower or any of its Subsidiaries. Indebtedness shall not include
trade payables or accrued expenses. For the avoidance of doubt, the foregoing definition of
“Indebtedness” shall not include preferred stock of any Person.




     Obligations in respect of Subordinated Bonds (2003 Series) having an outstanding
principal balance of up to $25,000,000 in the aggregate shall not be considered
“Indebtedness” for any purposes under the Agreement (including, without limitation, for
purposes of subsection 8.2.3, Section 8.3 or subsection 10.1.6 of the Agreement) to the
extent that there is compliance with the provisions of subsection 8.1.10 of the Agreement in
respect of such Subordinated Bonds (2003 Series).




     Intellectual Property — all past, present and future: trade secrets, know-how
and other proprietary information; trademarks, internet domain names, service marks, trade
dress, trade names, business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and other source and/or
business identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been or may hereafter
be issued thereon throughout the world; copyrights (including copyrights for computer
programs) and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible property
embodying the copyrights, unpatented inventions (whether or not patentable); patent
applications and patents; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books, records,
writings, computer tapes or disks, flow diagrams, specification sheets, computer software,
source codes, object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right to sue for
all past, present and future infringements of any of the foregoing; all other intellectual
property; and all common law and other rights throughout the world in and to all of the
foregoing. Notwithstanding the foregoing, Intellectual Property shall not include any
trademarks, trade names, business names or service marks that incorporate the word
“Peerless”.




A-13










 






     Intercompany Loans — as defined in subsection 8.2.2 of the Agreement.




     Interest Coverage Ratio — as defined in Exhibit 8.3 to the Agreement.




     Interest Period — as applicable to any LIBOR Portion, a period commencing on
the date such LIBOR Portion is advanced, continued or converted, and ending on the date
which is one (1) month, two (2) months, three (3) months, or six (6) months later, as may
then be requested by Borrowers; provided that (x) all loans outstanding on the Closing Date
shall be Base Rate Portions and (y) unless Agent notifies Borrowers that the initial
syndication of the Loan Commitments have been completed, each Interest Period commencing (a)
within the first 60 days after the Closing Date shall be a period of 1 month and (b)
thereafter shall be a period of 7 days; and provided further that (i) any Interest Period
which would otherwise end on a day which is not a Business Day shall end in the next
preceding or succeeding Business Day as is Agent’s custom in the market to which such LIBOR
Portion relates; (ii) there remains a minimum of one (1) month, two (2) months, three (3)
months or six (6) months (depending upon which Interest Period a Borrower selects) in the
Term, unless Borrowers and Lenders have agreed to an extension of the Term beyond the
expiration of the Interest Period in question; and (iii) all Interest Periods of the same
duration which commence on the same date shall end on the same date.




     LC Amount — at any time, the aggregate undrawn face amount of all Letters of
Credit and LC Guaranties then outstanding.




     LC Guaranty — any guaranty pursuant to which Agent, a Letter of Credit Issuer
or any Affiliate of Agent shall guaranty the payment or performance by a Borrower of its
reimbursement obligation under any letter of credit.




     LC Obligations — Any Obligations that arise from any draw against any Letter of
Credit or against any letter of credit supported by an LC Guaranty.




     Letter of Credit — any standby or documentary letter of credit issued by Agent,
a Letter of Credit Issuer or any Affiliate of Agent for the account of a Borrower.




     Letter of Credit Issuer — as defined in Section 1.2 of the Agreement.




     LIBOR — as applicable to any LIBOR Portion, for the applicable Interest
Period, the rate per annum (rounded upward, if necessary, to the nearest 1/8 of one percent)
as determined on the basis of the offered rates for deposits in U.S. dollars, for a period
of time comparable to such Interest Period which appears on the Telerate page 3750 as of
11:00 a.m. (London time) on the day that is two (2) London Banking Days preceding the first
day of such Interest Period; provided, however, if the rate described above does not appear
on the Telerate System on any applicable interest determination date, the LIBOR shall be the
rate (rounded upwards as described above, if necessary) for deposits in U.S. dollars for a
period substantially equal to the Interest Period on the Reuters Page “LIBO” (or such other
page as may replace the LIBO



A-14









 






Page on that service for the purpose of displaying such rates),
as of 11:00 a.m. (London Time), on the day that is two (2) London Banking Days prior to the
first day of such Interest Period. If both the Telerate and Reuters systems are unavailable,
then the rate for that date will be determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable to such Interest Period which are
offered by four (4) major banks in the London interbank market at approximately 11:00 a.m.
(London time), on the day that is two (2) London Banking Days preceding the first day of
such Interest Period as selected by Agent. The principal London office of each of the major
London banks so selected will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two (2) such quotations are provided, the rate for that date will
be the arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates quoted for
loans in U.S. dollars to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at approximately 11:00 a.m. (New
York City time), on the day that is two (2) London Banking Days preceding the first day of
such Interest Period. In the event that Agent is unable to obtain any such quotation as
provided above, it will be determined that LIBOR pursuant to a Interest Period cannot be
determined. In the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of Bank then for any period
during which such Reserve Percentage shall apply, LIBOR shall be equal to the amount
determined above divided by an amount equal to 1 minus the Reserve Percentage.




     LIBOR Interest Payment Date — the first day of each calendar month during the
applicable Interest Period and the last day of the applicable Interest Period.




     LIBOR Option — the option granted pursuant to Section 3.1 of the Agreement to
have the interest on all or any portion of the principal amount of the Revolving Credit
Loans based on the LIBOR.




     LIBOR Request — a notice in writing (or by telephone confirmed electronically
or by telecopy or other facsimile transmission on the same day as the telephone request)
from a Borrower to Agent requesting that interest on a Revolving Credit Loan be based on the
LIBOR, specifying: (i) the first day of the Interest Period (which shall be a Business Day);
(ii) the length of the Interest Period; (iii) whether the LIBOR Portion is a new Loan, a
conversion of a Base Rate Portion, or a continuation of a LIBOR Portion, and (iv) the dollar
amount of the LIBOR Portion, which shall be in an amount not less than $1,000,000 or an
integral multiple of $100,000 in excess thereof.




     LIBOR Portion — that portion of the Revolving Credit Loans specified in a LIBOR
Request (including any portion of Revolving Credit Loans which is being borrowed by a
Borrower concurrently with such LIBOR Request) which, as of the date of the LIBOR Request
specifying such LIBOR Portion, has met the conditions



A-15









 






for basing interest on the LIBOR in Section 3.1 of the Agreement and the Interest Period of which has not terminated.




     Lien — any interest in Property securing an obligation owed to, or a claim by,
a Person other than the owner of the Property, whether such interest is based on
common law, statute or contract. The term “Lien” shall also include rights of seller
under conditional sales contracts or title retention agreements, reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting Property. For the purpose of this
definition, any Property which a Borrower has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes shall be deemed to be
subject to a Lien.




     Loan Account — each loan account established on the books of Agent pursuant to
Section 3.6 of the Agreement.




     Loan Commitment — with respect to any Lender, the amount of such Lender’s
Revolving Loan Commitment.




     Loan Documents — the Agreement, the Other Agreements and the Security
Documents.




     Loans — all loans and advances of any kind made by Agent, any Lender, or any
Affiliate of Agent or any Lender, pursuant to the Agreement.




     London Banking Day — any date on which commercial banks are open for business
in London, England.




     Majority Lenders — as of any date, Lenders holding 51% of the Revolving Loan
Commitments determined on a combined basis and following the termination of the Revolving
Loan Commitments, Lenders holding 51% or more of the outstanding Loans, LC Amounts and LC
Obligations not yet reimbursed by a Borrower or funded with a Revolving Credit Loan;
provided, that (i) in each case, if there are 2 or more Lenders with outstanding
Loans, LC Amounts, unfunded and unreimbursed LC Obligations or Revolving Loan Commitments,
at least 2 Lenders shall be required to constitute Majority Lenders; and (ii) prior to
termination of the Revolving Loan Commitments, if any Lender breaches its obligation to fund
any requested Revolving Credit Loan, for so long as such breach exists, its voting rights
hereunder shall be calculated with reference to its outstanding Loans, LC Amounts and
unfunded and unreimbursed LC Obligations, rather than its Revolving Loan Commitment.




     Material Adverse Effect — (i) a material adverse effect on the business,
condition (financial or otherwise), operation, performance or properties of Borrowers and
their Subsidiaries taken as a whole, (ii) a material adverse effect on the rights and
remedies of Agent or Lenders under the Loan Documents, or (iii) the material



A-16









 






impairment of the ability of Borrowers and Borrowers’ Subsidiaries (taken as a whole) to perform their
obligations hereunder or under any Loan Document.




     Mercer — Mercer Forge Corporation, a Delaware corporation.




     Mortgages — (i) the deed of trust executed by Gregg on or about the Original
Closing Date in favor of Agent, for the benefit of itself and Lenders, by which Gregg has
granted to Agent, as security for the Obligations, a Lien upon the real Property of
Gregg located at 10460 Hickson Street, El Monte, California, (ii) the mortgage executed
by Mercer on or about the Original Closing Date in favor of Agent, for the benefit of itself
and Lenders, by which Mercer has granted to Agent, as security for the Obligations, a Lien
upon the real Property of Mercer located at 200 Brown Street, Mercer, Pennsylvania, (iii)
the mortgage executed by Dalton — Ashland on or about the Original Closing Date in favor of
Agent, for the benefit of itself and Lenders, by which Dalton — Ashland has granted to
Agent, as security for the Obligations, a Lien upon the Ashland Parcel; (iv) the mortgage
executed by Dalton Corporation, Stryker Machining Facility Co. on or about the Original
Closing Date in favor of Agent, for the benefit of itself and Lenders, by which Dalton
Corporation, Stryker Machining Facility Co. has granted to Agent, as security for the
Obligations, a Lien upon the real Property of Dalton Corporation, Stryker Machining Facility
Co. located at 310 Ellis Street, Stryker, Ohio; (v) the mortgage executed by Advanced Cast
on or about the Original Closing Date in favor of Agent, for the benefit of itself and
Lenders, by which Advanced Cast has granted to Agent, as security for the Obligations, a
Lien upon the real Property of Advanced Cast located at 18700 Mill Street, Meadville,
Pennsylvania; (vi) the mortgage executed by Dalton Corporation, Kendallville Manufacturing
Facility on or about the Original Closing Date in favor of Agent, for the benefit of itself
and Lenders, by which Dalton Corporation, Kendallville Manufacturing Facility has granted to
Agent, as security for the Obligations, a Lien upon the real Property of Dalton Corporation,
Kendallville Manufacturing Facility located at 200 West Ohio Street, Kendallville, Indiana;
(vii) the mortgages executed by Dalton and Dalton Corporation, Warsaw Manufacturing Facility
on or about the Original Closing Date in favor of Agent, for the benefit of itself and
Lenders, by which Dalton and Dalton Corporation, Warsaw Manufacturing Facility have granted
to Agent, as security for the Obligations, a Lien upon the real Property of Dalton and
Dalton Corporation, Warsaw Manufacturing Facility located at 1900 East Jefferson Street,
Warsaw, Indiana; (viii) the mortgage executed by Neenah on or about the Original Closing
Date in favor of Agent, for the benefit of itself and Lenders, by which Neenah has granted
to Agent, as security for the Obligations, a Lien upon the real Property of Neenah located
at 2121 Brooks Street, Neenah, Wisconsin 54956; (ix) the mortgage executed by Neenah on or
about the Original Closing Date in favor of Agent, for the benefit of itself and Lenders, by
which Neenah has granted to Agent, as security for the Obligations, a Lien upon the real
Property of Neenah located at 500 Winneconne Ave., Neenah, Wisconsin 54956; (x) the deed of
trust executed by Deeter on or about the Original Closing Date in favor of Agent, for the
benefit of itself and Lenders, by which Deeter has granted to Agent, as security for the



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Obligations, a Lien upon the real Property of Deeter located at 5945 North 70th Street,
Lincoln, Nebraska; (xi) the mortgage executed by Neenah on or about the Original Closing
Date in favor of Agent, for the benefit of itself and Lenders, by which Neenah has granted
to Agent, as security for the Obligations, a Lien upon the real Property of Neenah located
at 545 Kimberly Drive, Carol Stream, Illinois, (xii) the mortgage executed by Neenah on or
about the Original Closing Date in favor of Agent, for the benefit of itself and Lenders, by
which Neenah has granted to Agent, as security for the Obligations, a Lien upon the real
Property of Neenah located at 3831 Zane Trace Drive, Columbus, Ohio, (xiii) the mortgage
executed by Neenah on or about the Original Closing Date in favor of Agent, for the benefit
of itself and Lenders, by which Neenah has granted to Agent, as security for the Obligations, a Lien
upon the real Property of Neenah located at 5950 West 82nd Street, Indianapolis, Indiana,
(xiv) the mortgage executed by Neenah on or about the Original Closing Date in favor of
Agent, for the benefit of itself and Lenders, by which Neenah has granted to Agent, as
security for the Obligations, a Lien upon the real Property of Neenah located at 5075 28th
Avenue, Rockford, Illinois, (xv) the deed of trust executed by Neenah on or about the
Original Closing Date in favor of Agent, for the benefit of itself and Lenders, by which
Neenah has granted to Agent, as security for the Obligations, a Lien upon the real Property
of Neenah located at 55 Cherokee Drive, St. Peters, Missouri, (xvi) the mortgage executed by
Neenah on or about the Original Closing Date in favor of Agent, for the benefit of itself
and Lenders, by which Neenah has granted to Agent, as security for the Obligations, a Lien
upon the real Property of Neenah located at 701 Industrial Circle S., Shakopee, Minnesota
and (xvii) all other mortgages, deeds of trust and comparable documents creating a Lien on
real property (or any leasehold or other interest in real property) now or at any time
hereafter securing the whole or any part of the Obligations, each as amended from time to
time in accordance with its respective terms.




     Multiemployer Plan — has the meaning set forth in Section 4001(a)(3) of ERISA.




     Municipal Account — an Account of Neenah or Deeter that arises out of a sale of
any castings that Neenah or Deeter categorize as municipal castings in a manner that is
consistent with the practices of Neenah and Deeter in effect as of the Closing Date.




     Neenah Full Reorganization — the merger of each of Ultimate Parent and Parent
with and into Neenah, with Neenah remaining in existence after such merger, and, if elected
by the parties to the reorganization transaction in their sole discretion, the
reconstitution of Neenah as a Delaware corporation.




     Neenah Partial Reorganization — the merger of Parent with and into either
Ultimate Parent or Neenah, with both Neenah and Ultimate Parent remaining in existence after
such merger, and, if elected by the parties to the reorganization transaction in their sole
discretion, the reconstitution of Neenah as a Delaware corporation.



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     Neenah Reorganization — either the Neenah Full Reorganization or the Neenah
Partial Reorganization, as applicable.




     Neenah Transport — Neenah Transport, Inc., a Wisconsin corporation.




     New Mold Line — the new mold line of Borrowers described in the final offering
circular for the Secured Bonds.




     Notes — the Revolving Notes.




     Obligations — all Loans, all LC Obligations and all other advances, debts,
liabilities, obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from each Borrower to Agent, for its
own benefit, from each Borrower to Agent for the benefit of any Lender, from each Borrower
to any Lender, from each Borrower to any Letter of Credit Issuer and from each Borrower to
Bank or any other Affiliate of Agent, of any kind or nature, present or future, whether or
not evidenced by any note, guaranty or other instrument, whether arising under the
Agreement, any of the other Loan Documents or any agreements evidencing the Product
Obligations, whether direct or indirect (including those acquired by assignment), absolute
or contingent, primary or secondary, due or to become due, now existing or hereafter arising
and however acquired, and including, without limitation, any Product Obligations.




     Organizational I.D. Number — with respect to any Person, the organizational
identification number assigned to such Person by the applicable governmental unit or agency
of the jurisdiction of organization of such Person.




     Original Closing Date — October 8, 2003.




     Original Loan Agreement — as defined in the preamble to the Agreement.




     Other Agreements — any and all agreements, instruments and documents (other
than the Agreement and the Security Documents), heretofore, now or hereafter executed by any
Borrower, any of its Subsidiaries, any Guarantor or any other third party and delivered to
Agent or any Lender in respect of the transactions contemplated by the Agreement, each as
amended from time to time in accordance with its respective terms.




     Overadvance — as defined in subsection 1.1.2 of the Agreement.




     Parent — NFC Castings, Inc., a Delaware corporation.




     Patterns and Core Boxes — Goods consisting of casting patterns and core boxes.




     Peerless — Peerless Corporation, an Ohio corporation.



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     Permitted Acquisition — any acquisition after the Closing Date by any Borrower
or any Subsidiary formed by such Borrower for such purpose (a “New Subsidiary”), by any
means, of all or substantially all of the assets or capital stock, an operating division or
a business unit, of any Person that is a going concern, that has been incorporated or
organized under the laws of a State within the United States and that is in a similar or
related field of business to a Borrower as of the date hereof, and so long as Agent and
Lenders shall have received evidence at least 3 Business Days prior to the closing date of
such acquisition that such acquisition satisfies the following conditions (provided, that
the conditions set forth in clauses (b), (c), (h) and (i) below shall not apply with respect
to an Acquisition where (x) average Availability (as determined by Agent in its reasonable
credit judgment) for the thirty (30) day period ending on the date of any such Acquisition
(giving effect to the making of such Acquisition and the consummation of any transactions
occurring in connection therewith for each day in such thirty (30) day period) is not less
than $25,000,000 and (y) actual Availability (as determined by Agent in its reasonable
credit judgment) on the date of any such Acquisition, after giving effect
to the making of such Acquisition and the consummation of any transactions occurring in
connection therewith, is not less than $25,000,000):




	 	(a)	 	no Default or Event of Default is in existence at the time of
such acquisition or would be caused thereby after giving effect thereto;
	 
	 	(b)	 	after giving effect to the proposed acquisition, Borrowers are
in compliance with each of the financial covenants set forth in Section 8.3 of
the Agreement on a pro forma, but unadjusted, basis;
	 
	 	(c)	 	the Person or business to be acquired has shown an unadjusted
positive EBITDA (calculated in accordance with GAAP) for the twelve month
period ended immediately prior to the date of acquisition, as determined by
Agent;
	 
	 	(d)	 	the Board of Directors and/or owners of the entity whose
business is to be acquired have provided all requisite authorization of the
proposed transaction;
	 
	 	(e)	 	Agent has received at least ten (10) days’ prior written notice
of such Acquisition and, as soon as available, copies of all agreements
delivered in connection therewith;
	 
	 	(f)	 	subsection 8.1.8 of the Agreement has been satisfied with
respect to such assets, Person or New Subsidiary and, as a result thereof,
Agent has obtained a first priority Lien (subject only to Permitted Liens) on
the applicable stock and assets;
	 
	 	(g)	 	Agent has received a certificate from Neenah’s chief financial
officer (in such Person’s capacity as such) certifying that all of the
applicable




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	 	 	 	conditions contained herein to treating such acquisition as a
Permitted Acquisition have been satisfied;
	 
	 	(h)	 	if the total consideration (including cash, notes and other
debt, maximum earnouts, consulting and non-compete payments and the like) for
such acquisition, together with all other acquisitions completed since the
Closing Date, exceeds $5,000,000, Agent and Majority Lenders have consented in
writing to such acquisition;
	 
	 	(i)	 	immediately after giving effect to the consummation of such
acquisition, average Availability (as determined by Agent in its reasonable
credit judgment) for the thirty (30) day period ending on the date of such
acquisition is not less than $15,000,000 and actual Availability (as determined
by Agent in its reasonable credit judgment) on the date of such acquisition is
not less than $15,000,000; provided, that the foregoing test shall not
apply if the consideration for such acquisition is paid solely in equity of a
Borrower having terms reasonably acceptable to Agent; and
	 
	 	(j)	 	consents have been obtained in favor of Agent to the collateral
assignment of rights and indemnities under the related acquisition documents.






     In no event shall any Accounts, Inventory or Patterns and Core Boxes acquired in
connection with a Permitted Acquisition be deemed eligible for advance hereunder unless and
until Agent has completed (at Borrowers’ expense) a Collateral audit and appraisal of such
Property so acquired or to be acquired (which audit and appraisal shall be conducted in a
manner that is consistent with the audits and appraisals conducted pursuant to subsection
2.7 and subsection 2.10, respectively, of the Loan Agreement).




     Permitted Holders — any or all of the following: (i) Tontine Capital Partners,
L.P., (ii) any Affiliate of Tontine Capital Partners, L.P. and (iii) any Person the
Securities of which (or, in the case of a trust, the beneficial interests of which) are
owned 80% by Persons specified in the foregoing clauses (i) and (ii).




     Permitted Liens — any Lien of a kind specified in subsection 8.2.5 of the
Agreement.




     Permitted Purchase Money Indebtedness — Purchase Money Indebtedness of any
Borrower incurred after the date hereof which is secured by a Purchase Money Lien and the
principal amount of which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrowers and the Borrowers’ Subsidiaries
at the time outstanding, does not exceed the dollar limitation set forth in subsection
8.2.3(v) of the Agreement. For the purposes of this definition, the principal amount of any
Purchase Money Indebtedness consisting of capitalized leases (as opposed to operating
leases) shall be computed as a Capitalized Lease Obligation.



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     Person — an individual, partnership, corporation, limited liability company,
joint stock company, land trust, business trust, or unincorporated organization, or a
government or agency or political subdivision thereof.




     Plan — an employee benefit plan now or hereafter maintained for employees of
any Borrower or any of its Subsidiaries that is covered by Title IV of ERISA.




     Pledge Agreements — collectively, (i) the Amended and Restated Pledge
Agreement executed by Parent on or about the Closing Date in favor of Agent, for the benefit
of itself and Lenders, by which Parent has granted to Agent, as security for the
Obligations, a Lien on the 100% of the Securities of Neenah, (ii) the Amended and Restated
Pledge Agreement executed by Neenah on or about the Closing Date in favor of Agent, for the
benefit of itself and Lenders, by which Neenah has granted to Agent, as security for the
Obligations, a Lien on the 100% of the Securities of Neenah Transport, Deeter, Mercer,
Dalton, Advanced Cast, Cast Alloys and Gregg, (iii) the Amended and Restated Pledge
Agreement executed by Mercer on or about the Closing Date in favor of Agent, for the benefit
of itself and Lenders, by which Mercer has granted to Agent, as security for the
Obligations, a Lien on the 100% of the Securities of its Subsidiaries, (iv) the Amended and
Restated Pledge Agreement executed by Dalton on or about the Closing Date in favor of Agent, for the benefit of
itself and Lenders, by which Dalton has granted to Agent, as security for the Obligations, a
Lien on the 100% of the Securities of its Subsidiaries, (v) the Amended and Restated Pledge
Agreement executed by Advanced Cast on or about the Closing Date in favor of Agent, for the
benefit of itself and Lenders, by which Advanced Cast has granted to Agent, as security for
the Obligations, a Lien on the 100% of the Securities of its Subsidiaries and (vi) all other
pledge agreements and comparable documents now or at any time hereafter securing the whole
or any part of the Obligations, each as amended from time to time in accordance with its
respective terms.




     Product Obligations — every obligation of Borrowers owing to Bank, Agent or
any Affiliate of Bank or Agent under and in respect of any one or more of the following
types of services or facilities extended to any Borrower by Bank, Agent or any Affiliate of
Bank or Agent: (i) credit cards, (ii) cash management or related services including the
automatic clearing house transfer of funds for the account of any Borrower pursuant to
agreement or overdraft, (iii) controlled disbursement services and (iv) Derivative
Obligations.




     Projections — Neenah’s forecasted Consolidated and consolidating (i) balance
sheets, (ii) profit and loss statements, (iii) cash flow statements, and (iv) capitalization
statements, all prepared on a consistent basis with the historical financial statements of
Borrowers and Borrowers’ Subsidiaries, together with appropriate supporting details and a
statement of underlying assumptions.




     Property — any interest of Borrower or any Subsidiary in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible.



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     Purchase Money Indebtedness — means and includes (i) indebtedness (other than
the Obligations) for the payment of all or any part of the purchase price of any fixed
assets, (ii) any indebtedness (other than the Obligations) incurred at the time of, or
within 10 days prior to or 60 days after, the acquisition or completion of construction or
improvement of any fixed assets for the purpose of financing all or any part of the purchase
price or cost (as applicable) thereof, and (iii) any renewals, extensions or refinancings
thereof, but not any increases in the principal amounts thereof outstanding at the time.




     Purchase Money Lien — a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the fixed
assets the purchase price of which was financed through the incurrence of the Purchase Money
Indebtedness secured by such Lien.




     Register — as defined in subsection 11.9.5 of the Agreement.




     Related Person — of any Person means any other Person directly or indirectly
owning (a) 5% or more of the outstanding common stock of such Person (or, in the case of a
Person that is not a corporation, 5% or more of the equity interests in such
Person) or (b) 5% or more of the combined voting power of the Voting Stock of such
Person.




     Rent Reserve — means, with respect to any location leased by a Borrower where
Eligible Inventory is located and a satisfactory landlord’s agreement has not been provided,
a reserve in an amount equal to the sum of all rental payments scheduled to come due in the
next 3 months for such location.




     Rentals — as defined in subsection 8.2.19 of the Agreement.




     Reportable Event — any of the events set forth in Section 4043(c) of ERISA.




     Requested Revolver Increase — as defined in subsection 1.1.7 of the Agreement.




     Reserves — reserves against the amount of Revolving Credit Loans which
Borrowers may otherwise request under the Agreement that have been established by Agent in
such amounts and with respect to such matters as Agent shall reasonably deem necessary or
appropriate in its reasonable credit judgment exercised in good faith.




     Reserve Percentage — the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed on member banks of the
Federal Reserve System against “Euro-currency Liabilities” as defined in Regulation D.




     Restricted Investment — any investment made in cash or by delivery of Property
to any Person, whether by acquisition of stock, Indebtedness or other



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obligation or Security, or by loan, advance or capital contribution, or otherwise, or in any Property
except the following:




     (i) investments by a Borrower, to the extent existing on the Closing Date, in
one or more Subsidiaries of such Borrower;




     (ii) Property to be used in the ordinary course of business;




     (iii) Current Assets arising from the sale of goods and services in the
ordinary course of business of any Borrower or any of its Subsidiaries;




     (iv) investments in direct obligations of the United States of America, or any
agency thereof or obligations guaranteed by the United States of America,
provided that such obligations mature within one year from the date of
acquisition thereof;




     (v) investments in certificates of deposit maturing within one year from the
date of acquisition and fully insured by the Federal Deposit Insurance Corporation;




     (vi) investments in commercial paper given the highest rating by a national
credit rating agency and maturing not more than 270 days from the date of creation
thereof;




     (vii) investments in money market, mutual or similar funds having assets in
excess of $100,000,000 and the investments of which are limited to investment grade
securities;




     (viii) Intercompany Loans;




     (ix) investments made in exchange for Accounts arising in the ordinary course
of business which have not been collected for 120 days and which are, in the good
faith judgment of such Borrower or one of its Subsidiaries, substantially
uncollectable, provided that the instrument evidencing such investment is delivered
to Agent to be held as security for the Obligations pursuant to the terms of the
Agreement;




     (x) investments in evidence of Indebtedness, securities or other Property
received from another Person by such Borrower or any of its Subsidiaries in
connection with any bankruptcy case or by reason of a composition or a readjustment
of debt or reorganization of such Person as a result of foreclosure, perfection or
enforcement of any Lien in exchange for evidence of Indebtedness, securities or
other Property of such Person;




     (xi) repurchase agreements with respect to securities described in clause (iv)
above entered into with an office of a bank or trust company which



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is organized under the laws of the United States or any State thereof and has capital, surplus
and undivided profits aggregating at least $500,000,000;




     (xii) investments consisting of loans for salary, travel advances,
entertainment, relocation, advances against commissions and other similar advances
to employees in the ordinary course of business.




     (xiii) investments existing on the date hereof and listed on Exhibit
8.2.12 hereto;




     (xiv) investments otherwise expressly permitted pursuant to the Agreement; and




     (xv) investments made where (x) average Availability (as determined by Agent in
its reasonable credit judgment) for the thirty (30) day period ending on the date of
any such investment (giving effect to the making of such investment and the
consummation of any transactions occurring in connection therewith for each day in
such thirty (30) day period) is not less than $25,000,000 and (y) actual
Availability (as determined by Agent in its reasonable credit judgment) on the date
of any such investment, after giving effect to the making of such investment and the
consummation of any transactions occurring in connection therewith, is not less than
$25,000,000.




     Revolving Credit Loan — a Loan made by any Lender pursuant to Section 1.1 of
the Agreement.




     Revolving Credit Maximum Amount — $100,000,000, as such amount may be reduced
from time to time pursuant to the terms of the Agreement or increased pursuant to the terms
of subsection 1.1.7 of the Agreement.




     Revolving Loan Commitment — with respect to any Lender, the amount of such
Lender’s Revolving Loan Commitment pursuant to subsection 1.1.1 of the Agreement, as set
forth below such Lender’s name on the signature page hereof or any Assignment and Acceptance
Agreement executed by such Lender.




     Revolving Loan Percentage — with respect to each Lender, the percentage equal
to the quotient of such Lender’s Revolving Loan Commitment divided by the
aggregate of all Revolving Loan Commitments.




     Revolving Notes — the Secured Promissory Notes to be jointly and severally
executed by Borrowers on or about the Closing Date in favor of each Lender to evidence the
Revolving Credit Loans, which shall be in the form of Exhibit 1.1 to the Agreement,
together with any replacement or successor notes therefor.




     Secured Bonds — the 9.5% Senior Secured Notes of Neenah due 2017 issued as of
the date of the Agreement pursuant to the Secured Bond Documents in the original principal
amount of $225,000,000.



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     Secured Bond Documents — the Secured Bond Indenture, the Secured Bonds, any
guaranty, mortgage, security agreement or other collateral document securing the Secured
Bonds and all other documents, agreements and instruments now existing or hereinafter
entered into in connection with the foregoing, in each case as amended from time to time.




     Secured Bond Indenture  — that certain Indenture providing for the issuance of
the Secured Bonds among Neenah, as issuer, the Subsidiaries of Neenah party thereto as
subsidiary guarantors and the Secured Bond Trustee, dated as of the date of the Agreement,
as amended from time to time in compliance with its terms and in compliance with the terms
hereof.




     Secured Bond Intercreditor Agreement — that certain Intercreditor Agreement
dated as of the date of the Agreement by and among Agent, the Secured Bond Trustee,
Borrowers and Guarantors, as amended from time to time in accordance with its terms.




     Secured Bond Trustee — The Bank of New York Trust Company, N.A.




     Secured Bonds (2003 Series) — as defined in the Original Loan Agreement.




     Secured Bond Documents (2003 Series) — as defined in the Original Loan
Agreement.




     Security — all shares of stock, partnership interests, membership interests,
membership units or other ownership interests in any other Person and all warrants, options
or other rights to acquire the same.




     Security Documents — the Guaranty Agreements, the Mortgages, the Pledge
Agreements, and all other instruments and agreements now or at any time hereafter securing
the whole or any part of the Obligations, each as amended from time to time in accordance
with its respective terms.




     Solvent — as to any Person, that such Person (i) owns Property whose fair
saleable value as a going concern is greater than the amount required to pay all of such
Person’s debts (including contingent debts), (ii) is able to pay all of its debts as such
debts mature and (iii) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage.




     Subordinated Bonds — the 12.5% Senior Subordinated Notes of Neenah due 2013
issued as of the date of the Agreement pursuant to the Subordinated Bond Documents in the
original principal amount of $75,000,000.




     Subordinated Bond Documents — the Subordinated Bond Indenture, the
Subordinated Bonds, any guaranty, mortgage, security agreement or other collateral document
securing the Subordinated Bonds and all other documents, agreements and



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instruments now existing or hereinafter entered into in connection with the foregoing, in each case as
amended from time to time.




     Subordinated Bond Indenture  — the Indenture attached as Exhibit A to the
Subordinated Bond issued on the Closing Date.




     Subordinated Bond Trustee — The Bank of New York Trust Company, N.A.




     Subordinated Bonds (2003 Series) — as defined in the Original Loan Agreement.




     Subordinated Bond Documents (2003 Series) — as defined in the Original Loan
Agreement.




     Subordinated Debt — Indebtedness of any Borrower or any of its Subsidiaries
permitted under the Agreement that is subordinated to the Obligations in a manner reasonably
satisfactory to Agent, and contains terms, including without limitation, payment terms,
satisfactory to Agent.




     Subsidiary — any Person of which another Person owns, directly or indirectly
through one or more intermediaries, more than 50% of the Voting Stock at the time of
determination.




     Subsidiary Guarantors — each of Cast Alloys; Belcher; Peerless Corporation;
Dalton — Ashland; and each other Subsidiary of Ultimate Parent, Parent or Neenah that now
or hereafter executes a Guaranty Agreement.




     Swingline Loans — as defined in subsection 1.1.4 of the Agreement.




     Syndication Agent — Credit Suisse Securities (USA) LLC, in its capacity as
Syndication Agent under the Agreement.




     Tangible Assets — the total amount of assets of Neenah and its “Restricted
Subsidiaries” under and as defined in the Secured Bond Indenture (less applicable
depreciation, depletion, amortization and other valuation reserves), after deducting
therefrom all goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, all as (i) set forth on the most recent balance sheet of
Neenah and its “Restricted Subsidiaries” under and as defined in the Secured Bond Indenture
delivered pursuant to subsection 8.1.3 of the Agreement, (ii) determined in accordance with
GAAP and (iii) calculated on a pro forma basis after giving effect to asset dispositions or
acquisitions, or the designation of a “Restricted Subsidiary” under and as defined in the
Secured Bond Indenture as an “Unrestricted Subsidiary” under and as defined in the Secured
Bond Indenture occurring after the date of such most recent balance sheet delivered pursuant
to subsection 8.1.3 of the Agreement.




     Term — as defined in Section 4.1 of the Agreement.



A-27









 






     Total Credit Facility — $100,000,000, as such amount may be reduced from time
to time pursuant to the terms of the Agreement or increased pursuant to the terms of
subsection 1.1.7 of the Agreement.




     Total Leverage Ratio — as defined in Exhibit 8.1.3 to the Agreement.




     Type of Organization — with respect to any Person, the kind or type of entity
by which such Person is organized, such as a corporation or limited liability company.




     UCC — the Uniform Commercial Code as in effect in the State of Illinois on the
date of this Agreement, as it may be amended or otherwise modified.




     Ultimate Parent — ACP Holding Company, a Delaware corporation.




     Unused Line Fee — as defined in Section 2.5 of the Agreement.




     Voting Stock — Securities of any class or classes of a corporation, limited
partnership or limited liability company or any other entity the holders of which are
ordinarily, in the absence of contingencies, entitled to vote with respect to the election
of corporate directors (or Persons performing similar functions).



          Other Terms. All other terms contained in the Agreement shall have, when the context
so indicates, the meanings provided for by the UCC to the extent the same are used or defined
therein.




          Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder” and
other words of similar import refer to the Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all genders.
The section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All references to
statutes and related regulations shall include any amendments of same and any successor statutes
and regulations. All references to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.





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